Being sustainable is not just about reducing our environmental footprint. As a bank, we believe our role is to facilitate and finance society’s shift to sustainability. In other words: contribute to progress – environmental, economic, and social. We measure this with our Responsible Finance portfolio.
ING’s Sustainable Finance team pursues sustainable business opportunities within ING Wholesale Banking, identifying sustainable clients and deals. The team takes a broad approach, going beyond the idea that sustainability simply means a few people lending to a few renewable energy projects.
The team supports a range of clients in achieving their sustainability goals—those with a strong sustainability track record, an ambitious agenda, or that are addressing resource scarcity and seeking financing for sustainable deals in renewable energy, green buildings, waste management or water.
In 2017, we collaborated on several sustainable financing firsts: the first loan linking the interest rate to the borrower’s sustainability performance and rating (the better the rating, the lower the rate); the first green hybrid bond ever, raising EUR 1 billion to fund wind energy in the Netherlands and Germany; and the UK’s first green bond in the public utilities sector (water).
In Austria, ING teamed up with Kommunalkredit, a specialist bank for infrastructure financing, on a EUR 300 million social covered bond to support projects such as schools, universities, hospitals and social housing. It’s the first of its kind in Austria and the second social covered bond in the market.
Climate challenges and opportunities
ING has a clear approach to climate action. We firmly support the energy transition, investing billions in wind farms, solar energy and geothermal power production.
We also make an impact with what we don’t finance. We check every wholesale transaction and 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.
Our environmental and social risk policies guide us, and we regularly look for ways to strengthen them. For example, in 2017 we sharpened our coal policy to accelerate the reduction of our financing to thermal-coal power generation, reducing our exposure to close to zero by 2025.
Still, society still relies on fossil fuels, according to the International Energy Agency. There is not yet enough renewable energy being generated, nor is there an efficient and affordable way of storing it. This is both a challenge and an opportunity, for example for companies developing battery technology.
ING engages in strategic dialogue with clients to influence change. We talk about the challenges they face and help them identify opportunities. We see opportunities arising from the final recommendations of the G20 global Taskforce on Climate-related Financial Disclosures (TCFD).
We believe this will encourage investors to shift to more low-carbon and climate-smart options as companies become more transparent about reporting on the financial implications of climate change – an important step towards delivering on the commitments of the Paris Agreement to keep global warming below two degrees Celsius.
Real estate is a sector where improvements in energy efficiency can have a large impact on lowering CO2 emissions, as buildings make up roughly 40 percent of global emissions. Our transactions increasingly involve high-grade sustainable real estate collateral. In the Netherlands, for example, we aim to only have green buildings in our portfolio as of 2023. At year-end 2017, our low-carbon buildings portfolio totalled EUR 9.3 billion.
In 2017, ING joined forces with circular economy platform Madaster, which has a digital ‘materials passport’ to stimulate the use of recyclable materials and reduce waste in buildings. ING Real Estate also teamed up with ING Groenbank on a green loan to convert a former power plant into a sustainable ‘A’ energy label innovation hub.
The circular economy is also an area where ING aims to lead the way among banks, with the ultimate goal of helping clients make the transition from ownership to access.