ING to Align Steel Portfolio with Net-Zero by 2050 Pathway
Strategic Research Institute
Published on :
29 Nov, 2021, 4:57 am
ING’s steel lead Mr Erik van Doezum said “We’ve committed to aligning our steel portfolio with the net-zero by 2050 pathway. We’re doing quite a bit of work on sustainability improvement loans, supporting companies to improve their target setting, to start using science-based targets and improve their ambition levels. At the same time, we’re talking to them about their transition strategy. From a steelmaker’s perspective, the question is how am I going to do it? And how can I do it while remaining financially responsible, keeping shareholders and lenders happy, and generating sufficient cashflow in a business that is extremely cyclical? We’re there to have these discussions and help them find the best solutions.”
He said “We say steel is inevitable, it’s everywhere. It’s in the white goods we use, the cars we drive, in our windmills, the houses being built. No one actually wants steel per se, but there’s no alternative, it’s essential for modern life. Demand for steel will continue to grow from now till 2050 and until the end of the century. Unfortunately, at the moment producing steel is relatively carbon intensive. The average emissions are 1.83 tons of C02 per ton of crude steel. It accounts for an estimated 7% to 9% of global emissions.
He added “Steel isn’t sexy, it’s utilitarian, the visualisation of an old industry. It’s a large industry, and it will be a very big challenge to decarbonise it, but it’s an industry where we can make a real difference. It has the potential to move to something completely different. I think that’s exciting. It's an opportunity for the industry to reinvent itself, new technologies and innovation. That offers opportunities for us as banks to really team up with our clients and, I mean it sounds a bit dreamy, but to imagine the future together and realise it together.”
He said “A couple of years ago sustainability wasn’t at the top of the agenda for steelmakers. Now they're proactively asking for our advice. I’ve just got off the phone with a CFO who three years ago had no sustainability targets. Now his company has a net zero target by 2050, they’ve done a couple of sustainability improvement loans and are preparing a large investment into a relatively green steel production site. It’s going very fast and clients appreciate banks that have knowledge to advise and support them through this process. We’re leading the work stream on climate-aligned finance with four other banks to come up with a standard for steel companies to report CO2 emissions; a standard for banks to report on the carbon intensity of their steel lending portfolios; and the roadmap by which to measure that. It falls perfectly under our Terra approach. We’re currently starting the consultation phase for our proposed roadmap, which is an absolutely critical part of that methodology and hardest to get right. Banks would be obliging steel clients to report to that standard, gaining insights into where they are in their decarbonisation journeys, and then have the conversation of how to help them get there.”