ESG Outlook in the Netherlands

For the last 18 months environmental, social and governance (ESG) has been a hot topic and it is expected that this will continue to be so in the coming years.

Undoubtedly, the natural effects of climate change, the release of the latest IPCC report, COP26, growing investor pressure on corporates to address ESG issues, inequality on a social level, disruptions due to COVID-19 and new (disclosure) legislation will catalyse this. In this context, we give an overview on certain contemporary ESG topics currently discussed in or that have an impact on the Netherlands. For financial institutions and corporates the challenge is that of integrating these ESG matters into business as usual.

Read more on these ESG topics:

Climate policy and greenhouse gas emission reductions

In the National Climate Agreement (Klimaatakkoord) the central theme is to reduce greenhouse gas emissions in the Netherlands by 49% in 2030 compared to 1990 levels.

The European Union focused immensely on climate policy and further reduction of greenhouse gas emissions in the preceding months. The EU Climate Law enshrines the EU’s new climate targets:

  • carbon neutrality (i.e. net zero) by 2050 and “aim to achieve negative emissions thereafter”; and
  • a reduction in GHG emissions of at least 55% by 2030 compared to 1990 levels.

Moreover, the recently published “Fit for 55”-package sets the clear ambitions from an EU perspective to become a green and sustainable continent in the coming decades and to fully embrace the energy transition currently taking place.

Also the Netherlands has set some ambitious targets in recent years which may even become stricter in light of the current developments taking place at an EU level. In the National Climate Agreement (Klimaatakkoord) the central theme is to reduce greenhouse gas emissions in the Netherlands by 49% in 2030 compared to 1990 levels. This reduction target is laid down in the Climate Act (Klimaatwet) as well as a goal to arrive at a 95% reduction in CO2 by 2050.

Pursuant to the Climate Act the following mechanisms apply:

  • a climate plan which contains the key points of the government policy to be implemented in the next 10 years for which the Minister of Economic Affairs and Climate Policy is responsible;
  • a climate and energy report (KEV) which provides a report of actual and forecast CO2 emissions in the Netherlands; and
  • a climate memorandum which contains the appraisal by the Dutch government regarding the targets, accompanied by any additional policy intentions to achieve those targets.

Since the inception of its climate policy, significant steps have been taken by the Dutch government to abide by the targets set herein. Partly this was due to the Urgenda ruling in which the Dutch State was ordered to reduce greenhouse gases emissions by the end of 2020 by at least 25% compared to 1990. Amongst others, the obligation on the Dutch government to comply with the Urgenda ruling resulted in the early closure of a coal-fired power plant in Amsterdam.

Further compliance with the Urgenda ruling will be achieved among others by (i) the Coal phase out act (Wet verbod op kolen bij elektriciteitsproductie) which introduces a production cap for coal-fired power plants; (ii) a call towards the owners of each of the three modern coal plants to close a plant voluntarily in consideration for a subsidy award; (iii) increased budgets under incentive schemes for renewables; and (iv) development of CO2 reduction projects in joint consultation with the industrial players. The Dutch government will consider further suitable measures to comply with the Urgenda ruling, also in light of its long-term climate policy towards 2030 and 2050.

Lastly, in 2021 the Dutch Government introduced a CO2 levy on emissions from industrial installations. The amount of the CO2 levy per tonne of CO2 depends on the EU ETS price, as it is calculated as the difference between the rate set out in the Environmental Taxes Act and the EU ETS price. The CO2 levy for the industry is in addition to a minimum carbon price to produce electricity. The minimum carbon price applies to the emission of greenhouse gas from electricity generation by companies that fall under the EU ETS. Details of this legislative proposal are still being discussed in the Dutch Upper House (Eerste Kamer) of the Dutch parliament.

Renewable Energy and Incentive Schemes

It is expected that offshore wind capacity in the North Sea should be between 38 en 72 GW in 2050.

The Regional Energy Strategies (Regionale Energiestratiegiëen (RES)) are a key feature of the National Climate Agreement. Currently, local governments, social partners, network operators, the private sector and residents collaborate on the energy transition in an aim to become regionally supported choices of projects. In the RES there is a particular focus on processing and creating local support as well as spatial implementation of future projects. On 1 July 2021, the RES 1.0 was adopted for each of the 30 regions in the Netherlands. In the next decade the RES will determine the development of renewables in the relevant regions as well as the pace of the implementation of the wider energy transition at a local level.

Amendments to the Offshore Wind Energy Act (Wet windenergie op zee), since 2015 being the legal framework for the construction and operation of offshore wind farms, demonstrate that the offshore wind market has matured in recent years. It is expected that the amendments to the Offshore Wind Energy Act will come into effect in the near future. The amendments made relate to a more robust and future proof tender mechanism and an increase of the permitted operational period of offshore wind farms. On a national level, offshore wind is one of the key drivers to reduce CO2 emissions by 2030. This would require a total operational capacity of approximately 11 gigawatt (GW) by 2030. The Offshore Wind Energy Roadmap (Routekaart windenergie op zee) for the years 2024 to 2030 lays down the sequence for the development of the wind farms. Furthermore, it is expected that offshore wind capacity in the North Sea should be between 38 and 72 GW in 2050. In this context, the Dutch government will prepare an updated offshore wind road map up to 2040. This road map will not only target new offshore wind locations but also the integration of offshore wind with other energy systems (e.g. hydrogen) and the development of the relevant transport infrastructure.

The Stimulation of Sustainable Energy Transition (the SDE++) subsidy scheme replaced the SDE+ regime. Under the SDE++ subsidy scheme, in addition to renewable energy, other CO2 reduction technologies will become eligible for incentives as well. Consequently, technologies will no longer compete based on the amount of renewable energy produced, but rather on the amounts of CO2 that have been avoided. In fact, the SDE++ subsidy scheme offers an operating premium feed-in tariff subsidy for renewable energy and other CO2 reduction techniques compensating the difference between the cost price of the technology and the market price of avoided CO2. In the first SDE++ 2020 round, next to solar, CO2-reduction production through carbon capture, utilisation and storage (CCUS) applied for substantial amounts of subsidy.


To achieve electrolysis capacity of over 800 MW and 15 kilotons from biogenic fuels in the Netherlands by 2025.

In its Government strategy on Hydrogen (Kabinetvisie waterstof) from March 2020, the Dutch government envisages that hydrogen will be an indispensable part of the sustainability strategy for industrial clusters, ports and the transport sector generally. Within all industrial clusters in the Netherlands, market parties are preparing for hydrogen to play a growing role, including through feasibility studies, the development of business cases and proposed investments. The plans for green hydrogen collectively add up to a total aim to achieve electrolysis capacity of over 800 MW and 15 kilotons from biogenic fuels in the Netherlands by 2025.

A major milestone was reached by the end of June 2021 when it was announced that Gasunie would take the lead in the development of the hydrogen backbone in the Netherlands. Following research undertaken, the Dutch government will re-use the existing gas infrastructure and the roll-out plan for the hydrogen backbone will include details where (and where not) hydrogen transport infrastructure will be developed.

The National Hydrogen Programme (Nationaal Waterstof Programma) was launched in January 2021. A work plan is currently being developed. This will describe in further detail the activities to be undertaken by the National Hydrogen Programme to facilitate and realise the potential of hydrogen in the context of the energy transition. The work plan focuses on the period 2022-2025 with a further view towards 2030 and was published and handed over to the Minister of Economic Affairs and Climate on 9 July 2021.

Sustainable companies and collaboration by companies for sustainable objectives

Businesses will have more scope to enter into agreements, particularly to achieve climate objectives such as carbon emissions reduction.

The Netherlands is considering introducing a legal framework for social enterprises (besloten vennootschap met maatschappelijk doel (BVm)). Social enterprises will have a specific social purpose as set out in their articles of association (statuten). The managing directors of such an enterprise will need to consider and act in accordance with such a social purpose. A social purpose is likely to include one or more ESG elements. Social enterprises must report their purpose in their management reports. Being transparent and disclosing the impact of business activities on people, the environment and society are key to a sustainable future. Currently, no national or international framework on sustainable standards exists but the EU is rolling out its Taxonomy rules to scale up sustainable investment and to implement the European Green Deal whilst the International Financial Reporting Standards Foundation (IFRS) is also looking at improving its standards, specifically for sustainability reporting.

The Netherlands Authority for Consumers and Markets (ACM) wants to increase the opportunities for competing businesses to collaborate in pursuit of sustainability objectives. Businesses will have more scope to enter into agreements, particularly to achieve climate objectives such as carbon emissions reduction. The ACM proposes to allow this in cases where the benefits for society as a whole outweigh the disadvantages of any restriction of competition. For this reason, the ACM’s revised ‘Sustainability Agreements’ Guidelines, which include examples illustrating the opportunities for business collaboration that contributes to a sustainable society have been drawn up. The new draft guidelines are now ready for further discussions about sustainability and competition rules in the European Union. The ACM believes it is important that European guidelines are drawn up, which offer clarity to businesses that wish to make anticompetitive agreements that, for example, combat the climate crisis.

Corporate governance

Listed companies must include in their annual reports information on environment, workforce, social matters, human rights and anti-corruption and bribery policies.

In the Netherlands a debate is ongoing on the introduction in Dutch law of a duty of care on management board members and supervisory board members to participate responsibly in social and economic life. This would involve, among others, climate change, tax ethics, pay ratios within the business and diversity. Alternatively, scholars proposed to explicitly elaborate on the corporate purpose in the articles of association. Dutch government will further analyse how these proposals could be enshrined in Dutch law.

With regard to board diversity, Dutch listed companies must have a quota of at least one-third women and one-third men on their supervisory board or one-tier board. In addition, all ‘large’ public and limited liability companies must formulate a plan including appropriate and ambitious target figures for the supervisory board, the management board and the junior management. This plan must be reported to the Socio-Economic Council (Sociaal Economische Raad (SER)) and the management report (bestuursverslag) shall include a description thereof. The SER will publish reports on the progress of these companies’ achievements of the targets set. The aforementioned obligations are expected to come into effect later in 2021. Noteworthy is that the Dutch Corporate Governance Code Monitoring Committee noted in its report of 14 December 2020 that diversity in a broader sense is a topic of increased importance on the agenda of Dutch listed companies.

There are more transparency developments regarding ESG. The European Commission proposed in April 2021 a new framework of the Corporate Sustainability Reporting Directive (CSRD). It will completely replace and significantly expand the scope of the current EU Non-Financial Reporting Directive. On the basis of the current legislation, listed companies must include in their annual reports information on environment, workforce, social matters, human rights and anti-corruption and bribery policies. The proposed CSRD not only extends the number of companies which will need to report on ESG matters but also significantly widens the scope of the reporting obligation itself.

Accountants recognise the importance of ESG matters for business continuity reasons. The accountant of Shell plc noted the financial impact of climate change and the wider energy transition as a key audit matter. We expect companies to feel obliged to account for their ESG policy. The Royal Netherlands Institute of Chartered Accountants (Koninklijke Nederlandse Beroepsorganisatie van Accountants (NBA)) is further defining the role of accountants regarding analysing, verifying and auditing climate targets and objectives of Dutch listed companies.

Sustainable Finance Sources: survival guide

It can be hard to find in one place the legal, regulatory and industry sources you need when navigating the fast-moving and ever-developing sustainable finance landscape.

Our document provides you with a one-stop shop for this. The document is updated at least on a monthly basis. Starting with the EU legislative package, working through the Level 2 technical details and impacts on related sectoral legislation like MiFID II or UCITS, moving to local developments in the UK, and always with an eye to our UK future regulatory framework post-Brexit transition, this document brings all of the key sources and resources together and answers for each:

Netherlands ESG

With an upfront timeline and kept regularly updated, this resource will help you keep an eye on what’s on the horizon in sustainable finance.

Please click here for the latest edition. Of course, if you would like to discuss any of the sources or issues identified in this publication, please do get in contact with us.

Green loans and sustainability linked loans

Rather than environmental change, social projects would be aimed at bettering society through uses such as affordable infrastructure, essential services, affordable housing, or food security.

The LMA published new versions of its Green Loan Principles and Sustainability Linked Loan Principles in the first half of 2021. As a reminder:

  • green loans are loans allocated for “green” projects such as energy efficiency upgrades or replacing gasoline-driven vehicles with electric ones; and
  • sustainability-linked loans are loans for a general purpose where the pricing is linked to the borrower’s performance against certain ESG-related key performance indicators (KPIs), such as a target to reduce carbon emissions.

Certain Dutch banks led the initial charge in developing ESG products for their clients and, as a result, several Dutch lenders have considerable experience in the field. Many of these lenders go out of their way to encourage their clients to make use of ESG products and develop sustainability KPIs. Some act as sustainability co-ordinators, with specialist teams advising on ESG elements such as selecting and auditing KPIs, and there are also a range of third-party providers offering similar services.

Perhaps partly as a result of their lenders’ enthusiasm, green loans and sustainable loans are both popular options for Dutch borrowers. An increasing number of Dutch SMEs borrow green loans in order to finance a range of relevant projects, and larger businesses are following suit. With the encouragement of Dutch banks, and a growing awareness among borrowers of the available products, sustainability-linked pricing is also increasingly popular in large syndicated loans. As in other European jurisdictions, sustainability has mostly been integrated into investment grade lending, but there is growing interest in incorporating sustainability KPIs into leveraged finance transactions and the mid-market as well.

The LMA also released new Social Loan Principles in April 2021, aimed at developing a framework within which new “social loan” products will be created. These loans would be similar to green loans, in that they would fund projects. However, rather than environmental change, social projects would be aimed at bettering society through uses such as affordable infrastructure, essential services, affordable housing, or food security. This has not been a focus in the Dutch market to date, but the publication of the social loan principles may provide the necessary framework to encourage lenders and borrowers to begin developing those products – if only to agree a path for change with borrowers active in sectors with less of a sustainability footprint.

Rounding off a busy first half of the year for ESG loans, in July 2021 the LMA published a Best Practice Guide to Sustainability Linked Leveraged Loans, produced in conjunction with the European Leveraged Finance Association and a working group consisting of various financial institutions and law firms (including Linklaters). Along with our report on the subject, linked below, this represents the increasing interest in ESG from the leveraged market – particularly sustainability-linked loans. We have held discussions with several financial institutions (in the Netherlands and elsewhere) to discuss the emerging market practices, and how to implement them in the unique, often challenging, context of leveraged finance.

ICMA Green & Social Bond Principles 2021 edition issued

The updated GBP does not change the mandatory “core components” around use of proceeds, project evaluation and selection, proceeds management or reporting.

On 10 June 2021, the International Capital Market Association (ICMA) published the 2021 edition of the Green Bond Principles (GBP), voluntary process guidelines that recommend transparency and disclosure in the Green Bond market by clarifying the approach for issuance of a Green Bond. This is the first update to the GBP since 2018.

The Green Bond Principles 2021 edition features:

  • Two key recommendations on the Bond Framework and External Reviews designed to increase transparency alongside the four core components (Use of Proceeds, Process for Project Evaluation and Selection, Management of Proceeds, and Reporting);
  • A recommendation of heightened transparency for issuer-level sustainability strategies and commitments;
  • Encouragement to supply information, if relevant, on the degree of alignment of projects with official or market-based taxonomies;
  • Promotion of transparency on issuer processes to identify and manage perceived and known social and/or environmental risks; and
  • Links and references to the complementary guidance of the Climate Transition Finance Handbook, the Harmonised Framework for Impact Reporting, the Guidelines for External Reviews, which are supplemented by the Guidance Handbook.

The 2021 editions of the Social Bond Principles and Sustainability Bond Guidelines have been similarly revised.

The updated GBP does not change the mandatory “core components” around use of proceeds, project evaluation and selection, proceeds management or reporting. Nonetheless, it has added two “key recommendations” to these core requirements for issuers to encourage “heightened transparency”.

The following new guidance has also been issued by the ICMA:

The Sustainability-Linked Bond Principles, first published in June 2020, have not been updated.

EBA recommendations for ESG-linked capital issuances

On 24 June 2021, the European Banking Authority (EBA) published its updated Report on the monitoring of Additional Tier 1 instruments.

The Report included the EBA’s considerations on ESG capital bonds. The EBA has identified differences in the clauses of the environmental, social and governance (ESG) issuances made for capital/loss absorbency purposes. In this regard, the EBA has issued recommendations which in particular impact the disclosure of risks associated with the ESG elements in relevant documentation. In respect of sustainability-linked features, the EBA currently takes the view that step-up and/or fees based on missing ESG targets or other performance indicators should not be allowed or encouraged. The EBA will continue to monitor developments in this area and may provide further guidance in the future.


Requirements for periodic reporting to investors will apply from January 2022.

The Dutch Central Bank (De Nederlandsche Bank (DNB)) promotes a sustainable economic development. DNB advocates accelerating and scaling up climate investment. The Dutch government must create favourable conditions. The newly formed Dutch government is called up to do so by deploying a mix of pricing, supporting and regulating measures.

DNB’s Sustainable Finance Platform is a co-operative venture which brings together the Dutch financial sector, the Dutch government and the supervisory authorities to find ways of preventing or overcoming constraints for sustainable funding and to boost sustainability by working together.

A key priority of DNB’s supervision is the financial sector's management of climate-related and environmental risks. Financial institutions are to be aware of sustainability risks and to be able to manage them.

Additionally, the Dutch Authority for Financial Markets (AFM) is committed to promoting fair and transparent financial markets. In this context, among others, the AFM supervises the reporting of sustainable developments, climate-related issues and oversees that sustainability principles are being adhered to in an honest and transparent manner.

Finally, the new EU Sustainable Finance Disclosure Regulation (SFDR) requires financial service providers to be transparent from 10 March 2021 about investment decisions and advice with negative impacts on sustainability factors. Requirements for periodic reporting to investors will apply from January 2022. Primarily, SFDR is a set of EU rules which aim to make the sustainability profile of funds more comparable and better understood by end-investors. This will focus on pre-defined metrics for assessing the environmental, social and governance (ESG) outcomes of the investment process. Among the SFDR’s key parts is its focus on preventing “greenwashing”.

Supply chain due diligence and human rights

Fines for breaches under the Child Labour Due Diligence Act could be up to EUR 870,000 or 10% of the company’s total worldwide revenue.

In 2019, the Child Labour Due Diligence Act (Wet Zorgplicht Kinderarbeid) was adopted, which obliges companies to investigate whether their goods or services have been produced using child labour. Also, companies must develop a plan to prevent child labour in their supply chains. The obligations shall apply to all companies that sell or supply goods or services to Dutch consumers, regardless of where such company is based or registered, without exemptions for legal form or size. In addition, companies shall affirm to a regulator, which is to be determined, that they have exercised an appropriate level of supply chain due diligence to prevent child labour. Fines for breaches under the Child Labour Due Diligence Act could be up to EUR 870,000 or 10% of the company’s total worldwide revenue. The Child Labour Due Diligence Act will become effective by mid-2022.

Certain members of the Dutch parliament have proposed a new legislative proposal which obliges all Dutch incorporated companies with international operations to comply at least with the OESO-guidelines for multinational companies. If this initiative becomes law, it would mean that all such companies pursuant to the (to be introduced) Act on responsible and sustainable international operations (Wet verantwoord en duurzaam internationaal ondernemen) are by law required to take measures to prevent their supply chain making use of child and/or forced labour, slavery or that in their supply chain unsafe working conditions, discrimination, exploitation, breach of freedom rights to form trade unions or environmental damages are present. The Dutch Council of State has adopted its non-legally binding advice in respect of the legislative proposal in July 2021. This advice is, pending the reaction of the initiators of the legislative proposal, not yet publicly available. It is unclear when this will become publicly available, but in any event this will not be before the end of the summer break.

Climate litigation

On 26 May, the district court in The Hague ordered Royal Dutch Shell to reduce its global carbon emissions by 45% by 2030 compared with 2019 levels – that is, the emissions of the Shell group, its suppliers and its customers.

This was considered a ground-breaking decision whilst for the first time a court has intervened to force a company to reduce its carbon emissions and bring its strategy in line with the Paris Agreement. For the Netherlands, this decision was as important as the Urgenda case (see above under “Climate policy and greenhouse gas emission reductions”).

Undoubtedly, this is another important decision in the field of climate litigation that is on the rise on a global scale. Commentators have stated that the Shell decision is a “tipping point” in climate litigation but time will tell if that is indeed the case. However, this decision is the latest in a series of cases and investor decisions that - together - have very significant implications for companies’ climate strategies, not just in the oil & gas or energy sector.

Shell has indicated that it will appeal the decision, but has not done so at the time of writing. The appeal period expires on August 26.

Blog posts

Shell climate case: digging deeper into the court’s legal reasoning

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Shell climate decision: companies’ climate plans and targets under fire

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Spotlight on... climate and ESG action plans

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ESG Legal Outlook 2021

In this publication we explore some of the key global ESG themes that will shape the legal outlook for businesses in 2021 and the trends we see in different countries around the world.


x COP26 and beyond