Performance and reporting
We make our biggest contribution to a sustainable future through our financing. We are committed to better understanding the impact of our lending activities and working with our clients to drive progress on climate action and financial health. We have ambitious targets to guide us.
The Terra approach
We’re steering the most carbon-intensive parts of our loan portfolio towards reaching net zero by 2050. We call this the Terra approach. Our Climate Progress Update 2024 gives details on our targets and progress.
Wholesale Banking: committing to mobilise €150 billion per year by 2027 of financing that supports our clients’ transitions
To support our Wholesale Banking clients in their sustainability transition, we have set a target to mobilise €150 billion per annum by 2027 of financing that contributes to our clients' transition to more sustainable business models.
With this commitment, we capture the volumes of the following products that support our clients in their transition:
- Sustainability-linked loan products
- Green, social and sustainability loans
- Sustainable structured finance transactions
- Green, social, transition and sustainability bonds and sustainability-linked bonds
- Green and sustainability linked Schuldscheine
- Sustainable asset-backed securities (ABS)
- Sustainability-linked derivatives
- Sustainability-linked commercial paper
- Green commercial paper
- Sustainability-linked receivables finance program
- Green receivables finance program
- Sustainable supply chain finance
- Sustainability-linked guarantee
- Green guarantee
- Sustainable investments
- Advisory propositions for sustainable activities
The commitment makes a distinction between transactions where we are ESG lead (such as ESG coordinator or ESG structuring role) and transactions where we do not fulfil such a role (like when we are part of a consortium of banks). In cases where we have the ESG lead role in a loan, we record the pro-rata share (in case where there are multiple ESG leads) of the total transaction and if we merely participate, we only take our share into account. This methodology has been selected to reflect that if we are the ESG lead role for a transaction, we can pro-actively engage with our clients on their sustainability strategy, so our impact is more significant compared to a participation.
In more detail:
- Loan products: for loans such as sustainability-linked loans or green loans:
- If we participate in a transaction with no ESG role, we limit ourselves to our own commitment.
- When we fulfil an ESG lead role by structuring and/or coordinating the ESG debt structure, we reflect (our pro rata share in) the full transaction given that we mobilised the transaction for our client.
- For example: in an RCF of €1 billion, we have a commitment of €100 million. The nature of RCFs is that they are fluctuating and therefore can be fully or partially drawn by the client at any time depending on their liquidity needs throughout the year. Therefore we record the RCF limit, where we differentiate between our role as a participant or as an ESG coordinator.
- We do not have an ESG lead role: we register our final take of €100 million.
- If we are the ESG coordinator: we register the entire €1 billion in the case that we are sole ESG coordinator, and our pro-rata share in the case that there are multiple ESG coordinators.
- Capital markets products: for the bonds we record in accordance with the role we take.
- ESG lead role: if we are the ESG structurer or coordinator we take our pro-rata share of the full transaction, as we believe it properly reflects our contribution to support our clients to achieve their sustainability transition (for the avoidance of doubt: if we are the sole ESG structurer/coordinator we register the entire transaction, but if we for example are a joint structurer/coordinator with another bank, we only register the pro-rata part of the transaction as volume mobilised).
- Other roles: when we do not fulfil the ESG lead role, we only register our share of the bond, where we make a distinction between passive bookrunner roles and active bookrunner roles.
- Derivatives: for sustainable derivatives such as interest rate swaps we record the full notional amount hedged with ING. To prevent double counting, we exclude from the total any sustainable derivatives used to hedge sustainability-linked loans (or other securities) already included in our total.
- Transaction Services products follow the same reporting protocol as Loan products.
- Sustainable Investments: for financing solutions provided by our Sustainable Investments team (equity and subordinated debt solutions), we report ING’s final take in the transaction at closing.
- Advisory propositions for sustainable activities: we are increasingly asked to provide tailored ESG advice to our clients and we also address ESG-related topics as key part of our client engagements. When we provide such advice related to a financial transaction not yet captured as an ESG bond, loan or derivative, to avoid double counting we report:
- The full transaction when we are the sole ESG advisor.
- The pro-rata share if we fulfilled a joint ESG advisory mandate.
To realise our target, we will actively steer on increasing the share of sustainable transactions and ESG lead roles in our overall number of transactions through companywide KPIs as well as striving to ramp up our sustainable finance capabilities.
Sustainable investment services
ING is a service provider signatory to the UN-backed Principles for Responsible Investment and has committed to incorporating ESG issues into the investment decisions, policies and processes that underpin our investment services.
ING offers sustainable investing services (SIS) to our retail banking customers in the Netherlands, Belgium, Luxembourg, and Germany. The services may include brokerage, advisory and discretionary management. We provide dedicated portfolios, structured products, and investments funds, covering all asset classes. These services are part of our broader investment services to our clients. The solution provided and sustainability level of the service depend on the clients’ personal preferences. Since August 2022, we in the EU are required to ask our clients about their ESG preferences as per the newly adopted MIFID regulation and must provide an investment solution that matches these ESG preferences. To enable that our solutions match the client preferences we, at ING, distinguish four different approaches for ESG integration within our investment solutions: Traditional, Responsible, Sustainable and Impact. These levels are described in the Responsible Investment Guidelines of ING. Our portfolio managers follow these guidelines, as per the ESG preferences that have been agreed upon with the client.
Below we concentrate on the minimum assessment for our Sustainable and Impact investing approaches, as the assets invested according to these approaches are also published in the ING annual report (the Sustainable Investing Services). Over the past 25 years, ING has developed a methodology to assess all main asset classes including fixed income, equity and investment funds based on a diverse set of environmental, social and governance (ESG) criteria. The funds covered by the SIS number include funds reporting in accordance with Article 8 and 9 of the Sustainable Finance Disclosure Regulation (SFDR). Please refer to the relevant documentation of the fund for more information on the methodology and characteristics.
Our company-level analysis integrates both positive and negative ESG screening. Positive screening is based on a company score that incorporates the company's ESG risk management, the evolution of that risk and the management of adverse impacts on society and the environment by the company. We adhere to a best-in-class approach, investing only in companies that belong to the top 70% in their sector when it comes to ESG performance. Applying negative screening means that we exclude companies with severe negative corporate conduct. We also exclude companies whose revenues from products or services that have a negative environmental or social impact are higher than five percent (for production) or 10 percent (for distribution). Excluded companies operate in the following sectors: alcohol, coal, controversial weapons, fur, gambling, non-conventional gas, oil, tobacco, and weapons. We aim to follow this same screening process for international financial institutions and semi-sovereigns.
For investment funds, we apply quantitative and qualitative screening. The quantitative screen is conducted to understand the ESG profile of the asset and the fund manager. It covers nine ESG categories across policies, selection methodology and governance. The qualitative screen consists of an interview with the fund manager focused on their assessment and ESG approach. In a final step, we validate the fund’s investments against our sustainable investing criteria. This approach applies to funds from active managers, but also to structured products or index funds. Where the policies of external investment funds will not fully align with the ING policy, preference is given to investment funds whose sustainability policy is most in line with that of ING.
Our sovereign level analysis integrates several sustainability factors such as social issues, environmental performance, corruption, endorsement of international treaties and the adverse impacts of these sovereigns on environment and society. For these assessments we use data from several different established public data sources. By combining best-in-class scores with minimum requirements, we define the eligibility of a sovereign for our sustainable investing portfolios.
During 2023, ING’s SIS applied to our biggest sustainable investing markets: the Netherlands, Belgium, Luxembourg, and Germany, with total sustainable investing services valued at €16.0 billion, up from €14.7 billion in 2022. The increase was influenced by the overall market performance of equities and bonds, which increased by 12 percent on average.
As regulations and market standards constantly evolve, ING is investigating various ways of categorizing and reporting on SIS, and we are monitoring regulatory developments. We believe that transparency, uniformity and collaboration are needed from all market participants, to create a meaningful reporting standard for customers, which can easily be benchmarked against other investments.
If you want to read more on these assessments, please visit the site of our management company, or your local ING website.