ABN AMRO sets net-zero course

Back in 2019, ABN AMRO joined forty-nine other banks, insurers and pension funds when it signed up to the Dutch Climate Agreement. The bank published its climate strategy and joined the Net-Zero Banking Alliance in December, this latest step resulting in a concrete roadmap to reduce carbon emissions generated by activities the bank finances.

Carbon targets

Global Head of Climate & Innovation Anne Huibrechtse-Truijens says, “We’ve committed to a net-zero financing portfolio by 2050. It’s a continuation of our strategy, but is now linked to specific carbon targets we measure using an international standard.”

The bank’s climate strategy has singled out the first five energy-intensive sectors where carbon reduction will be most effective: mortgages, commercial real estate, shipping, oil & gas, and power generation. “We’ve also taken on board the size of the portfolios,” Anne adds. “About 60 percent of our loan portfolio consists of mortgages and commercial real estate, for example.”

The bank has set intermediate targets for these five sectors. The mortgages and commercial real estate portfolios, for example, will have to reduce their carbon emissions by 34 and 46 percent respectively by 2030 compared to 2021. The bank also aims to ensure by 2030 that the carbon intensity of its clients’ managed investments is reduced by 50 percent relative to the market average. Further, as part of its Lead by Example programme, ABN AMRO intends to share with its clients all the latest expertise it gains in sustainability. That’s why the bank is continuing to make its own operations more sustainable, which will be carbon-neutral by 2030.

‘Carbon reduction crucial’

Now that its objectives and focus are clear, the bank is setting its sights on implementation, a key component of which involves discussing with clients the steps they plan to take to become more sustainable. The bank can help by sharing expertise, forming partnerships and offering “green” propositions like interest rate reductions for sustainable investments.

“As a bank, we want to help bring about the carbon reduction the world needs,” says Global Head of Reporting, Regulations & Stakeholder Management Tjeerd Krumpelman. “And since that principle aligns with our objective to accelerate the transition to sustainability, we’re taking a multi-pronged approach.”

Responsibility

People may be wondering why the bank is assuming responsibility for its clients’ carbon emissions. After all, isn’t that their own responsibility? It’s a fair question, Tjeerd admits: “First and foremost, ABN AMRO has a responsibility to society, one that we’re held accountable for, too. The biggest impact we can make as a bank is together with our clients. Besides, we wouldn’t be a very good partner to them if we didn’t provide them with the best possible support to succeed, since the energy transition abounds in new opportunities and challenges. Obviously, high carbon emissions could also represent a risk to the bank because they’re simply not future-proof.”

“These days, clients aren’t at all surprised this topic is on our agenda,” says Anne. “We discuss sustainability and support clients in their transition. But clients are already hard at work. Just look at the shipping and energy sectors, where ‘sustainability’ is on everyone’s lips. The point is we’re all in this together – nobody can make the transition alone.”

An inclusive transition

It takes an inclusive approach to meet all these aims, since ABN AMRO intends to support all its clients in their transition to sustainability. That means the bank won’t be saying goodbye to its more energy-intensive clients as it seeks to make its net-zero financing portfolio a reality. Tjeerd makes the point that excluding clients doesn’t solve anything in the end. “You’d just be passing the buck. It’s actually by helping society at large become more sustainable that ABN AMRO can make the greatest impact.”

And although signing up to the Net-Zero Banking Alliance is important, it’s not a silver bullet, Anne says: “This is the beginning of a journey that will last decades. We’ll be adding more sectors in the short term and implementing our strategy across all our operations – until sustainability is the norm in every single department at the bank.”