A climate-adaptive Netherlands requires a balance of measures and broader cooperation

Rotterdam, 9 November 2023

The financial sector is looking at the government to adapt laws and regulations and to initiate public-private partnerships, aimed at promoting opportunities for the financial sector to accelerate climate adaptation. This requires a proactive attitude and bolder policy-making from both the government and the financial sector. Together, they must determine the possibilities for more efficient cooperation and how parts of the total cost can be financed. The report will be presented to Delta Commissioner Peter Glas today, during the annual National Delta Congress. Liesbeth Mol, Chair Deloitte North South Europe and Geeke Feiter-van Heuvelen, Director of the Dutch Association of Insurers, will hand over the report.

Scientific research shows that the Netherlands has to adapt to the impact of extreme weather. This means that we must not only take measures to prevent further global warming (climate mitigation), but we also need to become climate-adaptive. This research provides insight into the importance of striking the right balance between climate mitigation and climate adaptation. In addition, it has brought the right parties together in order to be able to make concrete recommendations for practical next steps.

Key findings

•  Financing climate adaptation is complex. Business cases are predominantly assessed on shorter-term financial risks and not on longer-term social added value.
•  There is a need for more direction from the government; An overarching vision that shows what (economic) perspective there is, with clear transition paths that lead to choices about, for example, climate-adaptive construction. The government is also being looked at to amend laws and regulations and to initiate public-private partnerships.
•  Social inequality may increase due to the effects of climate change. This is evident from in-depth analyses of the city of Rotterdam, because of its specific location and relationship with water. Here, entire residential areas are at the end of their life cycle and residents are not all able to adapt their homes in a climate-adaptive way. As a society, it is important to guard against such a dichotomy and to ensure that climate risks do not become greatest for those with the least financial capacity.

"As a consultancy organisation, we also feel the responsibility to contribute, together with key stakeholders from the public and private domains, to the major transitions, such as climate adaptation, that are necessary to keep our world liveable," says Liesbeth Mol, Chair Deloitte North South Europe (NSE). "The concrete recommendations from our report were developed together with experts from the financial sector, government institutions and academia. In this way, we want to encourage action."

Delta Commissioner Peter Glas: "Public-private partnerships in the field of climate adaptation are the key to success. I therefore very much welcome Deloitte's initiative. By learning from Limburg and Rotterdam and by emphasising the specific role of the financial sector, we can improve collaboration and accelerate adaptation. This report provides valuable insights for the future, which will help to keep the Netherlands AAA-Climate-proof."

Key recommendations

• It is important that the government and the financial sector recognise that climate adaptation is a complex task, because interests and goals are not the same for everyone. In addition, there sometimes is a lack of knowledge and/or misunderstanding about how things work in another sector or organisation.
• The government must provide more clarity about the total costs of a climate-adaptive Netherlands. The financial sector can be asked to provide support.
  
• Take a look at long-term business models. This requires innovative leadership and courage from both the government and businesses. Current financial models are often about short-term results, which are valued at profits. The advice is therefore to look at improving the quality of life, safety and lifespan of Dutch people. Because this needs to be quantified differently, it is necessary to look at a longer term, of at least 25 years.
  
• As a society, it is important to be wary of an increase in social inequality and to ensure that climate risks are not passed on to those who can least bear the burden. The effects of climate change may increase social inequality. Residents with more financial resources are better able to take adaptive measures or move to a more favourable region, while residents with less financial resources are unable to do so.
  

Research accountability

This research was set up by the Deloitte Impact Foundation, from a historical context. The lessons learnt by the Netherlands in the past help in adapting to extreme weather due to climate change. The researchers specifically analysed how the financial sector is already contributing and what opportunities remain. The research was deepened on the basis of two cases:

1. The flood in Limburg as the most recent case, about how society was prepared, the handling and the lessons learnt, and
   
2. The city of Rotterdam, because of its specific location and relationship with water, the associated risks and the necessary climate adaptation.
   

This report was produced through desk research, including annual reports of financial institutions and qualitative interviews with experts from the financial sector, government agencies and academia and can be read as a widely supported report. This is not scientific research but aims to increase the urgency of climate adaptation, to bring parties together and to make concrete recommendations for practical follow-up steps towards a climate-adaptive Netherlands. In order to guarantee the right content and quality, Deloitte received supported during the preparation of the report by parties from both the private and public sectors, with financial expertise and knowledge in the field of climate adaptation.