From Tilak´s Substack

By Tilak Doshi

On September 2nd, the OECD published an 88-page report, funded by the European Union and produced in cooperation with the European Commission, setting out a framework for risk assessment of Net Zero commitments for De Nederlandsche Bank (DNB), the Dutch central bank. It carries the OECD’s imprimatur, but Brussels paid for it and Brussels co-wrote it – an odd arrangement given that the OECD’s own membership includes a United States Treasury that has spent the past 18 months telling the IMF and the World Bank to abandon precisely this kind of work and instead refocus on narrower, more traditional mandates. Bureaucracies exist to produce reports, and reports, evidently, are what we get, however far the political winds beneath them have already shifted.

The timing could hardly be worse for the study’s underlying premise. The climate-alarm narrative that has underwritten a decade and a half of ‘green finance’ activism is unravelling in full public view. The scientific committee that builds scenarios for the IPCC’s next assessment report has retired RCP8.5 and its successor SSP5-8.5 – the lurid ‘business as usual’ emissions pathway that supplied the statistical backbone for a generation of doomsday headlines – calling it implausible. Acting on demands from the Trump administration, the World Bank’s board voted at the end of June to retire its target of directing 45% of lending to projects with climate co-benefits. I made the case in these pages last month that the ECB and Bank of England continue doubling down on climate regulation even as green finance collapses around them. I also argued in July that the whole alarmist edifice is now engaged in a desperate rear-guard action to save a narrative the data no longer support. Into this rubble steps the OECD, handing the Dutch central bank an 88-page manual on how to keep the faith.

There is something almost quaint about the OECD’s involvement at all. The organisation counts among its members a United States that has withdrawn from the Paris Agreement and pushed the multilateral development banks to abandon climate lending targets. It is not obvious Washington signed off on its own club publishing an 88-page manual instructing a European central bank how to entrench climate criteria in bank supervision. But the OECD functions as a technical secretariat and when the European Commission foots the bill and co-authors the terms of reference, its imprimatur becomes less a mark of international agreement than a convenient laundering of a Brussels policy preference through an ostensibly neutral institution.

A study in search of a problem

Strip away the technical language of physical emissions-intensity metrics and disclosure frameworks, and the study’s own description of its purpose gives the game away. The study exists to help DNB assess legal and reputational risks that arise when a bank’s stated decarbonisation targets fail to keep pace with what it had pledged. Note that what is being risk-managed here is not the solvency of Dutch banks nor the stability of the payments system or anything resembling a conventional prudential concern. It is the risk that a bank might fall short of a voluntary climate pledge it was pressured into making in the first place – pressure that, as it happens, came substantially from the same Brussels apparatus that has just commissioned a study on how to police it.

The financial sector’s own direct emissions – the diesel in branch managers’ company cars, the gas boilers heating head office – are trivial, a rounding error next to the emissions of a steel mill or an airline. The entire object of the exercise is therefore not the banks’ own minor environmental footprint but the composition of their loan books: which sectors get financed cheaply and which get starved of capital or charged a premium, irrespective of their creditworthiness on ordinary commercial terms. That is not prudential regulation. It is industrial policy conducted through the back door of bank supervision, with the added advantage, from Brussels’s point of view, that it never has to pass through a legislature or face voters who might notice that their mortgage or small-business loan has become dearer because their bank has been nudged into rationing credit to ‘dirty’ sectors.

What the 88 dense pages on emissions-reporting mechanics never pause to ask is whether the Net Zero commitments being defended so elaborately are themselves durable. The European Commission’s own flagship green mandate – the effective 2035 ban on new combustion-engine cars – was quietly gutted in December, with Brussels preparing a looser regime that keeps hybrids and some fuel-burning engines on the road well into the 2040s, after sustained pressure from carmakers and Berlin. German utilities, meanwhile, reported rising coal-fired power generation through 2025 as the country’s wind fleet underperformed. If the commitments anchoring the entire monitoring framework are already being renegotiated by the very governments that made them, a risk-assessment methodology built to enforce fidelity to those commitments is practically defunct.

Net Zero as the true prudential commitment

There is a name for what happens when ‘prudential’ risk is redefined so that decarbonisation, rather than the pecuniary interests of shareholders and depositors, becomes the yardstick against which a bank’s conduct is judged. Professor John Cochrane of Stanford’s Hoover Institution put the point plainly in Senate testimony some years ago, that allowing regulators to tilt the financial playing field in favour of businesses deemed ‘green’ destroys the impartiality that financial regulation is supposed to guarantee across regions, sectors and industries. Once a central bank or its advisers begin treating a contested, multi-decade policy commitment as the organising principle of ‘prudence’, they have left the terrain of financial stability for the terrain of picking winners – precisely the politicisation of the capital-allocation process that classical liberal, shareholder-driven capitalism was designed to prevent.

This is not a new ambition; it merely refuses to die. It was Mark Carney, then governor of the Bank of England and freshly anointed a “rock star” central banker by the BBC, who set much of this machinery in motion. He urged central banks in his 2020 Reith Lecture to arm shareholders with the tools to impose their moral sentiments on company managers – a mandate far beyond any central bank’s statutory brief. The Glasgow Financial Alliance for Net Zero that Carney built has since gone into visible retreat. Its Net-Zero Banking Alliance, once boasting well over a hundred member banks and tens of trillions of dollars in assets, voted last October to cease operations altogether after JP Morgan, Goldman Sachs, Citi, HSBC, Barclays and UBS all walked out rather than face antitrust and fiduciary-duty exposure at home. Yet the study now advising DNB proceeds as though none of this happened, treating Net Zero commitments as a fixed star by which prudential risk should be navigated, rather than as the fraying, politically contingent pledges they actually are.

The contrast with what is happening on the other side of the Atlantic could not be sharper. US Treasury Secretary Scott Bessent has told the IMF and the World Bank bluntly that “mission creep has knocked these institutions off course”, arguing that both should return to their core mandates of macroeconomic stability and economic development rather than sprawling climate and social agendas. The World Bank’s board, facing that pressure alongside a shareholder coalition that included Russia and Saudi Arabia, duly retired its 45% climate-lending target at the end of June. Whatever one thinks of the coalition that produced it, the direction of travel at the Bretton Woods institutions is now unmistakably away from embedding climate objectives in the core business of finance. The European Commission, funding an OECD study to help a national central bank do exactly what Washington has just told the multilaterals to stop doing, is swimming hard against that tide – and, tellingly, doing so through an intergovernmental technical body rather than through legislation by an elected European Parliament.

The 80% reality Brussels doesn’t want to see

All of this proceeds against a physical reality that no amount of prudential re-engineering can wish away. Oil, coal and natural gas together still supply on the order of four-fifths of the world’s primary energy, a share that has barely moved despite two decades of subsidies and mandates. The energy industry’s most recent statistical review found fossil fuels’ share of global energy supply higher still, with all three fuels reaching fresh absolute highs in 2025. Wind and solar energy are growing, at least where subsidy fatigue has not fully arrived, but they are a tiny sliver of electricity generation growing on top of an expanding fossil base, not in place of it. This is the energy system that heats Dutch homes, moves Dutch freight and keeps Dutch factories running – the same ‘dirty’ sectors that an EU-funded methodology now wants Dutch banks to treat as walking prudential liabilities.

The study elaborates on physical emissions-intensity metrics to police lending to carbon-intensive sectors at the very moment the Commission’s decarbonisation mandates are increasingly being challenged by the strong performance of populist-nationalist parties across the EU. A regulatory architecture built to penalise banks for financing ‘dirty’ industry is being erected in parallel with a political retreat from the very commitments that architecture exists to enforce.

None of this is to deny that financial institutions face genuine risks worth monitoring: credit risk, liquidity risk, the risk that a borrower’s business model becomes obsolete for perfectly ordinary commercial reasons. What the DNB study does is something else. It dresses up a policy preference for reallocating capital away from the energy sources that supply four-fifths of the world’s needs as a technical exercise in prudential supervision, immunising a contestable political judgement from scrutiny. As I have argued elsewhere, once the ESG-industrial complex could no longer win the argument in the marketplace – amid fund outflows, underperformance and mounting fiduciary-duty litigation – it retreated into the regulatory machinery of central banks and financial supervisors, where the same objectives could be pursued with far less democratic friction.

We have plans for your savings…

The OECD study is one plank of a larger platform. The European Commission’s Savings and Investments Union, adopted in March 2025, starts from the observation that around 70% of EU household savings, worth some €10 trillion, sit in ordinary bank deposits rather than in capital markets. Commission President Ursula von der Leyen’s mission letter to the commissioner running the project was explicit about the purpose: to “unlock the substantial amount of private investment” needed for the green, digital and social transitions. The mechanism under discussion is not compulsion – nobody is proposing (yet?) to confiscate deposits – but a mix of tax incentives, new pan-European savings products and centralised supervision designed to ‘nudge’ ordinary citizens’ savings out of the bank accounts they currently sit in and into vehicles aligned with Brussels’s strategic priorities, a shift that would let policymakers determine where household wealth ultimately flows.

It is the same instinct that produced the DNB study, applied one rung further down the financial system. If a bank’s loan book must be steered away from ‘dirty’ borrowers on prudential pretexts, why not the deposits that fund those loans? Once savings are re-routed into capital-market products carrying the green, digital and defence priorities Brussels has already chosen, the question of which industries get financed is settled well upstream of any saver’s actual preferences.

Britain, despite Brexit, is running an identical playbook. Rachel Reeves’s Mansion House Accord, signed in May 2025, commits 17 of the country’s largest workplace pension providers, managing the bulk of Britain’s defined-contribution pension assets, to put at least 10% of default funds into private markets by 2030, with at least 5% earmarked for UK assets – funds the former chancellor herself has framed as unlocking money for “infrastructure, clean energy and exciting start-ups”. The agreement is voluntary for now, but the Treasury has kept reserve powers to mandate binding allocation targets if providers fail to deliver on their own. Reeves herself pointedly declined to rule out compulsion. Pension trustees are bound by fiduciary duty to act in members’ best pecuniary interests. A government reserving the right to override that judgement in favour of its own industrial and climate priorities is, in substance, the London branch office of the same project under way in Brussels and Amsterdam.

Whether the mechanism is a central-bank risk-assessment framework steering bank lending, a Brussels strategy steering household savings or a Whitehall accord steering pension defaults, the pattern repeats. Capital that would otherwise be allocated on commercial judgement by banks, savers and fiduciary trustees is instead ‘nudged’ – and held in reserve to be mandated – towards sectors that governments and their advisory bodies have already decided are virtuous. It is an un-levelling of the playing field by degrees. First the banks’ loan books, then depositors’ savings, then pensioners’ retirement funds, each step moving real resources away from the fuels that still supply four-fifths of the world’s energy and toward the industries Brussels and Westminster have chosen to prefer.

Central banks and the technical bodies that advise them are duty bound to ensure sound money, financial stability and a level playing field on which capital flows to its most productive use as judged by savers and shareholders, not by Brussels officials working from a spreadsheet of approved sectors. An institution that starts treating voluntary, wobbling, politically contested decarbonisation pledges as the master variable of ‘prudence’ has already abandoned that job. The Dutch central bank would do well to file this particular report where so many of its predecessors now belong – on a shelf, next to the retired RCP8.5 projections. Brussels and Westminster alike would do well to leave household savings and pension defaults to the savers and trustees whose money it actually is, while the real economy, still four-fifths powered by the fuels the planners would like to un-bank, gets on with the business of keeping the lights on.

This article was first published in the Daily Sceptic https://dailysceptic.org/2026/09/08/oecd-risks-us-wrath-by-pushing-ahead-with-climate-finance-despite-washington-calling-time-on-net-zero/