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ING CEO: Banks can go green fast but 'indirect footprint' is a challenge

ING Groep NV has been carbon neutral since 2007 but it still has to work hard on achieving the climate goals set in the Paris Agreement, CEO Ralph Hamers said Sept. 5.

The Dutch lender is committed to the Paris climate change target of limiting the increase in global temperature to below 2 degrees Celsius, or even below 1.5 degrees, Hamers said at the Handelsblatt Banking Summit.

Under ING's climate action plan, by 2020 the group wants to procure 100% renewable electricity for all buildings its worldwide. The bank plans to reduce its carbon emissions by 50%, its global residual waste by 20% and its water usage by 20% from their 2014 levels. It intends to remain carbon neutral by offsetting remaining carbon emissions.

Banks, apart from the energy they use, do not have big footprints, Hamers said.

"The influence that a bank can have is much more through its indirect footprint, and that is the footprint of our customers," he said.

Providing incentives

The question is whether ING can incentivize its customers to change their way of working, so their businesses become sustainable too.

If clients become more sustainable, the risks of banking with them will fall as well, Hamers said.

ING has focused on customer engagement over the last couple of years. The group provides various types of green financing via bonds or loans but it also actively speaks to clients about what they can do, according to Hamers.

"Basically we agree with large corporate customers that if they set themselves specific KPIs as to what they need to accomplish, we would lower the rates we charge if they meet those," he said.

Banks can make a real impact

Banks and companies together need to take leadership in climate action because "for politicians in general it is pretty hard to take very effective measures because they are run by the next election" and face more pressure.

ING is trying to reduce the indirect footprint of its loan portfolio of €600 billion. But even if ING succeeds in doing so, the bank will still need to do more to achieve its climate goals.

Hamers said he was happy that the likes of BNP Paribas SA, Société Générale SA, Banco Bilbao Vizcaya Argentaria SA and Standard Chartered PLC have committed to the global climate goals from COP24, held in Katowice, Poland, in 2018.

"Together we can make a real impact," Hamers said.