Since the publication of ESG in the Dutch banking sector, there have been several legal developments in the Dutch banking and finance sector concerning Environmental, Social, and Governance (ESG) factors. These changes highlight the growing importance of ESG considerations in shaping the future of banking.
Sustainable finance incentives
Dutch banks are playing an increasingly active role in financing sustainable real estate and other green projects, supported by favorable legal frameworks. To support the energy transition banks are encouraged to offer green mortgages, loans, and other ESG-linked financial products. In 2024, the Dutch government introduced several legal incentives, including tax benefits for sustainable investments, aimed at stimulating green finance and improving the energy efficiency in the real estate sector. This push is part of a broader legislative effort to transition the Dutch economy to a low-carbon future.
Climate risk regulation and the CO2 levy
In line with national climate objectives, the Dutch government has tightened regulations on climate risk assessments for banks. Starting in 2024, changes to the CO2 levy on industrial emissions directly impact financial institutions requiring them to consider the carbon footprints of the companies and projects they finance. This levy, part of the Dutch Climate Agreement, encourages banks to prioritise financing for low-carbon projects to avoid financial penalties. Consequently, new financial products and services that account for these environmental costs have emerged, ensuring compliance with both national and EU regulations.
Legal exposure to climate litigation
Dutch banks and financial institutions are facing greater legal risks due to climate-related litigation. Court rulings, such as the Urgenda case, which compelled the Dutch government to meet its climate targets, have empowered environmental organisations to take legal action against companies failing to mitigate climate risks. In 2024, the pressure on banks to demonstrate that they are not financing environmentally harmful projects is intensifying.
For example, last year, Friends of the Earth Netherlands (Milieudefensie) issued a "notice of liability for unlawful climate policy" to ING, the largest bank in the Netherlands. The environmental group demands that ING align its climate policies with the Paris Agreement by reducing CO2 emissions by at least 48% and ceasing financial support for polluting industries. Failure to comply may lead to a court injunction to halt ING’s activities that contribute to environmental harm.
While these claims are still in the early stages, organisations like Friends of the Earth Netherlands are committed to using legal means to enforce corporate responsibility for climate action. If successful, these cases could set powerful precedents for environmental accountability in the Dutch banking sector and beyond.
Stricter disclosure requirements under EU and Dutch law
Over the past year, important changes have been made to the Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD), significantly affecting Dutch banks and financial institutions.
Revisions to the SFDR have been implemented to improve the consistency of sustainability disclosures and provide clarity on reporting requirements. These changes are intended to increase transparency around Sustainable Responsible Investment (SRI) and standardise the reporting of environmental impacts. Financial institutions must now report on negative impact indicators and classify sustainable products more clearly. New rules also require enhanced disclosure on whether investments cause significant harm to the environment or society, including exposure to controversial sectors such as gas and nuclear energy.
The CSRD has broadened its scope to require most listed and large non-listed companies in the EU to publish an annual sustainability report. The update to the size criteria in 2023 expanded the directive’s reach, now including a larger number of financial institutions. These institutions are required to ensure their sustainability reports are not only detailed but also verified by third-party auditors. Reporting must cover climate-related risks, human rights practices in supply chains, and other material sustainability factors. This significantly expands upon previous obligations under the Non-Financial Reporting Directive (NFRD), pushing banks to adopt a more comprehensive approach to sustainability performance.
