Dutch lender ING (INGA.AS) will stop financing oil and gas exploration and production by 2040 and triple new lending to renewable energy over the next two years as part of an updated climate strategy, the bank's chief executive told Reuters.
Investors and regulators are increasingly pushing banks to cut climate-damaging emissions tied to their financing and many are looking to tighten lending criteria to companies in high-emission sectors unless they have a plan to transition to net-zero.
The Netherlands' biggest lender had made its latest decision, CEO Steven van Rijswijk said, in light of an agreement this month from the COP28 climate talks in Dubai for countries to move away from fossil fuels and bolster roll out of renewables.
Under the new plan, ING will reduce loans to upstream oil and gas by 35% by 2030, a move that would cut absolute emissions from its portfolio by 50%. Its current lending to the sector is 4 billion euros, according to an ING spokesperson.
"Initially we had said we would bring down our upstream oil and gas exposure by 50% by 2040 and now we are saying that we're going to be completely out," van Rijswijk said.
As well as the COP28 outcome, he also linked it to an updated report by the International Energy Agency that said to limit global warming to 1.5 degrees Celsius, advanced economies needed to phase out oil and gas by 2040.
Its renewables financing would hit 7.5 billion euros ($8.22 billion) by 2025, up from 2.5 billion euros in 2022. The target would mean the bank would hit its tripling target five years ahead of the pledge made by governments at COP28, it said.
A spokesperson for Extinction Rebellion, which has targeted ING as the Netherlands' largest financier of fossil fuels, said the move announced on Wednesday was a step in the right direction but "not enough."
"Existing projects extracting oil, coal and gas are already enough to take us over 2 degrees of warming," said Tessel Hofstede, saying the bank should rule out financing new oil projects.
Climate groups are planning to block a highway that runs past Amsterdam's financial district on Dec. 30 to protest ING's policies.
The update is the latest move by ING, which has a market capitalisation of around $54 billion, to toughen up its climate strategy to rein in emissions linked to its financing.
Last March, it said it would restrict lending to clients engaged in sectors including trade finance. In October, it called on governments to help by setting tougher decarbonisation rules in sectors including real estate.
It also follows similar steps by other regional lenders. Last week, France's second-biggest listed bank Credit Agricole (CAGR.PA) said it would stop financing new fossil fuel extraction projects and triple renewables financing.
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