Finance and investment policies
We avoid business dealings that are not in line with our vision on corporate responsibility. When we make ethical choices, we take into consideration the expectations of our stakeholders. We ask ourselves whether a business dealing is ethically acceptable or not. We have devised policies in various areas to help our employees spot and deal with sustainability issues and business dilemmas. This chapter sets out our vision and the related policies that have been implemented in each of our core business operations.
The ESR Framework is managed by the Environmental and Social Risk Team. The strategic responsibility of this dedicated team is to develop ESR Policies and facilitate their implementation across ING Group. Additionally, the team exercises its expertise in its advisory role as all transactions which carry “high” environmental and/or social risk require a mandatory ESR advice. The team also assists in client dialogue related to policy compliance and undertakes stakeholder dialogues with peer groups (Equator Principles Financial Institutions network and other relevant organisations).
ESR Governance Model
All ING activities are within the scope of the ESR Framework. The ESR management procedures were first developed for ING Wholesale activities with the exception of the Defence Policy which has always been applied across the Group. In August 2008, the scope of the ESR Policies was extended to cover all of ING’s Business Lines. Relevant process changes and training initiatives are ongoing to ensure consistent application of the policies at all levels of ING. The ESR assessment associated with ING’s business engagements requires the involvement of:
(a) Front Office – the departments which have direct client contact and originate transactions (leading to potential ES Risks) and
(b) Risk Management – the departments which provide control over the Front Office activities (may include involvement of ESR Team).
ESR Framework
Applicable to all ING Business Lines
When entering into business engagements, the ING Front Office first checks whether the engagement is in line with ING’s Business Principles. The second step is to determine whether the engagement carries “high” or “low” risk under the ESR Policies. When assessing the applicability of ESR Policies, focus is put on the (potential) client as well as the sector and country where it operates. The criteria used to flag high risks business engagement refers (among others) to:
- Impact on protected areas (IUCN, Ramsar, UNESCO)
- Environmental and social performance of client and purpose of the financing
- Involvement in countries defined as “high risk” by ING
- Projects with high and medium environmental and social impacts (EP Category A/B)
In case of low risk transactions, Front Office and Risk Managers proceed with the engagement. However, if the transaction is considered to be “high risk” a further ESR assessment is undertaken by the ESR Team (or equivalent). A negative advice from the ESR Team can only be waived by ING’s highest credit committee or the Executive Board. In practice, such waivers are exceptional. The simplified version of this process is outlined in the image below.
ESR Governance Process
Equator Principles
The Equator Principles (EP) is a financial industry benchmark for determining, assessing and managing social and environmental risk in project financing. The EP are based on World Bank and International Finance Corporation standards. The EP are applied either separately to business engagements or in combination with other ESR Policies.
ING endorsed the EP in 2003 and its updated version in 2006. In addition to applying the EP for project finance, ING also applies the so called ‘EP spirit’ approach for engagements which are not purely project finance but which underlying transaction relates to a project. ING continues to play a pro-active role in the Equator Principles Financial Institutions (EPFI) Network and is a formal member of the EPFI Steering Committee. ING also leads the Working Group on Adoption and participates in several other Working Groups.