(Bloomberg) -- ING Groep NV plans to further reduce the financing it provides to fossil-fuel companies as part of its effort to drive down emissions in its loan portfolio and achieve a net zero target by 2050.
In its annual climate report published Thursday, the Netherlands’ largest bank said it will no longer finance so-called pure-play companies that continue to develop new oil and gas fields. That follows an earlier pledge to end all funding of upstream oil and gas activities by 2040.
ING said its outstanding exposure to upstream oil and gas activities fell almost 40% last year to €1.2 billion ($1.3 billion). The Dutch bank also plans to stop providing new financing for new liquid natural gas terminals after 2025.
“ING wants to play a leading role in accelerating the global transition to a low-carbon economy,” Chief Executive Officer Steven van Rijswijk said in a statement. The bank has already promised to cut loans for oil and gas exploration and production by 35% by 2030.
The company joins a growing list of European and UK banks imposing restrictions on financing new oil and gas fields and related infrastructure. In the past year, Barclays Plc, BNP Paribas SA, HSBC Holdings Plc and Societe Generale SA are among the institutions that have introduced such constraints.
The International Energy Agency has said that to limit global warming to the critical threshold of 1.5C, there should be no investment in new fossil-fuel supplies. Still, many banks continue to finance the industry, putting them squarely in the crosshairs of climate protesters.
Some environmental groups say ING isn’t doing enough to curb emissions. Earlier this year, climate campaigners who took Shell Plc to court and won have said they are gearing up for a lawsuit against the Dutch bank.
Milieudefensie, the Dutch arm of Friends of the Earth, said in January that 99% of ING’s emissions come from loans to polluting companies. It called for the bank to draw up a climate plan that falls in line with the ambitions of the Paris Agreement or else.
“We share the vision with Milieudefensie, but we don’t think what they ask is the solution,” Anne-Sophie Castelnau, ING’s sustainability chief, said in an interview. “We are very confident that what we are doing is the right thing for banks to do.”
ING disclosed 207 more megatons of emissions, which accounts for about 22% of its loans, said Nicky van Dijk, a researcher at Milieudefensie, in an interview on Thursday. The emissions known so far equal “one and a half times the emissions of the Netherlands, and this is just the tip of the iceberg,” she said.
ING believes that “we need to have the opportunity to give a chance to our clients to show that they are moving in the right direction,” Castelnau said. “Milieudefensie would like us to close the shop in one year, which is absolutely unrealistic,” she said.
As part of an effort to steer the most carbon-intensive sectors in the loan portfolio to a low-carbon economy, ING said it’s closely assessing the disclosures of about 2,000 corporate clients. Those that can’t — or won’t — take sufficient steps to curb emissions by 2026 may face stricter loan conditions or won’t receive financing, the bank said.
“If clients don’t report information, we can’t engage properly,” said Castelnau. “We’ve given them two years.”
--With assistance from Alastair Marsh.
(Updates with comments from climate activists)
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