ARKANSAS, Oct 5 (Future Headlines)- The CEO of ING, Steven van Rijswijk, has called on governments to establish stricter regulations to support the decarbonization of sectors like real estate. He emphasized that without more stringent rules, banks like ING will find it challenging to achieve their climate targets. ING, the largest bank in the Netherlands with a market capitalization of approximately $48 billion, has joined a growing number of financial institutions pledging to reduce their carbon emissions linked to their financing activities.
Van Rijswijk specifically pointed out that governments in markets where ING offers residential mortgages, including Belgium, the Netherlands, Germany, Poland, Spain, and Australia, could significantly contribute to lowering emissions by transitioning power grids to rely on renewable energy sources. Many banks have been advocating for increased policy support to accelerate environmental initiatives. They have faced criticism from climate advocacy groups for what is perceived as a slow pace of progress, particularly regarding the financing of new fossil fuel projects.
While ING has demonstrated year-on-year improvements across various sectors in 2022, such as power generation and steel, it faces a challenge in reducing emissions from residential real estate, which accounts for the majority of its loans. In 2022, emissions from residential real estate were 5.8% above the required pathway, compared to 3.2% the previous year.
While ING has the option to enforce stricter lending rules for new mortgages, the bank believes that its existing mortgage portfolio, which totals over €300 billion, requires government intervention to encourage homeowners to adopt more sustainable building and renovation practices.
ING noted that the adoption of sustainable housing products like green mortgages has shown promise but has not reached the level required to drive the transition effectively. Residential real estate accounts for approximately 12% of ING’s financed emissions.
In contrast, emissions from other sectors have seen improvements. Emissions from ING’s power generation financing were tracking 31.3% below the net-zero emissions pathway, compared to 23% below in the previous year. Other sectors, including upstream oil and gas, shipping, steel, cement, and aviation, have also made progress in reducing emissions.
Van Rijswijk emphasized that ING’s preferred approach is to collaborate with companies to help them decarbonize. However, in some cases, the bank has had to end relationships with companies that are not committed to transitioning to more sustainable practices. For example, ING phased out its involvement with coal-fired power plants and lost several Polish and German clients in the process.
The call for tougher government regulations and stronger policy support to advance decarbonization efforts aligns with the broader global push for more aggressive climate action. Financial institutions like ING are increasingly recognizing the need for robust regulatory frameworks to ensure a swift and effective transition to a low-carbon economy.
In conclusion, ING’s CEO’s call for stricter government rules to support decarbonization underscores the role that policymakers must play in facilitating the transition to a sustainable future. It highlights the challenges banks face in achieving their climate goals in sectors like real estate, where government intervention is crucial to driving meaningful change.
Reporting by Emad Martin