Governance, risk & compliance
Change-ING for the better ING – which says its biggest contribution to a sustainable future is made through its financing, for which it has “ambitious targets” – has long been committed to understanding the impact its lending activities have on the climate and sustainability, and to work with clients to drive progress on climate action. By 2025, it hopes to channel as much as €125bn a year to sustainable finance solutions. As Castelnau puts it: “We’re basically steering our lending portfolio into reducing its emissions by focusing on the most carbon-intensive sectors of our lending book and steering them towards net zero pathways.” It isn’t just wholesale banking where ING aspires to have an impact. In 2021, it announced a new initiative with the Dutch National Heating Fund to provide €50m by way of “favourable terms” loans to building owners, including homeowners, to help improve the sustainability profiles of buildings. These, and other efforts, are part of what ING calls its so-called ‘Terra’ approach. Comprising power generation, oil, gas, and shipping, and other heavy industries, as well as domestic and commercial real estate, the Terra approach brings together all the fields ING believes are most responsible for global climate change. In short, it is aimed at financing the switch to low-carbon technologies and using data to understand the bank’s climate impact – and drive sustainability through all the work it does. By way of example, the bank says it has created extensive global heat maps on specific sectors. ‘We assessed the impact of physical risk events on our global mortgage portfolio and updated our credit risk policy with specific requirements for climate- related and environmental risks,’ the report’s summary said. “We have a very clear picture of where we need to go on emissions,” adds Castelnau, “and we work with our clients to ensure that over time our portfolio reduces its impact.” ING isn’t alone in using data this way. Given the ongoing energy market volatility, and the increasingly challenging financial climate, it’s perhaps unsurprising that so many banks are using technology to analyse how customers impact the environment via spending habits and lifestyle choices – then offering suggestions on cutting back. Some European banks have targeted energy as a way of supporting customers, introducing resources and tools they can use to get a handle on this increasingly costly necessity. At the beginning of the year, for instance, Belgium’s KBC Group launched ‘Energy Insights’, a service delivered via its mobile app and used by almost two million customers. In the UK, the Royal Bank of Scotland and Co-Operative Bank each offer customers the ability to cut energy costs – and their carbon footprint – by modelling the impacts home
Future Banking /
www.nsbanking.com
improvements might have. ING similarly hopes to have a real, measurable influence on how customers behave and the choices they make. This partly through an app, launched in the summer of 2022, that allows customers to track their CO2
footprint,
based on their spending on products and services and measure their behaviours against other users. “In retail we are a very digital bank: we interact mostly with our clients digitally,” Castelnau says. “So we don’t have the ability for dialogue, per se. It’s more about giving them insights into what they’re doing, and triggering thoughts about what they can do to contribute to reducing global warming over time.” Castelnau adds that this analysis is enhanced by “incentivising” customers to make sustainable choices through dedicated offers – such as energy purchasing, homebuying or renovating – via sustainability-driven financial products.
Sustained sustainability
Beyond these environmental questions, all this activity makes sense from a business perspective too. According to a survey last year, two thirds (67%) of British banking customers want their financial services providers to be more sustainable. Cloud banking provider Mambu found consumers were increasingly looking for ways to make greener financial decisions, wanting to play a more active role in adopting green finance. Mambu added that this amounted to be a ‘huge opportunity’ for banks forward-thinking enough to offer the right services. Banks like ING, for their part, are very much aware of those issues, expanding their financial products to reflect a growing trend towards more green-minded customers. Sustainable loans, for example, are becoming increasingly important, with institutions offering their own variants to retail and business customers respectively. Individuals can then sign up for
Low-lying coastal areas are particularly vulnerable to the effects of climate change, even as banks are offering opportunities to invest in green mortgages.
Anne-Sophie Castelnau, global head of sustainability, ING.
Eric Usher,
head of the UNEP Finance Initiative.
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Bself/
Shutterstock.com
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