ING is a large, listed Dutch bank. That means that its purpose is (or ought to be) to deliver return to its shareholders. And yet, it appears that its CEO believes that it is part of the bank’s purpose to fight the fight against climate change. It’s not. That’s a matter that is up to individuals, should they choose to give up this or that, and, if for anyone else, democratically elected governments.
Dutch bank ING will dump large clients it believes are not making sufficient progress on reducing their climate impact, in the latest sign of divergence between European and US banks over the risks of global warming.
Chief executive Steven van Rijswijk said ING had put its clients on notice that it would either restrict or stop providing finance to companies that fail to address their carbon footprint on a case-by-case basis. . . .
Van Rijswijk said ING had assessed 2,000 of its largest clients based on their publicly available climate transition plans and other data. Companies had until 2026 to make sufficient progress, he said.
“Our goal is to make sure we fight climate change. It is not to say goodbye to clients,” he said. “But if it is about them not being willing [to address their carbon footprint] then that will mean we will say goodbye.”
The Financial Times being the Financial Times, it contrasts the position of ING with that of some U.S. banks, which have apparently loosened “climate targets” (they should not have any) or have, the FT claims, refrained from talking about this topic because of the “backlash against so-called woke capitalism.”
Framing this is as being about “woke capitalism” is a familiar FT ploy. The newspaper’s position has been to frame the debate about shareholder primacy (which is what, at its core, this really is) as just another part of the “culture wars.” Sadly, it has, as I have noted a few times before, been helped in that respect by the way that many ESG critics use the same term.
Some of ESG’s loudest opponents have indeed concentrated on [corporate wokery, which is real enough], even though that is only one element in, as described above, a far bigger story. Some have done so out of personal conviction, others, (and the two motives are not mutually exclusive) as a matter of tactics. It’s easier to gin up popular support for a campaign to oppose corporate wokery than to base it on a defense of shareholder rights or a rejection of corporatism, causes with possibly rather less immediate populist appeal. Something similar holds true for those in the opposing camp. It is far easier for defenders of ESG and stakeholder capitalism to frame the debate as another chapter in the culture wars than to address the serious threat to both property rights and to democracy that their efforts represent.
What ING’s CEO is doing is (in essence) “borrowing” shareholder capital and the power that it gives him as the CEO of a large bank to use the bank’s financial power to advance not shareholder return, but an ideological agenda (he wants to be “moving in tandem with Paris”).
There is no real evidence that climate change will pose a significant financial risk to most borrowers within the lifetime of a typical loan. If there is, the bank can always increase the price of that loan to reflect that risk, or it can decline it on economic grounds. To refuse to extend financing because of some hopelessly flawed and failing accord entered into under the auspices of the U.N. is a different matter.
The bank will, the Financial Times reports, “look at whether companies are implementing their transition plans and if their efforts are ambitious enough within their sector, among other factors, as part of the assessment.”
I would have my doubts about the creditworthiness of any company prepared to put up with such invasive behavior on the part of its bankers (unless ING’s pricing was attractive enough justify the humiliation). Couldn’t they find another bank that remembers who is the client and who is the service provider? And if not, why not?
Van Rijswijk worries that the discussions around climate change are becoming more “polarized,” which is just a way of saying that he is unhappy that people are arguing back against current climate policy. Unsurprisingly, he drags out tired old arguments about the financial risk of “stranded assets,” a reliable sign of intellectual desperation. He also maintains that climate change poses societal as well as financial risks. He would do better to get out of his C-suite and the Davos echo chamber and check out the societal and financial risks posed by net-zero climate policies, something of which Dutch voters (judging by the composition of their new government ) appear to be increasingly aware.
The bank will, the FT reports, stop providing new financing for LNG export terminals in 2025. This is apparently in line with recommendations with the International Energy Agency, a body not known for its impartiality when it comes to these matters. On the other hand, reducing financing for LNG terminals is almost certainly something that Vladimir Putin and the usual Middle Eastern suspects would endorse, so there’s that.
Oh yes:
ING is “also stopping all new financing for pure play upstream oil and gas companies that are developing new fields.”
That’s an insult to shareholders and an insult to common sense. It will make no difference to the climate. But once again, Putin and his pals will be grateful.