Dutch lender ING 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 green their operations 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 cut loans to upstream oil and gas by 35% by 2030, a move that would cut absolute emissions from its portfolio by 50%.
"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.
The move is the latest 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 said it would stop financing new fossil fuel extraction projects and triple renewables financing.
(Reuters - Reporting by Simon Jessop; Editing by Josie Kao)