Why we all need to embrace uncomfortable conversations for sustainability

To your mind, how can businesses balance their key stakeholders’ different priorities around sustainability?

It can be challenging to get this right. Some investors might want you to focus entirely on your short-term profitability, but you need to be able to take a long-term view if you are going to put sustainability first. It may be that certain shareholders choose to divest because of this, but it’s essential that your commitment remains firm. At the same time, you can’t forget about profitability altogether because that would mean going out of business.

At ING, the key for us has been to decide what we stand for as a business and then develop an ESG strategy that reflects the conversations we have had with all our stakeholders – not just investors, but also clients, employees and regulators – and stick to that consistently.

We have put ESG at the heart of our approach to doing business and today it is embedded in all our commercial and risk-related decisions. In effect, we have reached a point where sustainability is one of the most important factors when we consider a new transaction. Staying true to principles like these can lead to uncomfortable conversations – not just with investors, but also with regulators who ask about identifying and assessing risk, and with NGOs who appreciate what we are doing but think we could push even harder. That, however, is the nature of ESG.  

We help clients transition to sustainable business models with our insights and financing structures.

If uncomfortable conversations are necessary sometimes, how can businesses get better at having them?

Conversations become a lot easier if you are consistent and transparent in what you say and do. No one will be surprised when ING decides to stop working with a client that is making no effort to decarbonise its organisation. If we are communicative and transparent about our position and what we believe, the conversation is more straightforward. 

We have always been clear, for example, that our sustainability strategy is informed by science. This is why our activities in the oil and gas industry is guided by scenarios developed by the International Energy Agency (IEA). When the IEA revised its position on liquid natural gas (LNG), indicating that there is now sufficient supply for what is required, we updated our strategy and said we would stop financing LNG export terminals after 2025.

Decisions like these may be difficult for certain clients, especially when there is a business case for the investment going ahead, but the feedback we receive overall is that our stakeholders respect our position. Moving away from LNG was seen as a logical next step because we have always been transparent about how we assess opportunities in the energy industry.

Moreover, as we engage with clients on these topics, the relationship can inspire new business models connected to sustainability. Our clients may look to develop new, more sustainable products and services, for instance, which are more attractive to the market and therefore outweigh any initial impact on margins and profitability. Over time, we hope a change in mindset will help pivot the whole industry. Businesses will no longer think about sustainability just in terms of it being right for society, but also in terms of the business case. If you can marry ESG with profitability, it’s a real game changer.

How are banks helping companies achieve more sustainable value chains?

The conversations we have with our clients about their value chains are largely positive because, ultimately, these conversations are about enabling new opportunities. Our role is to help clients move more quickly towards a more sustainable business model, to provide insight and experience while developing suitable financing structures.

One internal challenge we face is the lack of existing risk models for some transition technologies, which are so new that we need to develop these models ourselves. In hydrogen, we have much less data than we do in sectors where we have a track record stretching back forty or fifty years. We obviously can’t just approve a billion-euro investment in unprecedented, untested technologies without getting a better understanding of its viability, so we are educating our people internally. This is a challenge but it’s a good challenge to have.

I’m optimistic because of the progress we’re making within ING and the commitment of our clients to sustainability.

What makes you optimistic about the direction of travel for ESG, considering the backlash of recent years?

I am optimistic partly because of what we are managing to achieve within ING itself. In 2024, for example, we set out with the goal of financing €20 billion in green development in the Americas and ended up hitting €25 billion. So, while it’s true that the US environment may be becoming more challenging for sustainability initiatives, there are plenty of clients who remain committed and want to make progress on their sustainability journeys.

It's important to be realistic. Even in Europe, the automotive industry is delaying its electric vehicle targets. We also see some banks backpedalling on ESG. But the only thing you can do is to stay true to what you stand for as a business, to make sure you are consistent from the board down.

It is our responsibility to use our influence to help others and guide them towards their sustainability goals. We tell potential new clients that we only work with companies that are serious about the need to transition and are open to us being part of that journey with them. Fortunately, there are plenty of corporates that embrace this.

What advice would you give to a company that is serious about transition but is early in the process and facing pressure from shareholders to focus on the bottom line? 

Ultimately, it’s essential to believe that the transition will generate economic value for all stakeholders. While some shareholders may be more focused on short-term gains, it’s important to recognise that not embracing the transition could impact the long-term viability of the business. So, embrace change!

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Society is transitioning to a low-carbon economy. So are our clients, and so is ING. We finance a lot of sustainable activities, but we still finance more that’s not. See how we’re progressing on ing.com/climate.