Simon Jessop & Toby Sterling

LONDON, (Reuters) – ING Groep (AS) NV has announced that it will not finance new oil- and gas projects. The statement was made by the NV’s energy chief. This is the first time that a major bank in the world committed to taking such a bold step to combat climate change.

This Dutch financial services company’s move puts pressure on its peers to heed the International Energy Agency’s (IEA) call for a halt in funding of new fossil fuel projects that help to limit global warming to 1.5 degrees Celsius.

Michiel de Haan stated to Reuters that ING will not finance any projects after December 31, 2021, but it would continue funding energy companies. However, ING has already begun to reduce financing for the oil and natural gas sector and is increasing lending for renewables.

De Haan declared that the “decarbonisation” of the energy system is essential but also affordable and reliable energy.

We can decide to stop our involvement with new greenfields but (will) keep our current involvement in oil-and gas around the globe because we have to achieve those two other targets.”

De Haan stated that the bank would aim to increase lending for renewable energy by 50% by 2025. This is in addition to strong growth seen in 2021 when funding grew 26%, reaching 7.3 billion euros ($8.05 billion).

ING is reducing funding for current oil and natural gas clients and projects in a more gradual manner. It aims to do this by lowering it by 12% and aiming to make the total amount of funds available to them by 2025 to a maximum of 3.5 billion euros.

De Haan stated that “It is important to recognize that the IEA also suggests that in the future oil and gas will need to be used,” adding that customers were seeking help to decarbonize their operations.

Since the IEA’s report about ending fossil fuel financing, investor pressure has grown on banks to take action on climate change.

Many banks only have the promise to cease lending when necessary, like for Arctic drilling. Europe is looking for alternative sources to Russian oil or gas, and the Ukraine crisis might further hinder this transition.

ShareAction is an organization that promotes responsible investing. In a February report, it stated that in 2021, 25 European banks provided $55 billion of funding to energy companies aiming to increase oil and gas production.

It stated that HSBC. Barclays BNP Paribas and (LON:), were the largest funders for oil and gas projects by 2021.

($1 = 0.9069 euros)