“In line with the Paris Agreement’s ‘well-below two-degree’ goal, ING has begun steering its lending portfolio of over EUR 500 billion to meeting this goal.”

After launching a new survey on the circular economy, Anne van Riel, Head of Sustainable Finance Americas at ING, explains the growth trajectory of their new sustainable lending business.  In this context, “sustainable lending” connotes a new business line where ESG performance incentives are part of obtaining a lower cost of credit.  According to ING, it’s both good business risk management and good for the planet.  Tim Nixon, Managing Editor, Thomson Reuters Sustainability.

Tim: What is the scale of your sustainable lending business compared to overall?

Anne: ING has mainstreamed sustainability across all its financial services, in lending, strategic advisory and debt capital markets. Every financing opportunity can be approached through a “green lens” and almost all projects can have a sustainability component. In 2017, we committed EUR 14.6 billion to climate finance and our goal is to double our lending to ESG industry leaders by 2022.

Tim: How fast is it growing?

Anne: Our Sustainable Assets Under Management grew to EUR 4.8 billion in 2017, up by EUR 1.1 billion of new business. We structured 23 green bonds for our clients in 2018, up from 12 in 2017. Since closing our first sustainability-improvement loan with Philips in February 2017 – which links the interest to the company’s sustainability rating – we have closed about 30 deals across various sectors and regions.

Tim: What are the growth targets as a % of total business?

Anne: In line with the Paris Agreement’s ‘well-below two-degree’ goal, ING has begun steering its lending portfolio of over EUR 500 billion to meeting this goal. To help us achieve and measure this, we have co-created, along with think tank 2° Investing Initiative, an approach called Terra. This will help us determine the climate impact of our portfolio and steer it towards alignment with the well-below two-degree goal. As far as we know, ING is the first bank to commit to using a science-based based approach such as Terra to steer business strategy in this area.

Tim: How are you using your recent circular economy survey and engagement to target and catalyze the growth ?

Anne: We commissioned this research to better understand how the circular economy is viewed in the US and what progress has been made, and where the gaps and opportunities are so ultimately we can help companies make the transformation to sustainable business models. For example, the survey showed that across all sectors US firms are having difficulty recovering materials for recycling, and that there are concerns around the potential risks associated with testing circular business models. This is valuable insight and we can take our learnings and experience for other projects and apply it to these challenges.