The largest fossil fuels creditor and financier of emissions is the biggest laggard in fighting climate change

While the Dutch ING Bank’s climate policy and practices have been the subject of numerous critical studies by Profundo and others, providing financing to fossil fuels companies is still dominating its portfolio. The bank has only taken “baby steps” to curb its contribution to devastating climate change. As the bank cannot make the needed change on its own initiative, it’s indeed time to go to court. ING should be held accountable for its (lack of genuine) climate actions. 

Milieudefensie, the Dutch branch of Friends of the Earth, firmly stated it all in a 40-page letter in January this year directed to the Dutch bank. ING contributes to dangerous climate change because its current climate policy is “flawed and leads to unacceptable greenhouse gas emissions. ING is consequently undermining achieving the 1.5°C target required by the Paris Agreement. This poses a great danger to society, the environment and nature.”

On the 19^th of January, the environmental organisation dragged the Netherlands’ biggest bank to court, stating that the bank will not improve by itself. Meanwhile, ING’s financed emissions amounted to 73 megatons CO2e per year (2022), the highest of all Dutch banks and almost half of the emissions by the Netherlands.  

The case - the first one against a bank in the Netherlands (a similar case runs in France against BNP Paribas) - follows another groundbreaking court case: the one against Shell, also initiated (and won) by Milieudefensie and five other environmental organizations in 2019. In May 2021, the Hague District Court ordered that Shell must reduce its own CO₂ emissions and those of its suppliers and clients by 45% by 2030 compared to 2019. Shell appealed the decision, but the case has shown that the world’s biggest polluters and drivers of climate change can no longer get away with it. 

The enablers of fossil fuel industries

While the spotlights have so far been mainly highlighting major polluting industries such as Shell, increasing attention is paid to the ‘enablers’ of these industries. These actors, like pension funds and banks, enable all kinds of industries to produce and consume dangerously high volumes of fossil fuels. Part of the greenhouse gas (GHG) emissions of these companies can therefore be seen as the “financed emissions” of the financial institutions which provide them with loans and investments. In 2022, United Nations Secretary General António Guterres, during his address to the General Assembly, stated that: “We need to hold fossil fuel companies and their enablers to account.”

ING provides loans and other credits to companies and its private banking arm makes investments in their shares and bonds. The companies it is financing include a lot of fossil fuel producers, but also companies in industries that use a lot of fossil fuels, such as steel, cement, and aviation. In 2022, ING’s balance sheet assets amounted to 968 billion euros, of which 279 billion euros consisted of loans to companies.

The bank could accelerate the global transition from fossil fuels to renewable energy generation by making responsible lending and investment choices, divesting from companies which are not aligned with the Paris Agreement and making sufficient capital available for companies that are realizing the energy transition. Two years ago, ING already received a letter from Milieudefensie requesting the bank (and 28 other polluting companies and financial institutions) to come up with a better climate plan, with details on how it intends to reduce its financed CO₂ emissions by at least 45% by 2030 - what is needed to reach the goal of the Paris Agreement to limit the global temperature rise to 1.5 °C.

Baby steps

According to Milieudefensie, ING has been taking “baby steps”, too little to improve its performance on climate action. Its climate goals are not enough to bring down its financed emissions in the pace agreed in the Paris Agreement. On the contrary, ING’s emissions even increased. While the bank states, in a written reaction to Milieudefensie, that it engages with the polluting companies it finances about a transition to sustainable production, these talks are on a voluntary basis and have not produced satisfying results so far. The environmental organization therefore demands that the bank halves its financed emissions before 2030 and stops collaborating with polluters, or companies that lack a sound climate policy in line with the Paris agreement.  

The court case, one of the first targeting a financial institution, does not come out of the blue. For years, ING’s climate policies and practices have been the topic of studies, by Profundo and others. Already in 2015, the report Undermining our future that we wrote for Fair Finance coalitions in a number of countries criticised ING’s climate policy. The report concluded that while the bank “endorsed every Corporate Climate Communique since 2009, it has also increased its financing to fossil fuels precisely in the period after this endorsement.” Despite its promises, the bank turned out to be one of the top European financiers of fossil fuel companies.

A follow-up report for Fair Finance Netherlands in 2018, entitled Still undermining our future?, examined the changes since the Paris Agreement in the lending and investment patterns of Dutch financial institutions related to renewable energy and fossil fuels. It came with a similar conclusion: ING’s fossil fuel financing (loans and underwriting), still represented 83% of ING’s total energy financing in the period 2016-2017 and only 17% was going to renewable energy. By the way, ING was not the only one with a great appetite for fossil fuels. For 10 out of 12 Dutch insurance companies and banks owning or managing shares of energy companies, the proportion of fossil fuels in the value of their energy shareholdings was more than 80% on average in that period.

Largest creditor of fossil fuels

Two years later, a similar study by Profundo for Fair Finance Netherlands, revealed that ING was moving away from fossil fuels less rapidly than other Dutch financial institutions. Of the EUR 9.1 billion in loans and underwriting services provided by the bank to energy companies in the period 2018-2020, 75% went to fossil fuels. Looking at the percentages per year in that period, ING reduced the share of fossil fuels, but this was relatively small compared to its peers. While Rabobank increased the proportion of renewable energy in its energy sector credits from 63% to 88%, ABN Amro increased from 31% to 48%, and ING from 21% to 38% in the last year.

The previous reports all focused on the financing amounts earmarked for fossil fuels and for renewable energy. In 2022 we calculated for the first time, on behalf of Milieudefensie, the financed emissions of the 16 largest banks, pension funds and insurance companies in the Netherlands.

The report concluded that in 2021, ING accounted for an estimated 32% of all financed emissions of these 16 financial institutions. When looking only at the scope 1 and 2 emissions of its clients, as data availability on scope 3 emissions is very poor, the financed emissions of the bank already amounted to 73 Mt CO₂e in that year. This could only partly be explained by the size of its corporate lending portfolio, which is more than twice the size of that of Rabobank. This is because the emissions intensity of ING’s corporate lending portfolio is higher: 185 tons of CO₂e per million EUR, followed by ABN Amro (170 tons) and Rabobank (144 tons).

The report also revealed that ING’s financed emissions and emission intensity are in reality much higher than the bank reports itself. The financed emissions from ING Group’s wholesale banking portfolio were 35 Mt CO₂e higher and the estimated emissions intensity was 43 tons of CO₂ per million EUR higher than what ING reported.

No disclosure

In our most recent report for the Dutch Fair Finance Guide, in 2023, Profundo assessed the climate policies of ten Dutch financial institutions. The report concluded among others that ING does not disclose information about the carbon footprint of its private banking portfolio nor of its underwriting activities, although a large share of all the financed emissions of the bank is linked to these activities. The bank also does not disclose emission reduction targets for the private banking portfolio.

The study also noted that the bank’s target for the reduction of upstream oil and gas financing does not seem to align with a 1.5 °C scenario. Instead of ING’s 19% reduction plans for 2030, at least 30% is needed. Furthermore, while the bank measures emissions for almost its entire portfolio, scope 3 emissions are not covered for the oil & gas and mining sectors, as was recommended by PCAF, the global partnership of carbon accounting financial institutions. The overall score for the climate action plan of ING was 4.9 (out of 10).

No phase out for fossil fuels

In response to these and other reports, and pressure from various stakeholders, ING announced it will “stop providing dedicated finance to new ‘upstream’ (exploration and extraction) oil and gas fields (…) and to stop dedicated finance to ‘midstream’ (oil & gas infrastructure) activities that unlock new oil and gas fields, also aiming to reduce the volumes of the traded oil and gas we finance.” Such announcements look more relevant than they actually are, as most of the financing of ING for the fossil fuels sector is general corporate finance, which is therefore not affected by the reduction of forms of “dedicated” finance.

To meet the goals of the Paris Climate Agreement, financial institutions are needed to take radical steps. Over the past ten years we have produced enough evidence showing that more action from the biggest Dutch bank (and other financial institutions) is required. But reports, letters, and protests have hardly moved the bank. And as our latest study concluded that “we cannot rely on the voluntary steps of financial institutions in this respect”, the time has come to use other instruments.

This expert view is written by Manon Stravens, based on studies conducted under the leadership of researcher Ward Warmerdam of Profundo. For further information on this topic, please contact us at w.warmerdam@profundo.nl or m.stravens@profundo.nl.

(Photo: GlobalP on iStock)