Green bond

At ING, we believe sustainable business is better business. The choices we make in lending, investing and the services we offer to customers enable us to contribute to a sustainable economy, as well as build a strong portfolio of the businesses of tomorrow.

Our sustainable finance programme promotes sustainable business opportunities throughout the different sector and product teams at ING Wholesale Banking. We finance projects that accelerate our clients’ transition towards becoming more sustainable, and by supporting clients that develop solutions to environmental and social challenges. We measure and drive this part of our business as “sustainable transitions financed” (STF).

Matching this sustainable asset generation from our lending teams with the green funding from investors strengthens and supports our approach to sustainability. From real estate to renewable energy and from corporate lending to export finance, we focus on clients who adopt leading sustainable practices, ensuring a strong portfolio supporting tomorrow’s economy.

To support our sustainable finance programme and fund this portfolio, we designed a green bond framework meeting the highest standards on transparency and disclosure. In order to explicitly support growth of the green market, we committed ourselves to using at least 20% of proceeds for newly generated sustainable assets.

We successfully issued our first green bond in November 2015, a milestone in achieving our sustainability ambitions as it aligns our green lending activities with our corporate funding program. The green bond governance document tells more about our programme and approach.

The money raised in the green bond issue—USD 800 mln and EUR 500 mln in the initial issue and USD 62.5 mln in a private placement a month later—is being used to finance and refinance loans in six different categories: renewable energy, green buildings, public transport, waste management, water management and energy efficiency (described in our green bond framework). This reflects our approach to integrate sustainability in all sectors and products globally.

ING wants to be transparent about what the money is used for, making sure we fulfil our commitment to use at least 20% of the proceeds to fund new transactions1, and being open about the impact these transactions have on the environment and society.

We’ve worked with an external expert to develop a framework for measuring the environmental impact of the projects and deals. For the renewable energy projects and waste to energy projects the total carbon avoided is 656 kilotonnes, which is the equivalent of removing the annual emissions of 82,000 Dutch households.

Allocation of proceeds

The bond raised a total of EUR 1.315mln2, funding a total of 24 projects (see table below).

Allocation of proceeds per sector
Sector Allocation of proceeds Number of projects
Renewable energy - Wind 30% 8
Green buildings 26% 5
Renewable energy - Solar 24% 5
Public transport 16% 4
Water management 3.7% 1
Waste management 0.3% 1
Energy efficiency 0% 0
Total 100% 24
As of 1 July 2016

The independent assurance company oekom has verified that the projects meet the highest environmental and social criteria, as outlined in the second party opinion by oekom.

This ensures that all projects contribute positively to society and developing a sustainable economy, with no negative impact. We’ve gone further and have calculated the positive environmental impact of our projects, expressed in carbon avoided. Below is the carbon avoided from the renewable energy and waste to energy projects we financed. Please refer to the methodology document how Ecofys calculated the positive impact.

Sector % of proceeds Environmental impact
Renewable energy - Wind 30% 428.6 kilotonnes carbon avoided
Renewable energy - Solar 24% 223.6 kilotonnes carbon avoided
Waste to energy 0.3% 3.8 kilotonnes carbon avoided
As of 1 July 2016

A key component of our green bond was to allocate at least 20% of proceeds to new transactions, as we aim to grow our sustainable portfolio and continuously generate loans to projects with positive environmental and social impact. The table below shows how we’ve done more than that, we have allocated 25% of proceeds to new transactions.

Allocation of proceeds
  Refinancing
Transactions closed before November 2015
New financing
Transactions closed after November 2015
Total EUR of financing EUR 991mln EUR 324mln
% of proceeds 75% 25%
As of 1 July 2016

We will provide an update here every six months on how we’ve allocated the proceeds.

Renewable Energy

Renewable energy refers to electricity generated from renewable sources such as wind, solar power, geothermal, hydropower and biomass.

It’s crucial to finance the switch to renewable energy to protect the climate and facilitate the transition to a low-carbon economy.

Renewable energy
  Committed financing Allocation of proceeds
Onshore wind € 218mln 16%
Offshore wind € 183mln 14%
Solar € 314mln 24%
Hydro 0 0
Geothermal 0 0
Total renewable energy € 715mln 54%
As of 1 July 2016
Westermeerwind

Example

A good example of a renewable energy project included in the green bond portfolio is Westermeerwind. This unique project to construct 48 wind turbines in the large Dutch lake ‘IJsselmeer’ was developed by local entrepreneurs, assisted by project management company Ventolines B.V.

The project is a landmark transaction in the Netherlands due to its size and unique near-shore nature, featuring strong support from the Dutch government (in light of meeting its 2020 targets). The wind farm has been operational since June 2016, providing 160,000 households with sustainable electricity.

Environmental impact calculation

We’re committed to disclosing the environmental impact of our green bond financing. Independent assurance company oekom assesses all projects on environmental and social criteria. We’re also working with an independent expert to develop a framework that will transparently and reliably calculate the environmental impact of the projects (see the methodology that was used). We’ve started by looking at carbon avoided and building performance, and we will see if more factors can be added later.

Portfolio renewable energy projects
Total number of projects 13
Total % of proceeds 54%
Total annual energy generation 7,240,047 MWh
Total carbon avoided 656 kilotonnes

Green buildings

Buildings make up roughly 40% of global emissions, which is why it’s important for them to become increasingly more energy and resource efficient. Green buildings contribute to climate protection through optimised energy efficiency, air quality, waste reduction and water conservation. From a social point of view, green buildings can improve occupant health and comfort.

Green buildings
  Committed financing Allocation of proceeds
Green buildings € 337mln 26%
As of 1 July 2016.
Canary Wharf

Example

A good example of a green building included in the green bond portfolio is 25 Churchill Place, Canary Wharf.

ING participated in a EUR 534 mln loan to Canary Wharf Group to acquire a landmark building in the London business area Canary Wharf.

The building was awarded an excellent green building certificate in recognition of meeting best practices in areas such as energy monitoring, water consumption and sustainable procurement .

Environmental impact calculation

We’re committed to disclosing the environmental impact of our green bond financing. Independent assurance company oekom assesses all projects on environmental and social criteria. We’re also working with an independent expert to develop a framework that will transparently and reliably calculate the environmental impact of the projects. For green buildings we will determine a method for impact calculation at a later stage.

Public transport

Public transport can help climate protection through lower carbon emissions and optimised transport efficiency.

From a social point of view, it helps minimise strain on transport infrastructure, cleaner air and reduce injuries and fatalities caused by car accidents.

Public transport
  Committed financing Allocation of proceeds
Total public transport € 209mln 16%
As of 1 July 2016
A-Train AB

Example

A good example of a public transport project included in the green bond portfolio is the A-train transaction.

A-Train AB operates the Arlanda Express, a 20km rail link between Sweden’s Arlanda Airport and Stockholm’s city center. Its electric trains run entirely on green energy derived 100% from renewable sources such as hydropower, wind power and biofuels. ING was part of a group of banks that provided a SEK 1.28 billion (EUR 136.5 mln) debt refinancing package to A-Train AB.

Environmental impact calculation

We’re committed to disclosing the environmental impact of our green bond financing. Independent assurance company oekom assesses all projects on environmental and social criteria. We’re also working with an independent expert to develop a framework that will transparently and reliably calculate the environmental impact of the projects. For public transport we will determine a method for impact calculation at a later stage.

Waste management

Waste that isn’t recycled is dumped in landfills, producing toxic and hazardous gases and pollutants that contribute to global warming and can damage air quality and pose risks to human health.

Converting the waste (landfill gas, or LFG) to energy reduces the both the climate change impacts and the human health risks caused by the hazardous and toxic gases, as it keeps those gases from entering the atmosphere, converting them to energy fuel and destroying toxic pollutants through combustion.

Waste management
  Committed financing Allocation of proceeds
Waste to energy € 5mln 0.3%
As of 1 July 2016
Aria Energy

Example

The waste management project included in the green bond portfolio is our financing of Aria Energy Operating LLC, a special purpose company that owns and operates a portfolio of landfill gas (LFG) projects.

LFG projects convert highly potent methane gas (20 times more potent than CO2) into electricity or pipeline quality gas. ING acted as joint lead arranger, joint bookrunner and co-documentation agent for the credit facility for Aria Energy.

Environmental impact calculation

We’re committed to disclosing the environmental impact of our green bond financing. Independent assurance company oekom assesses all projects on environmental and social criteria. We’re also working with an independent expert to develop a framework that will transparently and reliably calculate the environmental impact of the projects (see the methodology that was used). We’ve started by looking at carbon avoided, and will see if more factors can be added later.

Portfolio waste to energy
Total number of projects 1
Total % of proceeds 0.3%
Total carbon avoided 4 kilotonnes

Water management

Water is one of the most important of life’s resources, and it’s increasingly under stress. On the one hand, there’s a need to invest in wide access to healthy drinking water and clean water for agriculture. On the other hand, we see an increasing need for protection from flooding and rising sea levels. In other words, there can be too little, too dirty or too much water.

We include loans in the green bond portfolio that are for financing the acquisition, development, building, operating and/or maintenance of assets for treatment and recycling of water and assets for flood protection.

Water management
  Committed financing Allocation of proceeds
Waste water treatment € 49mln 3.7%
As of 1 July 2016
Kelda Water Services

Example

A good example of a water management project included in the green bond portfolio is our financing of Kelda Water Services (KWS).

UK-based KWS has a portfolio of water and wastewater treatment facilities. It identified further growth opportunities in the areas of anaerobic digestion (converting wastewater into fertilizer and biogas, which is used for energy production) and small single wind turbines next to its facilities as a cost-effective renewable energy source.

The financing we provided is completely structured on the performance and revenues generated by KWS’s existing portfolio of wastewater projects.

Environmental impact calculation

We’re committed to disclosing the environmental impact of our green bond financing. Independent assurance company oekom assesses all projects on environmental and social criteria. We’re also working with an independent expert to develop a framework that will transparently and reliably calculate the environmental impact of the projects. For water management we will determine a method for impact calculation at a later stage.

1 New transactions are when financing was provided after date of issuance in November 2015.
2 For reporting purposes, we use euros, based on the November USD/EUR exchange rate of 1,0574.

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