Amsterdam-based global bank ING announced today that it will phase out financing of upstream oil and gas activities, ending its lending for oil and gas exploration and production, by 2040, while setting a new target to triple financing for renewable power generation by 2025.
According to ING, the new commitments are aimed at building on the progress made at the UN COP 28 climate conference, which for the first time resulted in an international agreement to transition away from fossil fuels in order to reach net zero by 2050, and a call to triple renewable energy capacity globally by 2030.
ING CEO Steven van Rijswijk said:
“Climate change is one of the world’s biggest challenges. The world needs energy, but still too much of that is coming from fossil fuels. Building on the progress made by world leaders at the COP28 conference and the most recent scientific insights and scenarios, we’re today announcing our next impactful actions to contribute to the acceleration of the energy transition.”
As part of its plan to phase out upstream oil and gas financing, ING also announced a target to reduce loans to upstream oil and gas activities by 35% by 2030, which the bank said will result in a 50% reduction in absolute emissions financed linked to its upstream portfolio.
The new commitments mark a significant update ING’s “Terra approach,” its strategy to steer the most carbon-intensive parts of its portfolio towards reaching net zero by 2050. In March 2022, the bank announced that it will no longer provide new dedicated upstream finance for oil and gas fields, and earlier this year, ING introduced plans to introduce new funding restrictions targeting oil and gas infrastructure, and to reduce the volume of traded oil and gas financed in its Trade and Commodity Finance business.
The new renewables target would take the bank’s financing of renewable power generation to €7.5 billion annually by 2025, well ahead of its prior goal of a 50% increase by 2025 from the €1.5 billion base in 2021.
Noting that 80% of global energy utilization is still fossil fuel-based, ING stated that its energy policy aims to balance the key interests of decarbonization to address climate change while enabling energy to remains affordable for people and companies and ensuring a secure energy supply.
van Rijswijk added:
“We realise more work will be necessary by all parties to reach a net zero society. We will therefore continue to adapt our financing and policies, collaborating with clients, sector experts, scientists, regulators, and governments in addressing the urgency to transition to more sustainable ways of doing business.”