Environmental and social risk management

... min read Listen

As a global bank, our influence is through the ways we channel the flow of money entrusted to us. With this influence comes responsibility. For us, this means making transparent choices about how, where and with whom we do business.

We check every transaction and every client against our environmental and social risk policies. If they don’t meet our standards, and aren’t willing to change, we don’t do the deal.

While these policies are global and apply to all customers and clients, it’s our corporate clients that often have more significant potential environmental and social impacts. These clients account for about 30 percent of our total lending portfolio.

There are certain sectors and countries that are totally excluded from financing. For example, we don’t finance things like fur production, cosmetic animal testing, controversial arms industries or deforestation of rain forests.

As we assess potential clients and deals, our approach is to have a dialogue and support them in improving their environmental and social impact where possible. Our response to funding requests is often, “yes, but…”, outlining improvements that the company will have to make first. We feel that this is how we can make the most positive impact. One example is with our client Wilmar, which you can read about below.

ING’s ESR management is in three steps: creating and maintaining our policy framework; conducting the screening of transactions and clients; and monitoring the relationship after an agreement is reached. For an example of the ESR team in action, see the story and video “A responsible road” on ing.com.

Our policies and broader business ambitions are structured around strongly embedded social, ethical and environmental criteria.

An overview of our ESR policies (PDF 809 KB) is available for download. Other sustainability policies (PDF 172 KB) can be downloaded here.

An example of how our policies form part of our client engagement process:

Wilmar International Limited

“In implementing our Environmental and Social Risk Framework, we frequently engage with clients on specific topics and industry sectors. In the palm oil industry sector for example, there are at times issues linked to deforestation in Southeast Asia and Africa, and illegal labour practices on some plantations.

We have engaged in discussions on environmental and social issues with Wilmar, among other players in the sector. Our discussions aimed to understand Wilmar’s Environmental and Social Risk policies and their implementation, their compliance with the ING ESR Framework and their plans to support the best practices in the sector, like the RSPO certification. As a result, Wilmar achieved several good results. For example, Wilmar is the first large palm oil company that publicly disclosed names and locations of its suppliers in its palm oil supply chain in Malaysia and Indonesia (the sustainability section of Wilmar’s website), a major step in addressing deforestation.

We continue to monitor and remain in dialogue with Wilmar. Such a collaborative approach also allows ING and Wilmar to widen their perspectives and align sustainability objectives, leading to a deeper and more meaningful relationship with the aim to contribute to the betterment of the sector.”

Once we enter a business agreement with a client, we continuously monitor and evaluate whether they are complying with our policies. The process and governance model is explained in the images.

What does ING’s ESR team do?

  • Create and maintain policies for sensitive industry sectors.
  • Assess transactions for environmental and social risk.
  • Monitor high-risk clients to ensure compliance with sustainability criteria.
  • Spread ESR awareness throughout ING.
  • Train staff (545 employees trained in 2016).
  • Participate in European and global advisory groups (i.e. OECD advisory group, steering committee to the Equator Principles, Thun Group of Banks) to help bring all banks to the same high standard.
Client ESR Assessment
Transaction ESR Assessment

The outcome of the client assessment together with the outcome of the transaction assessment will determine the overall risk profile of the business engagement and the approval process thereafter (see table).

Client and Transaction ESR Assessment
Back to top