05/27/2021 | Press release | Distributed by Public on 05/27/2021 05:52
ING and five other banks have formed a working group to take action on climate in the steel sector.
The banks, all leading lenders to the steel industry, will define common standards for measuring progress on climate targets, proactively supporting the sector's decarbonisation. ING will lead this working group.
Steel is essential for modern life. Many industries have low-carbon technologies, but the steel sector, which emits roughly 7% of global energy emissions and is heavily dependent on coal, currently lacks commercially viable alternatives. Since the sector is so carbon intensive, there are expectations that financial institutions should support its decarbonisation, but so far financial institutions lack the practical tools to do this effectively.
The Steel Climate-Aligned Finance Working Group will consist of senior representatives from each bank's metals and mining teams. It will work to draft a climate-aligned finance agreement for the sector, including the scope, emissions pathways, methodologies and governance structure. It will align with other initiatives as much as possible. The goal is to set global best practices on climate for financial institutions that facilitate steelmaking.
'The challenge for the steel sector to decarbonise is significant, with alternative technology paths unproven and not yet commercialised,' said Arnout van Heukelem, global head of Metals, Mining and Fertilizers at ING. 'By leading this working group, we signal our commitment to help define what the energy transition means for the sector and our clients. It will also help us to define our expectations for change and define an ambitious yet realistic trajectory to meet those ambitions.'
The working group's ambitions are in line with ING's Terra approach, which uses sector-based methodologies in the aim to steer our lending book in line with the climate goals of the Paris Agreement.
The agreement will be modelled after the Poseidon Principles, the first sector-specific climate-aligned finance agreement for maritime shipping. The Poseidon Principles were launched in July 2019 with 11 banking signatories representing $100 billion - or 20% - of senior shipping debt and have since more than doubled to 24 signatories representing $175 billion as of March 2021. Developed through unprecedented multi-stakeholder collaboration between major shipping lenders, industrial corporates, and experts, the Poseidon Principles set the stage for a similar framework in other sectors, such as steel.
The working group aims to get more banks to join in the final climate-alignment agreement, which will be released at the 26th UN Climate Change Conference of the Parties (COP26) in November 2021. The working group falls under the umbrella of the recently launched Net Zero Steel Initiative, which is part of the broader Mission Possible Platform.