The Netherlands is the leader among eurozone nations in raising green debt securities, according to data from De Nederlandsche Bank, the central bank of the Netherlands.

The Dutch green bond has doubled in size since October 2020, according to the DNB, rising to 122.9 billion euros as of the end of July 2023 and up 21% from one year earlier. In contrast, the overall Dutch bond market contracted 3.4% during that same time.

Dutch firms and the Netherlands government are, among European nations, the leading issuers of green bonds in terms of share of total outstanding debt at 6.0% as of the end of July, followed by Finland at 4.9% and Germany at 4.7%. According to the DNB, European countries with large outstanding total debt, such as France, Spain and Italy, issue relatively fewer green bonds and fall below the eurozone average of 3.5%. However, the bank also pointed out that even this is still more than the global average of 1.5%.

While the debate over what makes a bond “green” has yet to be settled, as far as the DNB is concerned, capital raised through green bonds may only be used for initiatives and projects aimed at making the economy more sustainable.

“When issuing these financial instruments, a company explicitly commits itself to working towards climate goals,” the bank stated. “This is in contrast to regular bonds, where such restrictions on expenditure do not apply. Making the economy more sustainable could include, for example, investments aimed at boosting the energy transition and improving water management.”

Data from DNB also showed that Dutch pension funds, which invest most of their assets in foreign countries, significantly reduced their holdings in Asia in 2022. The asset value of Dutch pension fund investments in Asia fell 19% to 109.1 billion euros during the fourth quarter of 2022, from 134.1 billion euros one year earlier. That figure has declined even further to 106.6 billion euros through the first quarter of 2023.

Although many investors have been wary of China’s economic struggles as it tries to recover from the COVID-19 pandemic, the DNB attributed the geographical shift in assets to pension funds rebalancing their investment portfolios, which mainly involved selling equity investments.

While cutting back on Asian holdings, Dutch pension funds increased their assets held in European countries outside the Netherlands to 516.3 billion euros in Q1 2023 from 488.4 billion euros in Q4 2022. Meanwhile, the value of their assets in North America increased to 313.1 billion euros during the first quarter from 303.4 billion the previous quarter, while their domestic assets grew to 237 billion euros from 224.4 billion euros.

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