In an interview with the Financial Times published on 19 September, Steven van Rijswijk, the chief executive of ING, said that the Dutch bank had put its clients on notice that it would either restrict or stop providing finance to companies that fail to address their carbon footprint on a case-by-case basis. Additionally, from 2025, the bank will no longer offer extra funding for LNG export terminals, a decision in line with the International Energy Agency’s recommendations. Fresh funding for upstream oil and gas businesses exploring untapped geographical areas will also be halted.
The bank, which believes “We’re facing a climate emergency and that we can no longer afford to not face it together,” has previously introduced funding limitations in the property sector, with customers required to draw up a sustainability plan or face being denied financing for new projects. “Our goal is to make sure we fight climate change. It is not to say goodbye to clients,” van Rijswijk said. “But if it is about them not being willing [to address their carbon footprint] then that will mean we will say goodbye.”
Van Rijswijk added that the bank wanted to move “in tandem with Paris,” by which he means The Paris Agreement, a global agreement organised under the auspices of the United Nations and intended to limit global temperature rises to 2C (and ideally to no more than 1.5C) above pre-industrial levels.
This commitment popularised the concept of achieving ‘Net Zero.’ According to the UN, it will require global emissions to be reduced by 45% by 2030, with the world reaching the point at which greenhouse gas emissions are equal to or less than what is removed from the atmosphere (by either the natural environment or carbon capture) by 2050.
Achieving that goal on schedule will require the phasing out of fossil fuels, transitioning to renewable energy sources, and strictly regulating the way people live their lives, how land is used, and how buildings are heated. In 2021, the UK House of Commons Public Account Committee concluded that as much as 62% of the future reduction in emissions will rely on individual choices and behaviours, from day-to-day lifestyle choices like travelling less often and eating less meat, to one-off purchases such as replacing boilers that use fossil fuels or buying an electric vehicle.
ING has assessed 2,000 of its largest clients based on their publicly available climate transition plans and other data. Van Rijswijk says they now have until 2026 to make “sufficient progress.” Although some banks have previously introduced restrictions on lending to specific sectors such as coal, and tightened mortgage lending criteria for houses with poor energy efficiency ratings, policies that apply across large chunks of their portfolio are rare. Van Rijswijk said he was concerned that discussions around climate change were becoming more “polarised,” adding that, even if competitors were reluctant to talk about the issue, ING wanted to be “as open and honest as we can be.”
ING’s announcement comes amid growing concern that the relatively recent digitalisation of financial transactions has placed a vast amount of power in the hands of financial services companies that move virtual money seamlessly around the world in real-time. For a while, the risk that these powers might be exercised to cut off and shut up groups, organisations, and people seemed entirely abstract. But with ‘FinTech’ companies adopting an increasingly militant stance on Net Zero, the risk is that their business functions will effectively end up compelling clients, contractors, and other companies in its supply chain to profess belief in what are effectively highly politicised, eminently contestable policies.
While it’s indisputable that average global temperatures have increased since the mid-19th century, people hold a range of views about the causes and severity of climate change and that in turn influences their opinion about the best way to tackle it—or, indeed, whether tackling it is possible or necessary. Different solutions to tackling climate are informed by different values and recommending one approach over another inevitably involves making a political choice. There is no-such thing as an apolitical, ‘scientific’ solution.
In other words, whatever stance one might take on the issue, climate scepticism is a view people should be free to express without fearing that it will have negative consequences for their finances. In the UK, for instance, a recent Ipsos poll highlighted that public support for Net Zero drops significantly once respondents are made aware that there will be a cost they’ll have to pay. For example, support for Low Traffic Neighbourhoods (LTNs) drops from 53% to 18%. This suggests the so-called consensus about the urgency of reducing our carbon emissions isn’t nearly as ‘settled’ as the advocates of Net Zero and related measures would have us believe.
But there is little hope that there is anyone willing to listen among the executives sitting in the C-suite of a bank like ING. In a cashless, highly leveraged society, it is now surely only a matter of time before this creeping trend for the politicisation of corporate financial architecture wreaks its effects on a business, farm, landowner, landlord, entrepreneur, wealth generator, or risk-taker near you.
