Risk management

How does ING show its commitment to the environment and society?

We want to be transparent about how we are supporting the transition to a sustainable economy and equitable society, so we have established clear guidelines that steer our business decisions.

What is ESR about?

With over 34 million customers in more than 40 countries, the ING Group’s business activities have a significant impact on society, the environment and the climate. With this impact comes great responsibility. That is why it is crucial that we make the right choices for how, where and with whom we do business, and that we are transparent about our principles.

Our policy on environmental and social risks is an important part of this. We are guided here by our Environmental and Social Risk (ESR) policy, which we update regularly. Indeed, this framework should reflect changing social standards and regulations relating to sustainability.

The ESR policy applies to all our products and services, including corporate lending, project finance and asset management. Moreover, it is our corporate clients, accounting for about 30% of our loan portfolio, who often have a greater potential environmental and social impact.

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What does ESR mean for your company or organisation?

ING’s ESR policy consists of three steps

  1. creating and maintaining our policy framework
  2. screening transactions and customers
  3. monitoring the relationship after an agreement has been reached.

When assessing potential customers and deals, we engage in dialogue and try to assist with improving the environmental and social impact where possible. We are convinced that this is how we can have the most positive impact. For some sectors, we ask customers to complete an ESR declaration to determine whether the activities are in line with our sustainability policy.

For some sectors, we ask customers to complete an ESR declaration to determine whether the activities are in line with our sustainability policy

If customers apply for credit but do not meet ESR standards and are not willing to modify their activities, this will lead to a refusal. In certain cases, we may terminate the relationship.

Moreover, there are certain sectors and countries that are completely excluded from financing. For example, we do not finance activities such as fur production, controversial weapons industries or deforestation of rainforests. By 2025, we also want to completely phase out our financing of coal.

Why do we update our ESR policy?

We have already updated our ESR policy several times to ensure that we adequately identify and manage new environmental and social risks. The latest revisions date from 2021. As a result of these changes, our policy complies with the European regulations for financial institutions concerning the management of environmental, social and governance (ESG) risks.

What are ESG risks?

  • Environmental: risks associated with, for example, the physical effects of global warming, changes in government policy, technological advances or changes in consumer behaviour
  • Social: risks associated with the negative consequences of, for example, inequality or human rights violations
  • Governance: risks associated with, for example, corruption or fraud

The updated ESR policy takes into account the European Banking Authority (EBA) requirements for lending and loan management, improved controls and comments received from internal and external stakeholders.

The revisions should also ensure a better understanding of the existing process and evaluation requirements, with a particular focus on supply chain due diligence. Where necessary, internationally recognised certification standards and guiding principles have been added or adapted. 

What is the importance of ESR for banks?

Banks like ING cannot avoid ESG risks due to the nature of their core business of lending and investing. If our customers or the invested assets are affected by the negative impact of ESG factors, financial risks arise for the banking sector.

What is the Terra approach?

In addition to risks, the sustainable transition also presents opportunities. At ING, we believe that through our lending and investment strategy we can have a positive impact on people and the environment. With our Terra approach we are steering our global loan portfolio towards ambitious climate targets (net-zero emissions by 2050).

We are focussing on those sectors which can make the most difference, such as the energy sector, shipping or the steel industry. To do this, we calculate the technology shift needed in each of these sectors and discuss with our customers how we can support them in this transition.

To help the banking sector manage ESG risks and encourage the financing of sustainable activities, the European Commission published its ‘Action Plan on Financing Sustainable Growth’ in 2018. Facilitating transparency, integrating sustainability into risk management and directing money flows towards a sustainable economy are central to this.

For example, the Commission launched the ‘EU taxonomy for sustainable activities’, which clearly defines which economic activities can be labelled as ‘sustainable’. This helps companies and lenders to make climate-friendlier choices.

In addition, the Commission introduced guidelines for the disclosure and reporting of climate-related information, and the EBA was mandated to examine how regulators should incorporate ESG risks into their assessments of the financial sector.

Since 2017, ING has been communicating progress on climate risks and opportunities according to the Task Force on Climate-Related Financial Disclosures (TCFD) reporting. We have set our ambition for climate risk management on the basis of other relevant material, such as the European Central Bank’s recent ‘Guide on climate-related and environmental risks’. 

Want to know more?

Find out how ING can support your company or organisation in the sustainable transition, with tailored products and services and customised advice, at ing.be/sustainable-business.

Frequently asked questions