Our climate approach

... min read

Climate change is threatening our planet. The world needs to transition to a low-carbon economy and the financial sector has an important role to play in this.

At ING we take this role seriously and want to be a banking leader in driving that transition. Our integrated approach to climate action covers three priorities:

  1. Aim to reach net zero in our own operations
  2. Steer our portfolios and engage with clients for positive climate impact
  3. Manage climate and environmental risks

Changing sectors from the inside out

ING finances a lot of sustainable activities, such as green loans, green bonds, energy projects and innovative products and financing solutions. Our sustainability-linked products, for example, offer corporate clients a lower interest rate for improved sustainability performance. We’ve supported hundreds of these types of deals since we introduced them to the world in 2017.

We are proud of the progress we’ve made and also strive to move faster. But we must balance the need for urgent action with the need for an inclusive transition. As a large bank we have a role to fund what the economy currently needs to keep going.

As society transitions to a low-carbon economy, so do our clients, and so does ING. The low-carbon transition cannot happen overnight. Even though we finance a lot of sustainable activities, we still finance more that’s not, which is a reflection of the current global economy. We could exit certain clients or sectors, and our loan book may then look greener, but we wouldn’t have ultimately helped change anything.

Our approach follows data and science, and evolves as the available science evolves. We want to be part of the solution and strongly believe we can make the most impact by engaging with clients, talking to them about their climate goals, and helping finance what they need to reach them.

Steering financing towards net-zero goals

Our Terra approach aims to steer the most carbon-intensive parts of our portfolio towards net zero by 2050 - with intermediate 2030 ambitions. We focus on parts of the sectors in our loan book that are responsible for most greenhouse gas emissions.

It’s about supporting our clients in their transition towards net-zero and financing the new low-carbon technology needed to reach net-zero goals – like renewable power, green hydrogen, energy efficiency and energy storage – and away from high-carbon technology. Terra is based on data and climate science and uses what we consider to be the best-fit methodology per sector.

We continue to broaden Terra to have more impact, working to include additional carbon-intensive sectors and other parts in the value chain of existing sectors.

Managing climate risk

Managing our climate (and other environmental) risks is a key element of our climate approach and ING's overall strategy. We have invested a significant amount of time and resources in developing our capabilities and expertise in this emerging and fast-developing area of risk, and strive for continuous improvement.

ING’s integrated climate approach considers how we can mitigate climate change through our financing as well as how climate change may adversely impact our business. We're working to become more resilient to climate risk, and have the ambition to become as expert in managing and mitigating these risks as we are in managing credit and other forms of financial risk.

See page 9 of the 2023 climate report for a full image.

No one can do it alone

We work with peers, clients, other companies and experts to contribute to standardised frameworks. Then ING, other banks and clients use these to measure and disclose progress towards net-zero targets.

This is important because it means companies in the same industry, and in the same sectors of banks’ portfolios, can be compared in the same way. Banks get a shared understanding of how they can support the decarbonisation of hard-to-abate sectors.

Our collaborations with industry peers and other partners have seen us make important new contributions to standard-setting. For example, in 2023 we launched the Sustainable Aluminium Principles at COP28 with the RMI’s Center for Climate Aligned Finance and three banking peers. This builds on previous efforts to help develop methodologies that can be used by financial institutions and sector participants to benchmark their own alignment with net zero and other climate goals. See how we engage for more information.

We specifically call on governments and regulators to guide the low-carbon transition more firmly. They must help answer the question "what does 'good' look like?". Ultimately, change will only come if everyone – companies, governments, consumers – works together. See climate report (page 58 onwards) for more information on calls to action to government and policy makers for the Terra sectors.

What’s the deal with fossil fuels?

Yes, we’re involved in the energy sector. Around 80% of the world’s energy still comes from fossil fuels for things like heating, cooking, transportation and electricity. And while decarbonisation is crucial, the same is true for energy remaining affordable and the supply remaining secure.

We take a sector-by-sector, science-based approach and have already made important policy decisions when it comes to fossil fuels. We’ve accelerated the phasing out of financing upstream (exploration and production) oil and gas activities. These loans will be reduced by 35% by 2030 and will be zero by 2040. That’s ten years sooner than most scenarios.

We’re also reducing the financing of coal-fired power plants to close to zero by 2025, we stopped the dedicated project financing of new oil & gas fields and restricted the financing of the midstream infrastructure that supports the development of those fields.

The best way to reduce fossil fuel demand is to increase the availability of renewable energy. More than half of our power portfolio is already renewables and we set a target to triple our investments in renewable energy to €7.5 billion per year by 2025.

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