2022

Climate Report

Putting sustainability at the heart of what we do

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Contents
CEO Foreword 3

Executive summary 5 Governance 12 Strategy 18 Risk management 34 Metrics and targets 44 Annex 96
Snapshot: climate action 9 Introduction 13 Our approach 19 Introduction 35 Own operations 45 TCFD recommendations table 97
About this report 10 ESG risk governance 14 Reach net zero in our own Our approach to managing Terra – steering our portfolio 47 Environmental programme 98
operations 21 climate risk 37
Our climate action milestones 11 ESG opportunities governance 15 Financed emissions 81 List of abbreviations 99
Steer our portfolio towards Summary per risk domain 39
ESG-linked remuneration 16 Sustainable finance 83 Important legal information 100
net zero by 2050 or sooner 23
The ESR framework 41
Upskilling and empowering Climate and environmental risk 85 Contact 101
Finance and advise clients in
our organisation 16
line with a net-zero economy 24
Managing climate and
environmental risks 30

ING Group 2022 Climate Report 2

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

CEO Foreword For ING, sustainability is a key strategic priority. It’s also something that I’m personally
passionate about. And it’s about much more than the environment – there are the
many social aspects of helping customers and society stay a step ahead of the
Climate scientists are ringing the alarm bells louder than ever challenges they’re facing. We focus more specifically on financial health and inclusion
as heatwaves, fires and floods become more frequent and alongside our established commitment to climate action. And when it comes to
taking action on climate, we’re determined to be part of the solution and to inspire
widespread. This makes us more determined to make the
others to do the same. First, we aim to set the example by striving for net zero in our
difference for people and the planet, by defining new ways of
own operations and by empowering all colleagues to contribute to company goals.
doing business that align economic growth with positive social We’re also playing a leading role in helping the financial sector to collaboratively
and environmental impact. We want to be a banking leader in develop practical and scalable solutions to decarbonise the global economy. Yet the
building a sustainable future for our company, our customers, biggest impact we can make is by using our financing to help our clients align their
society and the environment. That’s why we’re putting activities with the Paris Agreement goal to limit the rise in global temperatures to
1.5 degrees Celsius.
sustainability at the heart of what we do.

Our clients recognise that sustainability is essential for future-proofing their businesses
and operations, and we’re here to help them through their transformation and beyond.
And although the physical and transition risks of the climate crisis are only growing
and are an increasingly important part of our risk management approach, we also see
many new opportunities in supporting the decarbonisation of the global economy.
For example, the World Economic Forum predicts that by 2030 annual clean energy
investments of $4 to $5 trillion will be required to avert a catastrophic climate disaster.
Facilitating the necessary investments in new low-carbon technologies and climate-
friendly business models is a key part of our Terra approach.
Steven van Rijswijk,
CEO of ING

ING Group 2022 Climate Report 3

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Taking impactful action on climate is a priority for me as CEO. I know we’re not perfect customers, society and the environment. We’re proud of the steps we’re taking, and
and will need to keep learning and improving, but the important thing is to have the transparency with which we share the progress towards our targets. But none of us
moved past words to action. In this report we describe the many initiatives underway can do this alone. For true transformative change to happen, at the increasingly urgent
to align ING with the goal of achieving a net-zero economy by 2050. We also know speed it needs to, a concerted collaborative and consensus-based effort across all
that 2050 is far in the future and shorter-term targets are necessary to get us there, sections of society is desperately needed. We all have a part to play, and we can all do
and so we’ve set ambitious-yet-realistic green financing targets for 2025 as well as much more. Let’s do it together, before it’s too late.
intermediate sector-specific goals for 2030 that match a global emissions decrease of
45% compared to 2010 levels, aligned with climate science. Steven van Rijswijk,
CEO of ING
It’s clear that the world needs to drastically decrease its dependence on fossil fuels,
so we also need to decide on what not to finance, like our recent decision to no
longer provide dedicated upstream financing to new oil and gas fields. When we take
decisions like this, we do it in an inclusive way by first having the discussion with our
clients. Our starting point is to do what we can to help them improve rather than
excluding them altogether. That said, we know that there will be dilemmas to deal with
and trade-offs to make.

This report highlights how ING intends to make the difference. It aims to give our
stakeholders a balanced overview of ING’s climate commitments, our initiatives and
the impact we’re already making. Of course, the world looks very different now than
in 2021 with the war in Ukraine, high inflation and soaring energy prices. Everything
that’s happening in the world around us makes us even more determined to achieve
our goals and become a banking leader in building a sustainable future for our

ING Group 2022 Climate Report 4

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Executive
summary

ING Group 2022 Climate Report 5

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Executive summary Steering our portfolio towards net zero by 2050 or sooner
Our strategy to steer our loan book to reach net zero by 2050 or sooner is
operationalised through our Terra approach. We have refined and optimised aspects
At ING, we recognise the need, and our responsibility, to take
of our approach through, for instance, joining and leading working groups on steel and
impactful actions to address climate risks and opportunities. aluminium with the aim to develop sector-specific methodologies that can be used to
That is why in 2021 we set the ambitious goal of aligning our lending measure and steer financial institutions’ portfolios.
portfolio with a net-zero future by 2050 or sooner. This year, we
sharpened our path to net zero by setting intermediate 2030 targets Regarding our climate alignment, we are on track with five of our nine Terra sectors,
with power generation (-23%) and upstream oil and gas (-15.2%) showing strong
for all nine sectors in scope of Terra climate alignment. In this climate
performance. Commercial real estate (-9.2%), automotive (-0.8%), and shipping (-6.0%)
report, we share our progress on our path to net zero along with our
are all also on track for their respective climate alignment pathways. Residential real
other climate action objectives. estate (3.2%) and cement (4.2%) are within 5% of their alignment pathway, while steel
(5.4%) and aviation (57.3%) are not on track. The latter’s performance continues to be
affected by the impacts of the coronavirus pandemic, although it is beginning to trend
Reaching net zero in our own operations
back to its decarbonisation pathway as the sector recovers.
Our climate action begins with managing our environmental footprint through our
operations and suppliers. In this regard, we have set a mid-term target to reduce
To promote immediate action towards decarbonisation and to adhere with our
scope 1, scope 2, and scope 3 business travel CO2e emissions by 75% by 2025
Net-Zero Banking Alliance (NZBA) commitment, we set intermediate 2030 targets for
compared to our 2014 baseline. To support this target, we have updated our travel
all of these Terra sectors. Of the nine intermediate targets, eight are aligned with
policies to encourage the use of trains instead of planes for short-haul business trips.
net-zero scenarios. A target for shipping will be set as soon as one is adopted under
Next to this, we are also adding more on-site renewables at our buildings, including
the Poseidon Principles, a financial industry framework for assessing climate alignment
adding solar installations to nine offices in the Netherlands, a rooftop solar installation
for the shipping sector.
at our main office in Brussels, and receiving building permission for our first rooftop
solar installation in Germany.

ING Group 2022 Climate Report 6

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

And, to align our energy portfolio with the International Energy Agency's (IEA) ING’s global mortgage portfolio is in the very low risk category (12/100) and <1% of our
Net-Zero by 2050 Roadmap, we aim to grow new financing of renewable energy global mortgages outstandings score as high risk. Finally, we targeted the integration
by 50% by year-end 2025 versus year-end 2021. ING does not provide dedicated of biodiversity into our sustainable finance frameworks and strengthened biodiversity
upstream finance (lending or capital markets) for new oil and gas fields approved considerations into risk assessments.
for development after 31 December 2021.
ING’s process for identifying, assessing, and managing climate risks continues
Financing and advising clients in line with a net-zero economy to develop. For example, we have updated our credit risk rating policy to include
Our involvement in sustainable financing continues to grow rapidly. In 2021 we specific requirements for climate-related and environmental risks. This included the
concluded 317 sustainable finance transactions, which is more than double that of introduction of a mechanism to limit the growth of subsectors that have a higher
2020. In the first half of 2022, we were involved in 205 sustainable finance transactions. exposure to climate-related and environmental risks, which became binding for
We have set ambitious sustainable financing targets, such as a goal of mobilising €125 Wholesale Banking sectors this year.
billion in sustainable finance by 2025 for Wholesale Banking and providing €1 billion in
annual green financing by 2025 for SMEs and mid-size corporates in the Netherlands. In 2022, the European Central Bank (ECB) conducted climate risk stress testing on
significant financial institutions within the European Union (EU). Its stress test of ING
Managing climate and environmental risks enabled us to understand where we are performing well and where we are facing
In the area of climate and environmental risk, there have been several developments. challenges. We will apply lessons learned from this exercise to enhance our climate
Firstly, our climate risk heatmapping assessment for Wholesale Banking is now risk capabilities. Further details on how we are improving our integration of climate
complete and covers all Wholesale Banking sectors. These heatmaps categorise risk drivers across existing processes can be found in the Risk Management section
physical and transition risk drivers per sector based on a score of low, medium, or high. of this report.

Another development was to expand the scope and granularity of our pilot project
assessing physical climate risk within our mortgage portfolio to cover 99% of our
residential mortgages book. This assessment found that at an aggregated level1,

1 Meaning all individual risk drivers together are captured into one overarching score: the so-called
‘Summary Climate Risk score’.

ING Group 2022 Climate Report 7

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Integrating sustainability into our governance structures help standardise the way banks measure their alignment with climate goals. And we
Our governance approach enables the implementation of our climate objectives. will continue to explore further ways in which to link biodiversity, human rights, and
In 2022, we updated our approach to better reflect our strategic commitment to circular economy into our approach to climate action.
put sustainability at the heart of what we do. The Supervisory Board now has an
Environmental, Social, and Governance (ESG) committee that is responsible for While we are committed to doing our part, we know that climate action requires
supervising our sustainability direction and advising the Management Board Banking everyone to play theirs. Clients, for instance, need to take action. Governments should
(MBB) on dilemmas. For the MBB, sustainability is a regular topic on their agenda and direct and guide the changes needed, for example, via dedicated policies to reach
its members have ESG-related key performance indicators (KPIs) that are cascaded net zero by 2050. We would like to see regulators working together with the financial
throughout ING’s business lines. industry in further supporting the harmonisation of climate reporting requirements,
particularly on climate impact measurement and target-setting. The availability and
To help guide the development and implementation of our sustainability strategy, as quality of climate risk and climate alignment data is critically important to the success
well as monitoring and reporting on our progress, we established an ESG Sounding of our climate approach. We count on, and are working with, third parties and clients
Board. This Sounding Board is comprised of senior leaders across different functions to improve the datasets that we use for climate portfolio steering and assessing
who own ESG KPIs. And, to build a stronger connection between global and local climate risk.
activities, we have established a functional reporting line for Sustainability leads in
major countries to the global head of Sustainability, who reports directly to ING’s CEO.

Next steps
Approaches to managing climate risks and opportunities are evolving rapidly. We are
committed to ensuring that we are actively contributing to, and up to date with, the
latest methodologies and approaches in these areas. Looking ahead, for example,
we plan to expand our Terra approach to cover more of the carbon-intensive parts
of our lending portfolio. We will continue to partner with expert organisations like
the NZBA and sector working groups like those on shipping, steel, and aluminium to

ING Group 2022 Climate Report 8

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Snapshot: climate action

26
317
Supported

7
Set intermediate Physical and

9
on track Power generation 2030 targets for all
on track Upstream oil & gas Conducted physical risk
impact asssessment sustainable transactions
on track Commercial real estate
of climate events on Transition sub-risk drivers in 2021, more than double
on track Automotive our mortgage portfolio
sectors covered assessed in our climate 2020 performance
on track Shipping under Terra and underlying assets, risk heatmapping exercise

99%
close to on track Residential real estate covering covering all Wholesale

€1
close to on track Cement Banking sectors

1.5�C
not on track Steel
not on track Aviation of our residential

billion
mortgages book Wholesale Banking
aligned targets: commitment to mobilise

€125
8 of the 9 Terra targets annual new green
already use net-zero- financing in 2025 for SMEs
by-2050 scenarios and Mid-Sized Corporates

billion
in the Netherlands

volume in sustainable
finance2 in 2025
2 Volume mobilised includes loan products, capital markets, derivatives and advisory propositions that support
clients by financing their sustainable activities and the transition to a more sustainable business model.
In case of an ESG lead role, the pro-rata share of the transaction is included, otherwise our final take is included.

ING Group 2022 Climate Report 9

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

About this report

Who this report is for We continue to adapt our approach to climate-related and environmental disclosures
This report is intended to inform all of our stakeholders about ING’s approach to as we build on our expertise in measuring and quantifying climate metrics, and in line
climate action. These stakeholders include customers, investors and shareholders, with evolving regulatory and methodological developments.
regulators and supervisors, employees, government authorities, and non-
governmental organisations. It aims to give these stakeholders a balanced overview Additional disclosures are available at https://www.ing.com/Sustainability.htm
of ING’s commitments, initiatives, impacts, and other relevant updates regarding our We welcome reactions and views, which can be emailed to [email protected]
progress on climate action.

How our climate reporting has evolved

ING has reported on our climate and environmental approach for many years. Since
2017, we have captured our progress on climate risks and opportunities according to
the recommendations of the Financial Stability Board’s (FSB) Task Force on Climate-
related Financial Disclosures (TCFD) in our Annual Report. In addition, we have reported
annually on our Terra progress since 2019, on climate risk since 2020, and combined
these elements into an integrated report since 2021. This year, we are aligning our
climate reporting structure with the TCFD format in order to support standardisation
and comparability across the financial sector.

ING Group 2022 Climate Report 10

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Our climate action milestones

At ING, we have been taking climate action for many years.
For example, we launched our first Environmental and Social Risk
(ESR) policy in 1997 and created the Groenbank in the Netherlands
in 1998. This timeline shows highlights of our climate action from • UNEP FI Collective
2015, when we endorsed the Paris Climate Agreement. Commitment to Climate
Action builds on Katowice
Commitment and grows to
38 banks, with ING as co-chair.
• Publishes first Terra report.
• Issues the world’s first • Conducts first internal climate
so far:
sustainability-linked loan, risk stress test.
with Philips. • Issues world’s first • Set 2030 intermediate targets
• Commits to phase out coal sustainability linked derivative, for the nine Terra sectors.
to close to zero by 2025. with SBM Offshore. • Commits to grow new
financing of renewable energy
by 50% by year-end 2025.
2015 2018 2021 • Announces commitment to
stop the dedicated financing
2017 2019 2022 of new oil & gas fields.
• Completes our Climate and
Environmental risk heatmap
• Endorses the Paris Agreement. • Launches Katowice • Joins the Net-Zero Banking
for all WB sectors.
• Stops new financing of coal Commitment with four Alliance in support of reaching
banks to align with the Paris net zero by 2050 or sooner. • Commits to mobilise
fired power plants.
Agreement. €125 billion volume in WB
• Announces target to reduce
sustainable finance in 2025.
• Launches Terra approach for fossil fuel portfolio by 12%
climate alignment with 2DII by 2025, from 2019.
partnership. • Publishes first integrated
climate report.

ING Group 2022 Climate Report 11

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Governance

ING Group 2022 Climate Report 12

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Introduction steering committees such as the Climate Change Committee. An ESG Committee has
been created at the Supervisory Board level, responsible for supervising our direction as

Our new ESG governance approach well as endorsing and monitoring progress and advising the MBB on dilemmas.

ING initiated its climate governance structure in 2018, when we established a Climate
ING has also created an ESG Sounding Board comprised of senior leaders who own
Change Committee (CCC) to provide Management Board-level oversight of strategic
ESG KPIs. This Sounding Board helps to guide the development and implementation of
climate-related risk and opportunity management. The CCC was Chaired by the
our strategy for ESG topics as well as monitoring and reporting on our progress. The
Group chief risk officer (CRO) and co-chaired by the board member responsible for
Sounding Board is organised by Group Sustainability, who co-chairs it with the newly
Wholesale Banking. It was mandated to oversee and set priorities for implementing the
formed ESG Risk Centre of Expertise, discussed below.
recommendations of the TCFD, as well as other strategic climate-related topics that
impact the group.
We believe our new ESG governance approach supports a future-proof ING and drives
long-term value creation; it makes action on climate change a strategic priority and
In March 2022, in line with our commitment to put sustainability at the heart of what
an integral part of ESG. These changes provide clearer ownership and leadership on
we do, we updated our governance approach. The main purpose of updating the
ESG topics, increasing our effectiveness, efficiency, and accountability as we strive to
governance was to integrate and align our ESG governance with the existing business-
be a banking leader in building a sustainable future for our company, our customers,
as-usual governance of the bank. By doing this, we want to ensure that ESG is shared,
society, and the environment.
steered, and accounted for at different levels of the bank. This new governance setup
allows us to holistically steer across ESG themes like climate, biodiversity, human
rights, and financial health.

Our global head of Sustainability reports directly to ING’s CEO. Sustainability/ESG leads
in major countries have a functional line to the global head of Sustainability in order to
create a stronger connection between global and local actions. All MBB members have
ESG-related key performance indicators that are cascaded through the business lines.
ESG has become a regular topic on the MBB agenda, and we no longer have separate

ING Group 2022 Climate Report 13

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

ESG risk governance assessments, business lines will help determine compliance with the applicable ESR
sector policies and work with the credit risk managers and the ESR team, who act as a
ESG risk governance at ING is mainly managed via three risk functions: Environmental second line of defence, to assess and mitigate such risks to be within our risk appetite.
and Social Risk (ESR), Climate Risk, and the ESG Risk Centre of Expertise. They are
described in detail below. The ESR function also develops environmental and social policy and procedures and
takes the lead in communicating them internally and in training internal stakeholders.
Environmental and social risk It performs an advisory role to support the deal principals, senior credit officers
Environmental and social risks are governed through our ESR department, whose and approval authorities on individual transactions. The degree of the ESR function
reporting line is to ING’s CRO. engagement in transactions is dependent upon the risk profile of the project and ING’s
exposure. In some locations an ESR delegated advisor may be appointed if mutually
The ESR function encompasses the following activities: agreed by the head of ESR and regional head. Such a role would support the senior
• Create and maintain policies for sensitive industry sectors. credit officer (SCO) who would be responsible for ESR issues in the region.
• Assess transactions for environmental and social risk.
Committees involved in managing environmental and social risks include the Global
• Monitor high-risk clients to ensure compliance with sustainability criteria.
Credit and Trading Risk Committee (GCTP) and the Global Credit Committee for
• Spread ESR awareness throughout ING.
Transactions Approvals (GCC-TA). The GCTP approves the policies, methodologies and
• Participate in European and global advisory groups (i.e. OECD advisory group, steering
procedures related to ESR. The GCC-TA approves transactions that entail taking higher
committee to the Equator Principles, Thun Group of Banks) to help bring all banks to
environmental and social risk.
the same high standard.
Climate risk governance
This function is responsible for setting ING’s ESR framework, which helps us make In addition to the ESR governance, in accordance with the ECB’s Guide on climate-
transparent choices about how, where and with whom we do business based on related and environmental (C&E) risks, in 2020 ING established the Climate Risk
an assessment of environmental and social risks in those business areas, among Initiative (CRI). CRI is a programme aiming to address C&E risks across our organisation.
other factors. This framework applies to all ING business lines and the primary
responsibility for its application lies with the business lines. They act as the first line The Climate Risk Initiative is sponsored by the CRO and overseen by a Steering Committee.
of defence, identifying environmental (including climate) and social risks and impacts Within the programme, 12 workstreams are responsible for implementing regulatory
at transaction level. Using screening processes such as client and transaction ESR requirements such as risk identification, business strategy and governance, risk appetite,

ING Group 2022 Climate Report 14

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

and external disclosures. Workstreams for Wholesale Banking and Retail Banking are ESG opportunities governance
responsible for implementation in the business lines and country organisations.
For Wholesale Banking, driving ING’s sustainable finance business sits within
The governance of the programme was strengthened in early 2022 by extending the Sustainable Finance, whose reporting line is to ING’s Wholesale Banking CEO.
composition of the Steering Committee to include a broader representation of the This team operates as a centre of expertise for engaging and advising clients and
Wholesale Banking and Retail Banking business lines, the first and second lines of executing transactions together with exploring possibilities to innovate by mobilising
defence of the Risk domain and an observer role for the internal audit function – the teams across the organisation: sustainable lending, debt capital markets, corporate
third line of defence. investments, project finance and advisory business. For Retail Banking, the innovation
of green products and the execution of sustainable finance transactions are steered
On top of strengthened governance, we also installed a permanent Climate Risk Centre through the recently set up Retail Banking Sustainability Steerco and the Business
of Expertise within our Group Sustainability department. This core team supports the Banking Sustainability Steerco who cascade this responsibility to the relevant experts
workstreams in the delivery of their roadmaps and reports to the programme’s Steering and country teams as needed.
Committee and internal and external stakeholders on progress. Next to supporting
the programme, the Centre of Expertise will also cooperate with the ESR department
of ING’s Risk function to continuously embed C&E risk management practices across
the organisation.

ESG Risk Centre of Expertise

After a strategic review of our risk organisation structure this year, we decided
to establish an ESG Risk Centre of Expertise that will be part of the integrated
risk department and report to ING’s CRO. This Centre of Expertise will ensure that
ESG regulations are tracked, assessed, and implemented in accordance with the
expectations of supervisors and society. It will be responsible for developing the
overarching ESG risk framework and policies, setting Risk Appetite Statements, and
reporting on them, as well as coordinating internal and regulatory ESG risk stress
testing and scenario analysis.

ING Group 2022 Climate Report 15

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

ESG-linked remuneration Upskilling and empowering

ING aims to align its remuneration policy with its risk profile and considers the broader our organisation
interests of all stakeholders. To that end, targets in areas such as customer centricity,
risk and regulatory, sustainability, and people, are just as important as financial results. Putting sustainability at the heart of what we do means ensuring that our employees
At least 50% of our Executive Board’s variable remuneration metrics are based on non- are highly engaged on the topic, especially climate action. We seek to equip our
financial targets, including climate-related targets. For 2022, we have created an ESG employees with the relevant knowledge, skills, and mindset to put sustainability into
variable remuneration target area that incorporates sustainability, risk and regulations, practice within and outside of the workplace. To that end, ING is building an updated
and people metrics. global sustainability learning programme to be delivered in 2023 and will be required
for all employees. There are two levels of proficiency:
In 2022 the following sustainability targets are taken into account for the Executive
Board’s variable remuneration: Foundation level
At the foundation level, we will empower colleagues across ING to contribute to our
• Increase the level of sustainable loans.
sustainability direction, with a focus on climate action. An e-learning will explain the
• Develop and introduce sustainable products for our retail customers.
importance of ING’s sustainability direction to each of us and why ING has made
• Reach net zero emissions for ING’s own footprint.
certain choices on its sustainability direction. To achieve lasting behavioural change,
the training will enable colleagues to take sustainability into account in their daily
For all other eligible staff, variable remuneration is awarded based on criteria for the
work. This learning is mandatory for all colleagues and will be complemented by
Group as a whole, for the business line and for individual performance. As with the
on-demand micro-learning.
Executive Board, at least half of these targets are based on non-financial performance
and include ESG targets used in the determination of Group and business line variable
Expert levels
remuneration pools for the wider workforce. To ensure their independence, no variable
Where our employees require more breadth and depth of skills, we are developing
remuneration is provided to Supervisory Board members.
learning plans for specific role groups. For the expert level, we need to equip our leaders
and strategic business partners to influence policies and processes in ING and lead

ING Group 2022 Climate Report 16

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

dialogues and coalition-building. We will also cover our new ways of working to assist
our customers and society to transition, and to enable our leaders to empower their
teams. Local initiatives are encouraged and coordinated.

More content will be added to learning channels by topic, such as introductory videos
on climate risk, created in cooperation with the Dutch Banking Association (NVB). To
ensure the effectiveness of this training, we have selected best-in-class vendors to
partner with us, have expert colleagues collaborating across ING, and have a clear
evaluation programme aligned to business and societal impact. Additional training
opportunities on sustainability-related topics will also be available such as human
rights, biodiversity and financial health.

ING Group 2022 Climate Report 17

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Strategy

ING Group 2022 Climate Report 18

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Our approach We therefore welcome the regulatory developments in this regard. We are pleased
to see more concrete guidance from governments and regulators on climate risk
At ING we take the call to climate action seriously. By putting sustainability at the and climate adaptation. We are eager to see further harmonisation of reporting
heart of what we do, we are defining new ways of doing business that make our planet requirements, including alignment with requirements on climate impact measurement
and its people just as important as economic growth. We recognise that sustainability and target-setting.
is an essential part of running a business. Being sustainable is about the choices we
make – in our own operations, our financing, and in the services and products we By putting sustainability at the heart of what we do, we focus on ensuring that the
offer to our customers. We take a holistic approach to sustainability, which means progress we make, the policies we set, and the actions we take, have a positive impact
that climate change mitigation, climate adaptation, climate and environmental risk, in the real economy.
biodiversity, human rights, financial health, business ethics and other ESG issues are
in scope. Our climate action objectives
ING has the following strategic priorities which comprise our integrated climate
In practice, this means that we strive for net zero in our own operations, while in approach:
parallel steering our financing towards meeting net zero by 2050 and supporting the
smooth transition to a low-carbon society. As biodiversity and human rights are closely 1. Reach net zero in our own operations.
linked to climate change, these are also in focus for the transition we aim to support. 2. Steer our portfolio towards net zero by 2050 or sooner
This also means that we must identify the risks that climate change, biodiversity, and 3. Finance and advise clients in line with a net zero economy
human rights pose to our business. Sustainability issues impact our business, and 4. Manage climate and environmental risks
we work to assess these risks and take action to mitigate them across our business
relationships. We highlight our progress on each of these strategic priorities in turn below.

ING is committed to sharing the progress on our targets and wholeheartedly

supports the role of organisations and alliances to promote transparency in reporting.
Transparency, clarity and uniformity will drive accountability and accelerate action.

ING Group 2022 Climate Report 19

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Our integrated climate approach

Our ambition Empower our clients and business to reach net zero by 2050 or sooner

Our convictions Climate change is a major threat to It can impact human It’s also a business A major energy transition is An inclusive and proactive approach is
the environment and biodiversity rights and wellbeing imperative and opportunity required to reach net zero needed to change the real economy

Our objectives Reach net zero in our own operations Steer our portfolios towards net zero by Finance and advise clients in line with a Manage climate and environmental risks
2050 or sooner net zero economy

Core initiatives • Environmental programme • Terra approach • Sector finance • Environmental & Social Risk Framework
• Sector alignment targets and steering • Sustainable finance and advisory • Climate Risk Initiative
• Circular economy approach • Biodiversity approach
• Sustainable insights by ING Research

Our enablers Improved climate data analytics Faster innovation on sustainable Upskilling & empowering Effective climate governance Collaborating for joint climate
& operational integration products & services our organization on ESG & performance culture impact

ING Group 2022 Climate Report 20

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Reach net zero in our own operations In 2022, we are working on procuring SAF to be used by airlines, that will create an
in-sector emissions reduction for our flights. We aim to increase our use of SAF in the
coming years.
Our Environmental Programme
Our aim of contributing to a healthy planet begins with our own operations and our To limit the impact from our car travel we focus on electrifying our fleet of leased cars.
own employees. This means bringing our buildings, data centres, and business travel Recently ING in Belgium and the Netherlands announced that from late 2022 only fully
in line with the net-zero economy of the future. We measure and steer our progress electric vehicles (EVs) will be available in our range of new lease cars. Together, Belgium
towards this through our Environmental Programme. Its steering committee includes and Netherlands represent 72% of our total number of lease cars. Globally, we have set
the chief technology officer and chief operations officer. In 2020 and 2021, our an ambition to reach at least 90% EVs in our fleet by 2030. This ambition encourages
footprint continued to be impacted by Covid-19 related restrictions to both buildings countries like the Netherlands and Belgium to reach 100% earlier, while accounting for
and travel. As we adjust to the new normal, we have set a new mid-term target for EV infrastructure challenges in countries like Poland, Turkey, and Romania.
2025 to reduce our CO2e emissions by 75% compared to our 2014 baseline. We have
previously shared a scope 1 and scope 2 target for 2030 of a 90% reduction by 2030, We are exploring additional categories of scope 3 emissions that we can report on in
where we plan to review this ambition and come with a combined target for scope 1, addition to business travel, such as reporting on commuting, working from home, and
scope 2 and scope 3 for business travel by 2030. franchises. A review of these categories is planned for late 2022.

Business travel Buildings

For business travel, our strategy focuses on reducing our air travel, and procuring For our building emissions, our strategy focuses on improving their energy efficiency
increasing amounts of Sustainable Aviation Fuel (SAF) as a measure to limit the impact and moving towards district and electrified heating systems. This year we have
of remaining flights. We recently launched our Green Travel Budget programme, where completed a net zero assessment on our major buildings in partnership with CBRE,
managers and colleagues are made aware of the CO2 impact of their travel choices and which will form the basis of a new sustainable real estate strategy.
encouraged to find greener options. We have also updated our global travel procedure
to restrict most air travel on short-haul distances where high-speed rail options exist as Since 2014, ING has focused on increasing the amount of renewable electricity sourced
alternatives. This includes travel between Amsterdam, Brussels, London, and Frankfurt. for our operations. This resulted in us reaching 100% for the first time in 2020 and

ING Group 2022 Climate Report 21

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

maintaining this in 2021 for owned and managed buildings, including the use of Climate contributions
Guarantees of Origin (GoOs), Renewable Electricity Certificates (RECs), and other kinds Along with our work in reducing our emissions, we make proactive climate
of Energy Attribution Certificates (EACs). 99.7% of this sourcing in 2020 and 99.2% contributions. Since 2007, we have been purchasing voluntary carbon units for all of
of this sourcing in 2021 was aligned with the RE100 market boundary criteria. Over our remaining carbon emissions. We do not count them in our emissions reduction.
80% of ING’s total electricity consumption footprint can be traced to our larger retail This year we have conducted a review of our approach to climate contributions,
markets, such as the Netherlands, Belgium, Poland, Turkey, and Germany, where our including a review of external partners and projects available in this space. Following
primary electricity sources are from green energy products with energy suppliers. this review, we plan to release an updated approach by the end of 2022. This evolving
approach accounts for the need to continue focusing on protecting and building
In many locations and countries, particularly those where ING does not maintain nature-based solutions, including biodiversity impacts, how to ensure the quality and
management control over buildings, we procure GoOs, RECs, or other kinds of EACs additionality of compensation measures, and the role of new and emerging carbon
which represent the environmental attributes of the generation of one megawatt hour capture technologies.
(MWh) of electricity produced by renewable sources. EACs are market mechanisms
that are recognised under government frameworks and RE100 guidelines. We Further details on our environmental programme strategy and performance are found
acknowledge that over time we should move towards more on-site renewables and on ING’s website.
direct purchasing agreements from local renewable projects, such as wind, solar power,
geothermal and hydropower. This shift has already started for some years in many
of our markets, and we are planning to quantify milestones in this transition to guide
our progress in years to come. More information about the shift in our major
markets and our alignment with RE100 market boundary criteria can be found
in the Metrics and targets section of this report.

We plan to start monitoring and reporting on additional data around our use of EACs.
This includes, for example, the year in which the source of the EACs was constructed.

ING Group 2022 Climate Report 22

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Steer our portfolio towards net zero we need governments to step in and set clear timelines for energy efficiency measures

by 2050 or sooner
as well as recognising the social impact by supporting an inclusive transition.

Steering our portfolio also sometimes means saying ‘no’ to financing certain activities.
In 2017, we pledged to exit coal-fired power plants by 2025 and have since decreased
Following the path to net-zero with Terra our exposure by 80%. In March 2022, we announced our decision to stop the dedicated
The biggest impact we can make is through our financing. Having officially endorsed upstream financing of new oil and gas fields approved for development after
the Paris Agreement in 2015, we have committed to steer our portfolio in line with 31 December 2021, aligned with the IEA's Net-Zero Emissions by 2050 Roadmap.
climate goals. Since 2018, ING has used the Terra approach to help realise this
commitment. The Terra approach, which is the name of ING’s strategy for climate Enhancements to our Terra approach
alignment, focuses on nine sectors in our loan book that are among the world’s most We are pleased to share that we set intermediate 2030 targets for all nine sectors
carbon-intensive industries. Terra measures how each sector is doing in reaching ING’s covered in Terra, on top of their long term 2050 targets. Of these targets, eight are
climate alignment goals. However, with Terra, we also calculate the targets our sectors already in line with net zero scenarios, while, for for shipping, a target will be set as
must meet to achieve emissions reductions. As ING has committed to steering towards soon as one is adopted under the Poseidon Principles. Please see the Metrics and
net zero by 2050, the Terra approach has been instrumental this year in setting new targets section of this report for more details on our increased ambitions.
targets that will help us steer our portfolio towards net zero by 2050, improving our
previous commitment and targets of well-below two degrees. To leverage our impact in tackling climate change, we are actively involved in strategic
partnerships. In 2022, we became the first European partner of RMI’s Center for
In practice, steering means engaging with our clients to make the tangible changes Climate-Aligned Finance (CCAF), a leading expert platform committed to driving the
needed to decarbonise the economy. As financier, we play a critical role in helping harmonisation of climate alignment efforts. As an example of our collaboration,
them achieve this. Next to financing, we aim to provide corporate clients with ING leads the Sustainable STEEL Principles (SSP) Working Group, facilitated by the
actionable data-driven insights on their emissions trajectory benchmarked against CCAF. Replicating the success of the Poseidon Principles in the shipping sector,
their sector’s climate pathway with the purpose of supporting their decarbonisation the SSP Working Group created a credible and widely accepted measurement
journey. For residential mortgages, we encourage our customers to take greening and reporting methodology for assessing the degree of climate alignment of
measures through products we offer. However, to reach net zero in residential housing, steelmakers and financial institutions’ steel portfolios. With such efforts, we aim to

ING Group 2022 Climate Report 23

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

support standardisation in the market as well as providing tools to steer towards Finance and advise clients in line
with a net-zero economy
net zero by 2050. The progress of this initiative has already been incorporated in our
Terra approach.

Further to these efforts, we are striving to expand the scope of Terra. We are, for Sustainable finance and transition finance
instance, leading a new working group on Aluminium, also in this case facilitated by
the RMI’s CCAF, aimed at developing a framework to measure and decarbonise this Our approach
sector. Additionally, we are exploring ways to further expand our Terra approach to The shift to a more sustainable global economy is gaining pace as governments,
other sectors and products, and we will pursue our contribution to methodologies consumers, businesses, and investors realise the need for climate action. There are
development and refinements, focused on making a tangible impact in the various factors driving this upswing in momentum, including: regulatory initiatives
real economy. supporting a surge in government pledges to become net-zero economies; a rapidly
increasing demand for ESG-themed assets (under management) by investors; and
ING is committed to transparently reporting on the progress of our climate targets. stricter regulations on ESG reporting and disclosure, which makes companies more
We believe that transparent, clear, and uniform reporting supports accountability and aware and focussed on reducing their environmental impact.
action. To this end, this year’s report introduces new visualisations to transparently
show how our sector profiles evolve from year to year. At the same time, we welcome Sustainability has become a key strategic topic for most companies with a recent ING
regulation on climate alignment, which will help in harmonising reporting standards study showing around 70 percent of companies accelerating their sustainability activities.
and ensuring the robustness of data disclosures. We would like to see regulators As companies embark on the road to net zero, the role of financial institutions needs
working together with the financial industry in further supporting the harmonisation to adapt and evolve to help clients navigate this changing environment. This needs a
of climate reporting requirements, particularly on climate impact measurement and combination of traditional banking knowledge of how capital streams work, along with
target-setting. in-depth knowledge of the investments companies can make and how they can change
their business models to become more sustainable. To achieve real change, cooperation
between companies and their banks is crucial.

ING Group 2022 Climate Report 24

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Supporting our clients in the acceleration of their sustainability activities green or sustainable projects. For instance, we structured a green loan for Italian real
The Sustainable Finance team is part of Wholesale Banking and advises clients on estate investment fund Coima RES for the re-financing of a portfolio of office properties
translating their sustainability ambitions (including alignment to net-zero where in Milan. As the buildings are best-in-class regarding their energy consumption,
applicable) into their financing, through sustainability-linked structures, providing green they comply with the strict requirements of the EU Taxonomy for environmentally
and social financing solutions, ESG rating advice, and other strategic ESG advice. sustainable buildings.

The team supports a range of clients in achieving their sustainability goals: from those Financing the transition
with a strong sustainability track record, an ambitious agenda, or that are addressing To support clients who are shifting to more sustainable business models, we
resource scarcity and seeking financing for sustainable deals in renewable energy, incentivise them to achieve certain sustainability milestones. We do this through
green buildings, waste management or water. We’ve financed billions of euros in our sustainability-linked financing solutions. This is a way of providing innovative
energy projects, from wind farms, solar energy, and geothermal power production; solutions that can help companies address their most material sustainability risks,
to energy efficiency in buildings and production lines; to electric vehicles and bio- including transitioning to a low-carbon business model. In 2017, ING coordinated the
based plastics; to wastewater treatment and circular economy solutions. This supports first syndicated sustainability-linked loan. This loan was for Philips and linked to the
our approach to climate action. We also finance deals that make a positive social improvement of Philips’ Sustainalytics ESG rating. In 2022, ING was the sustainability
impact, such as social covered bonds and projects such as schools, hospitals and coordinator for turning this loan into a sustainability KPI-linked loan with KPIs aligned
social housing. with Philips’ sustainability goals for lives improved, lives improved in underserved
communities, circular revenues, and operational carbon footprint.
Our sustainable finance approach can be divided in the following main categories,
outlining the part they play in the road to sustainability: As the originator of the sustainability-linked loan, we feel a responsibility to keep
standards high for the use of this product. In September 2021, we published a
Accelerating the green economy position paper outlining the crucial elements that must be considered to protect the
We seek to fund significant growth in our green asset portfolio that will accelerate credibility of the sustainability-linked loan market.
the green economy. Green financing solutions such as green bonds and loans form
an integral part of our sustainable finance strategy as they are used to fund specific

ING Group 2022 Climate Report 25

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Social financing This team also provides financing solutions to smaller scale renewable energy projects
Our sustainability efforts are also directed towards the social aspects of helping in the Netherlands, such as the ‘ZonnepanelenDelen’ (ZPD), a solar financing platform
customers and society stay a step ahead of the challenges they are facing. As an which offers non-recourse project finance between €200,000 – €5 million to small-
example, ING acted as joint lead manager, joint bookrunner and joint social structuring to-medium sized solar power projects undertaken by SMEs and project developers.
advisor for Singapore based healthcare real estate investment trust First REIT’s At the same time, the company provides retail investors the opportunity to make a
S$100 million social bond. This social bond is guaranteed by the Credit Guarantee sustainable investment in these projects based on standard documentation. We helped
and Investment Facility, a trust fund of the Asian Development Bank. This issuance ZPD to upscale their platform and accelerate its growth strategy.
marks the launch of Singapore’s first-ever healthcare social bond. The proceeds of this
guaranteed social bond will be used to refinance existing debt, as well as to finance the Advisory services
ownership, and the management and maintenance of its healthcare related assets in Besides financial support, we support our clients to navigate through the rapidly
Indonesia. changing landscape of regulation and advise on their net-zero strategy. Clients benefit
from our deep and broad experience in helping other companies in this regard. Some
Pioneering for the future of our clients are ahead of the curve: for them we act as a sounding board, alongside
We advise clients who we can support in taking a step ahead with their sustainability our financial role. Other clients are at the early stages of their sustainability journey.
ambitions and anticipating the future economy. Some innovative technologies, For these clients we provide guidance based on our market experience and suggest
business models or client propositions have a higher risk profile that is not yet suitable areas where they can make impact to become aligned with climate pathways and
for a standard financing solution. This is where ING Sustainable Investments helps their peers. Through teaming up with the relevant capital structuring and advisory
clients with their sustainability goals by providing more risk-bearing capital through departments, we also advice on financing corporates’ CAPEX and M&A (selling non-
a wide range of tailor-made financial solutions, including equity investments and sustainable assets, buying sustainable assets).
subordinated debt. Our Sustainable Structured Finance team can also support clients
by functioning as a laboratory for new sustainable technologies and business models Next steps
in need of financing within the EMEA region. The team is involved in the origination, We are committed to supporting our clients in their sustainable transition through
structuring and execution of structured finance transactions, with the focus on our financial offering and our advisory. Despite volatile markets, high inflation and
circular economy, bio-chemicals, waste and water or any other project supporting geopolitical unrest, we managed to mobilise over €40 billion for our clients in the first
sustainable development. half of 2022. This year, we set an annual target to support our Wholesale Banking

ING Group 2022 Climate Report 26

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

clients in their sustainability transition by committing to mobilise €125 billion of Framework. One way we help reduce negative impact on biodiversity is by supporting
sustainable finance per annum by 2025 (from €87.7 billion in 2021). We provide more clients to reduce their pressures on nature through the five direct drivers of biodiversity
details on how we calculate the volume mobilised in the Metrics and targets section. loss as identified by the Intergovernmental Science-Policy Platform on Biodiversity and
Ecosystem Services (IPBES). These are, in descending order of global impact:
Next to our Wholesale Banking efforts, we are also increasing our focus on SME and
1. changes in land and sea use;
Mid-corporate clients. We are expanding the number of markets offering sustainable
2. direct exploitation of natural resources;
loans to this customer segment, including Netherlands, Belgium, Romania, Poland,
3. climate change;
Turkey and Luxembourg. These products include green loans, green lease financing,
4. pollution and
and sustainable improvement loans.
5. invasive alien species.

Biodiversity With our sustainable finance offerings we already focus our attention on some of
The world is currently experiencing dramatic and accelerating biodiversity loss these drivers. For instance, as the agricultural sector is one of the largest users of land
caused largely by human behaviour. Considering the tremendous capacity of healthy in the world, it has significant potential to contribute to addressing the challenges
ecosystems to capture carbon, protecting and restoring nature is a way to address of biodiversity loss. Our clients realise this and increasingly commit to practices and
climate change. To restore biodiversity to acceptable levels, the world needs to urgently initiatives that support the preservation of biodiversity. These commitments gradually
mobilise substantial amounts of funding for nature conservation; it also needs to find their way into sustainable financing frameworks whereby our clients are rewarded
transform operations and supply chains across industry sectors. The gap between for their biodiversity efforts. This development is visible in various industries and
current funding and what is needed on average per year to protect the most important across the supply chain, but mostly concentrates around land use change, use and
biodiversity and its services, is known as the global biodiversity funding gap, and exploitation of natural resources and climate change. Examples include an increasing
currently stands at $711 billion. level of agricultural commodities supply chain traceability (land use change), flower
strip planting alongside agricultural lands to stimulate crop diversity and biodiversity
At ING we believe we have a role to play in protecting biodiversity, and that as a bank monitoring (use and exploitation of natural resources), and reduction of the
we can best do this by shifting financial flows toward nature-positive outcomes. By ecological footprint.
doing so we also contribute to the goals of the United Nation’s (UN) Global Biodiversity

ING Group 2022 Climate Report 27

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

We also see more attention with our clients to secure funding for specific projects Circular economy
that reduce pressures on biodiversity and protect and conserve nature. In this area we
have started to help our clients by structuring Green Bond Frameworks through which Our approach
projects can be financed that, for example, relate to combating desertification, soil In fighting climate change, there is a huge focus on the transition to renewable energy
pollution and deforestation. Within these frameworks, projects can also be financed and activities related to energy efficiency. However, these measures can address just
that concern the preservation of nature, including the conservation and monitoring of 55% of emissions, according to the Ellen MacArthur Foundation, a circular economy
endangered species. charitable organisation.3 The remaining 45% can only be tackled by reducing the
production of cars, clothes, food, and other products we use every day. To address this,
Connecting sustainable finance directly to biodiversity protection and restoration is not we see the circular economy as an important means to reach global climate goals,
common in the financial market. We are proud and excited to do pioneering work in while at the same time preventing pollution and harmful impacts on biodiversity.
this area and are looking forward to many new opportunities to work with our clients to
protect and restore biodiversity. Advancing the circular economy is a fundamental step towards achieving the
Paris Climate Agreement goals as well as the UN Sustainable Development Goals.
Further information on our approach to managing biodiversity risks can be found in the The European Commission (EC) recognises that the transition to a circular economy
Managing climate and environmental risks section of this report. is one of the main building blocks of the European Green Deal and has set up the EU
New Circular Economy Action Plan (CEAP), which aims to reduce the EU’s consumption
footprint and double the EU’s circular material use rate in the coming decade. This
means making products more durable, reusable and reparable, making more use of
recycled materials and increasing recycling capacity.

As transitioning to a more circular economy is becoming a priority for many of our

clients, it is also part of our integrated climate approach. We support our clients by
financing circular business models and activities and by focusing on those value

3 Ellen MacArthur Foundation, 2021, ‘Completing the picture: how the circular economy tackles climate change’,
https://ellenmacarthurfoundation.org/completing-the-picture

ING Group 2022 Climate Report 28

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

chains that use the most resources and where the potential for circularity is high, Dutch financial institutions to invest €90 million in technology company Avantium,
such as plastics, packaging, construction, textile, batteries and vehicles and electronic which is building the world’s first polyethylene furanoate (PEF) bioplastic factory; PEF
equipment. bioplastic is a more sustainable alternative to the fossil-based PET plastics used for
bottles and packaging.
Our progress
• Enhancing collaboration across the value chain. Choices made in the upstream
We offer the following finance solutions to fund the circular activities of our clients:
part of a company’s value chain have consequences for the downstream part. For
• Sustainability-linked products such as sustainability-linked loans or bonds. We example, is a product designed with repair or recyclability top of mind? ING supports
incentivise our clients to achieve certain ‘green milestones’, which relate to circular clients by taking a lead role in enhancing collaboration across the entire value chain.
ambitions. For example, we structured a sustainable finance framework for German In a recent case, we leveraged our network to support clients in the textile sector to
chemicals and consumer goods producer Henkel, including an important KPI for achieve their sustainability and circularity goals.
increasing the use of recycled plastic in all their plastic packaging.
We see the role of circularity in sustainable finance transactions continuing to grow, as
• Green loans and green bonds whereby proceeds from the loan or bond are fully
well as the number of transactions themselves. This is driven by changing consumer
dedicated to the financing or refinancing of circular projects or assets. One example
demand as consumers become more aware of companies’ sustainability efforts.
is a green loan we structured for Green Group in Romania, the largest integrated
Changing regulations arising from the EU’s CEAP, introduced in March 2020, are also
recycling park in Europe, focusing on the recycling of polyethylene terephthalate
a driver. The EC is currently working on an extension to the EU Taxonomy, in line with
(PET) plastic, glass and electronic equipment waste. We also created a green finance
the CEAP, with more detailed technical screening data. This data will make it clear
framework for corrugated packaging company Smurfit Kappa Group, which reflects
which economic activities contribute to a transition to circular economy and, equally
their sustainable and circular business model. This is one of the first bonds in the
important, the associated thresholds in labelling an activity ‘circular’. This extension
market (and a first for ING) where circularity is the main theme.
is expected in the second half of 2022 and will come into effect from 1 January 2023.
• Financing new circular business models. We see a rise in new circular business It will create more clarity on what we can call ‘circular’ which in turn will help with the
models, such as sharing, or product-as-a-service, as well as the emergence of new allocation of green funding to circular activities.
technologies. With regard to circular economy and new technologies, ING focuses
largely on the chemical recycling of plastics. In April 2022, ING was one of several

ING Group 2022 Climate Report 29

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Financial health Managing climate and

We believe financially healthy people contribute to a healthy economy and drive
social progress. Financial health also has close ties to people’s ability to take action environmental risks
on climate. The costs of climate change are unequally divided, with the financially
vulnerable being highly exposed and impacted4. As a bank, there are several ways we Introduction
work to improve people’s financial health: through financial inclusion; by helping people
ING’s integrated climate approach considers how we can mitigate climate change
manage their everyday finances; and by helping them plan for the future and protect
through our financing as well as how climate change may adversely impact our
their dreams. In our communities, we partner with local organisations that provide
business. We are working to become more resilient to climate risk. As a bank, we
financial planning, coaching and debt counselling. Activities focusing on financial
consider both physical risks, such as the risk of property damage on our mortgage
health are already a part of our banking operations in retail markets. These are
portfolio, and transition risks, such as the loss in value of assets and/or markets
becoming more critical in 2022 as we see the energy crisis putting additional strain on
that are no longer part of a more sustainable world. Climate risk can impact the
customers facing higher energy prices. For more details on our financial health efforts,
macro-economy, businesses, and individual households. Ultimately, physical and
please see here.
transition risks could impact our balance sheet and profitability. That’s why we
have a comprehensive process in place to identify and understand these risks and
integrate them into our risk management frameworks. Our approach is focused on
consistently embedding climate risk considerations across the global organisation
and making it a pivotal part of how we do business. We continue to develop our
approach to climate-related and environmental disclosures as we build our approach
to quantifying such risks.

4 World Inequality Report

ING Group 2022 Climate Report 30

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Preparing for alignment with ECB expectations Assessing biodiversity risks and impacts
The ECB expects all banks to be fully aligned with the 13 expectations outlined in the The world is currently experiencing dramatic and accelerating biodiversity loss caused
ECB’s Guide on climate-related and environmental risk. We are building our roadmaps largely by human behaviour. This poses not only a threat to our own wellbeing, but also
to ensure we make steady progress and taking firm action to close gaps where we to economic prosperity. The World Economic Forum lists biodiversity loss among the
need to. ECB designated ‘good performers’ of these 13 expectations, and we are keen top global risks to society. We are committed to working with our clients to understand
to learn from their experience where appropriate. We aim to be fully aligned with ECB’s risks related to biodiversity loss and help them manage these risks. In 2021 we
expectations in terms of both content and timelines. improved our understanding of how the drivers of biodiversity loss relate to our lending
portfolio through a biodiversity hotspot analysis (see Risk management section). The

Climate risk data challenges interaction between business and nature forms the core of this analysis and is central
to the work of the Taskforce on Nature-related Financial Disclosures (TNFD), established
ESG data is crucial to fully understanding and managing climate and environmental
in response to the growing realisation that nature needs to be an important
(C&E) risks and to report in line with current and upcoming regulation on ESG
consideration in corporate decision-making. ING supports the TNFD framework and
disclosures, such as the European Banking Authority’s (EBA) Pillar 3 disclosures. In order
intends to use it as guidance in our future reporting. We are actively working with peers
to upgrade the current expert-based assessment per sector and subsector of both
and expert organisations to contribute to the development of the framework. When
transition risk and physical risk, we will need detailed data from our counterparties;
completed, this framework will form the foundation of how companies, including banks
including data on specific assets and regions, their vulnerability to risks, and the
like ING, manage biodiversity and nature-related risks.
actions they are taking to mitigate these risks. The upgrade of the current assessment
methods will further quantify the C&E risks at a more granular level. We hope to
achieve more visibility regarding these risks as our counterparties start to engage
in C&E reporting for different purposes, one of which is the upcoming disclosure
requirements in the Corporate Sustainability Reporting Directive (CSRD). Collecting
counterparty data will be a massive exercise for which we currently collaborate with
peers and third-party data providers within both global and local initiatives.

ING Group 2022 Climate Report 31

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Climate adaptation companies or business areas vulnerable to climate change and then engage with them
The current 1°C of global temperature rise compared to pre-industrial level is already to support adaptation efforts. In other words, in addition to reducing the physical risks
causing more frequent and intense extreme weather events such as heatwaves, impact on our portfolio, banks can support clients and communities to adapt through
floods and wildfires. These have resulted in devastating losses and damage, with financing.
disproportionate impact on the most vulnerable people and natural systems. Since
global temperatures will continue to rise even under the most ambitious emission We support our clients mainly via loans for general corporate purposes that may
reduction scenarios, it is essential to take measures to reduce our vulnerability from be used for adaptation efforts and by advising on sustainable financing solutions.
the harmful effects of climate change, known as climate adaptation. Examples of An example of this is our role in a financing package to construct the UK’s first new
climate adaptation measures include protecting coastlines and dealing with sea-level reservoir in a generation, ensuring water resilience in the Southeast region for the
encroachment, managing land and forests, dealing with, and planning for reduced next 80 years. KPIs for this Sustainability Improvement Loan covered environmental
water availability, developing resilient crop varieties, protecting energy and public and social factors such as water leakage, supply interruptions, carbon reduction,
infrastructure. biodiversity, and affordability.

Climate adaptation and mitigation (reducing greenhouse gas (GHG) emissions) are Human rights
linked and when addressed jointly, their impact can be magnified. For example, urban
Climate change has a profound impact on many fundamental human rights including,
green measures like green roofs, help reduce GHG emissions from energy use, while
but not limited to, the right to food, health, water, and sanitation. Although it is more
increasing water absorption capacity, thereby making urban areas more resilient to
important than ever that we take serious mitigation and adaption measures, we must
potential flooding events.
ensure that these measures avoid impacting human rights. As a financial institution,
we help finance the energy transition through projects and by working closely with
Adaptation requires investment by governments, companies, and private individuals,
our clients. In order to manage the potential human rights impacts of customers
and we recognise that as a bank, we have an important role to play. According to the
and clients, including our corporate clients, the ESR framework includes a standalone
United Nations Environment Programme Finance Initiative (UNEP-FI) Physical Risks &
human rights policy. Our stance is outlined in a specific human rights policy, as well as
Resilience statement, which ING endorsed in 2021, banks should support adaptation
in our policies for sectors known to be sensitive to human rights related issues.
by improving their understanding of physical climate risk drivers and their impact on
banks’ portfolios under different climate change scenarios. This will help banks identify

ING Group 2022 Climate Report 32

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

We are committed to aligning our lending portfolio with net-zero goals, but we also
believe that our climate mitigation and adaptation strategies should be socially
inclusive and responsible. For instance, building a hydroelectric dam to regulate floods
in lowlands might be an effective climate adaptation measure, but it may also restrict
access to land and forest resources for people who live upstream, increasing their
vulnerability to the impacts of climate change. Climate mitigation actions could also
have an adverse effect on human rights. Reducing carbon emissions involves closing
down coal mines and coal-fired power plants, which in turn could result in millions
of people losing their jobs. In such cases, we believe it is the joint responsibility of
governments and businesses to ensure that employees are re-trained to meet the
demands of the job market and remain employable.

The transition to a green economy may impose impacts to people. Transitioning out
of fossil fuels may result in stranded assets and communities, and increase energy
poverty of vulnerable people reliant on fossil fuels. Transitioning into renewable
energy may raise issues of land grabbing, indigenous peoples’ rights, displacement of
communities due to the increase into mining for green energy metals and minerals.
It may also may affect food and water security, potentially increasing the presence of
forced labour and harmful child labour.

We recognise that as the world is transitioning from a carbon-intensive economy into a

green economy, we must collectively put people, especially the most vulnerable, at the
front and centre of the energy transition based on the articulation of their needs.

ING Group 2022 Climate Report 33

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Risk management

ING Group 2022 Climate Report 34

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Introduction
As climate risk becomes increasingly relevant, many banks have started to evaluate The potential impacts of physical and transition risks on households, businesses
the potential negative impacts it could have on their business. Transition risk as well as and the macro-economy require us to consider climate and environmental risk as
physical risk could impact the economy, our clients, and therefore our business. Even a driver that could have material impact in both the financial and the non-financial
after implementing measures to finance positive change, physical risks could continue risk domains. As shown in Figure 1, the feedback effects for climate risk need to be
to rise, and therefore need to be well understood and managed. embedded in existing risk management processes for the credit, market, liquidity,
and operational risks areas to enable monitoring and portfolio steering.
Managing climate and environmental risks covers both physical risks and
transition risks: Under ING’s governance for policy review, we assessed the Group-wide policies and
procedures for Financial Risk, ESR, Operational Risk, Compliance and Retail Risk for
• Physical risk. This can be event-driven (acute), caused by extreme weather guidance on climate-related and environmental risks. We updated relevant policies
conditions such as cyclones, droughts, floods and fires, or longer-term (chronic), with specific requirements for climate and environmental risks, focusing on credit
due to progressive shifts like rising temperatures and sea levels, water stress and risk. Our risk rating policy was updated to explicitly include climate-related and
biodiversity loss. environmental risks as a valid reason to appeal the rating.

• Transition risk. This can arise from changes in policy, law, technology and the market
that occur in the transition to a lower-carbon economy. Transition risk could result in
stranded assets and/or markets consequently eroding the value of assets that are no
longer part of a more sustainable world.

ING Group 2022 Climate Report 35

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Figure 1 Climate risks to financial risks Source: Adapted from NGFS Climate Scenarios for central banks and supervisors, June 2020

Climate risks Economic transmission channels Financial risks

Transition risks Businesses Households

Credit risk
• Defaults by businesses and households
Policy and regulation • Collateral depreciation
Property damage and
Loss of income
business disruption

Technology development Market risk

• Repricing of equities, fixed income,

Financial system contagion

Stranded assets and commodities etc.
Property damage
new capital expenditure
Market changes
Underwriting risk
• Increased insured losses
Physical risks Macro-economy • Increased insurance gap

Acute
• Flood
Operational risk
• Wildfires
• Supply chain disruption
• Cyclones
• Forced facility closure

Chronic Shifts in Productivity Labour market

• Increase in temperature prices changes frictions
Liquidity risk
• Shifts in precipitation • Increased demand for liquidity
• Sea level rise • Refinancing risk

Climate and economy feedback effects Economy and financial system feedback effects

ING Group 2022 Climate Report 36

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Our approach to managing climate risk

Risk identification and assessment ECB stress test outcome
We continued to enhance the tools used to identify and assess climate and
Introduction
environmental risks in our portfolio. We created extensive heatmaps to climate and
Stress testing is an important risk management tool that provides input for strategic
environmental risks for Wholesale Banking and Retail Banking. See more detailed
decisions and capital planning. The purpose of stress testing is to assess the impact
information about the heatmaps in the Metrics and targets section.
of plausible but severe stress scenarios on ING’s capital and liquidity position. Stress
tests provide complementary and forward-looking insights into the vulnerabilities of
The C&E heatmaps also facilitated the materiality assessment of climate and
certain portfolios, regarding adverse macro-economic circumstances, stressed financial
environmental risks through the scores assigned to risk drivers in each portfolio. This
markets, and changes in the geopolitical climate.
enabled us to create a global overview of the extent of climate risk impact on specific
sectors, indicating which sectors are most exposed to climate risk.
In the second half of 2021, ING started preparing for the regulatory climate risks stress
test, which, in 2022, became part of the bi-annual ECB Single Supervisory Mechanism
Risk Appetite Setting (SSM) stress test. This regulatory stress test, combined with our own climate risk
We used the outcomes of the C&E heatmap exercise to introduce climate-related and analyses, will be used to enhance ING’s internal climate risk stress testing. In the first
environmental risk in our 2022 credit RAS cycle. For Wholesale Banking a mechanism half of 2022, ING participated in the ECB’s industry-wide climate stress test. The test
was introduced on a monitoring basis at the start of 2022 that limits growth of consisted of three modules to test our capabilities for assessing climate risk:
subsectors with a higher exposure to climate-related and environmental risks while
• Questionnaire. A qualitative assessment was made of ING’s climate risk stress testing
allowing for growth within the overall limit of the sector. As from July 2022, this
framework, including its governance, design, and usage.
mechanism has become binding for the Wholesale Banking sectors. For Retail Banking,
the monitoring period will continue until the end of this year as the outcome of the • Peer benchmark. Information about ING’s interest and fee income was provided for
physical risk assessment will be used to decide on the limit setting for climate-related specific sectors, for those countries that are understood to be sensitive to transition
and environmental risks in the risk appetite framework. risk and that are associated with financed GHG emissions. Revenues, loan volumes and
scope 1, 2 and 3 GHG emissions were also reported for the top 15 clients per sector.

ING Group 2022 Climate Report 37

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

• Bottom-up stress test. Six individual stress tests were performed, based on a uniform Next steps
methodology and on the scenarios of the Network for Greening the Financial System. We will use the data we gathered and the models we developed for the ECB exercise
Three transition risk stress tests were also carried out: two short-term tests covering as a starting point for enhancing our internal climate risk stress test capabilities.
credit risk and market risk, and one long-term test covering credit risk. Two physical An internal climate risk stress test is planned for the fourth quarter of 2022 and will
risk stress tests were performed: one for the impact of droughts and heat, and one include the full credit risk portfolio as well as other risk types like interest rate risk in the
for the impact of floods. Lastly, a qualitative assessment was made for non-financial banking book (IRRBB) and operational risk. This stress test will be used for our Internal
and reputational risks. Capital Adequacy Assessment Process (ICAAP).

Progress and challenges on climate risk stress test

The ECB shared its assessment of the climate risk stress test on an aggregated basis
in its 2022 Climate Stress Test Report, as well as in a bank-specific report. The key
challenges of the stress test were data-related. The required attributes, such as
GHG emissions and Energy Performance Certificates (EPC), were not available for all
counterparties and proxies were used. Other challenges were the modelling of new
drivers such as carbon pricing, for which the ECB provided guidelines, and the long-
term horizon of 30 years, which requires us to consider evolving strategic decisions
and changes to ING’s balance sheet over this period.

ING Group 2022 Climate Report 38

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Summary per risk domain

ING has been further enhancing its capabilities for identifying climate risk drivers and
integrating them into existing risk management processes. Table 1 shows the impact
climate risk can have on various risk areas, what has been done to address it and what
steps have been defined for the coming period.

Table 1 Summary per risk domain

Risk category Potential effects of climate risk drivers What we do to manage risk Next Steps
Financial risk
Credit Climate risk drivers (physical and transition risk as outlined above) • Climate risk drivers have been incorporated in the risk • Refine the Climate Credit RAS methodology and operationalisation
can reduce the ability of businesses and households to cover their identification and assessment process and the climate risk WB • Expand the Climate Credit RAS for retail sectors.
obligations due on existing lending contracts. These may also lead to sector heatmap was further completed. • Develop dedicated Climate risk credit stress scenarios and materiality
depreciation/erosion of collateral values which would translate into • This heatmap has been utilised in the introduction of Climate WB assessment.
higher credit losses and loan-to-value ratios. Sector Limits in the Credit RAS 2022 • Roll out the C&E risk analysis to all sectors incorporating longer time
• Climate and environmental risk analysis within the credit approval horizons and extended use of data.
process was piloted in the Transport and Logistics sector.
Market Volatilities of equities (for companies with unsustainable business • C&E risk drivers have been integrated in the liquidity and market • Integrate climate risk in stress scenarios for both Liquidity and
models), fixed income products (increased sovereign risk) and risk identification process and assessed for materiality. Market risk.
commodities as well as stranded assets may have a negative • Funding and liquidity risk policies have been updated with the • Incorporate Climate risk elements in RAS for both Liquidity and
effect on ING’s income from related products due to financial asset inclusion of C&E risk elements. Market risk.
revaluations and mismatches in price levels. • Plan and execute updates to policy.

Liquidity As a result of changing market conditions, ING’s funding base may

become more volatile and be affected both in terms of availability
and cost. That might lead to increased deposit outflows, higher
drawdowns on credit/liquidity facilities, and scarcity of professional
funding at increased cost.

ING Group 2022 Climate Report 39

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Risk category Potential effects of climate risk drivers What we do to manage risk Next Steps
Non-financial risk
Operational ING’s operational capabilities and/or ability to deliver services to • The Business Continuity Framework has been updated to • Add transition risk as a new risk driver and assess it on materiality.
clients may be disrupted due to acute or chronic physical risks. incorporate physical risk drivers and the ability to recover from • Develop dedicated Climate risk stress scenarios.
their impact.
• Physical risk drivers are embedded in the risk identification and
assessment process.
Compliance Risk from failure to act in line with applicable or emerging climate • Relevant regulations identified, followed up and implemented • Maturing climate risk management by further embedding climate-
related laws, regulations, society expectations and internal policies following the ING Change process and Compliance processes like related risk in compliance risk framework, relevant policies, guidelines
and Codes e.g. ING Code of Conduct. risk assessment, policy making and monitoring. and processes and relevant governance.
• The Product Approval and Review Process contains a Customer • Incorporate climate risk indicators in Compliance cockpit and Risk
Golden Rule on ESG, considering ESG risk, impact and Appetite Statement.
communication for products we launch and review.
• Scenarios for assessing climate risk drivers have been included in
the non-financial risk materiality assessment.

Overarching risk
Reputational Risk from ING being negatively viewed by stakeholders for not When a transaction is deemed prone to reputational risk by the Determine approach to identify, assess, and mitigate reputational risk
meeting or sufficiently progressing on climate-related expectations. Management Board Banking (MBB), then the Environmental and from the full scope of ING.
Social Risk (ESR) team and Group Sustainability’s Business Ethics
team provide advice for those clients/transactions. Negative ESR
advice can only be overruled by either MBB or the Global Credit
Committee.

ING Group 2022 Climate Report 40

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

The ESR framework opportunity to reduce their exposure to the new restrictions; in case a reduction is not
feasible, we implement an exit strategy. We will continue to update and refine our ESR
ING’s ESR policy framework helps us make transparent choices about how, where and policy to ensure it reflects ING’s risk appetite and sustainability direction.
with whom we do business. In 2021, we updated the ESR Framework as part of the
three-year mandatory comprehensive review cycle. The new release takes account of Biodiversity hotspot analysis
the recent ESR requirements of the EBA Loan Origination and Monitoring guidelines,
Business operations can impact biodiversity, while biodiversity loss can impact
improved controls and comments received from internal and external stakeholders.
business. To calculate the risks involved to both, we first need to understand the
The update further aims to improve understanding of existing process and evaluation
relationship between the two and how a particular business impacts, and depends
requirements, with special attention to supply chain due diligence. Where appropriate,
on, certain ecosystems. To gain such insights, ING performed a biodiversity hotspot
internationally acknowledged certification standards and guiding principles have been
analysis in 2021.
added to or adjusted per the individual sector policies.

ING’s biodiversity hotspot analysis reveals those sectors where our lending portfolio
In 2021, we continued the implementation of the new ESR self-declaration approach
is most dependent on, and could most impact, biodiversity. We based our analysis
for Business Banking. The concept was incorporated in the updated ESR Framework.
on the tool ENCORE, (Exploring Natural Capital Opportunities Risks and Exposure).
There is an alternative ESR client assessment implementation for Business Banking
The outcome of this analysis led us to focus on the sectors food and agriculture,
clients where lending and pre-settlement limits exceed €1 million and where the client
construction, mining, and energy because these have an increased impact and
is active in any of the pre-identified sectors, such as employment agencies. Such
dependence on biodiversity. The dependence is largely because companies operating
clients will be required to confirm their compliance with specific statements related
in these sectors rely on ecosystems for water while the ecosystems protect them from
to safeguarding labour rights and/or environmental regulations that are specific for
floods and storms. On the impact side, the main issues in these sectors are the amount
that sector. The initiative has already been rolled out in half of the countries where we
of land used, the way it was used, and the levels of water used in production.
are active with Business Banking clients globally while other affected ING locations
are expected to implement this in the course of 2022. Following any key ESR policy
updates on restrictions, we engage with affected clients and provide them with the

ING Group 2022 Climate Report 41

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

ENCORE
Figure data
2 Materiality shows impact
of sector-level & dependency
biodiversity materiality
impacts and dependencies on sector- and stability, and to ensure water retention. The use of fertilisers and pesticides can
level negatively affect surrounding natural environments, and some forms of agriculture
compete with nature for water. Nitrogen deposits, which can disturb ecosystems and
Veryhigh
Very high cause biodiversity loss, are a growing problem in the agriculture sector, especially in the
Netherlands and Belgium. For this reason, and because of its relevance to our clients,
we follow the public debate with great interest.
Mining
High
High
Food & Agri

Construction
Companies with a high ecosystem impact face a higher level of transition risk from
regulatory and policy changes, changes in consumer demand and market changes.
For instance, if a valuable ecosystem gains protected status, the financial risk for
Medium
Medium companies operating in or near that area can increase. High dependency of sectors
Dependency

Energy

in our portfolio exposes ING to physical risk from ecosystem deterioration, leading for
instance to reduced availability of natural resources.
Impact High
High Very
Very high
high

*Size of bubble represents size of ING Wholesale and Business Banking loan portfolio, per Dec 2021 Knowing these risks allows us and our clients to look for ways to mitigate or negate
them. The agriculture sector for instance, is increasing its efforts to realise regional
food supply chains. By connecting local producers with local consumers, the emissions
caused by long-distance transport can be minimised. At the same time, food
We can explain the outcomes of the hotspot analysis by focusing on the agricultural production for the world market is also needed. In this case, new technologies and
sector. ING is a financier of the agriculture sector, which clearly is important for the innovative farming practices can ensure high yields with a low footprint per unit of
total food chain and vital for livelihoods in rural areas all over the world. However, output. Another trend is the increase in organic and circular farming, both of which
the sector also contributes to the climate problem, as farming is responsible for both help reduce the use of artificial fertilisers and nitrogen deposits. There is also an
carbon and methane emissions. The biodiversity hotspot analysis showed biodiversity increase in nature-inclusive farming, where farmers, for example, create herb-rich grass
loss is also material to the sector. While agriculture can have a negative impact on fields or flowery field borders. The sector is also working to reduce its emissions of
nature, it depends on its biodiversity, in the case of crop pollination, for soil health greenhouse gasses, by technological innovations or changes in animal feed.

ING Group 2022 Climate Report 42

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

ING is keen to support agricultural entrepreneurs in their transition to a sustainable

business and we discuss the trends mentioned above with our clients. For such
a transition to be successful it must be profitable for the farmer, which is often a
challenge. To create a better earnings model, we reach out to actors throughout the
food value chain to work on solutions that will provide farmers with extra income
for their sustainability efforts. Large-scale agriculture is not always the way to
achieve good income, and diversification of income is also possible. That’s why in the
Netherlands we have changed our credit assessment process to consider income
from other sources, such as farm stores, camping sites or day-care activities, in our
calculations.

We acknowledge that some exposures indicated by the hotspot analysis could be

higher or lower than our analysis reveals. The data we used is based on sectoral and
geographical averages and therefore has limitations in accurately assessing the risks in
our portfolio. Going forward, we will further granulate our assessment of impacts and
dependencies.

ING Group 2022 Climate Report 43

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Metrics and targets

ING Group 2022 Climate Report 44

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Own operations our 2014 baseline. We have previously shared a scope 1 and scope 2 target for 2030
of a 90% reduction by 2030, where we plan to review this ambition and come with a
From 2020 to 2022, our targets for operational carbon emissions were divided between combined target for scope 1 scope, 2 and scope 3 for business travel by 2030.
a scope 1 and 2 target of 80% reduction, and a scope 3 target for business travel of
25% reduction. As part of a detailed review of our Environmental Programme and our Renewable electricity
historical data, we have identified that our progress against these targets was behind In 2020, we reported that we reached 100% renewable electricity for the first time
what was reported in our 2021 Annual Report. Reviewed data indicate that at year end in our owned and managed buildings worldwide, and in 2021 we reported that we
2021, we reached: maintained this 100% level. An additional note should have accompanied our reporting
in those years relating to RE100 requirements for market boundaries. In 2020 we
• In scope 1 and 2, a 77% reduction in CO2e to roughly 18,700 tonnes, instead of the assessed our reporting as reaching 99.7% alignment with the technical criteria of
80% reduction previously reported. the RE100 related to market boundaries, where the remaining 0.3% was not aligned.
This was because the EACs that we have sourced for some of our smaller markets
• In scope 3, a 72% reduction to 6,900 tonnes, instead of the 79% previously reported.
(for example Kazakhstan and Argentina etc.) were sourced outside of the market
• Collectively, this brought our combined operational emissions reduction across scope boundaries specified in the RE100 criteria. The EACs sourced for these locations were
1, 2 and scope 3 business travel to over 75% at the end of 2021. mostly in neighbouring markets to ensure relative proximity to the market operations.

Aside from corrections to historical data, our review also included correcting coverage In 2021, we maintained 100% renewable electricity, where we assessed that our
statistics applied to our extrapolated emissions reporting totals. We also improved our reporting was 99.2% in alignment with the technical criteria of the RE100 related to
methodology, by updating the emission factors applied to district heating use from market boundaries, where the remaining 0.8% was not aligned. This was because the
a global average factor to country specific factors and backdating the application of EACs for some of our smaller markets were sourced outside of the market boundaries
these to our baseline year. Updated figures, including restatements for 2020 and 2021 specified in the RE100 criteria. In addition, for 2021, the sourcing of RECs for our Russian
can be found in the appendix of this report. market was interrupted due to the suspension of the Russian I-REC platform, following
the conflict in Ukraine and sanctions. In that situation we have sourced RECs for those
In 2020 and 2021, our footprint continued to be impacted by Covid-19 related operations from Poland. We will continue to share our alignment with RE100 criteria on
restrictions to both buildings and travel. As we adjust to the new normal, we have set an annual basis.
a new mid-term target for 2025, to reduce our CO2e emissions by 75% compared to

ING Group 2022 Climate Report 45

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

In order to dive deeper, in this report we share more information about our approach Poland
to renewable electricity usage in our largest markets. We recognise that we can and Around 90,000 KWh of electricity was generated in 2021 from installed roof-top solar
should go further in quantifying the milestones described below and our targets to in Poland, including from solar installations at three of our largest headquarters offices
improve, and plan on doing so going forward. in Katowice. One of the buildings also installed a new solar-collectors system for hot-
water heating systems in 2021. We have continued to construct solar installation on
The Netherlands the ground and parking shelter close to our Roździeńska St building in Katowice, which
Approximately 1.4 million KWh of renewable electricity was generated in 2021 through is due for completion in 2022. The majority of remaining electricity used in Poland
roof-top solar installations at seven of our buildings in the Netherlands. These include comes from renewable electricity contracts with Tauron energy company, sourced
rooftop solar installations at Maple and Cedar, two headquarter buildings, the latter from local wind farms. We also buy renewable electricity from TGE for energy from
of which is our largest building in the Netherlands. Cedar’s electricity is sourced from different electricity suppliers by landlords in locations where we rent the space. In 2022,
both rooftop solar, and from a solar park in Diemen, approximately 5km from the site work is underway to install additional solar capacity on the ground and parking shelter
which generated an additional 1.5 million KWh in 2021. This project is run by Vattenfall, at another of our headquarters’ buildings in Katowice.
under a 15-year contract with ING. In 2022, we are adding solar installations at nine
other offices. For next year, plans are already in place to install solar panels on at least Turkey
two more branches with likely more to be added to the planning, and expand the We generated more than 440,000 KWh from rooftop solar installations in 2021 in
current installations on two main offices. The vast majority of our remaining renewable Turkey. This came from the solar power system installed in our large operations centre
electricity for our operations in the Netherlands comes from a renewable electricity in Maraş. In 2022, this rooftop solar installation contributed more than 50% of the
contract with Vattenfall from Dutch wind projects. facility’s electricity consumption during the summer months, with an annual average
rate of just over 35%. There are plans to develop a large-scale solar power plant in the
Belgium land adjacent to this building in 2023. The majority of the remaining electricity used
In 2021, 10,000 KWh of electricity was generated by rooftop solar across our buildings in our buildings in Turkey is sourced from the Kolen Energy company, from the hydro-
in Belgium, most of it from an installation at one of our largest branches. In addition, electric power facility in Akkoy.
we started the construction of a new rooftop solar installation this year as part of the
renovation of our main headquarters building in Brussels. The remaining electricity
used in Belgium comes from a renewable electricity contract with Engie for sourcing
electricity from Belgian onshore wind and solar projects.

ING Group 2022 Climate Report 46

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Germany Terra – steering our portfolio

The majority of our renewable electricity in Germany comes from renewable electricity
contracts with Entega Energy and Mainova Energy. We recently received building
permission for our first roof-top solar installation, which will be up and running in the Introduction
third quarter of this year and is expected to generate around 100,000 KWh per year. The Terra approach is ING’s strategy for steering our loan book towards net zero
by 2050 or sooner and contributing to keeping global warming within 1.5 degrees
We continued to expand our installed renewable capacity in other countries, such as compared to pre-industrial levels. The Terra approach was developed in partnership
Spain, where the new installation on our new headquarters building is expected to with the 2 Degrees Investing Initiative (2DII), using their Paris Agreement Capital
produce about 101 MWh/year. A rooftop solar installation for our Italian headquarters Transition Assessment (PACTA) tool. In 2019, ING published its first annual Terra report
in Milan is being constructed over the coming months. over its 2018 loan book. Over the past few years, the Terra approach has brought
nine sectors into scope and has seen several improvements on data quality and
methodologies. We will continue to improve the Terra approach on all fronts to ensure
a continually informed, transparent and robust transition to a net-zero economy.

With the Terra approach, ING currently measures the emissions associated with
the clients active in the most carbon-intensive sectors and uses this information to
benchmark its clients’ activities against the relevant decarbonisation scenarios. This
allows us to steer our portfolio by means of engagement with our clients and by
supporting them in their transition where necessary. Additionally, by measuring the
absolute financed emissions of our portfolio, we perform hotspot analyses to monitor
our loan book and define next steps for expansion.

ING Group 2022 Climate Report 47

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

In the following sections, we provide all details related to our principles, the adopted Based on climate science
methodologies, climate scenarios and data sets, which provide the foundation for the We follow the most up-to-date climate science available, which is the cornerstone of
Terra approach and the basis for measuring our performance in the covered sectors: how Terra measures our loan book’s climate alignment, sets our targets and steers
power generation, upstream oil and gas, commercial real estate, residential real estate towards them. All targets and decarbonisation pathways are based on recognised
(mortgages), cement, steel, automotive, aviation and shipping. While most of the and reputable institutions, like the IEA, and all carbon accounting is done in line with
information on how we are transitioning towards net-zero is already available in the the Greenhouse Gas Protocol. Additionally, through participation in alliances, like the
following sections, next year, we will also publish a more detailed transition plan on NZBA, and in working groups including the Poseidon Principles and the Sustainable
how we plan to reach net-zero. STEEL Principles, we continually commit to guidelines based on the most recent
developments in each sector. Continued membership and leadership in sector working
groups compliments our toolbox approach by helping us build and apply the best fit
Principles of the Terra approach methods for each sector to make the most impact in the real economy.
Three main principles underpin the choices we make in Terra:
Engagement driven
Impact based Through the billions of euros flowing through our loan book, we play an important role
Terra is designed to make the biggest possible impact in terms of real-world in our clients’ transition to net zero by 2050. As such, simply reducing our exposure to
decarbonisation. Banks can maximise their effectiveness by redirecting financial flows emissions-intensive clients is not how we intend to reach net zero, because divestment
towards a greener economy. As such, we first focus on supporting the transition in the will not promote decarbonisation in the real economy. Rather, it is our priority to
most carbon intensive sectors, and more specifically by financing the changes that finance and support clients who have ambitions to decarbonise their activities and
need to happen in specific part of the sector value chain. For example, our approach engage with new ones that will allow us to further steer our portfolio towards net zero
is to steer our power generation portfolio towards renewable sources of energy and targets by 2050. The Terra approach augments this principle by providing insights on
our automotive portfolio towards electrified vehicles. By targeting the integral control the current and forecasted performance of our clients, which helps in making informed
points in the value chain, as defined by the methodologies we adopted such as PACTA, decisions regarding the decarbonisation ambitions of all the covered sectors.
we intend to achieve the actual transition to a low carbon economy.

ING Group 2022 Climate Report 48

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Key methodology choices Figure 3 Portfolio scoping

Methodologies
Within Terra, we apply what we consider to be the best-fit methodology per sector Power Power generation Distribution Electricity off takers

to measure and steer our loan book. For most sectors, and more specifically power
generation, cement, aviation and automotive, we use PACTA, which ING co-developed Oil & gas Upstream Trading Midstream Storage Downstream

together with 2DII. For oil and gas, we apply the PACTA Credit Portfolio Alignment.
For commercial real estate and residential real estate, we use the PCAF methodology.
Commercial
Finally, for shipping and steel we respectively use: the Poseidon Principles and the real estate
Suppliers Construction Building owner Maintenance Recycling

Sustainable STEEL Principles.

Residential
Suppliers Construction Home owner Maintenance Recycling
real estate
Terra’s coverage of sectors and value chains
As guided by Terra’s principles, the methodologies we use focus on the part of the
value chain which controls the bulk of the impact on the climate system, and on Cement Suppliers Production Recycling

which decarbonisation efforts must be concentrated to spur the entire sector to fall
into alignment. The specific boundaries are defined by the methodologies adopted.
The Terra approach thus covers the subset of lending activities depicted in the Steel Mining iron Transport Production End users Recycling

following chart.

Automotive Suppliers Car producers Dealers Maintenance Recycling

Aviation Suppliers Airplane manufacturers Airliners (incl. leased aircraft)

Shipping Suppliers Ship builders Ship operator / owner Recycling

ING Group 2022 Climate Report 49

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Focusing on specific sectors and specific parts of their value chain means that we can Figure 4 Terra coverage of ING’s lending book financed emissions
concentrate our efforts to support our most carbon-intensive clients in their transition.
More specifically, with our Terra approach, we cover 63% of the emissions associated
with our Wholesale Banking book and 93% of the emissions coming from our
mortgages book. Regarding the SME and mid-corporates book, we have joined a new
project of our partner 2DII to develop a climate database on SMEs, which we aim to

Ter
Mo
93 gag

ra
% es
rt
use in the future to measure their climate alignment. Figure 4 provides an overview

of
of the financed emissions associated with our loanbook and our current coverage,

Mo
following PCAF methodology.

rtg
14

age
%

s
Terra
Currently B
not of W
under Terr Business 63%
a Banking
19%

Wh
o
Ba lesa
nk
ing le
67
%

unde tly not

ra
r Ter
en
Curr
ING Group 2022 Climate Report 50
Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Figure 5 Terra coverage of ING’s Wholesale Banking book financed emissions Additionally, for Wholesale Banking, Figure 5 shows a breakdown of the estimations
of our absolute emissions per sector, the inner circle, and the Terra coverage, the
outer circle. We aim to increase our coverage in the coming years by expanding to
new sectors where data and methodologies allow. An example of expansion which

Currently not
Curr r Terra

under Terra
und
we foresee in the near future is the inclusion of the Aluminium sector, following the

entl
e
y no
completion of the Center for Climate-Aligned Finance’s facilitated Aluminium working
Ter %
25
ra

t
Cu group that ING is co-leading.
un rre

Wholesale Tr
de ntl
rT yn
er ot
Product scoping
ra

Othe
rra
Te
6%
M

r
7
an

The product types in scope are those that most accurately represent lending on
ade
uf
ac
tu
11

a continuous basis, currently: revolving loans and term loans, each based on loan
rin
%

Cur r e
under
ntly n
Terra
ot outstanding. This selection follows the PACTA Credit Portfolio Alignment paper, co-
ies
Utilit
41%
written by ING, which also provides additional information regarding this choice and
Mining, Quarryin
d Ga
g,
s
the possible expansion to additional products and services in the future. Within the two
and Oil an
Extraction covered product types, we distinguish broadly between two types of loans:
18%
• General corporate purpose loans will be linked to the borrower, which can be a
a
Terr
52%
subsidiary or the ultimate parent company, provided that the borrower is known in
Wareh ion and

external data. ‘General corporate purpose’ means that we don’t control the use-of
ousing

Cu
un rren
proceeds, so we assume that the funding is at the disposal of the company; and
ortat

24%

t de tly
no r T no
lt y rra er t
Transp

en Te ra
rr er
Cu nd • Special purpose loans, on the other hand, are ring-fenced loans where >50% of
u

the proceeds will be used for a specific purpose (e.g. project-based or asset-based
finance) and as such can generally be matched to physical asset(s), provided external
81%
Terra

data sources cover the relevant physical asset(s).

ING Group 2022 Climate Report 51

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Scenario selection and target setting Table 2 Updated targets per Terra sector
To align a portfolio with net zero, we need climate scenarios to benchmark with. Those
Sector Old targets New targets
benchmarks also determine what the net-zero aligned intermediate (2030) and long
term (2040 or 2050) targets should be. In line with our Terra principles, we believe Power generation 2040 net-zero target 2030 and 2040 net-zero targets

scenarios used should always reflect the most recent scientific information from Upstream oil and gas 2025 net-zero target 2025,2030 and 2050 net-zero targets
recognised institutions like IEA, if available. While in past years our benchmarks were
Commercial real estate 2050 net-zero target 2030 and 2050 net-zero targets
aimed at limiting the increase in global temperatures to well below 2 degrees, our
Residential real estate 2050 well-below-2-degrees target 2030 and 2050 net-zero targets
commitment to net zero by 2050 means that this year we assessed and applied new
net-zero-aligned scenarios to the sectors for which they are available. The targets have Cement 2050 well-below-2-degrees target 2030 and 2050 net-zero targets

been approved by ING’s MBB. Steel 2050 well-below-2-degrees target 2030 and 2050 net-zero targets

Automotive 2050 well-below-2-degrees target 2030 and 2050 net-zero targets

Power generation and upstream oil and gas were already benchmarked against the
Aviation 2050 well-below-2-degrees target 2030 and 2050 net-zero targets
IEA’s NZE2050 net-zero pathway in our 2021 Climate Report. This year, the automotive,
steel and aviation sectors have also adopted the IEA NZE2050 as the new benchmark. Shipping well-below-2-degrees target 2030 and 2050 well-below-2-degrees target

For the cement sector, however, we selected the Institute for Sustainable Futures’
Net-Zero by 2050 scenario (ISF-NZ). The ISF-NZ is the scenario most compatible PACTA’s
measurement methodology. For Commercial Real Estate, which is currently only
measured for the Netherlands, we kept the Paris Proof Scenario of the Dutch Green
Building Council (DGBC) as our benchmark. Finally, for residential real estate, we have
also adopted the IEA NZE2050 scenario.

Realisation of targets is also dependent on factors which are outside of ING’s direct
influence. Policy interventions are required to ensure the global transition to a
low carbon economy. Specific material factors are explained per sector in each
sector section.

ING Group 2022 Climate Report 52

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Asset level and client level data

For our measurements, when possible, we prioritise asset level data. Having emissions
information on asset level provides the most granular and accurate measurement
on our clients’ impact, which mainly comes from the buildings, aircraft, ships, power-
generation plants that they own or operate. When we provide general purpose loans
rather than asset financing, we make use of company level data. This is also the case
when asset level data is not available.

Offsets for GHG scope 3 category 15 emissions

Reducing our GHG scope 3 category 15 (scope 3.15) emissions should first and
foremost come from the reduction in carbon emissions of our customers, as the
priority should lie in limiting the amount of CO2 emitted into the atmosphere. In our
approach, we therefore prioritise real decarbonisation efforts and do not use any
offsetting in measuring our portfolio.

ING Group 2022 Climate Report 53

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

The Terra toolbox

Table 3 Overview of approaches applied, output types and data sources

Baseline 2021YE Target vs. baseline

Outstanding Methodology used to Scopes Scenario / Alignment
Sector Metric Convergence
in scope measure portfolio covered Pathway Portfolio Portfolio score
Year pathway 2030 2050
value value
value

Power generation € 8.9 billion PACTA Scopes 1, 2 kg CO2e / MWh IEA NZE 2050 2018 335 289 223 -23.0% -53% -100%

PACTA Credit Outstanding amount

Upstream oil and gas € 3.1 billion N/A IEA NZE 2050 2019 3,986 3,701 3,138 -15.2% -19% -69%
Application Paper in EUR million

Commercial real estate € 10.9 billion PCAF Scopes 1, 2 kg CO2 / m2 Deltaplan DGBC 2019 51.4 48.1 43.7 -9.2% -35% -100%

CRREM 1.5° pathways/

Residential real estate € 297.0 billion PCAF Scopes 1, 2 kg CO2 / m2 2021 45.7 44.3 45.7 3.2% -57% -99%
IEA NZE 2050

Cement € 337 million PACTA Scopes 1, 2 t CO2 / t cement ISF-NZ 2020 0.704 0.681 0.709 4.2% -31% -69%

Sustainable Steel 0* 0*
Steel € 2.9 billion Scopes 1, 2 t CO2 / t steel IEA NZE 2050 2021 2.10 1.99 2.10 5.4%
Principles (~28%) (~94%)

Automotive € 2.4 billion PACTA Scope 3 kg CO2 / km IEA NZE 2050 2020 0.199 0.189 0.187 -0.8% -49% -98%

Aviation € 3.1 billion PACTA Scope 1 g CO2 / passenger km IEA NZE 2050 2019 88.2 82.9 130.4 57.3% -33% -87%

Shipping € 6.5 billion Poseidon Principles Scope 1 Alignment delta Poseidon Principles 2020 -0.4% 0% -6.0% -6.0% 0% * 0% *

* Target for alignment score

ING Group 2022 Climate Report 54

 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Climate alignment
Climate Alignment dashboard
Dashboard
On track: Under or equal to benchmark

Above benchmark by up to 5%
Portfolio view - Outstandings as of year-end Not on track: Above benchmark by more than 5%

Power Generation ING vs. pathway Upstream Oil & Gas ING vs. NZE2050 Commercial Real Estate ING vs. pathway
Global Decarbonisation Pathway -23.0% Absolute Financing Trend Reduction Pathway -15.2% NL Decarbonisation Pathway -9.2%

600 5,000 60

kg CO2 / m2
Outstandings (M€)
3,986
kg CO2e / MWh

500 NZE2050 scenario 4,000 50

NZE2050 Trajectory ING Ambition
400 Market 40
3,000 -12% ING Portfolio
300 ING Portfolio 3,138 -19% ING Portfolio 30
2,000 -36% ING Interim Target
200 ING Interim Target ING Interim Target 20
1,000 -53% ING Target
100 -61% ING Target 10
ING Target -69%
0 Convergence Pathway
0 0
Convergence Pathway

Residential Real Estate ING vs. scenario Cement ING vs. pathway Steel Alignment delta
Global Decarbonisation Pathway +3.2% Global Decarbonisation Pathway +4.2% Sustainable Steel Principles 2021YE +5.4%

60 0.8 4.0

t CO2 / t cement
kg CO2 / m2

SSP Alignment Score

NZE2050 scenario
50 ISF-NZ scenario Sustainable Steel Principles
Market (NL/DE/AU/ES/PL) 0.6 2.0
40 Market 1.23 Alignment Score
30 ING Portfolio (NL/DE/PL) 0.4 0.0 ING Interim Target
ING Portfolio
20 ING Portfolio (NL/DE/AU/ES/PL)
0.2 ING Interim Target -2.0
10 ING Interim Target ING Target
ING Target
0 ING Target 0.0 -4.0
Convergence Pathway
Convergence Pathway

Automotive ING vs. pathway Aviation * ING vs. pathway Shipping PP score
Global Pathway to Zero Tailpipe Emissions -0.8% Global Decarbonisation Pathway +57.3% Poseidon Principles 2020YE -6.0%

0.25 150 10%

g CO2 / passenger km

Alignment Delta
kg CO2 / km

0.20 NZE2050 Scenario 125 NZE2050 Scenario

5%
100 Market Poseidon Principles Score
0.15 Market
75 ING Portfolio 0% ING Interim Target
0.10 ING Portfolio
50 ING Interim Target ING Target
ING Interim Target -5%
0.05 25
ING Target ING Target
0.00 0 -10%
Convergence Pathway Convergence Pathway

2021, the
* Despite a significant reduction in absolute emissions in 2020 and 2021, the aviation
aviation sector
sector experienced
experienced aa severe
severe fluctuation
fluctuation in
in CO
emission intensity
2 intensity due todue to Covid-19.
COVID. Please
Please refer refersector
to the to thedeep-dive
sector deep-dive for information.
for further further information.

ING Group 2022 Climate Report 55

 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

2021 Performance
As part of our NZBA commitment, in 2022 ING set an interim 2030 target for our power
generation portfolio. Benchmarked against the latest IEA NZE2050 scenario energy
transition pathway, this is a more demanding reduction target for emissions intensity
than the benchmark we used in previous years. In the NZE2050 scenario, global power
generation leads the way by achieving net zero emissions in 2040, to enable the global
economy to achieve net-zero emissions by 2050. The emissions intensity of ING’s
power generation portfolio has continued its steady decline and has already decreased
by 33% since 2018, which is on track to meet our 2030 interim target corresponding
to a 53% reduction. This is due to our concerted efforts to support clients investing

Power generation in renewables and ING’s strict policy since 2017 to cease new financing of coal-fired
Climate Alignment
Power generation Dashboard power generation, with a goal to reduce existing exposure to close to zero by 2025.
Portfolio view - Outstandings as of year-end
Specifically, in 2021, the following chart shows which factors contributed to the
€ 8.9 billion -23.0% -53% emission intensity decrease compared to last year. The main drivers behind this year’s
positive performance, accounting for more than 75% of the yearly improvement, are
Power Generation
Outstanding Performance vs. 2021 ING vs. target
2030 reduction pathway Upstream Oil & Gas ING vs. NZE2050
inGlobal
scope
our focus on growing renewables5 and our existing clients transitioning to less carbon-
Decarbonisation Pathway net-zero benchmark vs. 2018
-23.0% Absolute Financing Trend Reduction Pathway -15.2%
intensive sources. At the same time, the improvement in global average efficiency
translated
5,000 into lower emissions released into the atmosphere while generating
600

kg CO2 / m2
Outstandings (M€)
3,986
kg CO2e / MWh

500 NZE2050 scenario electricity,

4,000 contributing to an even lower emission intensity.
Upstream
400 Oil & Gas Market
3,000
3,138
-12%
-19%
NZE2050 Trajectory
ING Portfolio
300 ING Portfolio
2,000 -36%
€ 3.1
200 billion -15.2% -12%
ING Interim Target -53%
ING Interim Target
100 1,000 -61% ING Target
ING Target -69%
Outstanding
0 Performance vs. 2021 2025 reduction
Convergence target
Pathway
0
in scope net-zero benchmark vs. 2019

5 See the ‘Sector transition plans’ section for more details on our focus on renewables.

Commercial
ING Group Real
Residential
2022 ClimateEstate
Real Estate
Report
ING vs. scenario Cement ING vs. pathway
56
Global Decarbonisation Pathway +3.2% Global Decarbonisation Pathway +4.2%
 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Figure 6 2021 performance breakdown: Power generation which bring focus and resources to areas of new opportunity, such as hydrogen,
energy storage, and carbon capture and storage.
250

240
235
Sector transition plans
230 Our power generation portfolio is already fully on track with the Paris Agreement’s
223
-9
220 -3
most ambitious climate goal of limiting global temperature increase to 1.5 degrees
kg CO2e / MWh

210
this century, using the IEA’s NZE2050 scenario as the benchmark. Nonetheless, ING
200
will continue to put in practice its strategy, which is already yielding positive results, to
190
support the financing of renewable energy. To do so, ING recently disclosed its ambition
180

170
to grow commitments to new financing of renewables by 50% by year-end 2025
160
(vs. year-end 2021).
2020 Increased focus on Global average 2021
emission intensity low carbon sources from efficiency improvement emission intensity
new and existing clients

Increase
Toename DecreaseTotaalTotal
Afname

Strengthening the path to net zero in ING’s Energy portfolio

In its World Energy Outlook 2021 Report, the IEA stresses that a massive and immediate investment
How we steer our portfolio in clean and efficient energy is needed. The NZE2050 scenario outlines that if such investments
are made, demand for oil and gas will reduce, and there will be no need to develop new oil and gas
ING’s Energy Sector covers clients in conventional and renewable power generation, fields after 2021.
and energy storage. Through continued engagement with these clients, we support
innovative technologies and new market opportunities, helping accelerate the To strengthen our net-zero portfolio alignment commitments and to support the rapid increase in
energy transition. Our client base is diverse, ranging from global to local, from broad renewables investment that the world needs, ING announced in March 2022 that, together with the
goal to grow commitments to new financing of renewable energy by 50% by year-end 2025 (versus
integration across the value chain to specific niches, and from state-owned enterprises
year-end 2021), ING will not provide dedicated upstream finance (lending or capital markets) for
to public and privately owned companies. new oil and gas fields approved for development after 31 December 2021.

The Sector’s specialist Renewables and Power, and Utilities teams work alongside ING’s
Energy sector-led, multi-disciplinary New Energy Technologies Centres of Expertise,

ING Group 2022 Climate Report 57

 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

2021 Performance
Over the course of the year, the Terra exposure decreased from €3,623 to €3,138
million. This steep continuation of last year’s downward trend is explained by the
combination of planned portfolio management with unusually low drawings under
Power generation committed facilities, due to high prevailing oil and gas prices. In reaffirming ING’s
commitment to the ‘portfolio financing trend’ reduction commitment towards our
€ 8.9 billion -23.0% -53%
2025 and 2030 interim target and 2050 final goal, we note that if oil and gas prices
Outstanding Performance vs. 2021 2030 reduction target fall in future years, the actual outstandings under currently committed facilities may
in scope net-zero benchmark vs. 2018
increase, although the total portfolio will remain below the trend line required for 2030
and net zero by 2050 alignment.

Upstream
Upstream Oil & Gas
oil & gas How we steer our portfolio On track: Under or equal to benchmark

For oil and gas, the alignment metricAbove

is thebenchmark
‘portfoliobyfinancing
up to 5%
trend’ which will require
€ 3.1 billion -15.2% -12% Not on
a continuing reduction in the size of the track: Above
upstream oilbenchmark by more than
and gas portfolio 5% with the
in line
rate of reduction in global oil and gas production set out in the transition pathway of
Upstream Oil & Gas Performance vs. 2021
Outstanding 2025 reduction
ING vs. target
NZE2050 Commercial
IEA’s NZE2050 Real
scenario. Estate
Interim
ING vs. pathway
targets for 2025 and 2030 are to reduce the upstream
inAbsolute
scope Financing Trend Reduction
net-zero
Pathwaybenchmark vs. 2019
-15.2% NL Decarbonisation Pathway -9.2%
oil and gas portfolio by 12% and 19% respectively, from our 2019 target-setting
baseline.
60
The NZBA guidelines for the oil and gas sector, which will set minimum
5,000

kg CO2 / m2
Outstandings (M€)

3,986 standards for the whole sector value chain, are currently being developed. We will
4,000 50
Commercial
3,000 Real-12%Estate NZE2050 Trajectory ING Ambition
adopt40these for future target setting and reporting when they are finalised.
ING Portfolio
3,138 -19% ING Portfolio 30
€ 10.9
2,000
billion -36% -9.2% -35%
ING Interim Target 20
Since joining the NZBA in August 2021, ING has been an active participant
ING Interim Target
1,000 -53%
-61% 10 ING Target in the
-69% ING Target
Outstanding Performance vs. 2021 2030 reduction target working0
group established to develop guidelines for a common approach forPathway
Convergence NZBA
0
in scope net-zero benchmark vs. 2019 banks to set net zero targets for their oil and gas sector portfolios. The guidelines

Residential
Cement
ING Group Real
2022 Estate
Climate Report ING vs. pathway Steel Alignment delta 58
Global Decarbonisation Pathway +4.2% Sustainable Steel Principles 2021YE +5.4%
Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

are expected to be finalised and approved by the NZBA Steering Group before year-
end 2022. Until the final guidelines are published ING will continue to use the PACTA
methodology for upstream oil and gas target setting and portfolio steering.

Sector transition plans

As with power generation, our upstream oil and gas portfolio is aligned with the Paris
Agreement’s goal of limiting global temperature increase to 1.5 degrees Celsius, using
the IEA’s NZE2050 energy transition pathway scenario as the benchmark. Under
this scenario, oil and gas will still play a role in the global economy of 2050, but at
much reduced levels of production. The IEA’s scenario indicates that by 2050 oil and
gas production will need to decline by 69%. We note that if oil and gas production
reduction requirements become more demanding in future updates to the NZE2050
scenario, we will adjust our interim and final portfolio volume reduction targets
accordingly. The importance of aligning with NZE2050 scenario transition pathway
cannot be understated as in addition to the achievement of the UN’s Sustainable
Development Goals (SDGs) on Climate Action (SDG 13) it also takes into account Clean
Air (SDG 3) and Affordable and Clean Energy (SDG 7).

ING Group 2022 Climate Report 59

 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex
Commercial Real Estate
€ 10.9 billion -9.2% -35%
On track: Under or equal to benchmark
Outstanding Performance vs. 2021 2030 reduction target Above benchmark by up to 5%
in scope net-zero benchmark vs. 2019 2021 Performance
Not on track: Above benchmark by more than 5%
The 2021 emission intensity shows a moderate increase compared to 2020, resulting
in ING’s portfolio being close to the global market (+1%) and above the 2021 point
Upstream Oil & Gas ING vs. NZE2050 Commercial Real Estate ING vs. pathway
of the convergence pathway to net zero (+4.2%). As the following chart shows, the
Residential Real Estate
Absolute Financing Trend Reduction Pathway -15.2% NL Decarbonisation Pathway
performance of ING’s clients improved over the year, meaning they now emit less
-9.2%

CO2 per
60 ton of cement produced. However, the overall reported intensity of ING has
€ 297
5,000billion 3.2% -57%

kg CO2 / m2
Outstandings (M€)

3,986
4,000 increased.
50 This is due to two factors: (1) the outstanding volatility, which depends
NZE2050 Trajectory ING Ambition
Outstanding Performance vs. 2021 2030 reduction target 40
on when and by how much credit lines are utilised by our clients,ING hence assigning a
3,000 -12% Portfolio
in scope 3,138 -19% net-zero benchmark ING Portfolio
vs. 2021 30
2,000 -36% different weight to each client at the moment of measurement, and (2) data
ING Interim quality
Target
ING Interim Target 20
1,000 -53%
-61% improvements,
10 meaning we now have better information to assess ING where
Target our clients
-69% ING Target

Cement 0 are. The

0 balance between these three factors is depicted in the below chart.Pathway
Convergence

Cement Figure 7 2021 performance breakdown: Cement

€ 337 million 4.2% -31%
0.7200
Cement
Outstanding Performance vs. 2021 2030 reduction target
ING vs. pathway Steel Alignment delta
in scope
Global Decarbonisation Pathway
net-zero benchmark vs. 2020
+4.2%
0.7100
Sustainable Steel Principles 2021YE 0.0035
0.0027
+5.4%
0.7092
0.7042
0.7000 -0.0011

0.8 4.0

t CO2 / t cement
t CO2 / t cement

SSP Alignment Score

0.6900
ISF-NZ scenario Sustainable Steel Principles
Steel 0.6
Market
0.68002.0
1.23 Alignment Score
0.4 ING Portfolio 0.67000.0 ING Interim Target
) € 2.9 billion 5.4% 0
ING Interim Target -2.0
0.2 0.6600
ING Target
ING Target
Outstanding
0.0 Performance vs. 2021 2030 target -4.0
0.6500
in scope net-zero benchmark Convergence
SSP score Pathway 2020 Performance Data quality Outstanding 2021
emission intensity improvements improvements volatility emission intensity

Toename
Increase Afname
Decrease Totaal
Total

Automotive
Aviation
ING Group *
2022 Climate Report ING vs. pathway Shipping PP score 60
Global Decarbonisation Pathway +57.3% Poseidon Principles 2020YE -6.0%
Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

While ING has already been taking relevant measures to support its cement- net-positive impact on biodiversity, through reducing net water usage for example,
manufacturer clients in decarbonising their activities, and hence be able to meet its eliminating water pollution, implementing biodiversity management, improving
own net-zero targets, investments in sustainable solutions such as carbon capture biodiversity scores on managed land, and implementing plans for rehabilitation on
storage and usage usually take longer for this industry to come into effect and to show large land-use sites. Actions around a circular economy include recycling concrete
progress. Nonetheless, ING continues its efforts towards meeting its targets. and building materials during demolitions. Leveraging on our sector expertise, we are
working to implement additional KPIs in these new areas, strengthening our clients’
How we steer our portfolio engagement with sustainability.
Following the successful set-up of the Construction sector to steer and drive activities across
the value chain, clients in scope have been segmented and monitored across four pillars As a tangible example of how ING supports sector transition plans, global cement
of which cement is one. For cement subsector, our strategy is to continue business with producer CEMEX appointed ING as its sole Sustainability Coordinator, underlining our
existing clients that demonstrate sustainable practices and to be selective about new clients, leading position in the cement sector, particularly in the field of providing sustainable
depending on their commitment to a decarbonisation pathway that will allow us to further finance solutions. ING played a significant role in the creation of CEMEX’s first
steer our portfolio towards net-zero targets by 2050, in line with ING’s overall ambition. Sustainability-Linked financing framework in the fourth quarter of 2021, which focuses
on climate action initiatives to align its corporate sustainability commitments to its
To meet concrete targets within our broader sustainability framework, we set out financing strategy, as part of its Future in Action programme. The Framework sets clear
KPIs to be included in Sustainable Finance Frameworks for cement manufacturers. targets: to reduce net CO2 emissions to 0.520 tons by 2025 and to below 0.475 tons by
These include targets to be reached by 2030, such as bringing CO2 emission intensity 2030, per ton of cementitious product; for 40% of its power consumption to be from
well below 0.500 ton of CO2 per ton of cement and setting a minimum level for both clean energy sources in cement production by 2025, and 55% by 2030; and for 43% of
alternative fuels and clean energy sources. We are pleased to see that major industry its fuels to be from non-fossil sources by 2025, and 50% by 2030.
players meanwhile committed to reduce respective CO2 emission intensities well below
this level, with our client Heidelberg Cement recently committing to the industry’s most CEMEX identified KPIs that are material to the cement industry and established
ambitious target: 0.400 ton of CO2 per ton of cement by 2030. ambitious Sustainability Performance Targets (SPTs) representing important
CO2reduction levers in CEMEX’s carbon mitigation strategy. The framework, praised by
Sector transition plans Sustainalytics for the ‘prospective of achievement’ of its targets, has been adopted by
Material sustainability topics for the cement sector include not only decarbonisation, CEMEX for a set of different financing solutions ranging from lending, working capital
but also biodiversity and the circular economy. Our biodiversity strategies target a solutions and interest rate derivatives.

ING Group 2022 Climate Report 61

 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex
Residential Real Estate
€ 297 billion 3.2% -57%
Outstanding Performance vs. 2021 2030 reduction target
in scope net-zero benchmark vs. 2021 2021 Performance
As from this year, we report our climate alignment using the Sustainable Steel
Principles (‘SSP’) methodology. This framework was developed by a group of five
international banks led by ING and facilitated by the Center for Climate-Aligned
Cement Finance at RMI, in consultation with over 80 representatives from industry, NGOs and
other institutions. It represents a crucial step towards standardised reporting in CO2 for
€ 337 million 4.2% -31%
the steel industry, enabling financial institutions to objectively compare steelmakers
Outstanding Performance vs. 2021 2030 reduction target performance and report on their portfolio alignment (see more information about SSP
in scope net-zero benchmark vs. 2020
in the Box Out below) versus two net-zero emissions trajectories.6

Steel In this very first year our portfolio alignment score (‘PAS’) is 1.23 which, for ING  7,

Steel represents an emission intensity of 2.10 t CO2/t steel. The fact that the PAS is slightly
above 1 signifies that we exceed the well below 2 degrees trajectory. Measured against
€ 2.9 billion 5.4% 0 the below 1.5 degrees benchmark, which for 2021 would be 1.99 t CO2/t steel, ING’s
portfolio is 5.4% above the benchmark. Our score reflects that fact that a significant
Outstanding Performance vs. 2021 2030 target
in scope net-zero benchmark SSP score
portion of our portfolio consists of companies in emerging markets, which generally are
more carbon intensive and the fact that as of today there are no significant low carbon
2.5 steel producers.
2.0

Automotive
t CO2 / t steel

SSP Misalignment zone

Score:
Both the performance and the carbon intensity are not directly comparable with
1.5
1.23
Well below 2 degrees those reported in previous years, as the SSP methodology includes emissions beyond
€ 2.4 1.0 billion -0.8% alignment zone -49% the standard scope 1 and 2 which were used previously. For this reason, 2021’s
0.5 Below 1.5 degrees alignment
Outstanding Performance vs. 2021zone 2030 reduction target
0.0in scope net-zero benchmark ING Portfolio vs. 2020 6 The trajectories represent a net-zero scenario with no overshoot, equal to 1.5, and a net-zero scenario with low
overshoot, equal to 1.5 to 1.6, defined here as ‘well-below-2-degrees’.
7 As the SSP corrects for average scrap use in the portfolio, depending on those levels’ targets may differ from institution
to institution.

Aviation
ING Group 2022 Climate Report 62
Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

performance will be ING’s starting point to steer its portfolio towards its first 2030 carbon credits, such as the EU ETS is planning); (2) facilitate the increased production
net-zero target. This target is an alignment score of 0, which aligns with the IEA’s of renewable energy by for instance reducing permitting periods; and (3) stimulate
1.5 degrees aligned net zero trajectory. the creation of a hydrogen infrastructure. In addition, buyers of steel will have to be
prepared to pay more for ‘green’ steel and also show a willingness to sign long term
How we steer our portfolio contracts to facilitate the investments required.
As a strategic partner to our clients, our immediate objective is to understand where
they are in terms of carbon intensity, and what their strategic targets are for 2030 and Currently, there are few decarbonisation projects in place, with producers being held
2050. This will allow us to engage in meaningful dialogue with them, not just around back by technological and cost constraints. However, we expect this to change over the
strategy and investments, but also concerning how they can best match their strategy next five to ten years as the first of such projects will appear and have a stimulating
to their funding profile. Our dialogue will also highlight where changes are necessary. effect on the rest of the sector.
To this end, we have created a team dedicated to the steel sector that prioritises client
initiatives; this team leads the SSP initiative (see box out below) and engages regularly ING believes that lower carbon production could represent a significant competitive
with clients across the globe on sustainability and strategy. advantage in the steel sector. However, given the competitive and cyclical nature of the
market (the price of steel being particularly sensitive to fluctuations in the economy),
Sector transition plans we remain careful when selecting who to provide funding to. Typically, we bank steel
Decarbonising the steel industry will be highly challenging. This is due to the highly companies with clear competitive advantages, such as low costs or high technological
competitive and cyclical nature of the sector, and the fact that investments required specialisation and supply chain integration. Increasingly carbon intensity will become
to decarbonise will be very significant and will require complete revamping of existing part of those parameters.
plants. In addition, ‘green’ production methodologies are expected to be costlier than
the currently prevailing ones. According to one estimate, total investments required will We are currently considering financing a number of greenfield green steel projects,
be $1.1trillion until 2050. which could be fully operational by 2025 – 2026. Financing these would be a significant
step and improve our alignment. ING will be actively looking to support clients in these
In our view, successful decarbonisation will depend on a number of factors, of which types of projects in the future.
the implementation of effective regulatory regimes is the most important. These
should (1) stimulate decarbonisation by setting carbon pricing (and phasing out of free

ING Group 2022 Climate Report 63

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Sustainable STEEL Principles

Steel is an emissions-intensive sector, accounting for roughly 7% of GHGs, with demand
projected to grow 30% by 2050. In order to avoid carbon lock-in, the decarbonisation of
this hard-to-abate sector is both demanding and urgent. Along with four other banks and
RMI’s Center for Climate-Aligned Finance, ING has led the development of the framework
for The Sustainable STEEL Principles which provide a sector-specific measurement and
disclosure framework for banks, enabling lenders to support the decarbonisation of the
steel sector, and assess climate progress, compatible with NZBA guidance. This was
reviewed by over 80 institutions across finance, industry, and civil society, including
30 steelmakers and industry associations.

Committing to the five Sustainable STEEL principles means that ING intends to:
1. Annually measure and report the climate alignment of our steel lending portfolios
according to the Sustainable STEEL Principles guidance and methodology;
2. Annually publish portfolio climate alignment scores, a brief narrative, and the percent
of our portfolio represented by emissions reduction targets;
3. Source data from clients, or when not available, from an approved third-party data
provider;
4. Engage with our clients to maximise real economy impact by advancing emissions
reductions in line with 1.5°C;
5. Be a leader by setting steel portfolio targets informed by the Principles, updating the
Principles as data evolves, and utilising the Principles for advocacy purposes, in the
interest of decarbonizing the steel industry. The SSP will be formally launched on the
23rd of September at New York Climate Week.

ING Group 2022 Climate Report 64

 Market NZE2050 Trajectory
400 3,000
-12%

kg CO2e
management           Metrics and targets

Outstandi
Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk ING            Annex

kg
Cement 200 300 ING Portfolio 3,138 -19% Portfolio
2,000 -36%
ING Interim Target ING Interim Target
1,000 -53%
-61% ING Target
€ 3370 million100
4.2% ING Target-31% 0
-69%
Convergence Pathway
Outstanding Performance vs. 2021 2030 reduction target
in scope net-zero benchmark vs. 2020 2021 Performance
In 2021, our emission intensity decreased for the third year in a row and is now at 187g
CO2/km, placing our portfolio below the convergence pathway to the net zero aligned
Residential Real Estate ING vs. scenario Cement ING vs. pathway
2030 target. We note that in the graph above, we restate the 2020 portfolio emission
Steel Global Decarbonisation Pathway +3.2% Global Decarbonisation Pathway
intensity from the 210g CO2/km reported last year to 199g CO2/km for 2021. This
+4.2%

restatement has been made, while setting new decarbonisation targets in line with net
€ 2.9
60 billion 5.4% 0 0.8

t CO2 / t cement
kg CO2 / m2

SSP Alignment Score

NZE2050 scenario zero by 2050, as we could make use of more accurate data for the year
50 ISF-NZ2020,
scenariowhich
Market (NL/DE/AU/ES/PL) 0.6
Outstanding
40 Performance vs. 2021 2030 target is the starting point of the IEA NZE2050 scenario. This will allow for aMarket
fair comparison
in
30scope net-zero benchmark SSP(NL/DE/PL)
ING Portfolio score 0.4 the IEA NZE2050 scenario starting point and ING’s portfolio
between starting
ING Portfolio point,
20 ING Portfolio (NL/DE/AU/ES/PL)
thereby
0.2 avoiding inconsistencies. ING Interim Target
10 ING Interim Target

Automotive
ING Target
0 ING Target 0.0
Convergence Pathway
Automotive Convergence Pathway The main driver behind the improvement from 2020 to 2021 is the higher percentage
of electrified vehicles, both electric and hybrid, produced by our clients, which leads
€ 2.4 billion -0.8% -49% to an overall less carbon-intensive fleet. The other drivers that contributed to this
decrease are, with a minor impact, (1) the volatility in outstanding, which reflects the
Outstanding Performance vs. 2021 2030 reduction
ING vs. target
Automotive pathway Aviation
relative share that* each client has in our portfolio, and which fluctuatesING vs. pathway
continuously
in scope net-zero benchmark vs. 2020
-0.8%
Global Pathway to Zero Tailpipe Emissions
on how and when our clients use their credit lines, and (2) other+57.3%
Global Decarbonisation Pathway
depending general
improvements to the emission factors of our clients, which can be related to both
0.25 150

g CO2 / passenger km

Alignment Delta
kg CO2 / km

better performance, meaning that the produced vehicles emit less CO2 than before,
125
0.20 NZE2050 Scenario
Aviation0.15
NZE2050 Scenario
or changes
100 to the company structure and the owned manufacturing plants (such as
Market
Market
the overall
75 fleet improving its average emissions due to the acquisition of another
ING Portfolio
€ 3.1
0.10billion 57.3% -33%
ING Portfolio
50
manufacturer that produces more efficient ICEs). These changes wereING only
Interimpartly
Targetoffset
0.05 ING Interim Target
25
Outstanding Performance vs. 2021 ING2030
Target
reduction target by a methodological improvement, as we are now using more accurate and granular
ING Target
0.00 0
in scope net-zero benchmark vs. 2019
Convergence Pathway emission factors per client instead of global market average. The chart Convergence Pathway
below provides
with an overview of how all the drivers contributed to the emission intensity decrease.

* Despite a significant reduction in absolute emissions in 2020 and 2021, the aviation sector experienced a severe fluctuation in CO 2 intensity due to COVID. Please refer to the sector deep-dive for further information.

Shipping
ING Group 2022 Climate Report 65
 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Figure 8 2021 performance breakdown: Automotive How we steer our portfolio

Since 2019, ING has disclosed key alignment indicators and targets for the Light
0.240 Duty Vehicles (LDV) sector in line with our commitment to the Paris Agreement
0.220
climate targets. To date, the sector has followed PACTA methodology, which uses
0.210 0.003
the technology transition roadmap published by the IEA outlining what needs to
0.200
-0.019 0.188 happen for these targets to be reached within the sector. For 2021, the technology
kg CO2 / km

-0.004 -0.002
0.180
mix indicator for our portfolio is 4.2% electric vehicles (EVs), 14.9% hybrid vehicles and
0.160
80.9% internal combustion engine (ICE) vehicles, which has outperformed the market
0.140
technology mix for 8.3% hybrid vehicles and 86.0% ICE vehicles.
0.120

0.100 Sector transition plans

2020 Methodology Electrification Other Outstanding 2021
emission intensity adjustment improvements volatility emission intensity In line with our commitment to sustainability and supporting the global transition to
Toename Decrease
Afname Totaal
Increase Total
greener energy, ING expects its automotive clients to have a strategy in place outlining
a path towards lower-carbon emission in their products, production, and supply
chain, and/or an aim to align with net-zero 2050 ambitions. Despite the challenges
that the industry is facing in transitioning at the pace required to meet the ambitious
targets of the NZE2050 scenario, ING set short-term and long-term net-zero targets,
in line with our commitment to the NZBA, with the ambition to support our clients in
their transition.

ING Group 2022 Climate Report 66

 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex
Steel
€ 2.9 billion 5.4% 0
Outstanding Performance vs. 2021 2030 target
in scope net-zero benchmark SSP score 2021 Performance
ING’s global, secured aircraft finance portfolio has outstandings of roughly €3.1 billion,
including 410 aircraft with an average aircraft age of 5.3 years. The calculation of
emission intensities (CO2 emissions per passenger-km per aircraft) is based on aircraft-
Automotive specific information such as its number of seats and flight data from 2021 (average
€ 2.4 billion -0.8% -49% distance per flight), which is supplemented by the airline’s load factor and publicly
available fuel consumption data.
Outstanding Performance vs. 2021 2030 reduction target
in scope net-zero benchmark vs. 2020
Since 2020, Covid-19 has had a significant impact on our measurements. While the
pandemic led to a substantial reduction in absolute aviation emissions for the global

Aviation aviation industry (in 2021 absolute emissions were 37% below pre-pandemic levels

Aviation vs. to 49% in 2020), it had a devastating impact on relative efficiency. Flight distances
shortened as long-haul and cross-border travel was restricted. In addition, load factors
€ 3.1 billion 57.3% -33% only rose from 65% in 2020 to 69% in 2021, while pre-pandemic stood at 82% in 2019.
Both factors had a material impact on our measurements and contributed to the high
Outstanding Performance vs. 2021 2030 reduction target
in scope net-zero benchmark vs. 2019
volatility of our portfolio emission intensity.

NZE2050 Scenario Therefore, we have measured the portfolio’s emission intensity based on 2021 load
150
g CO2 / passenger km

125 Market
factor data as well as pre-pandemic 2019 load factor data, the latter as a way of
Shipping100 ING Portfolio
normalising the data for the impact of Covid-19. This allows us to understand the
75 degree to which our own actions compared to external conditions influence the
€ 6.5
50 billion -6.0% 0
ING Portfolio Normalized
emission intensity of our portfolio.
25 ING Interim Target
Outstanding
0 Performance vs. PP 2020 Target vs. PP 2030
in scope (2020YE) decarbonisation trajectory ING Target
decarbonisation trajectory
Convergence Pathway

ING Group 2022 Climate Report 67

 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

This chart depicts the detailed breakdown of the drivers behind ING’s aviation portfolio The waterfall chart illustrates that the drivers behind the decrease in emission intensity
performance: over the course of 2021 are (1) the natural development of the portfolio, constituted by
the amortisation of older transactions and origination of new transactions with better-
Figure 9 2021 performance breakdown: Aviation performing aircraft, (2) the increased operational efficiency of our clients, the largest
positive impact of 2021, and (3) natural movements in loan amounts outstanding
160
149
over the course of the year. As a result of these drivers, portfolio emission intensity
140 -4
130 decreased from 149g CO2/passenger kilometre8 in 2020 to 130g CO2/passenger
-13 -2
120
kilometre in 2021. Notwithstanding this significant improvement, the emission
g CO2 / passenger km

100
87
intensity based on 2021 load factors remains well above the IEA NZE2050 compared
80 -44
to pre-pandemic levels as is depicted in both the climate alignment graph and the
60
waterfall chart. Taking into consideration the 2019 load factor, the 2021 loan book’s
40
normalised emission intensity of 86.6g CO2/passenger kilometre is only slightly above
20
the IEA’s NZE2050 scenario pathway point (85.0g CO2/passenger kilometre) as well as
0
2020 Deals amortisation Financed clients' Outstanding 2021 Use of pre-Covid 2021 normalised the convergence pathway point (82.9g CO2/passenger kilometre).
emission intensity and new clients performance volatility emission intensity load factors emission intensity

Toename Afname Totaal

How we steer our portfolio
Increase Decrease Total

We continue to have frequent conversations with our clients on Terra and pathways
for airlines to reduce their carbon footprint. These are fruitful discussions, where we
cover ING’s capabilities and its support on the client’s transition pathway, current
sector trends and their implications, and where we see the financial sector regarding
sustainability in aviation heading. For now, and in the absence of scalable and
commercially viable alternatives, we work together on financing the latest generation
of aircraft, as these are typically up to 25% more fuel-efficient than the preceding

8 The metric ‘passenger kilometre’ is equivalent to the metric ‘revenue passenger kilometer’ or RPK, which is the metric
for the number of kilometers travelled by paying customers.

ING Group 2022 Climate Report 68

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

generation. Around 47% of our loan book consists of these aircraft (vs. 38% at year-
end 2020). With increasing societal awareness on carbon footprints, airlines have a
clear incentive to acquire more energy-efficient aircraft which ING is keen to support.

Sector transition plans

Several long-term decarbonisation roadmaps have been published, such as the EC’s
Fit for 55, and most prominently the IEA’s NZE2050, which we have as per this year
adopted in our analysis. While the IEA NZE2050 prescribes restrained traffic growth and
the adoption of high-speed rail as a replacement for short haul flights where feasible,
both roadmaps require a significant growth in biofuel adoption: in the IEA’s NZE2050,
45% of the total fuel use in aircraft is bio-kerosene.

Fit for 55, a set of EC legislative proposals which may become law as early as this year,
aims to tax conventional aviation fuel for intra-European flights and requires airlines
to pay for carbon credits, as free carbon allowances will be phased out. ING continues
to explore further ways to support its clients into transitioning to less carbon-intensive
future, in line with the roadmaps published by relevant authorities and institutions.
This will also help in bringing our portfolio’s emissions intensity in line with our net-zero
2030 and 2050 targets.

ING Group 2022 Climate Report 69

 40
ING Portfolio

kg
Contents           CEO
30 Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex
Automotive
20
ING Interim Target

10 ING Target
€ 2.40 billion -0.8% -49%
Convergence Pathway

Outstanding Performance vs. 2021 2030 reduction target

in scope net-zero benchmark vs. 2020 Figure 10 Alignment Delta Distribution

Alignment Delta Distribution

Steel Alignment delta 100%

Alignmnet Delta
AviationSustainable Steel Principles 2021YE +5.4% 50% Alignment Delta based on
required Annual Efficiency
0% Ratio (AER)
€ 3.1 4.0 billion 57.3% -33%
SSP Alignment Score

Sustainable Steel Principles -50%

2.0
Outstanding
1.23 Performance vs. 2021 Alignment
2030 Score target
reduction Portfolio weighted average
-100%
in0.0
scope net-zero benchmark vs. 2019
ING Interim Target 0 100 200 300 400 500 600 700 800 900

vessel
-2.0
ING Target

y Shipping
Shipping
-4.0

2021 Performance
€ 6.5 billion -6.0% 0
In the third quarter of 2021, as part of our commitment under the Poseidon
Shipping
Outstanding Performance vs. PP 2020 Target vs. PP
PP2030
score Principles (PP), we reached out to clients and received actual 2020 emissions data for
in scope (2020YE)
Poseidon Principles 2020YE
decarbonisation trajectory decarbonisation -6.0%
trajectory approximately 94% of the ships we finance. After adding the debt per ship, we reported
a debt-weighted portfolio Alignment Delta (AD) of minus 6.0% in the PP annual
10% disclosure report released in December 2021. The negative AD means our portfolio
Alignment Delta

5% outperformed the PP decarbonisation trajectory and validates our strategy of financing

Poseidon Principles Score
market leaders who focus on owning and prudently operating fuel-efficient tonnage.
0% ING Interim Target
ING Target
-5%
As part of the PP methodology the actual emissions data used refers to 2020, but
y
-10% we feel that accuracy outweighs timing when informing our stakeholders on sector
alignment. We are in the process of collecting actual 2021 emissions data for the next
PP annual disclosure report to be released later this year.

ING Group 2022 Climate Report 70

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

The PP decarbonisation trajectories are regularly assessed to ensure their relevance. Sector transition plans
The PP trajectories for several ship types were updated after the International Maritime The AD of a ship and its potential impact on our portfolio is now an important
Organization (IMO), the UN agency responsible for regulating shipping globally, consideration when ING decides whether to pursue a ship financing transaction.
released its fourth GHG study, which provided new insights on ship size classification, We continue to be client-led but are also actively engaging our clients in a dialogue
methodology improvements, and transport demand. regarding sustainability and decarbonisation of the shipping sector. We are heartened
by the fact a large number of our clients are joining initiatives such as the Getting to
How we steer our portfolio Zero Coalition and the Call to Action for Shipping Decarbonisation and clearly signalling
ING is a founding signatory of the Poseidon Principles (PP), which is a framework for their ambition.
financial institutions to assess and report the climate alignment of their financed
shipping portfolio with the ultimate goal of promoting international shipping’s Clients that have a clearly defined strategy on these topics and put it into action will
decarbonisation. ING adopted the decarbonisation trajectories agreed under the PP, have a strategic advantage, which will eventually extend to their ability to attract
which are consistent with the policies and ambitions of the IMO, including its ambition ship financing. As a first step we are structuring Sustainability Improvement Loans
for GHG emissions to peak as soon as possible and to reduce the total annual GHG (SIL), which include a loan margin incentive linked to carbon emission reduction and
emissions by at least 50% by 2050 compared to 2008. other ESG-related KPIs. In 2021 we acted as Sustainability Coordinator for seven SILs.
We intend to continue offering SILs with material and meaningful KPIs to help drive
Under the PP, a carbon emission intensity metric called the Annual Efficiency Ratio shipping’s decarbonisation.
(AER) is measured annually for every ship financed by ING that falls under the purview
of the IMO based on distance travelled, fuel consumed and its deadweight tonnage. Apart from PP we engage with industry bodies to ensure decarbonisation remains
The AD is then determined as the difference between that ship’s measured AER and high on the agenda and to explore ways forward. We also participate in sector
the AER prescribed by the relevant PP decarbonisation trajectory. By adding the transition initiatives such as the Silk Alliance, a cross-industry working group looking
debt weight per ship, a debt-weighted average AD is then calculated for ING’s entire into decarbonising container shipping in a so-called green corridor between Asia and
financed shipping portfolio and disclosed. If a ship’s AD is zero or negative that means it Europe. Green corridors were a key tenet of the Clydebank Declaration during COP26.
contributes to meeting PP and IMO decarbonisation goals. The aim of the Silk Alliance is to drive development and adoption of certain ship types
and carbon neutral fuels that make this possible. As shipping’s focus shifts to net zero
Currently 29 financial institutions are PP signatories, representing a bank loan portfolio we expect targets and ambition levels to be amended accordingly and intend to play
of approximately $185 billion, over 50% of the global ship finance portfolio. our part in making that a reality.

ING Group 2022 Climate Report 71

 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex
Power generation
€ 8.9 billion -23.0% -53%
Outstanding Performance vs. 2021 2030 reduction target
in scope net-zero benchmark vs. 2018 2021 Performance
We are pleased to announce that in 2021 we have seen a dramatic decrease in our
emissions intensity for our commercial real estate portfolio in the Netherlands. This is
largely due to an increased investment focus into green energy labels, in collaboration
Upstream Oil & Gas with strategic run off activities. We have also introduced an enhanced Corporate
Facility Partners (CFP) model that integrates energy labels with consumption habits,
€ 3.1 billion -15.2% -12%
providing more granular insights into our portfolio’s emissions. This has resulted in an
Outstanding Performance vs. 2021 2025 reduction target emissions intensity for the entire portfolio of 43.7 kg CO2/m2, representing a 12.7%
in scope net-zero benchmark vs. 2019
decrease year on year (50.0 kg CO2/m2). This downward trend is an overwhelmingly
positive sign; however, we do not underestimate the challenge that lays ahead in

Commercial real estate reaching our 2040 ambition. The performance is related to our NL portfolio, where we
On track: Under or equal to benchmark
Commercial Real Estate Above benchmark by up to 5%
aim to expand to additional countries in the coming years.

€ 10.9 billion -9.2% -35%

Not on track: Above benchmark by more than 5% A linear progression has been used to demonstrate our current trajectory relative to
our ambition, noting that in reality we anticipate our decarbonisation pathway will
Commercial
Outstanding Real EstatePerformance vs. 2021 2030 reduction target
ING vs. pathway
more likely resemble a hockey stick.
in scope net-zero benchmark vs. 2019
NL Decarbonisation Pathway -9.2%

How we steer our portfolio

60
kg CO2 / m2

50 There is a heightened need for sustainability efforts in the real estate sector, with the
Residential
40 Real Estate ING Ambition
ING Portfolio
Paris Climate Agreement an important driver of this need. This was noticeable this
30 year as a raft of regulations were drafted in the Netherlands and elsewhere which we
€ 297
20 billion 3.2% -57%
ING Interim Target
expect to come into force in the coming years. This has led us to embed sustainability
10 ING Target
Outstanding Performance vs. 2021 Convergence Pathway
2030 reduction target even deeper into our sector strategy. Our refined sustainability strategy enables us
0
in scope net-zero benchmark vs. 2021 to steer our portfolio towards greater climate alignment, ensuring we are best placed

Cement Steel
ING Group 2022 Climate Report Alignment delta 72
Sustainable Steel Principles 2021YE +5.4%
Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

to combat the impact of climate change on our commercial real estate portfolio. that enables clients to positively contribute to the environment by planting trees in the
In addition to our sector transition plans and targets, we have developed key initiatives Netherlands and Bolivia. This initiative included a social element to help train farmers in
to further accelerate progress towards our ambitious goals. Bolivia on a more sustainable agri-forestry culture and planting a tangible public forest
in the Netherlands. In October 2021, together with our clients, we planted 30,000 trees
In April 2021 for example, we launched our first sustainability loan for the sector, in collaboration with a Dutch NGO ‘Trees for All’. These trees were planted in the Dutch
which provided finance to convert buildings to energy label A at a reduced rate of 1%. province of Limburg, and shortly after we commenced similar operations in Bolivia.
This first loan supported a client in the conversion of two retail buildings from energy These trees are estimated to contribute to the environment in a magnitude equal to
label E to energy label A. We have seen great improvements in the development of more than 10% of the total loan book by the end of 2022.
this product in 2021, which motivate our clients to make their assets more sustainable.
Our assistance extends beyond financing and includes a full suite of advisory services We also developed an ‘energy robot 2.0’ application, giving customers granular insights
to help drive the best client outcomes. into energy consumption activity relative to industry benchmarks. This new iteration
is an improvement on the previous version since it removes complexity, and with it,
One of the incentives that ING can use to steer its commercial real estate portfolio is by certain security challenges. As a result, a frictionless, easy-to-use platform gives clients
financing green loans. These green loans can be used as collateral to receive funding at insight into their energy consumption patterns. Currently in pilot phase, roll out is
discounted prices. This benefits both ING and its clients, as ING can then offer a lower expected for the second half of 2022.
interest rate to its clients for financing green buildings. As a result of such financing,
we made significant contributions to UN SDGs SDG 13 (Climate Action), and 9 (Industry, We continue to work closely with clients to advise on, and help finance, their
Innovation, and Infrastructure). We continue to take important steps to enhance our sustainability strategies, focusing our efforts primarily on improving existing buildings
sustainable debt strategy and see it as an important tool in supporting the strong since they remain the most important element of meeting global climate goals in
growth of our sustainable real estate finance portfolio. the commercial real estate sector. Many of our clients already have sustainability
strategies in place that are designed to steer their assets towards alignment with the
To further assist our clients in their transition to more sustainable operations, we look Paris Climate Agreement and/or net-zero carbon targets.
for ways to help them in making climate contributions that match their remaining
emissions. This led us to launch a ‘real estate forest’ (Vastgoedbos) in September 2021

ING Group 2022 Climate Report 73

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Sector transition plans

We stepped up our sustainability efforts this year and we aim to continue innovating
and improving our practices. This is why in 2020 we set the ambition of being in
alignment with the goals set out in the Paris Climate Agreement by 2040. To achieve
this, we have created a series of milestones we aim to meet along the way:

• Only recognise energy label A and above as ‘green’ from 2022.

• Integrate our energy transition approach into our credit risk policies in 2022.
• Identify an approach that seeks to shift all assets to energy label A label
or above by 2025.
• Execute on our 2025 ambition to shift all assets to energy label A label or
above by 2030.
• Identify a strategy that aligns with the goals set out in the Paris Climate
Agreement by 2035.
• Have executed on this 2035 ambition by 2045.

ING Group 2022 Climate Report 74

 Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex
Upstream Oil & Gas
€ 3.1 billion -15.2% -12%
Climate Alignment Dashboard
Outstanding Performance vs. 2021 2025 reduction target
in scope net-zero benchmark
Portfolio view - Outstandings as of year-end vs. 2019 2021 Performance
Buildings account for 40% of EU energy consumption and 36% of energy-related
direct and indirect GHG emissions, two-thirds of which can be attributedING
tovs.
residential
Power Generation ING vs. pathway Upstream Oil & Gas NZE2050
housing. More than 95% of EU buildings are not energy efficient (below EPC-15.2%
A) yet only
Commercial Real Estate
Global Decarbonisation Pathway -23.0% Absolute Financing Trend Reduction Pathway
1% of buildings undergo energy-renovation per year, according to BPIE. This is too little
to reach
5,000the EU’s climate ambitions and shows the need to address the transition of
€ 10.9
600 billion -9.2% -35%

kg CO2 / m2
Outstandings (M€)
3,986
kg CO2e / MWh

500 NZE2050 scenario the existing

4,000 building stock.
Outstanding Performance vs. 2021 2030 reduction target
Market NZE2050 Trajectory
400 3,000 -12%
in scope
300 net-zero benchmark ING Portfoliovs. 2019 3,138 -19% ING Portfolio
At year-end
2,000 2021 our combined-36% mortgage portfolio (the Netherlands, Germany,
200 ING Interim Target ING Interim Target
Australia,
1,000 Spain, and Poland) reached a CO2 intensity
-53%
-61% of 45.7 kg per ING
m2.Target
Belgium is
100 ING Target -69%

Residential real estate

0 not included
0 in this total, as their way of calculating the emission intensity (including
Convergence Pathway
Residential Real Estate power generation) is not comparable with the other countries in our portfolio.

€ 297 billion 3.2% -57% In previous years we compared our portfolio results with the Beyond 2°C Scenario
(B2DS) for the EU. Starting this year, we can not only compare with the more ambitious
Residential Real EstatePerformance vs. 2021
Outstanding 2030 reduction target
ING vs. scenario Cement
IEA Net
ING vs. pathway
Zero by 2050 scenario, but also calculate a country weighted starting point,
in scope
Global Decarbonisation Pathway net-zero benchmark vs. 2021
+3.2% Global Decarbonisation Pathway +4.2%
based on country level net-zero pathways, as published by Carbon Risk Real Estate
Monitor (CRREM) in 2022. We have used the CRREM scenario to model the targets we
60 0.8

t CO2 / t cement
kg CO2 / m2

SSP Alignment Score

50
NZE2050 scenario describe below. ISF-NZ scenario
Cement40 Market (NL/DE/AU/ES/PL)
ING Portfolio (NL/DE/PL)
0.6
Market
30 0.4 ING Portfolio
€ 337
20 million 4.2% -31%
ING Portfolio (NL/DE/AU/ES/PL)
0.2 ING Interim Target
10 ING Interim Target
ING Target
Outstanding
0
Performance vs. 2021 ING2030
Targetreduction target 0.0
in scope net-zero benchmark Convergence Pathway
vs.Pathway
Convergence 2020

Steel ING Group

Automotive
2022 Climate Report ING vs. pathway Aviation * ING vs. pathway 75
Global Pathway to Zero Tailpipe Emissions -0.8% Global Decarbonisation Pathway +57.3%
Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Figure 11 Residential real estate: country dashboard In The Netherlands, we maintained our methodology of using EPC labels provided
publicly by the Rijksdienst voor Ondernemend Nederland (RVO) and matching these
with the mortgages in our portfolio. In 2021, our NL portfolio showed an improvement
The Netherlands Germany
to 29.3 kg CO2/m2, an improvement of 5% from 2020. This result was partly due to our
100 100
engagement with clients, and also due to a continued shift in the energy mix towards
80 80
60 60 59.5 renewables and improving emission factors of those energy sources.
40 40
29.3
20 20
0 0 In Germany, we improved our methodology as we collected more energy performance
certificates for new mortgages which contain the CO2 emissions per building, resulting
in a more accurate picture of the CO2 emissions. The additional data shows that the
Belgium Poland CO2 intensity for our portfolio is much higher than our model-based estimation which
we have used in prior years, hence we have recalculated the baseline and results from
100 96.0 100
80 80 2018-2021. We continue to collect more data in order to make our calculations even
60 60
53.5 more accurate in the coming years.
40 40
20 20
0 0
Along with the more accurate picture of the CO2 emissions of our portfolio, Germany is
the first market where the 1.5° CRREM national scenario has been applied. In adopting
the CRREM scenario, we switched from an EU scenario to a national German scenario,
Australia Spain where the starting point is much higher since residential buildings in Germany emit
100 100
much more greenhouse gases compared to many other countries in Europe. The
80 80 calculations now apply the updated boundaries of the energy usage of a building
60 60
40 41.0 40 43.7 to include energy usage through cooking, lighting, and appliances as well as the
20 20 transmission and distribution losses. The CO2 intensity for heating, cooling and warm
0 0
water, for example, would only be 50.75 kg CO2/m2.

ING Portfolio CRREM pathway 1.5°c

ING Group 2022 Climate Report 76

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

What we also have learned is that the much worse starting point and the steep path In Australia, we measured our portfolio for the first time, resulting in an outcome
to net zero in 2050 will be extremely challenging and calls for more radical approaches, of 41.0 kg CO2/m2. We arrived at this outcome by looking at the residential energy
especially in the modernisation of the existing building stock in Germany. We can have consumption and emission factors in each of the States and Territories, sourced from
a major impact on building an ecosystem which enables modernisation, however, we the Department of Industry, Science, Energy, and Resources. We then matched the
also see that we cannot do this alone. We need government to support the transition number of dwellings in each State and Territory in our portfolio and applied the average
through more subsidies for homeowners and policies that foster the development of size in m2 sourced from the energy ratings data from Australia’s Commonwealth
the renovation supply chain. Scientific and Industrial Research Organisation (CSIRO) to calculate the final intensity.

In Belgium, we used an updated methodology to measure our portfolio, and show In Spain, we also reported for the first time, resulting in an outcome of 43.7 kg CO2/m2.
this reaching 96 kg CO2/m2 in 2021. We continued our partnership with Rock.Estate In Spain, energy label data is not widely available, so we partnered with Sociedad de
to measure the portfolio and improved the methodology in two ways. Firstly, we Tasación, an independent appraisal company with more than 36 years of experience in
replaced the mean with the median as it is more robust against skewed distributions the Spanish real estate sector. Using their data, we were able to obtain a picture of the
and outliers, both typical in EPC score observations, and secondly, we removed the use energy labels (A-G) of our mortgage portfolio. This was then used to map CO2/m2.
of the first two digits of the postcode as an additional factor related to geographical
location. The reason BE shows as much higher than other countries, is that their EPC In line with the recommendations for mortgages outlined by PCAF, we continue to
labels include emissions from the production of energy, where others focus only on use energy labels as a proxy for properties’ energy performance. We continue to
energy consumed at the home. collect EPC labels for new mortgages in our markets, meaning each year we will have
an increasingly accurate picture. However, data on energy labels is still not widely
In Poland, we noted a decrease in emission intensity, reaching 53.5 kg CO2/m2, an available in most of our markets outside of the Netherlands. We therefore continue
improvement of 7% from 2020. This is mainly related to new loan origination for to develop our own means of determining CO2 intensity for those markets using
buildings constructed with tighter energy efficiency norms. Slight improvement in other available data such as building year, modernisation, and subsidised loans. In all
national energy mix also contributed to this result. Data availability still remains one markets we aim to align these methods with local peers and stakeholders.
of the key challenges, where we continue working with other Polish banks to establish
access to central EPC databases.

ING Group 2022 Climate Report 77

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

We have focused on tracking primary energy demand of the homes, but some of approach to ensure we can actively track the impact of our products and services
our markets are including other energy use at the home into account, such as that so we can find out which of our efforts have the biggest impact on improving
used for cooking. Recently published joint guidance from PCAF, CRREM, and GRESB on energy efficiency.
measuring GHG emissions for real estate suggests that over time we should expand
our focus to all emissions from within the building boundary and not only of the Sector transition plans
building itself. As scenarios and data become available to do this, we will explore how
our reporting can adapt to accommodate for this ambition. Targets
This year we have adopted a net-zero scenario for the residential real estate sector,
In the Netherlands, we also started a pilot with other banks to explore the option of replacing the former beyond 2 degrees scenario used in former years. The new
using real energy usage data, which can improve our methodology beyond the use of scenario is informed by the CRREM 1.5-degree Celsius scenario for the six markets in
energy labels. Shifting to a methodology based on real-energy use is key to uncovering scope and by data for residential real estate derived from IEA global net zero scenarios.
the real picture of housing emissions, and we continue to urge governments and other
stakeholders to work together to make data available for this purpose. This scenario shows that the houses in INGs portfolio across these markets should
reach an average energy efficiency of 0.6 kg CO2/m2 by 2050 which is more ambitious
Steering our portfolio than the previous 2.6 kg CO2/m2. The scenario also shows that houses in our portfolio
We steer our mortgage portfolio at both global and national level, with a focus on should reach an average energy efficiency of 19.7 kg CO2/m2 in 2030. The scenario
our six largest mortgage markets (covering 96% of our mortgage book in terms of currently applies to five of the six markets in scope (Netherlands, Germany, Poland,
outstanding). This includes setting targets, forecasting portfolio change, and creating Spain, and Australia). Belgium is for now excluded from the target until the issue of
governance structures designed to steer on impact. Our governance approach data comparability with other markets can be solved.
includes key existing mortgage portfolio mechanisms within the bank, in addition
to sustainability-focused executive steering committees, which are now active in In line with our commitment under the NZBA, we can refer to these milestones as
the Netherlands, Poland, Germany, Australia and Belgium. In addition, our Global targets related to our portfolio, however there is a distinct difference between this
Retail Sustainability steering committee includes our Global Head of Sustainability, sector and other sectors that we set Targets for under our Terra approach. In residential
Global Head of Retail Products, and Heads of Retail from the Netherlands, Belgium, real estate, more so than other sectors, we foresee that the factors driving towards
and Germany – our largest mortgage markets. We continue to evolve our steering such efficiency milestones are influenced largely by the national energy mix of the

ING Group 2022 Climate Report 78

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

countries where those homes are located. Meaning that governments and institutions transition. Should a national government regulate minimum energy labels for example,
steering and installing new renewable electricity capacity and shifting away from fossil in line with the EU’s Energy Performance of Buildings Directive, such as barring G label
fuels like natural gas, thereby greening the energy mix available to homeowners, is the properties from 2030 and F labels from 2033, then we as a bank can support customers
most important factor for the residential real estate sector to reach net zero. with those labels, facilitating them in financing their renovations ahead of those
deadlines, but for now it is not our place to directly exclude such houses from access to
Next to this the energy efficiency of those homes, as represented by their energy our lending.
label is likely to be the next largest factor. This is something which we as a bank can
influence as a joint stakeholder with homeowners, where the willingness and ability In that sense we will target our efforts towards more products, services, and
of the homeowners is critical to unlock progress. Finally, homeowners influence an partnerships to encourage our mortgage customers to make the required changes,
additional factor, in terms of how much energy they use at home. This is likely to where we report on our efforts in this space within this report.
be the third most important element in reaching those milestones and requires the
involvement of all members of a household to succeed. For these targets to be realised in the real estate sector it’s important for all
stakeholders, including banks, governments, industry stakeholders, energy providers,
To show the significance of how these factors relate, even if all homes in our portfolio and homeowners to increase our efforts and collaboration in years to come. In
were label A or equivalent in the six markets by 2030, houses in our portfolio would not publishing these milestones, we aim to further critical discussion among the key
reach the milestone described above unless a significant and rapid greening of the grid stakeholders for how we can jointly achieve the sector ambitions.
continues in all countries, and homeowners consciously use less energy. At the same
time, it is possible that a greening of the energy mix in many markets could carry In the coming years we plan to evolve and add metrics to our reporting that can clearly
the sector well towards the targets without major improvements to the energy label demonstrate INGs best efforts in empowering our customers to improve their energy
composition. labelling through our financing and services. We fully expect the scenarios applied by
CRREM, IEA and industry stakeholders to change in the coming years and plan to adapt
Like in other sectors, we take an inclusive approach in empowering our customers to our application of these accordingly.
improve their efficiency. We do not see our role as a bank to limit finance to customers
with G and F label homes for example, where doing so may show positively in our
portfolio reporting but would not create real-world change to helping homeowners’

ING Group 2022 Climate Report 79

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Products and Services We continue to build our customer advisory services. In the Netherlands, our mortgage
In order to leverage our financing toward net zero, we have set a target that green advisors received external training on advising clients on how they can improve the
alternatives for our key retail products will be offered in all markets by 2025. sustainability of their homes. This is then discussed in every mortgage consultation.
Furthermore, ING intensifies the use of a tool where people can not only become
In 2022 in the Netherlands and Germany, we launched new Eco Mortgages, which offer aware of the improvements they can make, but also can have them realised. ING also
a discount, of 10 basis points in Germany and 15 basis points (energy label A+ and participates in the National Insulation Week programme of the Dutch government.
higher) or 10 basis points (energy label A) in the Netherlands, for homes with energy
labels of A and above. In the Netherlands this was offered to both new and existing In Germany we launched a renovation calculator with KfW bank in September 2021,
customers with those labels. We also launched an Eco mortgage in our Italian market where ING customers are offered insights into what sustainability measures they can
in 2022. This accompanies our Eco Mortgage in Poland, which was recently redesigned take in their homes. Traction since then has shown growing relevance for customers,
in order to adjust towards some of the requirements under the EU Taxonomy (EUT). ING where those taking part have mostly implemented the suggested measures. The
is planning to roll out Eco Mortgages in all countries where we offer mortgages product calculator will now be rolled out gradually to all our brokers to reach larger customer
model in all mortgage markets, and to align our definition of eco-mortgage products groups.
with the EUT definition of Green Mortgages.
While our products have shown the promise of change to come, we note that demand
However, in order to achieve net zero, we need to empower customers in homes with among clients is still not at the level required to drive the transition. We continue to
lower energy labels in their eco renovations. ING also continues to tackle this challenge, call on governments to implement ambitious and consistent legislation that mandates
where we have lending products in place in both Belgium and Poland for customers transition milestones for residential real estate.
that are renovating to improve the energy label of their home by for example
improving insulation or adding solar panels. In the Netherlands, clients can also extend
their mortgage loan to cover additional eco-renovations. Further eco-renovation
products are planned for launch in Romania.

ING Group 2022 Climate Report 80

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Financed emissions Our estimations were performed using PCAF compliant methodologies and cover
94.7% of lending activities covered by the PCAF methodology, including both wholesale
Next to emission intensity metrics, we also monitor our financed emissions to and retail banking at year-end 2021. This resulted in an estimate of 56 million tons of
complement climate disclosures. Financed emissions are absolute emissions CO2e, including our clients’ scope 1 and 2 emissions. The remaining 5% of our lending
associated with our lending and investment activities, also known as absolute GHG activities is related to Commercial Real Estate, which we aim to disclose in 2023.
scope 3 category 15 emissions. For more details on what this metric entails, please 0.1% of the Wholesale Banking book and 0.4% of the Residential Real Estate book
refer to the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Standard. are excluded from the analysis due to data quality reasons. Some lending activities
are excluded from the analysis as they are out of scope for PCAF (e.g., central banks’
Table 4 Overview of ING’s absolute missions per asset class and business unit exposure and personal loans). The estimation of our equity book, including ING’s stake
in other companies, is at 0.2 million tons of CO2e.
Sector Outstanding Measured Outstanding Financed Economic PCAF data
in EUR in EUR coverage emissions emission quality
billion billion in kt CO2e intensity in score
t CO2e/€ mln
Residential Real Estate
(Mortgages) 311.4 310.2 99.6% 7,515 24 3.8
Commercial Real Estate 35.4 N/A - - - -
Business Loans –
Wholesale banking 263.9 263.5 99.9% 37,431 142 4.3
Business Loans –
Retail banking 86.9 86.9 100% 10,791 124 5.0
Total lending in scope 697.5 660.6 94.7% 55,737 84 4.1
Lending out of scope 60.7 - - - - -
Total Lending in ING 758.2 660.6 87.1% 55,737 84 4.1
Total Equity in ING 4.2 3.5 83.8% 186 53 4.9

ING Group 2022 Climate Report 81

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Table 5 Table 6
Detailed breakdown of our emissions associated with our Wholesale Banking book Extract of the financed emissions associated with the Wholesale Banking sectors covered via Terra  9

NAICS Sector Outstanding Measured Financed Relative Economic PCAF Terra Sector Measured Financed Relative Economic PCAF data
in EUR in EUR emissions contri- emission data outstanding emissions contribution emission quality score
billion billion in kt CO2e bution intensity in quality in EUR billion in kt CO2e intensity in
t CO2e/€ mln score t CO2e/€ mln
Accommodation and Food Services 0.9 0.9 10 0.03% 11 4.5 Power generation 10.5 11,593 50% 1,107 4.7
Admin, Support, Waste Oil & gas 3.4 3,448 15% 1,027 4.4
Management and Remediation 3.9 3.9 238 0.6% 60 4.5 Cement 0.3 281 1% 825 4.2
Agriculture, Forestry, Fishing and Steel 3.5 757 3% 215 4.2
Hunting 0.6 0.6 423 1.1% 672 4.9
Automotive10 2.5 30 0.1% 12 4.0
Arts, Entertainment, and Recreation 0.3 0.3 3 0.01% 9 4.6
Aviation 3.0 2,854 12% 944 4.7
Construction 3.8 3.8 55 0.1% 14 4.5
Shipping 8.0 4,477 19% 562 4.7
Educational Services 0.1 0.1 1 0.003% 11 4.6
Total Terra 31.2 23,439 100% 752 4.6
Finance and Insurance 101.7 101.7 40 0.1% 0 4.8
Health Care and Social Assistance 0.9 0.9 6 0.02% 6 4.4
Information 10.5 10.5 116 0.3% 11 4.5
Management of Companies and Data limitations and difference with 2020 figures
Enterprises 2.4 2.4 56 0.1% 24 4.7
Manufacturing 38.1 38.0 4,120 11.0% 108 4.3 In ING’s 2021 climate report, we estimated our financed emissions associated with
Mining, Quarrying and Oil and Gas the whole lending book to be 42 million tons of CO2 at year-end 2020. The financed
Extraction 8.5 8.4 6,563 17.5% 778 4
Other Services (except Public
emissions results from last year are not easily comparable to this year’s results due to
Administration) 0.2 0.2 5 0.01% 27 4.7 the incomparability of the underlying data and improved methodology. This year we
Professional, Scientific and Technical
used the PCAF database to estimate our emissions. Re-stating 2020 absolute emissions
Services 3.2 3.2 53 0.1% 17 4.5
Public Administration 1.1 1.1 65 0.2% 61 5 by using the PCAF database means that ING’s financed emissions are approximately
Real Estate and Rental and Leasing 6.5 6.5 74 0.2% 11 4.7
Retail Trade 5.7 5.7 174 0.5% 30 4.4
Transportation and Warehousing 20.9 20.9 9,119 24.4% 437 4.5 9 The outstanding may differ from the Terra reported outstanding. In this table, the overall outstanding of each
Utilities 21.0 20.7 15,263 40.8% 736 4.4 client covered by Terra is considered. For Terra measurements, product filtering is applied. See page 51 for further
information.
Wholesale Trade 33.5 33.5 1,049 2.8% 31 4.3
10 The low economic emission intensity in this sector is due to the current coverage of emissions of our clients, which
Total WB 263.9 263.5 37,431 100% 142 4.3 include scope 1 and 2 only.

ING Group 2022 Climate Report 82

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

63 million tons of CO2e at year-end 2020. In addition to the new database, we are now Sustainable finance
measuring our emissions with more granular data: the PCAF data quality score on
year-end 2020 data was 5, while it is 4.3 on this year’s analysis over year-end 2021 Performance highlights
data. A decreasing score indicates improving data quality. In 2021 we exceeded our target for the year-on-year growth of our sustainable finance
business. Here are some of the highlights:
Through the new database and methodology, we observe a decrease in overall
emissions associated with our lending book from 63 million in 2020 to 56 million tons • We supported 317 sustainable transactions in 2021, more than double our 2020
of CO2e in 2021. This decrease is mainly driven by the data accuracy increase for our performance of 139 deals.
WB book. It is important to note that such fluctuations are still to be expected in the
• In 2021, we increased our number of sustainability-linked loans from 34 in 2020 to
coming years, until absolute emissions reporting becomes more accurate, granular,
147 in 2021. We supported the issuance of 95 bonds with a sustainability component
and standardised. More specifically, with higher data scores (e.g., PCAF score 1)
and 45 green and social loans. Sustainable Structured Finance Transactions remained
the expected error margin on absolute emissions estimation is considered to be
on a stable level of 18 transactions as well as Sustainable Investments with four
significantly lower than lower data scores (e.g., PCAF score 5). We will hence continue
transactions.
improving our measurements in order to report figures as accurately as possible.
• Of the 317 sustainable finance transactions closed in 2021, 245 were in EMEA, 26 in
Asia Pacific, and 46 in the Americas. And we saw some firsts: our first sustainable
supply chain financing, our first circular product-as-a-service financing, our first green
asset-backed security and our first green bond where circularity was the main theme.

• In the first half of 2022 we have supported 205 sustainable transactions of which 85
were Sustainability Linked Loans, followed by 54 bonds with a sustainable component
and 21 green/social loans.

We expect the sustainable debt market will continue its growth into 2022, fuelled by
the EU Taxonomy regulation and further accelerated by embedding our Terra targets
into stronger bank-wide KPIs.

ING Group 2022 Climate Report 83

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Sustainable finance targets in a transaction, we can pro-actively engage with our clients on their sustainability
We are financing the transition within Retail Banking by: strategy, so our impact is more significant compared to a participation.

• Providing green alternatives for our key retail products.

In more detail:
• Dedicating €1 billion annual new green financing in 2025 to SMEs and mid-sized
corporates in the Netherlands. Targets for other countries remain to be determined. • Loan products: for loans such as sustainability-linked loans, green loans, in case we:

• Only participate in a transaction with no ESG role, we limit ourselves to our own
Wholesale Banking: committing to mobilise €125 billion of sustainable
commitment.
finance per year by 2025
• When we fulfil an ESG lead role by structuring and/ or coordinating the ESG debt
With this commitment, we capture the volumes of the following products that support
structure, we reflect (our pro rata share in) the full transaction since we mobilised
our clients in their transition:
the ESG transaction for our client.
• Sustainability-linked loan products For example: in an RCF of €1 billion, we have a final take of €100 million. The facility
• Green and social loans is drawn for only €25million.
• Green, social and sustainability bonds and sustainability-linked bonds • We are participant only: we register the €100 million;
• Sustainable investments • We are the ESG coordinator: we register the entire €1 billion in case we are sole ESG
• Sustainable structured finance transactions coordinator, and our pro-rata share in case there are multiple ESG coordinators.
• Sustainable improvement derivatives
• Capital markets products: for the bonds we record in accordance with the role we take:
• Advisory propositions for sustainable activities
• ESG lead role: if we are the ESG structurer or coordinator we take our pro-rata
The commitment makes a distinction between transactions where we are ESG lead share of the full transaction, since we believe it properly reflects our contribution
(such as ESG coordinator or ESG structuring role) and transactions where we do not to support our clients to achieve their sustainability transition (for the avoidance
fulfil such a role (like when we are part of a consortium of banks). In cases where we of doubt: if we are the sole ESG structurer/coordinator we register the entire
are the ESG lead role in a loan, we record the pro-rata share (in case of multiple ESG transaction, but if we for example are a joint structurer/coordinator with another
leads) of the total transaction and if we merely participate, we only take our share bank, we only register the pro-rata part of the transaction as volume mobilised);
into account. This methodology has been selected since if we are the ESG lead role

ING Group 2022 Climate Report 84

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

• Other roles: when we are not fulfilling the ESG lead role, we only register our share Climate and environmental risk
of the bond, where we make a distinction between passive bookrunner roles and
active bookrunner roles.
Risk identification and assessment –
• Derivatives: for sustainable derivatives such as interest rate swaps we record the full Qualitative assessment of transition and physical
notional amount hedged with ING. To prevent double counting, we exclude from the risk drivers per sector
total any sustainable derivatives used to hedge sustainability-linked loans (or other
securities) already included in our total.
Introduction
• Sustainable Investments: for financing solutions provided by our Sustainable A heatmap is one way ING identifies short-term C&E risk; its risk drivers include physical
Investments team (equity and subordinated debt solutions), we report INGs final take risks and transition risks and are aligned with ECB categorisation. In the heatmap,
in the transaction at closing. we plot physical and transition risk drivers against a score of low, medium, or high,
primarily based on expert judgement. The scores are assigned based on the potential
• Advisory propositions for sustainable activities: we are increasingly asked to provide
financial impact of C&E risks on ING’s portfolio, not on the general sector outlook.
tailored ESG advice to our clients and we also address ESG as key part of our client
For example: a certain risk could be high for a sector but because ING doesn’t operate
engagements. When we provide such advice related to a financial transaction not yet
in the geography where the risk is high, it could be low/medium in our heatmap.
captured as a ESG bond, loan or derivative, to avoid double counting we report:
Our 2021 Climate Report provides more information on the methodology and risk
• The full transaction when we are the sole ESG advisor. drivers used in the heatmaps.
• The pro-rata share if we fulfilled a joint ESG advisory mandate.
The risk assessments from the heatmaps have been incorporated in our business-
To realise our goal, we will actively steer on increasing the share of sustainable as-usual risk management processes such as Sector Credit Risk Appetite Statements
transactions and ESG lead roles in our overall number of transactions through (CRAS) which set limits on the credit risk level ING is willing to undertake for a sector
companywide KPIs as well as ramping up our sustainable finance capabilities. (see box out: Using heatmaps as input for managing credit risk) and the Sector
Strategy and Risk Appetite (SSRA) Papers which determine the strategy for selecting
where and how we fund clients in each sector.

ING Group 2022 Climate Report 85

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Progress Table 7 Consolidated heatmap for Wholesale Banking sectors

In the latter part of 2020 and early 2021, we conducted
Sector Transition Physical EAD/Total Sector Transition Physical EAD/Total
the first phase of the heatmap assessment process, which risk risk WB EAD  11 risk risk WB EAD  11
covered most Wholesale Banking sectors and Retail Banking Building and Construction Medium Low 1.4% Real Estate Holding and
Building Materials Medium Medium 0.6% Development Medium Low 0.3%
Mortgages, Consumer Lending and Business Banking Real Estate Investment Medium Low 3.0%
Mid and Downstream Oil
portfolios. We disclosed an extract of the result in the 2021 and Gas Medium Low 4.1% Real Estate Property
Management Medium Low 5.7%
Climate Report and our 2021 Annual Report. This year, Offshore High Low 0.9%
Renewables & Power Low Low 3.3% Food Retail Low Low 1.0%
the assessment for all Wholesale Banking sectors is Household Products Low Low <0.0%
Traders – Energy Low Low 4.3%
complete. The assessment was conducted by the business Upstream Oil and Gas High Low 1.9% Non-food Retail Low Low 0.9%
lines and challenged by the second line, including ESR Utilities Low Low 3.3% Personal Care Low Low 0.3%
Business Support Services Low Low 0.7%
and SCOs. The heatmap across sectors was consolidated Central Banks Low Low 7.5%
Commercial Banks Low Low 6.7% Hospitality and Leisure Low Low 0.6%
and then approved by the GCTP, the highest-level ING Management and
Non-bank Financial Institutions Low Low 12.5%
Bank body authorised to approve policies, methodologies Farming and Fishing Low Low 0.5%
Administrative Services Low Low 1.2%
Management Science and
and procedures related to Credit, Trading, Country, and Food and Beverages –
Tech. Consulting Services Low Low 0.2%
Processing and Retail Low Low 3.5%
Reputation Risks within ING Bank. Other Services Low Low 1.4%
Traders – Softs Low Low 1.2%
Civic Bodies Low Low <0.0%
Healthcare Low Low 0.9%
Public Sector Entities Low Low 0.1%
Pharma Low Low 1.1%
Sovereigns Low Low 0.6%
Chemicals Low Low 1.8%
Media Low Low 0.6%
Metals Machinery
Manufacturing Low Low 0.6% Technology Low Low 4.0%
Other General Industries Low Low 0.9% Telecom Low Low 3.5%
Other Manufacturing Low Low 1.9% Aerospace Low Low 0.2%
Fertilisers Low Low 0.1% Automotive Low Low 3.1%
Metals Manufacturing Low Low 1.7% Aviation Low Low 1.1%
Metals Mining Low Low 1.6% Container and Logistics Low Low 3.0%
Traders – Metals Low Low 1.9% Rail and Road Low Low 1.1%
11 The score scale shown here (Low/Medium/High) is different from that
in the 2021 Integrated Climate Report as here we apply the revised Shipping Low Low 3.3%
aggregation methodology introduced together with the Sector CRAS limit Other Utilities Low Low <0.0%
(see footnote 13 for aggregation methodology).

ING Group 2022 Climate Report 86

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Of the total Exposure at Default, 0.6% scored medium/high risk in terms of physical The following physical risk drivers are considered medium/high risk by more sectors
risk, and 17.9% scored medium/high in terms of transition risk.12 We proactively focus than other drivers:
on managing risks from exposures of medium/high risk sectors our risk management
• storms, hurricanes, and typhoons (extreme weather);
processes, such as Sector CRAS (see box out: Using heatmaps as input for managing
• supply chain resource use and management (resource scarcity); and
credit risk) and the SSRA Paper.
• air pollution and carbon emission management (pollution and waste).

As for transition risk drivers, the following risk drivers are considered medium/high risk
Using heatmaps as input for managing credit risk by more sectors than other drivers:

Sector CRAS set limits on the credit risk level ING is willing to undertake for a sector. Since July 2022, • environmental regulatory requirements changes/adoption (policy/regulation);
ING has started reducing how much a sector with a medium/high heatmap assessment score can
• environmental ING policy changes/adoption (policy/regulation); and
grow. By doing this, we limit growth in sectors where climate and environmental risks are assessed
to be significant and move funding towards sectors where heatmap assessment is low and/or
• reputational risk (market sentiment and demand).
to activities which can demonstrate a positive contribution to climate objectives or sufficiently
mitigate the climate and environmental risks that sector faces. Similar approach with soft limits is Challenges
implemented for our Business Banking (mid-corporates and SMEs) segment. As mentioned, the heatmap assessment was primarily based on expert judgment. The
key challenge to move from expert judgement-based assessment to a data-driven
approach is two-fold: sourcing data and interpreting data. Since our clients are active
It should be noted that the scores for physical risk are the aggregated scores of in various sectors and geographical areas, we need to look into multiple data sources
26 individual physical risk drivers, and the same goes for the scores for transition risk that often vary in scope, granularity, and quality, making it hard to compare or draw
which are the aggregated scores of 11 individual risk drivers.13 This means that even conclusions. We are exploring a way forward for sourcing data, such as developing a
though a sector or sub-sector is scored low risk at aggregated level, there could still be ESG data strategy for data collection and integration.
certain risk drivers which are rated medium/high in a sector and should be managed.
12 EAD is based on June 2022 data.
For instance, although the aggregated scores for Transportation and Logistics sector is 13 Each risk level has been assigned a score: Low-1; Medium-2; High -3. A sector or sub-sector is classified as
Low, Medium, High based on the aggregated score of each risk level.
Iow risk for both physical risk and transition risk, we will still assess individual risk drivers
• Low: when less than half of the risk factors scored Medium
scored medium/high risk at transaction level. • Medium: when more than half of the risk factors scored Medium
• High: when all risk factors scored Medium or High
Please refer to our 2021 Climate Report for detailed information on the risk drivers used for the heatmaps.

ING Group 2022 Climate Report 87

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Also, to understand the financial impact of C&E risks on our portfolio, in addition to Risk identification and assessment –
sector-based assessment, we need to make assessment at client level and distinguish Quantitative assessment of physical risk drivers
their risk levels. To achieve this, we need to know their readiness for the transition to
a more sustainable and low-carbon economy and their capacity to adapt to adverse
Introduction
effects of climate change. However, this type of data and information is not always
In 2021 and 2022 we improved our understanding of the physical risk impact of climate
available. Even when they are available, it is not straightforward translating the insight
events on our mortgage portfolio and underlying assets. For this assessment we
into forward-looking financial impact given the uncertain climate futures.
collected over two million granular location data items from the Netherlands, Belgium,
Luxembourg, Germany, Australia, Spain, Italy, Poland, and Romania and matched it
Next steps
with data of 19 individual climate hazard events provided by Royal HaskoningDHV, in
We plan to review the heatmap methodology periodically to ensure that our
partnership with Ambiental, a company of Royal HaskoningDHV (‘Ambiental’). With the
heatmaps stay relevant to the sector developments in our business and so that we can
received climate data, we were able to cover 99% of our total residential mortgages
continuously improve the quality of our risk assessment with new data, techniques,
book, representing €311 billion, in these countries. We carried out the portfolio
and learning. Our priorities for refinement include a transition from expert judgement
assessment on data from September 2021; this assessment is still valid since neither
towards a data-driven approach, a reflection on medium and long-term (beyond
our portfolio, nor the related climate risk has changed substantially since then.
five years and up to 30 years) climate and environmental risks and a deep dive into
country-specific risks.
Methodology and scope
Table 8 shows the individual climate hazards that we assessed. The climate hazards are
In addition to the Wholesale Banking and Business Banking sector heatmaps, we
grouped into four climate scores based on the aggregation of individual hazards into
initiated our first heatmap assessment to understand the impact of C&E risk on
Geological, Hydrological, Meteorological, and Fire. Also, for the assessment we made
sovereigns and their capacity to adapt to be resilient to C&E risk. We did so through
use of the Summary Climate Risk Score recommended by Ambiental which is derived
a combination of expert judgement, desktop research, and external data sources.
by taking the mean average of the four different aggregated scores of Geo, Hydro,
We intend to leverage the results by considering them as input for market risk
Meteo and Fire (see table 8 below).
appetite statement and stress testing.

ING Group 2022 Climate Report 88

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Table 8 Individual climate hazards assessed

Aggregated Individual Hazards Very low risk score Very high-risk score Aggregated Individual Hazards Very low risk score Very high-risk score
hazards assessed description14 description14 hazards assessed description14 description14
Geophysical Earthquake The property will experience light Property is likely to suffer severe Meteorological Tropical Cyclones Property is at low risk from Property is likely to suffer
(GEO) damage during a relatively rare damage from relatively frequent (METEO) Cyclones and is unlikely to suffer catastrophic damage from
event. events. moderate damage except from frequent events
extremely rare events
Volcano Property is at risk of low damage Property is at risk to suffer
from very rare events catastrophic damage from rare Extratropical Storms Property is in a region that Property is in a region that
events. incidentally experiences some experiences extratropical storms
days of extratropical storms per seasonally for a major period every
Tsunami Property is at risk from extreme Property is likely to suffer
year (<2 weeks) year (>2 months)
Tsunamis but unlikely to suffer catastrophic damage from
catastrophic damage except from frequent Tsunami events Hail The property is at risk of damage The property is at risk of damage
the rarest events from extremely rare events (less from very frequent events
than once every 3 years). (structurally multiple events per
Hydrological River Flood (defended) Property is at risk from Fluvial Property is likely to suffer high
year).
(HYDRO) flooding but unlikely to suffer high damage from frequent Fluvial
damage, except from the events Tornado Property is at risk of severe Property is likely to suffer
most extreme events damage from extremely rare catastrophic damage from
events relatively frequent events
Surge Flood Property is at risk from Surge Property is likely to suffer high
flooding but unlikely to suffer high damage from frequent Surge Lightning Property is in a region that Property is in a region that is
damage, except from the most events experiences lightning activity a exposed to major lightning activity
extreme events few times per year (0 – 16 days). throughout the year (64 – 80
days).
Flash Flood Property is at risk from Pluvial Property is likely to suffer high
flooding but unlikely to suffer high damage from frequent Pluvial Drought Stress Property is in a region that Property is in a region that is
damage, except from the most events incidentally experiences some exposed to major period of
extreme events weeks of drought stress per year drought stress throughout the year
(<2 months) (9 – 12 months)
Sea Level Rise15 Property is likely to be subject Property is below sea level and
to an increased risk of tidal likely to suffer annual flooding Heat Stress The property is located within The property is located within a
inundation from extreme weather without future shoreline a region that incidentally region that is exposed to major
or very extreme tide events in the management. experiences occasional days of periods of heat stress throughout
absence of future shoreline heat stress. the year (2-12 months)
Precipitation Stress The maximum daily rainfall is The maximum daily rainfall is Fire Wildfire Property is at risk of severe Property is at risk of severe
lower than 25 mm. higher than 100 mm. damage from extremely rare damage from wildfires that occur
wildfire events (once in 19 years) every one or two years.
Fire Weather Property is at very low risk, high Property is at very high risk, high
14 Note that if the score is 0 the properties assessed are not to be considered at risk of the respective individual hazards. fire weather rating for less than fire weather rating for more than
The ‘very low risk’ starts with a score of 1-20. And very high-risk score is 81-100.
15% of the year 70% of the year
15 Sea Level Rise has a different scoring than other hazard events – 0; 1-50; 51-99; 100.

ING Group 2022 Climate Report 89

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Progress and key highlights Low risk scores do not mean there is no likelihood of the hazards to
Based on the initial assessment of our mortgage portfolio we see the following happen or to cause damage
key results: It’s important to note that a low risk score has a slightly different meaning for the
19 individual hazard scores. This is why the meaning of very low risk scores as well as
• Assessing risk at present day at aggregated level (meaning all individual risk drivers
the very high risk score per individual hazard is included in above table. For example for
together are captured into one ovearching score: Summary Climate Risk score),
all Hydro hazards any property with a score of 1 or higher the property is at risk from
ING’s global mortgage portfolio is in the very low risk category (12/100) and <1%
the different types of flooding but with increasing likelihood of suffering damages.
of our global mortgages outstandings score as high risk.
Starting with the low risk scores (1-20) that indicate unlikely to suffer high damage,
• The hazards categorised under ‘Meteo’ (see Figure 13 below) account for the highest except from the most extreme events to high risk (61-80) with property is likely to
risk scores, although still in the very low category. In Italy and Romania the hazards suffer high damages from moderate and rare events and low or moderate damage
under ‘Geo’ transcends. from frequent events. This means that even in low-risk areas we will see individual
hazards occur but the low risk rating indicates that we are likely to see low damage
• Assessing the portfolio at an individual hazard level, around 5% of ING’s mortgage
from these events. Similar for drought and heat stress, properties with a very low and
book has at least one hazard with a very high score. We see this in Australia, Spain,
low score (1-40) do experience drought and heat stress but only for a short period per
Italy and Germany.
year (e.g. two months for drought and occasionally for heat) while properties with high
• Looking at future risks and assessing the Representative Concentration Pathway and very high risk scores experience this during a large part of the year (drought for
(RCP)16 scenarios we see a continuously deteriorating trend in the short, medium and 9-12 months per year).
long term. Moving towards 2030, 2050 and 2100, the aggregated Summary Climate
Risk score is expected to increase most for Italy, Romania, and Spain – although still
to be considerd as a ‘low risk’ score.

16 An RCP is a greenhouse gas concentration (not emissions) trajectory adopted by the Intergovernmental Panel on Climate
Change (IPCC). The four pathways – originally RCP2.6, RCP4.5, RCP6, and RCP8.5 – describe different climate futures, all of
which are considered possible depending on the volume of GHG emitted in the years to come. The RCPs are labelled after
a possible range of radiative forcing values in the year 2100 (2.6, 4.5, 6, and 8.5 W/m2, respectively).

ING Group 2022 Climate Report 90

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Detailed view on physical climate risk on mortgage portfolio Figure 13 Aggregated hazard score per country Source: Ambiental
To underpin the above key highlights, below are tables that show the outcomes per
Meteo score Fire score Geo score Hydro score
country and physical risk drivers on four aggregated levels: Geo, Fire, Hydro and Meteo.
0 = Negligible 1-20 = Very low 21-40 = Low 41-60 = Medium 61-80 = High 81-100 = Very high

Figure 12 Summary score and OS per country Source: Ambiental

Australia
OS (in billions of EUR)
Summary score Belgium
0 = Negligible 1-20 = Very low 21-40 = Low 41-60 = Medium 61-80 = High 81-100 = Very high
Germany

0 20 40 60 80 100 120 Italy

Australia Luxembourg
Belgium
Netherlands
Germany
Italy Poland
Luxembourg
Netherlands Romania

Poland
Spain
Romania
Spain 0 5 10 15 20 25 30 35 40 45

0 2 4 6 8 10 12 14 16 18 20

Comparing the four aggregated hazard risks, meteorological hazards account for
the highest risk scores in all countries, although this risk still classified as low in all
countries, except in Australia, where it is classified as medium risk. For Italy and
Romania, the geophysical hazards represent the highest risk scores, although classified
as low risk in both countries.

ING Group 2022 Climate Report 91

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Figure 14 Aggregated hazards in % per country Physical risk in future depending on climate scenarios
The above figures show the physical risks at present day. It is equally useful to look at
0 Negligible 1 Very low 2 Low 3 Medium 4 High 5 Very high
how this will change over the coming years under different climate scenarios, known
as RCP  . This is especially relevant for mortgage lending as these assets will be on our
Meteo Fire
book for a longer period. We have therefore assessed the risk categories Meteo, Fire
Australia Australia
Belgium Belgium
and Hydro under different climate scenarios for the year 2100.
Germany Germany
Italy Italy Figure 15 shows that by 2100, assuming our portfolio composition stays the same,
Luxembourg Luxembourg
risks will have increased the most for Italy, Romania, and Spain and we see the biggest
Netherlands Netherlands
Poland Poland
increase in risk under the worst climate scenario (RCP 8.5). The largest risk increases
Romania Romania are expected to be due to fire hazards, mainly in Australia, Italy and Spain. Applying
Spain Spain the worst-case scenario (RCP 8.5) we see that current low and medium Meteo risks are
0 20 40 60 80 100 0 20 40 60 80 100
expected to increase to a medium level for all countries.

Geo Hydro
Australia Australia
Belgium Belgium
Germany Germany
Italy Italy
Luxembourg Luxembourg
Netherlands Netherlands
Poland Poland
Romania Romania
Spain Spain

0 20 40 60 80 100 0 20 40 60 80 100

ING Group 2022 Climate Report 92

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Figure 15 Risk scores – summary and per hazard – for year 2100 and under different RCPs

Present day RCP 2.6 2100 RCP 4.5 2100 RCP 8.5 2100 0 = Negligible 1-20 = Very low 21-40 = Low 41-60 = Medium 61-80 = High 81-100 = Very high

Summary Meteo Fire Hydro

Australia Australia Australia Australia

Belgium Belgium Belgium Belgium

Germany Germany Germany Germany

Italy Italy Italy Italy

Luxembourg Luxembourg Luxembourg Luxembourg

Netherlands Netherlands Netherlands Netherlands

Poland Poland Poland Poland

Romania Romania Romania Romania

Spain Spain Spain Spain

0 10 20 30 40 50 60 0 10 20 30 40 50 60 0 10 20 30 40 50 60 0 10 20 30 40 50 60

ING Group 2022 Climate Report 93

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Individual hazard scores Figure 16 Scope of current work

Looking at the scores for individual hazards, as opposed to average summary and
aggregated scores, we see that around 5% of our mortgage book has at least one
individual hazard that is rated high or very high. Stress from drought, hail and heat are Scope of current work
the key hazards triggering a very high-risk score. The biggest impacts are in Australia,
Spain and Italy. It is important to note that these risks may have very different impacts Overall
Hazard events Exposure Vulnerability
(indirect) impact
on our mortgage book. For example, hail might cause damage to a property but is
unlikely to severely impact its value. A high-risk score for Hail means the frequency of Type of hazards The amount Expected damage Other indirect
might my (financed) exposed – in terms or loss (in value) of impacts to consider
the events will increase – it does not say anything about increased damage. assets experience of % of portfolio the assets expsosed besides the direct
and to what extent? in value. to hazard events. impacts coming
And potential from hazard events.
A higher risk score for drought and heat stress tells something about the duration of adaptation to the
events.
the stress during the year. A very high-risk score might mean it’s there almost the
entire year. It does not say anything about the severity of the drought or heat, nor
does it specifically indicate the consequences in terms of damage to the property.

Challenges
Taking our current work to the next stages, as visualised in Figure 16, is challenging. And/or will the additional costs for preventive measures and/or damage impact our
Calculating the vulnerability and especially the indirect impacts is hard especially probability of default (PD) since they affect the financial position of our mortgage
since hazards caused by climate change are expected to cause impacts we have customers? And what might the impact be of indirect impacts and potential insurance
not seen before. gaps with negative consequences on the property’s value? Getting the transmission
channel right is complex and deserves more and better understanding by banks and
To fully understand the financial impact of any physical risk driver, we need to supervisors alike before taking final decisions. We are confident that this first step in
understand the ‘transmission channel’ between the physical risk and the financial understanding and quantifying physical risk drivers contributes to that discussion and
impact itself. For example, will the impact of flooding be that a property drops in creates insights from which the market as a whole can benefit.
market value, impacting the loss given default (LGD) of (parts of) our portfolio?

ING Group 2022 Climate Report 94

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Another challenge is with translating our insights into consequences for our future
individual mortgage customers. What hazard events and what timing do we use
for strategic choices? For example, exclusion or differentiation in price and/or loan
conditions. And if we would apply these, how can we safeguard a fair playing field for
all homeowners and not penalise homeowners that happen to live in a house or in a
region that is hit the most by future hazard events?

Next steps
We will use the outcome of our physical risk assessment as input for our CRAS for
Mortgages as well as for our Retail lending strategy. Also, we will carry out a similar
exercise with the immovable assets we finance for our business clients. Finally, in order
to use the data on an ongoing basis, we need to create automated processes to be
able to assess potential new mortgages. Alongside our own next steps to continuously
improve, we will also actively share our learnings and outcomes in peer collaborations
and working groups such as within the UNEP-FI.

ING Group 2022 Climate Report 95

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Annex

ING Group 2022 Climate Report 96

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

TCFD recommendations table

The following table provides reference to ING’s progress on implementing the 11 TCFD recommended disclosures covered as part of this report.

TCFD Recommended Disclosures Section Reference Sub-Section Reference Page number(s)

Governance a Describe the board’s oversight of climate-related risks and opportunities. Governance Governance of ESG Risks and Opportunities 14 – 15
Governance ESG-linked remuneration 16
b Describe management’s role in assessing and managing climate-related risks and Governance Governance of ESG Risks and Opportunities 14 – 16
opportunities. Governance ESG-linked remuneration 16
Strategy a Describe the climate-related risks and opportunities the organisation has identified over Strategy Managing climate and environmental risks 30 – 33
the short, medium, and long term. Strategy Finance and advise clients in line with a net-zero economy 24 – 30
Strategy Steer our portfolio towards net zero by 2050 or sooner 23 – 24
Strategy Reach net zero in our own operations 21 – 22
b Describe the impact of climate-related risks and opportunities on the organisation’s Strategy Managing climate and environmental risks 30 – 33
business, strategy and financial planning. Strategy Finance and advise clients in line with a net-zero economy 24 – 30
Strategy Steer our portfolio towards net zero by 2050 or sooner 23 – 24
Strategy Reach net zero in our own operations 21 – 22
c Describe the resilience of the organisation’s strategy, taking into consideration different Risk Management Our approach to managing climate risk 32 – 38
climate-related scenarios, including a two-degree or lower scenario. Metrics and targets Terra – steering our portfolio 42
Risk management a Describe the organisation's processes for identifying and assessing climate-related risks. Risk Management Summary per risk domain 39 – 40
b Describe the organisation's processes for managing climate-related risks. Risk Management Our approach to managing climate risk 37 – 38
c Describe how processes for identifying, assessing, and managing climate-related risks Risk Management The ESR framework 41 – 43
are integrated into the organisation’s overall risk management.
Metrics and targets a Disclose the metrics used by the organisation to assess climate-related risks and Metrics and targets Own operations 45 – 47
opportunities in line with its strategy and risk management process. Metrics and targets Terra – steering our portfolio 47 – 83
Metrics and targets Sustainable finance 83 – 85
Metrics and targets Climate and environmental risk 85 – 95
b Disclose scope 1, scope 2, and, if appropriate scope 3 GHG emissions, and the related risks. Metrics and targets Financed emissions 81 – 82
Annex Environmental programme 98
c Describe the targets used by the organisation to manage the climate-related risks and Metrics and targets Own operations 45 – 47
opportunities and performance against targets. Metrics and targets Terra – steering our portfolio 47 – 83
Metrics and targets Sustainable finance 83 – 85
Metrics and targets Climate and environmental risk 85 – 95

ING Group 2022 Climate Report 97

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Environmental programme Table 11 Carbon emissions

Carbon emissions
A detailed data review of historical data and methodology has resulted in the below 2021 2020 2014
Actuals coverage (% of employees) 97 97 91
restatements. In this table we restate the last two years and our baseline year of 2014.
kilotonne CO2e
Total actual carbon3 25 28 96
Table 9 Breakdown of electricity consumption and other energy consumption Total extrapolated carbon 26 29 105

Breakdown of electricity consumption

Total actual carbon scope 14 10 11 25
2021 2020 2014 2021 2020 2014
Total actual carbon scope 25 8 8 49
Coverage (% of employees) 99 99 92 99 99 92
Total actual carbon scope 36 7 9 23
MWH x 1000 kilotonne CO2e
Non-Renewable electricity - - 75 – – 42
Renewable electricity 177 195 227 – – –
Total electricity 177 195 302 – – 42 In 2022, following a refresh of our data platform, we conducted a detailed historical
review of our carbon-related data. In doing so, we have (1) made corrections to
Breakdown of other energy consumption
2021 2020 2014 2021 2020 2014 datapoints that were incorrectly reported; (2) corrected our coverage statistics for
Coverage (% of employees) 99 97 92 99 97 92 extrapolation where those were incorrectly applied; and (3) improved our methodology
GJ X 1000 kilotonne CO2e
by applying more granular emission factors for our usage of district heating. The data
Natural gas 162 165 358 9 11 23
Fuel oil 5 4 15 0.4 0.3 2 has been restated for all carbon-related tables, displaying the last two reporting years
District heating 117 110 81 8 8 7 as well as our baseline year, 2014. Since 2014, our reporting was cumulatively under-
Total other energy1 284 279 454 18 19 31
reported by 5,900 tonnes of CO2e.

Table 10 Kilometres and carbon emissions through business travel1

1 The Total other energy is the sum of natural gas, fuel oil, and district heating. The total can deviate from the sum of all
Kilometres and carbon emissions through business travel categories due to rounding-up to gigajoules.
2021 2020 2014 2021 2020 2014 2 Business travel comprises travel by air and by road for business purpose only.
Coverage (% of employees) 97 99 90 97 99 90 3 The total actual carbon is the sum of scope 1, 2 and 3 actual emissions. The total can deviate from the sum of all categories
KM x 1 million kilotonne CO2e due to rounding-up to kilotonnes. Our calculation methodology and scope are defined in ING’s non-financial data reporting
protocol.
Travel KMs2 57 71 168 7 9 23
4 Scope 1 comprises emissions from our use of natural gas and fuel oil.
5 Scope 2 comprises emissions from our use of non-renewable electricity and district heating.
6 Scope 3 comprises emissions from our business travel by air and car.

ING Group 2022 Climate Report 98

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

List of abbreviations
2DII: 2 Degrees Investing Initiative EC: European Commission IEA: International Energy Agency RCF: Revolving Credit Facility
AD: Alignment Delta ECB: European Central Bank IRRBB: Interest Rate Risk in the Banking Book RCP: Representative Concentration Pathway
AER: Annual Efficiency Ratio EMEA: Europe, the Middle East and Africa ISF: Institute for Sustainable Futures REC: Renewable Energy Certificate
B2DS: IEA (ETP) Beyond 2°C Scenario ENCORE: Exploring Natural Capital Opportunities, KPI: Key Performance Indicator REF: Real Estate Finance
BPIE: Buildings Performance Institute Europe Risks and Exposure IMO: International Maritime Organisation REIT: Real Estate Investment Trust
C&E: Climate-related and environmental risks EP: Environmental Programme IPBES: Intergovernmental Science-Policy RMI: Rocky Mountain Institute
CAPEX: Capital Expenditures EPC: Energy Performance Certificate Platform on Biodiversity and Ecosystem Services RPK: Revenue Passenger Kilometre
CCAF: Center for Climate-Aligned Finance ESG: Environmental, Social and Governance LDV: Light Duty Vehicle RVO: Netherlands Enterprise Agency
CCC: Climate Change Committee ESR: Environmental and Social Risks LGD: Loss Given Default PAS: Portfolio Alignment Score
CEG: Climate Expert Group EU: European Union M&A: Mergers and acquisitions SCO: Senior credit officer
CEO: Chief executive officer EU ETS: European Union Emissions Trading MBB: Management Board Banking SDG: Sustainable Development Goal
System NAICS: North American Industry Classification
CFP: Corporate Facility Partner SIL: Sustainability Improvement Loan
EUT: European Union Taxonomy System
COP: Conference of the Parties SME: Small and Medium-sized Enterprises
(B)EV: (Battery) Electric Vehicle NACE: Nomenclature of Economic Activities
CRAS: Credit Risk Appetite Statement SSM: Single Supervisory Mechanism
FO: Front Office NVB: Dutch Banking Association
CRO: Chief risk officer SSP: Sustainable STEEL Principles
FSB: Financial Stability Board NZBA: Net-Zero Banking Alliance
CRREM: Carbon Risk Real Estate Monitor SSRA: Sector, Strategy and Risk Appetite
GCC-TA: Global Credit Committee – Transaction PACTA: Paris Agreement Capital Transition
CSIRO: Commonwealth Scientific and Industrial Approval Assessment TCFD: Task Force on Climate-related
Research Organisation Financial Disclosures
GCTP: Global Credit and Trading Policy PCAF: Partnership for Carbon Accounting
CSRD: Corporate Sustainability Reporting Directive Committee Financials TNFD: Taskforce Nature-related
DGBC: Dutch Green Building Council Financial Disclosures
GHG: Greenhouse gases PD: Probability of Default
EAD: Exposure at Default UN: United Nations
GOO: Guarantee of Origin PET: Polyethylene terephthalate
EAF: Electric Arc Furnace UNEP-FI: United Nations Environment
ICAAP: Internal Capital Adequacy Assessment PP: Poseidon Principles Programme Finance Initiative
EBA: European Banking Authority Process RAS: Risk Appetite Statement WB: Wholesale Banking
EBIT: Earnings Before Interest and Taxes ICE: Internal Combustion Engine RB: Retail Banking ZPD: ZonnepanelenDelen

ING Group 2022 Climate Report 99

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Important legal information

Nothing in this document expressed or implied, is intended to or shall create (11) non-compliance with or changes in laws and regulations, including (26) changes in credit ratings
or grant any right of any cause of action to, by or for any person (other than those concerning financial services, financial economic crimes and tax laws, (27) business, operational, regulatory, reputation, transition and other risks
ING Groep N.V.) and the interpretation and application thereof and challenges in connection with climate change and ESG-related matters
(12) geopolitical risks, political instabilities and policies and actions of (28) inability to attract and retain key personnel
All figures in this document are unaudited. Small differences are possible in governmental and regulatory authorities (29) future liabilities under defined benefit retirement plans
the tables due to rounding. (13) legal and regulatory risks in certain countries with less developed legal (30) failure to manage business risks, including in connection with use of
and regulatory frameworks models, use of derivatives, or maintaining appropriate policies and guidelines
Certain of the statements contained herein are not historical facts, including, (14) prudential supervision and regulations, including in relation to stress (31) changes in capital and credit markets, including interbank funding, as
without limitation, certain statements made of future expectations and tests and regulatory restrictions on dividends and distributions, (also among well as customer deposits, which provide the liquidity and capital required to
other forward-looking statements that are based on management’s members of the group) fund our operations, and
current views and assumptions and involve known and unknown risks and (15) regulatory consequences of the United Kingdom’s withdrawal from the (32) the other risks and uncertainties detailed in the most recent annual
uncertainties that could cause actual results, performance, or events to European Union, including authorisations and equivalence decisions report of ING Groep N.V. (including the Risk Factors contained therein) and
differ materially from those expressed or implied in such statements. Actual (16) ING’s ability to meet minimum capital and other prudential regulatory ING’s more recent disclosures, including press releases, which are available
results, performance or events may differ materially from those in such requirements on www.ING.com.
statements due to several factors, including, without limitation: (17) changes in regulation of US commodities and derivatives businesses of
ING and its customers This document may contain inactive textual addresses to internet websites
(1) changes in general economic conditions and customer behaviour, in (18) application of bank recovery and resolution regimes, including write- operated by us and third parties. Reference to such websites is made for
particular economic conditions in ING’s core markets, including changes down and conversion powers in relation to our securities information purposes only, and information found at such websites is not
affecting currency exchange rates and the regional and global economic (19) outcome of current and future litigation, enforcement proceedings, incorporated by reference into this document. ING does not make any
impact of the invasion of Russia into Ukraine and related international investigations, or other regulatory actions, including claims by customers representation or warranty with respect to the accuracy or completeness
response measures who feel mislead and other conduct issues of, or take any responsibility for, any information found at any websites
(2) the effects of the Covid-19 pandemic and related response measures, (20) changes in tax laws and regulations and risks of non-compliance or operated by third parties. ING specifically disclaims any liability with respect
including lockdowns and travel restrictions, on economic conditions in investigation in connection with tax laws, including FATCA to any information found at websites operated by third parties. ING cannot
countries in which ING operates, on ING’s business and operations and on (21) operational risks, such as system disruptions or failures, breaches of guarantee that websites operated by third parties remain available following
ING’s employees, customers, and counterparties security, cyber-attacks, human error, changes in operational practices or the publication of this document, or that any information found at such
(3) changes affecting interest rate levels inadequate controls including in respect of third parties with which we do websites will not change following the filing of this document. Many of
(4) any default of a major market participant and related market disruption business those factors are beyond ING’s control. Any forward-looking statements
(5) changes in performance of financial markets, including in Europe and (22) risks and challenges related to cybercrime including the effects made by or on behalf of ING speak only as of the date they are made,
developing markets of cyber-attacks and changes in legislation and regulation related to and ING assumes no obligation to publicly update or revise any forward-
(6) political instability and fiscal uncertainty in Europe and the United States cybersecurity and data privacy (23) changes in general competitive factors, looking statements, whether as a result of new information or for any other
(7) discontinuation of or changes in ‘benchmark’ indices including ability to increase or maintain market share reason. This document does not constitute an offer to sell, or a solicitation
(8) inflation and deflation in our principal markets (24) the inability to protect our intellectual property and infringement claims of an offer to purchase, any securities in the United States or any other
(9) changes in conditions in the credit and capital markets generally, by third parties jurisdiction.
including changes in borrower and counterparty creditworthiness (25) inability of counterparties to meet financial obligations or ability to
(10) failures of banks falling under the scope of state compensation schemes enforce rights against such counterparties

ING Group 2022 Climate Report 100

Contents           CEO Foreword           Executive summary           Governance           Strategy           Risk management           Metrics and targets           Annex

Contact
Written and produced by ING Groep N.V.

For questions and feedback, please contact us at

[email protected]

ING Groep N.V.

Bijlmerdreef 106, 1102 CT Amsterdam

P.O. Box 1800, 1000 BV Amsterdam
The Netherlands

Telephone: +31 20 5639111

Internet:
www.ing.com
https://www.ing.com/Sustainability.htm

Commercial Register of Amsterdam, no. 33231073

ING Group 2022 Climate Report 101