LEONIE SCHREVE, HEAD OF SUSTAINABLE FINANCE AT ING
How does ING define sustainable finance activities?
Although ING’s own operations have been climate-neutral for a decade, we can make our biggest contribution to a sustainable future through supporting our clients with financial services.
We believe sustainable business is better business and by focusing on forward-thinking companies that are driving change to become more sustainable, we will have a positive impact on business in the long term. By supporting clients as they are future proofing their business, we are future proofing ours.
Forward-looking businesses are embracing sustainability requirements, using them to foster innovation, drive competitiveness and create new business models. Change, innovation and sustainability go hand-in-hand and offer strong future business opportunities.
We approach every financing opportunity through a “green lens”—almost all projects can have a sustainability component, whether that entails implementing more alternative energy sources, recycling waste or developing green buildings/infrastructure.
We are focused on increasing financing for environmentally and socially responsible companies, while reducing financing for carbon-intensive sectors. We are committed to our involvement in the circular economy and increasing financing for projects focused on promoting social progress.
When companies want funding but can improve on sustainability, we outline the changes they need to make first. We feel we can make the most impact by having a dialogue with clients and supporting them in improving their environmental and social impact where possible.
Tell us more about the deals the bank has concluded in this segment and how complex are they and how does it defer from other sustainable financing activities in different parts of the world?
In 2018, we completed a number of sustainable finance deals across Europe and Asia. There is a discernable difference between regions. Each transaction is tailored to the client’s business and sustainability ambitions. Some of these transactions are also innovations.
The ING Sustainable Finance team works very closely with the client to ensure that the credentials of the transaction aligns with sustainable market expectations and practise.
An example is the design and market launch of the Sustainability-improvement Loan where sustainable improvements are linked to the margin of the transaction. We launched the product in the market and still lead it.
We have seen huge uptake by others, but ING still leads the troops in number of deals closed and coordinated. As sustainable finance becomes more mainstream, the process is becoming simpler and our experienced teams ensure support and guidance in every step of the process.
What kind of opportunities do you see for this in this region? And from this, what are the challenges to realising these opportunities?
Energy transition and water are very prominent topic on the agenda in the Middle East, with energy sources changing the regions actively seek new economic sources. Therefore, the appetite for energy and water transition ability is strong.
ING has multiple involvements in financing water and energy transition. With the declaration on Sustainable finance initiated by ADGM and IJNG signing the momentum even gets more evident. ING is keen to support clients in the region to accelerate on this transition.
In this regard, how would you describe your pipeline for the year?
We expect the sustainable finance market to keep growing. In particular, we expect to see the sustainable loan market to keep the accelerated growth that we have seen in 2018.
Given that many of our clients are investing in transitioning towards more sustainable business, and the increasing awareness around sustainability challenges (e.g. climate change, water scarcity, regulations, natural resource constraints), we see a strong demand for sustainable finance driven by investments needed for this transition.
What is ING’s goal in the sustainable finance space?
Our overall goal is to double our funding to companies and sectors that are helping to keep global warming below 2°C. We will do this by increasing our Climate Finance portfolio two-fold by 2022 (compared to 2017 where ING has committed EUR 14.6 billion to climate finance).
We want to steer our portfolio to a well below two-degree scenario and announced Terra, an innovative and accurate way to measure our portfolio, together with 2Dii (two-degree investment initiative). 2Dii have successfully applied their measurement to institutional investors and we are the first bank in the world applying it to a lending portfolio.
We hope this will also open up opportunities for other banks to look into measuring their portfolio, until now that was difficult (refer to TCDF). We want to remain at the forefront of the sustainable finance space, continue to grow our portfolio and create innovative products with a green footprint and share the market moving forward.