Climate change is one of the biggest challenges of our time.
Its consequences, like the growing scarcity of water, food, energy and other material resources, pose daunting social and environmental challenges. If we don’t tackle climate change, it could result in devastating and lasting impacts on the economy and society as we know it. So what is ING doing?
As a financial institution, we can play a role by financing change, sharing knowledge and using our influence. Being sustainable is not just about reducing our own impact, it’s in the choices we make as a lender, in our financing and through the services we offer our customers. That’s why sustainability is inherent to our purpose of empowering people to stay a step ahead in life and in business.
ING takes a holistic approach to climate action. On the one hand, we’re taking action on how our business impacts climate change, which includes aiming to steer the most carbon-intensive parts of our portfolio towards net zero by 2050, known as our Terra approach. And on the other hand, we’re considering how climate change impacts our business, as we work to assess climate risks and take action to mitigate them.
Our biggest impact on climate is through our financing
ING finances today’s society, which means we do also finance things that aren't green. But we’ve also financed billions of euros in energy projects, through green loans, green bonds and other innovative products and financing constructions. We want to help clients transition to a low carbon economy. It’s about making progress together, step by step.
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 in 2017.
We say ‘no’ to certain companies and sectors, like with our aim to reduce our exposure to coal power generation to close to zero by 2025. We also respond to financing requests with “yes, but…”, outlining sustainability improvements the client must make first. We believe helping clients improve is more effective than excluding clients altogether. Of course if they don’t meet our standards and aren’t willing to change, we don’t do the deal.
We also support our clients by financing circular economy solutions – where people and companies ‘reduce, reuse and recycle’ instead of ‘take, make and waste’, including making the transition from ownership to access.
Steering carbon-intensive parts of our portfolio towards net zero by 2050
Our Terra approach has been aiming to steer the most carbon-intensive parts of our portfolio towards net zero since 2018. As it became clearer that the world needs to move faster to reach climate goals, we increased our ambition in 2021. We joined the Net-Zero Banking Alliance and aim to steer in line with keeping the rise in global temperatures to 1.5 degrees Celsius rather than well-below two degrees, to achieve net zero by 2050 rather than 2070.
Our Terra approach is about steering towards the new low-carbon technology needed to reach these net-zero goals – like green hydrogen, carbon capture and energy storage – and away from high-carbon technology. Per sector, we use what what we consider to be the best-fit methodology to measure and steer our loan book, acknowledging that there are many roads to net zero and in the end it’s the impact that counts.
We manage climate and environmental risks
Of course, while we try to make a positive impact on climate change, we also strive to limit the impact of climate change on our business. There’s physical risks, like floods and wildfires. And there’s transition risks, associated with policy interventions or technology developments. Like what happens to carmakers who haven’t started making any electric cars once those are the only ones legally allowed to be sold?
Climate adaptation is essential to take measures to reduce our vulnerability against the physical impact of climate change. We have an important role to play by reducing the physical risks impact on our portfolio and supporting clients and communities to adapt through finance.
To strengthen our resilience to these risks, we have to identify them, understand them, figure out how likely they are and what their potential impact could be. Those insights shape our business strategy. Our approach continues to develop as methodologies advance and regulatory guidance and requirements evolve.
We also apply strict social, ethical and environmental criteria in our financing and investment policies. Clients and transactions are assessed, monitored and evaluated against the requirements of our Environmental and Social Risk (ESR) framework to ensure compliance and limit negative impact on the environment and communities. This way, climate and environmental impact are taken into account when we make financing or investment decisions.
We can’t do it alone
We engage with clients, business partners and other stakeholders, and collaborate in supply chains and at industry level. We share knowledge based on research and commit to or are part of many international initiatives.
We call upon governments to create incentives for long-term investments, for instance by setting science-based targets to mitigate climate change and to develop alternative energy sources. We also urge governments to work towards an effective price on carbon emissions and to stimulate and enable enterprises and institutions to publicly disclose their carbon emissions and forward-looking transition strategy, so banks are better capable to take climate impact into account in financing and investment decisions.
Transparency is an important aspect of combatting climate change. We’re committed to transparently communicating the impact of climate change on our business and our impact via our financing on climate change, following the Taskforce for Climate-related Financial Disclosure (TCFD) recommendations. We report more extensively on climate risk and our progress on alignment of our portfolio with global climate goals in our annual climate report.
We also recognise that other areas benefit from and contribute to tackling climate change, such as human rights, biodiversity and the circular economy. We have an approach for these areas and continue to strengthen their connection with our climate action agenda.
Our integrated approach to climate action covers four priorities:
- We want to lead by example by striving for net zero in our own operations.
- We play our part in the social and low-carbon transformation that’s necessary to achieve a sustainable future, steering our financing towards meeting global climate goals.
- We collaborate: working with clients to achieve their own sustainability goals, increasing our impact through partnerships and coalition-building.
- We aim to manage the most relevant environmental and social risks while fostering the protection of biodiversity and human rights across all of our relationships.