ESG risk management: developments in the Dutch and EU financial sector

In this blog we review this updated DNB Guide and address how financial institutions can better manage climate-related and environmental risks according to this DNB Guide. In addition, we briefly compare this DNB Guide with the EBA Guidelines on the management of ESG risks that were published in January 2025.

In addition to outlining what’s new in the updated DNB Guide, this blog also explores how its approach aligns with broader European developments – specifically, the EBA Guidelines and the EU’s broader regulatory and supervisory agenda – and highlights how these frameworks complement each other in shaping ESG risk management across the EU financial sector.

Climate change and environmental degradation are an ever-increasing threat to the financial sector. Financial institutions must identify and manage these risks to ensure financial stability. Following the publication of the final Guidelines on the management of ESG risks by EBA (the EBA Guidelines) - which will become applicable as of 11 January 2026 -, DNB has recently updated its Guide for managing climate and environmental risks (DNB Guide) and published it for consultation.

Below, we will first focus on the new consultation version of the DNB Guide, the similarities between the DNB Guide and the EBA Guidelines on the management of ESG risks (the EBA Guidelines) and why it is relevant for the financial sector. Finally, we look at the DNB Guide and the EBA Guidelines compared to the general revised approach of the EU towards sustainability regulations.

1. The consultation version of the updated DNB Guide

What is the DNB Guide?

The DNB Guide applies to insurers, pension funds, investment firms, investment institutions, electronic money and payment institutions. It complements the EBA Guidelines which apply to banks.

The DNB Guide aims to support in-scope financial institutions in identifying and managing climate and environmental risks. This  DNB Guide also supports financial institutions in embedding these risks in their business operations, in complying with laws and regulations and in implementing good practices in four key areas: business model and strategy, governance, risk management and information provision.

DNB published the first version of its Guide for managing climate-related and environmental risks on 30 March 2023. New good practices for managing these risks are included in new and updated version of the DNB Guide.

What does DNB consider climate and environmental risks for in-scope financial institutions and why does it matter?

Climate and environmental risks can affect financial institutions in multiple ways. The DNB Guide defines climate and environmental risks as "financial and non-financial risks that can arise from the exposure of financial institutions to the consequences of climate change and environmental degradation". DNB categorizes climate and environmental risks into two types. The first type are physical risks which are related to the physical consequences of climate change and environmental degradation, such as damage due to extreme weather conditions, flooding and loss of biodiversity. The second type of risks are transition risks which are related to the transition to a low-carbon and more environmentally friendly economy, such as changes in climate and environmental policy, technological innovations and changing consuming behaviour towards sustainability. These risks can have a direct impact on the value of investments, increase credit risks and put business continuity under pressure.

Climate and environmental risks can lead to both financial risks (and non-financial risks for financial institutions. These risks can threaten financial stability through increased liabilities, asset losses, operational damages and reputational risks. DNB therefore expects financial institutions to identify and manage climate and environmental risks, with the DNB Guide intended to guide the various in-scope financial institutions in this process.

Updated consultation version DNB Guide for managing climate-related and environmental risks

The new version of the DNB Guide contains a number of important updates compared to the previous version of 2023. Firstly, the DNB Guide has been updated to reflect recent developments in legislation, such as the Corporate Sustainability Reporting Directive (CSRD) and other European sustainability regulations. For example, the new guide places more emphasis on double materiality, whereby financial institutions must report and take into account both the impact of climate and environmental risks on their own business operations and their impact on the environment. There is also more focus on integration in core processes, because DNB research and self-assessments have shown that financial institutions have not yet gone far enough with the implementation of climate and environmental risks throughout their organisation.

In addition, the good practices have been expanded. For example, new examples have been added with regard to the management of nature-related risks and public statements regarding sustainability commitments and ambitions (also taking into account the greenwashing reports published by the various European regulators).. DNB has indicated that it will continue to share practical examples and guidance in the future through its website.

These amendments are intended to help financial institutions improve their risk management and transparency regarding climate and environmental risks.

Supervision

DNB supervises compliance with legal standards, including on the management of environmental and climate risks, in a risk-based manner, taking into account the nature, complexity and size of the institution and the materiality of the risks. The supervisory activities related to the management of climate and environmental risks may therefore differ per sector. In scope institutions will be informed about this separately.

If there is a failure to comply with legal requirements, DNB may take enforcement action in accordance with applicable law.

Consultation response

DNB has completed the consultation on the new DNB Guide, for which parties were invited to submit their responses. The published responses indicate that the revised version of the DNB Guide is very welcome. The specific guidelines provided by DNB to structurally place climate and environmental risks on the agenda are positively received. At the same time, they point to a practical, realistic approach, good data, and the need for further deepening and refinement in the  DNB Guide.

2. Comparison of the DNB Guide to the EBA Guidelines

On 9 January 2025, the EBA) also published its Guidelines on the management of ESG (EBA Guidelines). The EBA Guidelines will apply from 11 January 2026 except for small and non-complex institutions for which the Guidelines will apply at the latest from 11 January 2027.

As the DNB Guide, the EBA Guidelines also refer to the integration of sustainability and climate considerations into the risk management frameworks of financial institutions. The EBA Guidelines apply to banks within scope of CRR and CRD. Just like the DNB Guide, the EBA Guidelines also emphasizes the need for in-scope financial institutions to integrate ESG risks -–particularly climate-related risks – into their overall risk management frameworks. The EBA Guidelines specify requirements regarding the internal processes and ESG risk management arrangements that in-scope institutions should have in place under CRR/CRD. Both guidelines require strong governance structures, with clear roles and responsibilities at the board and senior management levels for overseeing ESG and climate risks. They promote embedding ESG considerations into the institution’s strategy and risk appetite frameworks.

Both the DNB Guide and the EBA Guidelines show significant similarities regarding risk identification and assessment, disclosure and transparency and use of scenario analysis. However, the EBA Guidelines are pan-European, applying across the EU to banks and focus on a broad range of ESG risks (environmental, social, governance), while the DNB Guide is specific to different types of financial institutions in the Dutch financial sector and has a strong focus on climate-related financial risks, given the Netherlands’ advanced position in climate risk management.

3. Broader EU regulatory agenda

We also note that both DNB Guide and EBA Guidelines are broadly in line with the EU’s regulatory and supervisory agenda on ESG, which not only aims to strengthen applicable rules on ESG risks and transparency, but also streamline compliance and provide assistance to financial institutions in order for them to comply.

The EBA Guidelines translate these expectations into prudential supervision and governance practices for EU banks, while the DNB Guide offers practical, hands-on guidance tailored to financial institutions in the Netherlands, with a particular focus on managing climate and environmental risks. Together, these frameworks support financial institutions in embedding ESG considerations into their strategies, governance, and risk management, in line with evolving EU sustainability objectives.

Key takeaways

The DNB Guide offers the latest guidelines for in-scope financial institutions that must comply with increasingly strict sustainability standards. This is essential to anticipate future regulations and limit reputation risks. In practice, this means that financial institutions must integrate climate and environmental risks into their long-term strategy and that directors and supervisors must explicitly take these risks into account in their decision-making.

With the updated Guide, DNB offers clear direction for financial institutions to manage climate and environmental risks more effectively. The DNB Guide helps financial institutions not only to comply with laws and regulations, but also to make their business models future-proof. It is therefore important for everyone in the financial sector to follow these developments closely and take the DNB's recommendations seriously.

If you have any questions regarding the above, please contact Helin Ozcan, Niek Groenendijk or Marieke Driessen of our Stibbe Financial Markets team.