ING to adopt policy pressing clients to meet climate goals
(14 September 2018 – UK) Dutch Bank, ING, has taken steps to align its entire lending portfolio with the emissions reductions required by the Paris climate agreement.
The new climate assessment will put pressure on clients whose businesses do not conform with the climate goals of the agreement and includes assessing the banks $600 billion loans.
While a number of big banks have adopted climate targets for their own operations and new lending, applying these targets to an existing loan portfolio has not been tried before on the scale, partly because of the complexity.
Getting the right data, pairing it with lending products, and choosing the right set of climate scenarios to use are among the many challenges. Leon Wijnands, ING head of sustainability explains “We’ve been working on this for four years. And a lot of the work we did previously, we threw it away. It didn’t work.”
Eventually the bank found an approach it was happy with. While the ban would not at this point use the climate assessment to direct individual decision on whether or not to grant a specific loan the bank hopes the policy will prompt its clients to “bring the discussion of this to a board level”, according to Mr Wijnands.
The bank has previously experimented with lending rates linked to carbon emissions, including one to the chemical company DSM, where the rate increased if emissions rose and fell if environmental performance improved.
ING, along with a number of others, has stopped lending to coal companies and expects that its portfolio will have close to zero coal by 2025.