Why sustainable banking pays off

Writer: Koen Donatz

“Historic ruling in climate case” headlined the Volkskrant recently, referring to the court case Milieudefensie won against Shell on 26 May. Specifically, the Hague court ruled that Shell must reduce its CO₂ emissions by 45% compared to 2019. [1] This ruling shows that large private parties, such as companies or banks, also have a responsibility to pursue sustainable policies. Even VVD State Secretary for Economic Affairs and Climate could not escape this conclusion after the court case, saying, “Shell too must comply with Climate Agreement”. [2] Exactly what the consequences of this lawsuit will be remains to be seen, but it shows very clearly that sustainability is more than a nice trend in corporate social responsibility: It can be a hard legal obligation. This gives food for thought, because when we think about sustainability in the private sector, we quickly (and quite rightly) look at oil giants like Shell or airlines like KLM. In doing so, one group is too often left out of the picture: banks.

Of course, banks themselves do not build oil refineries or polluting factories, but the huge sums they invest do give them a lot of power. ING, for instance, has €891.74 billion on its balance sheet, according to Business Insider. [3] By comparison, the total budget of the Dutch government is about €300 billion annually. So banks are talking about huge sums of money, and with how they invest these sums they can have a lot of influence on certain sectors. Banks can choose to support sustainable sectors, or to keep polluting sectors intact. Unfortunately, many large Dutch banks often choose the latter. From the Fair Money Guide, an alliance of various NGOs that keeps track of how sustainable banks are, ING, ABN AMRO and Van Lanschot all get an inadequate rating on climate change. Rabobank does slightly better on climate change, but there is still a world to be won there too. [4]

We need not expect the necessary changes in investment behaviour from the banks themselves. Fine words are there though, according to ABN AMRO: “You can talk about climate change for a very long time, or you can simply take action. ABN AMRO chooses the latter.” [5] Shortly afterwards, ABN AMRO proudly announces that their SRI assets are up to €16 billion. [6] That may sound sympathetic, but in doing so you have to consider that ABN AMRO has over €375 billion in its budget. [7] So ABN AMRO's sustainable investments are still really marginal. Then ING. The orange bank has a document called ‘Are we doing enough?’ on its climate page.’ [8] As far as I am concerned, the answer is clearly no, but ING thinks otherwise. Indeed, the document begins by stating that it is not possible to stop investing in oil and gas after all. ING acknowledges that Triodos and ASN do stay away from these sectors, but argues that ING is much larger, and therefore has “a different role in society”. [9] Instead of using its enormous influence to curb demand for fossil fuels, ING is using that as an excuse to keep investing in oil and gas.

Politicians also seem to be in little hurry to want to make major banks more sustainable. For instance, if you search the House of Representatives website for motions (requests to the government) with the terms ‘making banks more sustainable’, you will only come across two motions that deal with making banks more sustainable. And that while the database contains a total of over 41,500 motions. [10] So wanting to make the banking sector more sustainable does not seem to be a popular topic politically. Even the left-wing parties hardly hear about this. Anyway, standardising banks does not seem to be a hobby of politicians. ING was discredited a few years ago by a money-laundering affair and had to settle for €775 million with the public prosecutor. Yet, it was announced early this year, ING is allowed to remain the government's main banker. [11]

So we should not expect a more sustainable banking sector from the industry itself, nor necessarily from politicians. But from whom, then? I'm really not going to argue here that you can single-handedly change the world, but as a bank account owner, you can certainly do something. And that ‘something’ is actually quite simple: Switch to a sustainable bank. That way, you make sure your savings are not used by a bank to fund oil or gas, but to fund sustainable projects. On the previously mentioned Fair Money Guide you can check which banks in the Netherlands are the most sustainable. To make a long story short: Volksbank (ASN, SNS, and Regiobank) comes out as the most sustainable bank in the Netherlands. Therefore, I would like to invite you to switch to one of these banks. Switching banks is much simpler than you might think, and to make the process as clear as possible, the Action Committee has created a changeover guide created. Have fun with sustainable banking!

[1] https://www.volkskrant.nl/nieuws-achtergrond/historische-uitspraak-in-klimaatzaak-shell-moet-co2-uitstoot-drastisch-verminderen~b27cd4be/

[2] https://www.ad.nl/politiek/staatssecretaris-yesilgoz-ook-shell-moet-zich-aan-klimaatakkoord-houden~ac7cb4ab/

[3] https://www.businessinsider.com/largest-banks-europe-list?international=true&r=US&IR=T#11-ing-groep-nv-netherlands-89174-billion-11

[4] https://eerlijkegeldwijzer.nl/bankwijzer/praktijkscores/

[5] https://www.abnamro.com/nl/over-abn-amro/product/klimaatverandering

[6] https://www.abnamro.com/nl/over-abn-amro/product/klimaatverandering

[7] https://www.businessinsider.com/largest-banks-europe-list?international=true&r=US&IR=T#26-abn-amro-group-nv-netherlands-37505-billion-26

[8] https://www.ing.nl/media/Doen%20we%20wel%20genoeg_tcm162-161726.pdf

[9] https://www.ing.nl/media/Doen%20we%20wel%20genoeg_tcm162-161726.pdf

[10] https://www.tweedekamer.nl/kamerstukken/moties (searched on May 29)

[11] https://www.nu.nl/economie/6106060/ing-voldoet-aan-strengere-eisen-en-blijft-huisbankier-van-de-overheid.html