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The world needs nature to thrive, and nature needs rich biodiversity

Biodiversity is the variety of and interaction between all life on earth. Humans are causing the loss of biodiversity at an alarming rate. This is among the top global risks to society according to the World Economic Forum, posing a danger to both human wellbeing as well as economic prosperity.

Many businesses also count on nature. Agricultural businesses depend on the pollination of crops by insects and on soil fertility from the interaction between organisms. Construction companies need natural resources such as wood and purified water. Pharmaceutical companies depend on natural ingredients to create medicines. The list goes on.

If the rapid decline of biodiversity continues, the livelihood of many businesses is at stake. This has an impact for banks as well: ING thrives if our clients thrive and our clients thrive when nature thrives.

Our role in protecting biodiversity

We are committed to working with our clients to understand risks related to biodiversity loss and help them manage these risks. This means we engage with them to avoid impact where possible and minimise the impact that cannot be avoided. We also work with our clients to find and finance opportunities to do business in a way that respects nature. Our effort to steer the most carbon-intensive parts of our lending portfolio towards net-zero by 2050, called our Terra approach, allows us to engage our clients on climate change, which is an important driver of biodiversity loss.

We collaborate and share knowledge with a wide range of stakeholders to improve standards and methodologies, raising the bar in our whole industry.

Understanding the impacts and dependencies on nature and biodiversity in our portfolio

Biodiversity loss can be halted by reducing impact from land-use change, exploitation of natural resources, pollution, climate change, and the spread of invasive species. We have analysed our lending portfolio to assess which sectors in our portfolio have highest impact on biodiversity. We based this on data from a tool called Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE). Results showed that the sectors food and agriculture, construction, mining and energy were among those with the biggest impact. This comes mainly from the use of land and water for business operations in these sectors. We also found that these sectors are not only impacting biodiversity, but also depend on it. This is mainly because ecosystems provide them with access to water or protect them from floods and storms. These findings on impacts and dependencies help us to better manage biodiversity-related risks and opportunities.

We apply strict criteria and work with our clients to avoid and minimise negative impact

We apply strict ethical and environmental criteria in our financing and investment decisions. We don’t finance projects with direct impacts on high-value ecosystems. We’ve also excluded certain economic activities that are incompatible with our concern for nature and aim to align portfolios with global climate goals. These areas and activities are elaborated in our biodiversity stance and in our ESR policy framework.

Next to these exclusions, the ESR framework contains additional due diligence requirements for the sectors chemicals, energy, forestry and agriculture (including soy and palm oil), manufacturing, metals and mining, and infrastructure. These due diligence requirements are linked to the drivers of biodiversity loss. For instance, ING conducts enhanced due diligence before financing projects requiring significant land-use change. Land-use change was identified as the most substantial impact driver for the sectors in our portfolio. In 2022 we expanded the existing requirements to include ‘Key Biodiversity Areas’, which are home to critical populations of the world’s threatened species.

We help our clients find opportunities to do business in a way that respects nature

ING aims to help clients transform to business models that do not harm nature. We’ve developed a range of sustainability products and services, including green loans and green bonds. Our sustainability-linked products reward clients for their sustainability performance, bringing positive change for nature and ecosystems, but also for climate. With these products and services, ING supports clients and projects that contribute to the transition to a nature-positive economy.

Furthermore, projects financed under the Equator Principles framework that have an impact on natural ecosystems are expected to restore habitats during and/or after operations. We have strict criteria in place to apply this framework, ensuring that biodiversity impact is not only avoided and minimised where possible in these projects, but also restored.

Following our efforts to help our customers find opportunities for positive impact, we also aim to contribute to organizations working to restore nature, as well as empowering communities and develop carbon removal technologies. This is part of our Environmental Programme.

Biodiversity, human rights and climate change are closely connected

On the one hand, climate change is one of the main drivers of biodiversity loss, as rising temperatures can eventually lead to the destruction of entire ecosystems. On the other hand, biodiversity can make substantial contributions to climate change mitigation and adaptation. Reducing deforestation for example, is a priority for protecting biodiversity and can make major contributions to climate mitigation, especially when combined with other efforts to reduce greenhouse gas emissions.

Human rights are undermined by biodiversity loss and the threats presented by climate change. The impact can be wide-reaching, including negatively affecting rights around health, food, water, sanitation, culture, property, a healthy environment and more. Indigenous people are at further risk due to the connections between biodiversity and land rights, cultural rights and self-determination. Also, the world’s remaining forests and 80% of the biodiversity of the planet are found in territories that are managed, owned or traditional to indigenous people.

That’s why we approach these topics together. Biodiversity risks, human rights and climate risks are managed together via our ESR policy framework.

Transformative change is needed

To really restore biodiversity globally, all stakeholders have to work together. That’s why ING is an active member of external partnerships and initiatives. We are a member of the finance workstream of the EU Business@Biodiversity platform, which is an EU-led initiative that aims to support financial institutions in integrating biodiversity risks and opportunities.

We are also part of the Taskforce Nature Related Financial Disclosures (TNFD) Forum to contribute to a framework for corporates and financial institutions to assess, manage and report on their impacts and dependencies on nature. In 2022 we participate in a pilot to test the TNFD framework and provide feedback that helps to improve the quality and applicability of the frameworks’ disclosure recommendations.

The world is rallying behind a global biodiversity framework, which includes an overarching goal to halt biodiversity loss by 2030 and ensure that it is fully restored by 2050. At the moment it is not clear what these goals exactly mean for banks and their clients. We urge the international community to clarify so we can assess what it means for our business. We actively contribute to this discussion in the various forums we participate in and we are assessing biodiversity measurement approaches to find the right solution to align financial activities with a nature-positive future. In the meantime we continue to strengthen integration of biodiversity in our existing risk management and finance frameworks, focusing on the impact drivers of land-use change, exploitation of natural resources, pollution and climate change.

We are pleased to actively contribute to the journey of the financial industry to understand its impact on nature and the way financial activities can contribute to the protection and restoration of biodiversity and ecosystems. By doing so, we help to create a healthy world with prosperous businesses and people.

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