Accelerating the sustainability transition of the financial sector is essential

The Dutch Authority for the Financial Markets (AFM) is publishing a complete overview of its priorities and other supervisory activities for the coming year today in its annual supervisory agenda. The Agenda 2024 is based in part on the trends and risks set out in the AFM Trend Monitor 2024.

Sustainability is one of the supervisory priorities

In all kinds of areas within the financial sector, the pressure on sustainability is great, but there are also concerns about the speed at which the sustainability transition is continuing. Issuers and accountants, for example, will have to deal with new European reporting regulations, but available sustainability data often still fall short of these reporting requirements. Another issue that we see is finding the optimal balance between financial return and the ESG impact of investments. The way in which sustainable investments are presented is often still not sufficiently in line with the motivations of consumers. 

Laura van Geest, Chair of the Executive Board of the AFM: ‘Any delay reduces the chances of a swift and orderly transition to a sustainable economy. That is why ‘sustainability’ is one of the AFM's supervisory priorities.’

Increase in cross-border financial services 

The digitalisation of the financial sector and the offer of products and services via online platforms continue at a steady pace. The crypto market also continues to move. The Markets in Crypto Assets Regulation (MiCAR) is a first step in regulating this market. The AFM also notes an increasing interweaving of the financial sector with tech companies. This often leads to lower costs and greater efficiency, but also leads to more dependence and concentration risks as well as vulnerabilities such as digital crime. Driven by digitalisation, we are seeing an increase in cross-border financial services. The Dutch financial markets are attractive to foreign parties. In addition to the positive effects of an increase in supply and a greater diversity of providers, the cross-border nature of financial markets leads to cross-border risks, such as rogue foreign providers of investment products and cross-border market abuse in capital markets. These risks require an international approach by the AFM with other European supervisory authorities.

Supervision of the pensions transition

The AFM will also focus in the coming year on supervising the implementation of the Wet toekomst pensioenen (Wtp, Future Pension Act). As pensions are more sensitive to the financial markets, pension outcomes will be more dependent on financial and economic trends, such as developments in the share price and interest rate. The information provided to participants about a possible decrease and increase in their assets and the expected consequences for pension payments must be correct. We have been preparing for the pensions transition with additional pensions supervision for some time, together with the pensions sector and De Nederlandsche Bank.