From Reform to Responsibility: How the Dutch Central Bank’s ESG Guidance and Pension Overhaul Are Setting a Regional Precedent

Warren Sacks

Manager, Client Relations

Petra Stassen

Director, AF Advisors

Key Insights:

With the Dutch pension system moving to a defined contribution model, participants and regulators must pay closer attention to investment strategy and risk management, fees and administrative costs and ESG integration and responsible investing. For asset owners, this means greater responsibility to align investments with participants’ long-term preferences and values — including sustainability priorities.

De Nederlandsche Bank (DNB), the central bank for the Netherlands, is also clearly communicating its expectations to asset owners to demonstrate not only their intentions with regards to sustainability, but to actively identify ESG risks and implement, measure and mitigate these risks.

Dutch asset owners and the choices they make — about data, governance, engagement, and their contribution to sustainability risk mitigation — will not just shape national compliance, but serve as a test case for the future of sustainable investing in Europe.

The Dutch financial landscape is undergoing a significant evolution. On one hand, the Netherlands is implementing sweeping pension reforms — the largest in decades. On the other, De Nederlandsche Bank (DNB), the central bank for the Netherlands within the Eurosystem, is intensifying its expectations around environmental, social, and corporate governance (ESG) risk management and disclosure.¹ Together, these developments are reshaping how institutional investors, particularly asset owners, fulfill their fiduciary responsibilities.

Changes to Pension Plans

Pension reform via the Wet toekomst pensioenen (Future Pensions Act)² is transitioning plans from defined benefit (DB) to defined contribution (DC) models and fundamentally altering the Dutch pension system. In a DB scheme, the participant’s pension is a fixed percentage of their salary based on how long they’ve worked, while in a DC scheme, the pension depends on the total contributions made and investment returns.

This shift gives participants more insight (i.e., into their personal pension pot, contributions made as both employer and employee, and investment performance over time) and choice (i.e., by selecting risk profiles such as defensive, neutral, or offensive; selecting timing or method of benefit payout [e.g., drawdown vs. annuity] and optional additional contributions).

But the shift also leads to more scrutiny on how pensioners’ capital is managed. Since investment performance directly affects pension outcomes in DC, participants and regulators must pay closer attention to investment strategy and risk management, fees and administrative costs, and ESG integration and responsible investing. For asset owners, this means greater responsibility to align investments with participants’ long-term preferences and values — including sustainability priorities.

Changes to ESG Implementation

At the same time, DNB is raising the regulatory bar by clearly communicating its expectations — from climate risk and biodiversity, to governance practices and data integrity — sustainability risks must be integrated into financial decision-making. DNB’s recent thematic reviews,³ the ‘good practice’ guide⁴ update and supervisory letters⁵ signal an intent to move beyond policy rhetoric to tangible implementation. Asset owners are now expected to demonstrate not only their intentions with regards to sustainability, but to actively identify ESG risks and implement, measure and mitigate these risks.

Combined Impacts of Pension Plan and ESG Reform

The pension plan reform reshapes the structure of promises to participants by enabling more flexibility for end beneficiaries. DNB’s ESG and climate risk guides encourage pension funds to thoroughly think through how sustainability risks should be addressed in a changing world. Together, they demand that pension fund boards take a more holistic view on balancing financial metrics with pension participant preferences, where long-term financial security and long-term sustainability are deeply intertwined, rather than separate, mandates.

Strategic Implications for Dutch Asset Owners

Large pension funds are already evolving their approach by including sustainability considerations in their strategic asset allocation, strengthening stewardship practices, and expanding ESG reporting beyond aligning with Sustainable Finance Disclosure Regulations (SFDR) and EU Taxonomy requirements. Some are piloting double materiality assessments and exploring the role of nature-related risks in their portfolios.

For mid-sized and smaller pension funds, the challenge is acute. Some may have to rethink their data infrastructure, vendor selection, and internal ESG expertise. Others may place their governance frameworks under review. Practices that were once outsourced, implicit or reactive must now become proactive, explicit and accountable. Fiduciary managers are also under pressure to justify ESG decisions, not just through policy, but through traceable, auditable outcomes.

A Ripple Across Europe

Historically, the Netherlands has been an early mover in responsible investing.⁶ As Dutch pension funds evolve their views and practices, countries like Belgium, France and the Nordics are very likely observing how Dutch asset owners structure governance, balance sustainability with solvency, and navigate regulatory complexity.

DNB’s posture may also influence other central bank authorities in the region. The increased regulatory granularity in the Netherlands is creating a test case for how sustainability risks are understood, monitored, and enforced in institutional portfolios at a national level.

While other reforms (e.g., Corporate Sustainability Reporting Directive, European Green Bond Standard, SFDR, etc.) are already affecting asset owners and other institutional investors in the region, the cumulative effect is undeniable: expectations for transparency, integration, and accountability are increasing across the board.

What Happens Next

Dutch asset owners now stand at the intersection of reform and responsibility. The choices they make — about data, governance, engagement, and their contribution to sustainability risk mitigation — will not just shape national compliance, but serve as a test case for the future of sustainable investing in Europe.

The mainstreaming of ESG data within the financial system has enabled the data to become central to fiduciary duty, reputational risk, and long-term value creation. As the regulatory bar rises, so too does the opportunity to lead. This is a moment for Dutch asset owners to not only comply, but to define the path forward for Europe and beyond.

See our DNB Regulatory Solutions for information on how to integrate ESG data into your policies, risk management and disclosures.

References

De Nederlandsche Bank. 2024. “Pensioenfondsen, breng ESG-risico’s in kaart. October 28, 2024. https://www.dnb.nl/nieuws-voor-de-sector/toezicht-2024/pensioenfondsen-breng-esg-risico-s-in-kaart/
De Nederlandsche Bank. 2023. “Transitienieuws Wet toekomst pensioenen. July 1, 2023. https://www.dnb.nl/voor-de-sector/wet-toekomst-pensioenen/
De Nederlandsche Bank. 2023. “DNB publishes supervisory approach for climate and environmental risk management.” March 20, 2023. https://www.dnb.nl/en/sector-news/supervision-2023/dnb-publishes-supervisory-approach-for-climate-and-environmental-risk-management/
De Nederlandsche Bank. 2025. “TRANSITIENIEUWS - Good practice ‘stappenplan onderbouwing evenwichtige transitie door pensioenfondsen die beogen in te varen’ gepubliceerd.” February 4, 2025. https://www.dnb.nl/nieuws-voor-de-sector/toezicht-2025/transitienieuws-good-practice-stappenplan-onderbouwing-evenwichtige-transitie-door-pensioenfondsen-die-beogen-in-te-varen-gepubliceerd/
De Nederlandsche Bank. 2024. Annual Report. https://www.dnb.nl/media/pilghmfb/dnb-annual-report-2024.pdf
Wagemans, F., Verstappen, R., van Koppen, C., et al. 2024. “Institutional investors and the adoption of socially responsible investment: an explorative case study of Dutch pension funds.” March 18, 2024. https://www.tandfonline.com/doi/full/10.1080/20430795.2024.2327550

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