Terra approach

... min read

As a bank, one of the ways ING can make a positive impact on climate action is through our financing. We’re aiming to steer the most carbon-intensive parts of our portfolio towards reaching net zero by 2050. We call this the Terra approach.

ING is focusing on parts of the sectors in our loan book that are responsible for most greenhouse gas emissions: power generation, fossil fuels, automotive, shipping, aviation, steel, cement, residential mortgages and commercial real estate. We’re working to include additional carbon-intensive sectors, such as aluminium, and more parts of existing sectors in order to have more impact.

We are measuring whether our lending in scope in each sector is adding up to contribute to achieving net-zero greenhouse gas emissions by 2050. Per sector, we use 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.

Our progress

Our climate report (PDF, 15,6 MB) details our progress and targets on climate alignment in the nine sectors in our loan book most responsible for climate change.

Five sectors (power generation, automotive, commercial real estate, shipping and fossil fuel) are on track with climate-alignment pathways. Two sectors, cement and residential real estate, are within 5% of their pathway, and steel is just above 5% of its pathway. Aviation comes out well above the pathway due to the extraordinary impact that Covid-19 has had on the sector, although it is beginning to trend back to its decarbonisation pathway as the sector recovers.

We’ve set 2030 interim targets for all nine sectors, on top of our 2050 targets, to stimulate immediate climate action. For eight of the nine sectors, the targets are now aligned with net-zero climate scenarios, keeping the rise in global temperatures to 1.5 degrees Celsius rather than well-below two degrees. We will update the last sector, shipping, when a net-zero pathway is adopted under the Poseidon Principles.


While ING’s Terra approach makes use of various methodologies, there is one that applies to most of the sectors in scope. This is the methodology ING co-created with the 2˚ Investing Initiative (2DII), a global think tank developing climate metrics in financial markets.

It’s called PACTA for Banks. It looks at the technology shift that’s needed across certain sectors to slow global warming and then measures this against the actual technology clients are using – or plan on using in the future.

Detailed technology roadmaps for each sector are being developed by independent organisations like the International Energy Agency. These are used as benchmarks. We then compare the data from the sector roadmaps to the data on the technology our clients are using today and planning on using in the future.

This client data comes from global databases that track public and private companies of various sizes around the world. This makes it easy for clients, as they aren’t required to provide any data themselves.

In the automotive sector, for example, we measure the current mix of our clients’ production of internal combustion engine vehicles compared to zero-emission vehicles and how clients plan to shift this balance over time. We can then compare this with what science-based transition pathways prescribe for the automotive sector in order to reach the net-zero by 2050 goal. The analysis doesn’t only tell us what needs to shift, but also how much and by when. This is where financing comes in – and where ING can have an impact.


Collaboration is an essential part of our approach to climate action, as no sector or company can solve the world’s problems alone.

We joined the Center for Climate-Aligned Finance as a strategic partner in July 2022, building on our lead roles in climate alignment working groups for the aluminium and steel sectors, and our involvement as a founding signatory of the Poseidon Principles for the shipping sector.

Together with other financiers to those carbon-intensive sectors, we work to establish measurement methodologies, emissions data and reporting frameworks, and governance structures, which are necessary for financial institutions to support the transition to net-zero emissions.

ING also led a working group to design a climate-aligned finance agreement for steel, and we're proud to be one of six banks that have signed the Sustainable STEEL Principles. This will help banks measure and report the emissions associated with their steel loan portfolios compared to net-zero emissions pathways. Here Erik van Doezum, steel lead at ING, talks about the sector. Read the press release from RMI.

While we accept the important role we must play in financing and facilitating our clients’ transition to net zero, a massive joint effort is required for the world to actually reach net zero by 2050. We call for urgent action on climate change. Governments must lead the way and companies must ultimately make the changes.

Getting other banks involved

We believe all banks would benefit from having an industry-wide standard, increasing transparency and therefore our collective effectiveness in fighting climate change.

For this reason, ING was joined in December 2018 by the global banks BBVA, BNP Paribas, Société Générale and Standard Chartered in signing the Katowice Commitment – a pledge to steer our portfolios toward the well-below two-degree goal of the Paris Climate Agreement and work together to further refine the metrics and tools needed to do this.

In September 2019, the Katowice Commitment formed the groundwork for the UN-backed Collective Commitment to Climate Action, signed by ING and more than 30 other banks that together represent $13 trillion in loans. This then formed the basis for the Net-Zero Banking Alliance.

PACTA for Banks, the open-source methodology we co-created with 2DII, was released in September 2020. Then ING and the four other Katowice banks published our blueprint for how we will put the tool into practice.

Back to top