The De Nederlandsche Bank (DNB) has unveiled its plan to align its equity and corporate bond portfolios with the objectives of the Paris Agreement.
According to ESG Today, this ambitious initiative will see DNB striving to reduce the carbon footprint of its investments by 50% from the 2019 levels by the year 2030, a significant step towards real-world emissions reductions at its portfolio companies.
DNB’s decision reflects the European Union’s (EU) overarching commitment to environmental sustainability. The EU targets include reducing carbon emissions by at least 55% by 2030 compared to 1990 levels and achieving climate neutrality by 2050. DNB is translating these environmental pledges into tangible actions by reorienting its reserve management strategies.
To achieve these goals, DNB has outlined a tripartite strategy. The first, “Invest,” targets investments in companies with lower carbon emissions or those committed to reducing their emissions.
The second, “Engage,” involves active dialogue with both companies and fund managers, leveraging a dedicated voting and engagement manager. This approach includes voting at shareholder meetings and discussions with fund managers on issues ranging from eliminating coal investments to enhancing climate-related reporting.
Lastly, the “Avoid” strategy centres on steering clear of companies significantly involved in fossil fuel activities, those not committed to the Paris Climate Agreement, and entities violating standards like the UNGC principles or involved in controversial weapons or tobacco industries.
This multifaceted approach underscores DNB’s dedication to not only decarbonize its portfolio but also to ensure that these changes contribute to tangible reductions in carbon emissions at the company level. The central bank emphasises the importance of achieving “real-world carbon reductions,” a goal beyond mere portfolio decarbonization.
DNB’s commitment is a pivotal step in central banking, aligning financial strategies with environmental sustainability, setting a precedent for other institutions.
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