Decarbonizing steel: ING first bank to act
Dutch bank ING has become the first major bank globally to stop providing dedicated finance for new unabated steel blast furnaces and for the extension of existing unabated blast furnaces. Blast furnaces are steel making furnaces that rely on coal. If they are abated, that means they use emissions mitigation technologies like carbon capture and storage. Citing climate concerns, the bank has also announced it will no longer finance new metallurgical coal mines or the expansion of existing mines (i.e. coal mines for steel production). Reclaim Finance and BankTrack have welcomed this as a major step forward to support decarbonization of the steel sector, which is responsible for 11% of global CO2 emissions. While this policy marks a milestone in bank action on decarbonising the steel sector, as no bank has previously explicitly restricted finance for blast furnaces before, the policy has a significant loophole in that it only applies to project finance. ING and the financial sector still have a long way to go in order to stop financing runaway climate change, and we hope this small step will inspire others to join in adopting strong policies for climate action.
BankTrack has been actively engaging with ING to limit its coal-based steel and metallurgical coal finance since the launch of our Banks and Steel project in February 2023. We publicly challenged them to make their steel-sector climate commitments more ambitious, and provided recommendations for strong policies in line with the IEA’s Net-zero by 2050 scenario. In December 2023, together with Reclaim Finance and 67 organisations, we sent letters to the 50 largest banks financing metallurgical coal expansion including ING, calling on them to adopt a metallurgical coal exclusion policy. We will continue to engage with ING and other banks to once and for all end finance for the expansion of the coal-based steel and metallurgical coal mining sectors.
Dutch bank ING has become the first major bank globally to stop providing dedicated finance for new unabated steel blast furnaces and for the extension of existing unabated blast furnaces because of climate impacts. The bank has also announced it will no longer finance new coking (metallurgical) coal mines or the expansion of existing coking mines. Reclaim Finance and BankTrack have welcomed this as a major step forward to support decarbonization of the steel sector, which is one of the biggest industrial sources of CO2 emissions, and they urge other financial institutions to follow suit. But they say ING must also go further and extend its commitments beyond project finance to restrict corporate financing to companies with met coal expansion plans.
ING’s new commitment on steel (1), sets a minimum standard for other banks who have signed up to the ING-led Sustainable STEEL Principles (2), and represents a critical step forward. The steel sector is responsible for up to 11% of global emissions, primarily due to the use of metallurgical coal (3).
The bank says that it will no longer provide new dedicated finance for new unabated blast furnaces or for extending the life of existing unabated blast furnaces for steel making, and that it will engage with clients in strategic discussions about their transition strategies.
ING’s commitment to end finance for metallurgical coal projects brings it in line with the commitments already made by HSBC, BNP Paribas, Société Générale, Macquarie and Caixa Bank on project finance (4).
"Not only has ING become one of the first financial institutions to include met coal in its energy policy, it is also the first major bank to include steel facilities in this policy, making it a leader in decarbonizing this industry. Other signatories to the Sustainable Steel Principles, which include Citi, Crédit Agricole, Société Générale, Standard Chartered, and UniCredit, must follow this example. And ING should strengthen its ambition and extend its commitments beyond project financing to restrict corporate financing to companies with met coal expansion plans." Cynthia Rocamora, Industry Campaigner at Reclaim Finance
Banks have been slow to act on finance for the steel sector, with the Sustainable STEEL Principles criticized for lacking ambition (5). To meet climate commitments (6), the finance sector must stop supporting the expansion of metallurgical coal projects and stop supporting the development of new steel blast furnaces that rely on metallurgical coal, and the relining of existing ones.
"ING's new policy should send a clear message to steelmakers around the world: metallurgical coal’s future is dead. With major international banks like ING, BNP Paribas, and HSBC ruling out finance for new metallurgical coal mines, blast furnace operating steelmakers should be concerned about their access to future finance and metallurgical coal supply." Julia Hovenier, Banks and Steel Campaigner at BankTrack
To strengthen its leadership, ING should adopt a stronger stance by ending corporate finance and bond facilitation services for companies developing steel infrastructure that depends on metallurgical coal, and companies that have metallurgical coal mining expansion plans. Just 1.4% of finance for metallurgical coal developers currently takes the form of project finance (7).
Reclaim Finance and BankTrack warn that by only restricting finance for “unabated blast furnaces”, ING leaves room for inadequate decarbonization technologies such as carbon capture, utilization, and storage (CCUS), which may not deliver emission cuts quickly enough, and would prolong the use of coal in steelmaking (8). They urge the bank to adopt best practice in its engagement with clients in the steel-making sector (9) and call on financial institutions to exclude financing for met coal developers (10).
- See https://www.ing.com/Sustainability/Our-Stance/Energy.htm
- See https://steelprinciples.org/
- See: https://static1.squarespace.com/static/5877e86f9de4bb8bce72105c/t/624ebc5e1f5e2f3078c53a07/1649327229553/Steel+climate+impact-benchmarking+report+7April2022.pdf
- For more information on financial institutions’ commitments on metallurgical coal, see: https://coalpolicytool.org/
- See the International Energy Agency’s net zero scenario: https://iea.blob.core.windows.net/assets/deebef5d-0c34-4539-9d0c-10b13d840027/NetZeroby2050-ARoadmapfortheGlobalEnergySector_CORR.pdf
- See: https://ieefa.org/resources/carbon-capture-has-long-history-failure
- See: https://reclaimfinance.org/site/en/2023/12/19/asset-managers-playing-a-double-game-on-climate-votes/
This press release was originally published on Reclaim Finance's website here.