At ING, we believe sustainable business is better business. The choices we make in lending, investing and the services we offer to customers enables us to contribute to a sustainable economy, as well as build a strong portfolio of the businesses of tomorrow.
In 2017, we sharpened our long-term commitment to sustainability, with all our initiatives now helping to contribute to a low-carbon and self-reliant society. We make our biggest contribution to a sustainable future through our financing and have a clear set of objectives and targets for 2022.
For example, we aim to double our funding to companies and sectors that are helping to keep global warming below two degrees Celsius. We will do this by increasing our Climate Finance portfolio two-fold by 2022 compared to 2017. This includes funding projects that advance renewable energy, the circular economy and help combat climate change.
We will measure this in our Responsible Finance portfolio. To support our objectives and fund this portfolio, we designed a green bond framework meeting the highest standards on transparency and disclosure.
Green bond issuance
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 programme. The green bond governance document details our programme and approach.
|2015 Green Bond Issuance Overview|
|Issue date||24 November 2015||24 November 2015|
|Maturity||26 November 2018||24 November 2020|
|Second Party Opinion||Oekom Research|
Proceeds are being used to finance and refinance loans in six different eligible project categories, underpinning the diversification of ING’s Responsible Finance portfolio:
|Eligible project categories|
|Renewable energy||Loans to finance the acquisition, development, building, operating, and/or maintenance of assets that generate energy from the following renewable sources: wind (both onshore and offshore) solar, hydro (only small run of river projects) and geothermal.|
|Green buildings||Loans to finance the acquisition, development, building and/or refurbishment of commercial real estate (residential, office, retail and logistic sectors) located in important markets in Europe, the US and selected Asia-Pacific markets. Each included loan benefits from a certificate with one of the following quality levels: BREEAM (minimum ‘Very good’), LEED (minimum ‘Gold’), DGNB (minimum ‘Silver’) or HQE (minimum ‘Excellent’).|
|Public transport||Loans to finance the acquisition, production, operation, building and/or maintenance of electric public transport infrastructure, systems, vehicles and assets.|
|Waste management||Loans to finance the acquisition, development, operating, building and/or maintenance of assets for the recycling and/or reuse of wasted materials, in all forms and substances.|
|Water management||Loans to finance the acquisition, development, building, operation and/or maintenance of assets for treatment and recycling of water and assets for flood protection.|
|Energy efficiency||Loans to finance energy efficiency measures and/or loans where source of loan repayment is savings through energy efficiency measures. We have set the requirement that the measures should lead to a reduction of energy consumption of minimum 30%.|
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 new1 transactions, and being open about the impact these transactions have on the environment and society.
Allocation of proceeds
The bond raised a total of €1.315mln.2 Following maturity or repayment of some eligible projects in 2016 and 2017, ING has reallocated proceeds to new eligible projects that are part of ING’s Responsible Finance portfolio, and in compliance with the eligible project categories defined in the green bond framework.
The image below demonstrates how proceeds of the green bond have been (re)allocated to date, and number of projects included in the green bond per eligible project category:
|Number of projects included in the green bond portfolio per eligible project category|
|Eligible project category||Number of projects 2015||Number of projects added in 2016||Number of projects added in 2017||% of total asset pool|
|Renewable energy (wind)||5||3||11||46.4%|
|Renewable energy (solar)||2||3||1||17.1%|
|Waste management (waste to energy)||1||0||0||5.8%|
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.
Allocations to transactions that are part of our Responsible Finance portfolio have been verified by the independent auditor KPMG, in the scope of ING’s Annual Report audit.
Furthermore, oekom research has assessed the eligible projects included green bond portfolio in order to provide investors with assurance that the asset selection complies with the eligibility criteria and that new projects are selected accordingly. This ensures that all projects contribute positively to society and to developing a sustainable economy and meet the highest environmental and social standards. For additional information please refer to oekom’s research assessment report.
To provide additional transparency to investors and deliver additional insights on the impact of the green bond portfolio, we calculated the positive environmental impact of the financed projects. ING asked Ecofys, a leading environmental consultancy, to make an impact measurement of the eligible projects. This impact measurement included the avoided CO2-equivalent emissions of selected eligible projects financed by the 2016 green bond portfolio.
Below is an overview the carbon avoided from the renewable energy and waste management projects financed. For additional information, please refer to the Ecofys impact assessment document.
|Carbon avoided from renewable energy and waste management projects financed|
|Eligible Project Category||Number of projects||Environmental impact|
|Renewable energy – Wind||8||429 kton carbon equivalent avoided annually|
|Renewable energy – Solar||5||224 kton carbon equivalent avoided annually|
|Waste management||1||4 kton carbon equivalent avoided annually|
Green buildings: environmental certificates
Green building projects included in the portfolio have achieved the following independent environmental certificates:
|Green buildings: environmental certificates|
|Number of projects||Green building environmental certificate||Percentage of volume in this project category|
|1||BREEAM Very Good||21%|
Examples of projects financed
Renewable energy wind
An 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.
Westermeerwind 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, which achieved financial close in 2014 and is now constructed (on time), has been operational since June 2016, providing 160,000 households with sustainable electricity.
An example of a green building included in the green bond portfolio is 25 Churchill Place, Canary Wharf.
ING participated in a €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 .
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 a $270 million credit facility for Aria Energy.
An 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.