ING Groep NV will no longer finance new oil and gas projects, its energy chief said, one of the first major global banks to commit to such a step in the fight against climate change.
The move by the Dutch financial services firm raises pressure on peers to heed a call by the International Energy Agency (IEA) for a halt to funding for new fossil fuel projects to help cap global warming at no more than 1.5 degrees Celsius.
Michiel de Haan told Reuters that ING would not finance projects approved after Dec. 31, 2021, but would still fund energy firms, although ING is already phasing down financing to the oil and gas industry and scaling up lending for renewables.
"Decarbonisation of the energy system ... is of almost existential importance, but so is affordable energy and reliable supply of energy," de Haan said.
"We can make the decision to discontinue our involvement in new greenfields, but we (will) continue our existing involvement in oil and gas across the world because we need to meet those other two targets."
De Haan said the bank would target a 50% increase in lending for renewable energy by 2025, building on strong growth in 2021, when financing grew 26% to 7.3 billion euros ($8.05 billion).
ING's plan to reduce funding for existing oil and gas clients and projects is more gradual, with a target to cut it by 12% to about 3.5 billion euros by 2025.
"It's important to recognize that the IEA also indicates that in the future, oil and gas will be needed," de Haan said, adding that the bank was seeking to help customers decarbonize their businesses.
Investor pressure on banks to act faster on climate change has increased in the year since the IEA published its report on ending fossil fuel funding.
But many banks have only promised to stop lending in narrow circumstances, such as for drilling in the Arctic. The Ukraine crisis may further hamper the shift, as Europe seeks alternatives to Russian oil and gas.
ShareAction, an organization pushing for responsible investment, said in a February report that 25 of Europe's leading banks had provided $55 billion in funding in 2021 for energy companies planning to expand oil and gas production.
It said HSBC, Barclays, and BNP Paribas were among the biggest funders of oil and gas projects in 2021.
($1 = 0.9069 euros)
(Reuters - Simon Jessop and Toby Sterling/Editing by Edmund Blair)