ING Sharpens Focus on Client Engagement for Net-Zero Transition and Announces New Climate Financing Policies

ING released its update on climate progress 2024, which outlines what the company has recently undertaken to propel the low-carbon economy globally. What can be seen in this update is a sharper focus on client engagement while not showing much leniency toward carbon-intensive sectors with strict policies on financing. This report details the efforts with clients on reducing carbon emissions, financing new oil and gas fields, and extending its sustainability-oriented "Terra approach" to other sectors. These activities fall within a comprehensive strategy of portfolio steering by ING, mostly towards high-emitting industries, in their achievement of global climate goals. Net-Zero Transition with Clients One of the key points in ING's 2024 climate update is client engagement, hence bringing progress toward a net-zero emissions scenario. This could be through its innovative data-driven tool called ESG.X, to review the sustainability disclosure reports from its 2,000 wholesale banking clients. This helps ING review the environmental, social, and governance performance of its clients-put another way, the bank will have a better-informed dialogue with its clients about how they can accelerate efforts at cutting down emissions. The urgency of climate change becomes only more apparent with time, and ING wants to be at the forefront of accelerating the global transition towards a low-carbon economy. We all have a part to play," said Steven van Rijswijk, ING's CEO. In addition, the company said that with ESG.X, it will be able to make more bespoke advice and guidance available to their clients on how to reduce their carbon footprint. "It gives us a basis for more data-informed discussions with our clients on progress and how we may support them," Van Rijswijk added. More stringent energy financing policies Apart from the enhanced client engagement, ING further pushes its energy financing policies aggressively. The bank has openly said it will not fund pure-play upstream oil and gas companies developing new fields. This shift is part of global actions to limit the development of fossil fuel infrastructure and can thus contribute to reducing the amount of new oil and gas resources that are brought onto the market. The bank believes continued investment in new fossil fuel projects cannot be achieved in the light of the international goal to limit global temperature rise to 1.5°C, in keeping with the Paris Agreement. ING aims to assess client progress by 2026 and tighten conditions for those clients failing to meet climate transition goals. On failure to demonstrate sufficient progress, ING could withdraw all financing. ING also stated that it would cease financing new LNG (liquefied natural gas) export terminals from 2025. It does this as the International Energy Agency's World Energy Outlook 2023 advocates for eventually phasing out all LNG investments for net-zero targets. The reason ING will not finance further new LNG terminals is to demonstrate seriousness in investing in cleaner solutions for energy. Scaling Up the Terra Approach to More Industries ING's proprietary Terra approach measures and aligns the bank's portfolio of lending to the goals of the Paris Agreement. The group has introduced new industries in its 2024 version of its Terra approach. To be more specific, aluminium and dairy have been included in the list of sectors with a total of twelve sectors, which are now covered by the Terra approach. Examples of some of these sectors include power generation, cement, and steel. That this expansion demonstrates the effort of ING to expand the climate action into other industries which are integral to the world economy but also significant contributors to greenhouse gas emissions. Of the twelve sectors captured under the Terra approach, eight sectors are already in line with climate targets, whereas two sectors lag behind, and assessments for two sectors cannot be made at this time due to new methodologies being developed. In fact, much of ING's strategy is based on continuous assessment and improvement of the Terra approach to align its lending portfolio with international climate targets. A Call for Broader Climate Action Beyond its internal policies, ING remains an outspoken advocate for stronger climate action at the global level. The bank believes that implementation of the Paris Agreement is merely a call for action to businesses, but governments should aggressively undertake strong and decisive policies. ING proactively engages in climate advocacy to persuade policymakers to make regulations and frameworks supportive of the low-carbon economy. Regarding his recommendation, Van Rijswijk emphasized collective action: "We can't do it alone. Governments, businesses, and society all need to contribute to the global fight against climate change." What this position by ING means is that financial institutions increasingly play a more important role in public policy influence and systemic change in the war on global warming. Conclusion ING has vowed to support the world's shift toward a low-carbon economy as the message of its Inaugural Climate Progress Update for 2024. With ESG.X, it enables and continues to heighten client engagement in reducing the carbon footprint of clients. ING's new financing policies-representative of principle not to finance new oil and gas fields or LNG export terminals-showed its commitment to anchor investments with world-accepted international climate goals. Expansion of the Terra approach into new sectors and continued climate advocacy by the bank ensure that ING remains at the forefront of sustainable finance. With the focus of ING intensifying its climate action, it has opened doors to making more marked strides into net-zero emissions across industries through greater transparency and accountability.