Global bank ING makes progress on carbon-reduction lending efforts

By Rahul Vaimal, Associate Editor
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The global banking solution ING has reduced its lending to power industries linked with carbon-emission, cut down it’s funding to coal-fired power plants by 22 percent and increased its financing in renewable power generation by $22.3 billion in 2019.

The 2015 Paris climate agreement had a key objective to curb the global warming below 2 degree Celsius above the pre-industrial norms by 2050 and ING is one among the small group of banks which has joined together in lending $ 28.2 trillion to achieve the goal.

The ING has also commenced working on science-based methods and tools to support measuring the impact and to assist in lending decisions, along with the leading organizations BBVA, BNP Paribas, Standard Chartered and Societe Generale and non-profit think tank the 2° Investing Initiative.

With this initiative, the Dutch bank aims to open their path and present their efforts to the world with a belief that other financial institutions will also follow it. The ING highlighted its yearly progress in the report it presented recently after its first inaugural report presented in 2019.

For each of nine highly carbon-emitting sectors, ING has defined a multi-year pathway which dictates the level of emissions per unit of economic activity that must change to attain the climate goals.

Sector-wise data

The highest achievement in the impact of the bank’s lending was from the power generation sector with a 14.9 percent lower carbon intensity than the targeted amount. The carbon intensity is measured by kilograms of CO2 per megawatt-hour.

Even though the steel and cement sector consumes a comparatively smaller part of the bank’s loan book it has also achieved a lower emissions intensity than expected with 0.6 percent and 0.9 percent respectively.

However, it cannot be said that every sector has achieved the target as the lending in the residential real estate market showed a 2.4 percent above the emission intensity target, basically due to slower improvement in energy efficiency in many homes.

The emission intensity for ING’s automotive and aviation sector lending was broadly in line with the wider market 0.7 percent and 0.3 percent higher than their respective goals, as both industries have limitations in enabling fast pace low-carbon.

ING has assured that in the coming year it will be able to present an upstream in the oil and gas sector for the first time after agreeing on a methodology with its peers and will also aim a complete decrease in lending to the industry from its present $46.8 million.