One year ago, following the net-zero pathway laid out by the International Energy Agency (IEA), we became the first large global bank to stop providing dedicated finance to new ‘upstream’ (exploration and extraction) oil and gas fields. Now we’re expanding our approach to other parts of the oil and gas value-chain by restricting dedicated finance to ‘midstream’ (oil & gas infrastructure) activities that unlock new oil and gas fields, also aiming to reduce the volumes of the traded oil and gas we finance.
ING’s energy strategy balances three key interests: the need to decarbonise to fight climate change, the need for energy to remain affordable for people and companies, and the need to ensure the security of the energy supply. To achieve this balance in a society that’s still dependent on fossil fuels, we see it as our role to keep financing what the world needs today, while at the same time supporting the transition to the low-carbon economy of the future.
Aligned with the latest climate science
As we continue to finance clients that are active in the oil and gas sector, we’re aligning our portfolio with the International Energy Agency’s (IEA) ‘Net-Zero Emissions by 2050 Roadmap’ and the climate science that underpins the IEA’s approach. We’re currently on track to reduce our upstream oil and gas portfolio by 19% by 2030 in line with the IEA’s pathway, aiming for a 53% reduction by 2040 compared to 2019. We’re committed to following the science, and plan to adapt our approach to mirror any future changes to the IEA’s pathway.
By the end of the year we also want to adopt a ‘net zero by 2050’-aligned methodology for midstream oil and gas infrastructure such as pipelines, liquified natural gas terminals and storage facilities.
Reducing Trade and Commodity Finance
Up until now we’ve focused our efforts on the part of the value chain responsible for the biggest climate impact: upstream oil and gas. Today, we include our Trade and Commodity Finance business in our approach, with the aim to reduce the combined volume of traded oil and gas we finance by the same reduction targets we’ve committed to for our upstream lending – minus 19% by 2030 in line with IEA pathway. Here, because of exposure to fluctuations in the market prices of oil and gas, we intend to set our reduction targets based on volumes financed. And in line with our collaborative approach, we’ll be reaching out to experts and peer banks to co-develop a methodology that supports this approach.
We will publish targets for Trade and Commodity Finance in 2024. These targets will be aimed at reducing physical volumes and aligned with the IEA Net Zero pathway.
Restricting dedicated funding of infrastructure for new oil & gas fields
According to the IEA net-zero roadmap, the electrification of the economy through the necessary investment in clean energy and infrastructure will lead to decreased demand for fossil fuels, and no new oil and gas fields should be needed. That’s why, in addition to targeting a 50% increase in our new financing of renewable energy by 2025, in early 2022 we made the decision to restrict dedicated upstream finance (lending or capital markets) for oil and gas fields approved for development after 31 December 2021. Now we’re also expanding that approach to midstream oil and gas. We will respect our existing commitments to our clients.
This announcement is part of our Terra approach, which aims to steer the most carbon-intensive parts of our portfolio towards reaching net zero by 2050. For further details please see our integrated climate report.