Written by Simon Jessup
LONDON (Reuters) – Five of its top emitting sectors, such as energy and automobiles, were on track to meet tougher new climate targets, Dutch bank ING said, although other sectors such as residential real estate were lagging behind.
Banks are under increasing pressure to track and reduce climate-damaging emissions from the financing they provide to the real economy, and they are slowly putting pressure on customers to act or risk withdrawing funding.
After assessing clients in the most polluting sectors, the bank said most of them are on track to meet a more stringent climate target recently adopted, aiming to end global warming at 1.5°C above the pre-industrial average by mid-century.
“We’ve updated the pace at which decarbonization has to be achieved, essentially translating into steeper curves; we need to move faster in terms of lowering carbon intensity,” Anne-Sophie Castelnau, head of global sustainability at ING told Reuters.
Carbon intensity is a measure of emissions per unit of economic output.
The power generation sector, to which it provided €8.9 billion ($8.9 billion) in 2021, was 23% below the projected path it would have to take to achieve the climate goal, while oil and gas was 15.2% below its path.
Commercial real estate fell 9.2%, while the automotive sector fell 0.8%. Charging, which was not yet aligned with a 1.5° trajectory, was 6% lower than its current trajectory.
Residential real estate, the bank’s largest exposure, was 3.2% above its track, while cement was 4.2% higher.
The worst performers were the hard-to-retreat steel sector, 5.4% above the forecast trajectory, and aviation, about 57.3% off track after the industry bounced back from the COVID-19 lockdowns.
“In terms of achievement, we are very pleased with the progress, but this is very hard work. We can only reach these climate goals if we do it with other stakeholders,” Castelnau said, “such as their clients and policy makers,
A member of the Net Zero Banking Alliance, a group of banks that have publicly pledged to help the world transition to a low-carbon economy, ING said earlier this year that it would not fund new oil and gas projects.
(1 dollar = 1.0029 euros)