OIL & GAS PORTFOLIO
Pensioenfonds ING, the closed €26 billion pension system of the Netherlands' ING Bank, sold a substantial portion of its fossil fuel interests in 2017. As part of its dedication to the Paris Agreement, the fund made a choice.
In April of last year, ING
Pension Fund declared that it would align its investments with the goals of the
Paris Agreement, which call for a 50% decrease in CO2 emissions by 2030. Although
the fund does not publicly disclose using any particular benchmark, it has
indicated that it is guiding its policy decisions by the European Union's
Climate benchmark rule.
oil and natural gas
There are three competing goals
in ING's energy strategy:
- 1. reduce carbon emissions in order to slow global warming.
- 2. the importance of keeping the cost of energy low for consumers and businesses.
- 3. energy supply reliability must be guaranteed.
In order to strike this
equilibrium in a culture that is still heavily reliant on fossil fuels, ING believes it is its responsibility to
continue funding today's global requirements while also facilitating the shift
to a low-carbon economy.
compatible with current climate scientific work.
Following the climate research
that supports the International Energy Agency's (IEA) "Net-Zero Emissions
by 2050 Roadmap," ING is adjusting its investment strategy accordingly. In
line with the IEA's approach, ING plans to lower its upstream oil and gas
portfolio by 19 percent by 2030 and 53 percent by 2040 with respect to 2019. ING's
goal for oil and gas pipelines, LNG terminals, and storage facilities in the
midstream sector is to adopt a "net zero by 2050" methodology by the
end of the year.
Put a stop to the practice
of allocating specific funds toward building up new oil and gas fields.
If the economy is successfully
electrified by investing in renewable energy and infrastructure as per the
IEA's net-zero roadmap, then the demand for fossil fuels would drop and no new
oil and gas fields will be required. Because of this, ING decided in early 2022
to limit dedicated upstream finance (loan or capital markets) for oil and gas
projects licensed for development after 31 December 2021. This is in addition
to the firm's goal of increasing new financing of renewable energy by 50
percent by 2025. ING is now extending this strategy into the midstream sector
of the oil and gas industry
truth be told, the bank is
certain it cannot completely phase off support for fossil fuels.
The following are the
justifications behind ING's stance:
- Even now, people use them for heating, transportation, steel production, and other essential functions. Green energy is still in little supply, and even in the far future, a net-zero world will not be equivalent to a society without fossil fuels.
- ING can't address this by abandoning our consumers or industry, ING believes that working with customers to assist them in migrating away from fossil fuels will have the greatest impact on the battle against climate change.
- It's a delicate balancing act. The transition away from fossil fuels has societal implications, such as the risk of a spike in energy prices that might put many people in a financial bind. Taking climate action while also fulfilling our social responsibility to keep energy affordable and accessible is a priority for ING.
References
Pensioenfonds ING divests from
fossil fuels, Available at https://www.ipe.com/news/pensioenfonds-ing-divests-from-fossil-fuels/10065541.article
(accessed on 24 march 2023)
ING takes next step in aligning oil & gas portfolio with climate goals, Available At https://www.ing.com/Newsroom/News/ING-takes-next-step-in-aligning-oil-gas-portfolio-with-climate-goals.htm (accessed on 24 march 2023)
ING's 3 reasons for not fully
funding fossil fuels, Available at https://www.comunicarseweb.com/node/36795
(accessed on 24 march 2023)
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