Dutch financial institution ING to ditch local weather laggards as shoppers | USAEMALL.com

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Dutch bank ING will dump large clients it believes are not making sufficient progress on reducing their climate impact, in the latest sign of divergence between European and US banks over the risks of global warming.  

Chief executive Steven van Rijswijk said ING had put its clients on notice that it would either restrict or stop providing finance to companies that fail to address their carbon footprint on a case-by-case basis.

ING’s stance is in sharp contrast to many other financial institutions, especially in the US where banks such as Bank of America have loosened some climate targets or become reluctant to speak out about the financial risks of global warming amid a backlash against so-called woke capitalism.

Van Rijswijk said ING had assessed 2,000 of its largest clients based on their publicly available climate transition plans and other data. Companies had until 2026 to make sufficient progress, he said.   

“Our goal is to make sure we fight climate change. It is not to say goodbye to clients,” he said. “But if it is about them not being willing [to address their carbon footprint] then that will mean we will say goodbye.”

He added that bank wanted to move “in tandem with Paris”, the global agreement to limit global temperature rises to well below 2C and ideally to 1.5C above pre-industrial levels. “We want to help our clients also move in tandem with Paris.”

The bank will look at whether companies are implementing their transition plans and if their efforts are ambitious enough within their sector, among other factors, as part of the assessment.

Although some banks have introduced restrictions on lending to specific sectors such as coal, policies that apply across large chunks of their portfolio are rare.

Van Rijswijk said he was concerned that discussions around climate change were becoming more polarised, adding that even if competitors were reluctant to talk about the issue, ING wanted to be “as open and honest as we can be”.

Many US banks and financial companies have come under intense scrutiny from Republican senators and governors over the inclusion of environmental, social and governance factors into business decisions in recent years, prompting a wave of so-called greenhushing — where companies are reluctant to talk about climate issues.

In contrast, in the Netherlands, some companies have been under pressure to set more ambitious climate targets. Shell is currently appealing against a landmark court ruling in the Netherlands that called for the oil and gas company to increase cuts to greenhouse gas emissions.

Van Rijswijk argued climate change posed both societal and financial risks. “We are a bank that is financing the economy and financing the society, and a big societal challenge is the transition . . . In the end, if we get to a heathy society with sustainable progress for everybody . . . that is good for society and for banks,” he said.

“There is also a financial risk involved. There are companies in there who have more imminent financial risks because their assets might be stranded,” he added.

He pointed to shipping or airlines as examples where in future “cleaner ships or aeroplanes will be required”, making lending for traditional fossil fuel-intensive vessels risky.

ING’s analysis found that shipping and commercial real estate were among the laggards when it came to disclosing climate plans.

The bank will also stop providing new financing for LNG export terminals in 2025, which van Rijswijk said was in line with recommendations from the International Energy Agency. ING currently finances about five a year, the bank said.

It is also stopping all new financing for pure play upstream oil and gas companies that are developing new fields.

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here