In 2007/2008 banks globally were in crisis. Many had misjudged risks, over-extended their loan books and failed to fully understand the collateral sitting behind securities they were trading. The result was a global economic contraction, from which many countries have not fully recovered. Today, as world faces geopolitical fragmentation, increasing conflict and mounting climate-related risks, it is vital we learn lessons from past mistakes. We need our banking system to be as resilient as possible.
Against this backdrop, Sarasin & Partners has been engaging with our largest bank holdings to press for anticipatory climate risk management. In this, we are building on calls by prudential authorities such as the European Banking Authority and the UK’s Prudential Regulation Authority for banks to strengthen their preparedness for rising physical and transition risks, to underpin system-wide financial stability.
As we approach ING’s 2026 Annual General Meeting on 14 April, we are reflecting our concerns in both our voting and a public question we intend to put to the bank’s Audit Committee Chair and Auditor, as outlined below.
Question for Ms Haase, Audit Committee Chair
As long-term investors, we are keen to ensure that ING, like all systematically important Financial Institutions (SIFIs), manages its capital prudently such that it remains resilient to economic shocks. This is particularly true today as the world faces an uncertain geopolitical, economic and climate future.
Following dialogue in 2025, in February we wrote to you in your capacity as Audit Committee Chair, copying in the lead Audit Partner at KPMG, to underscore our particular concern that, despite ING’s welcome ambition to align its financing with faster decarbonisation, we lack visibility on how this is translating into credit due diligence, financial reporting and capital adequacy processes.
ING has stated that this is underway, but little quantitative information has been disclosed. For instance, we have no visibility on the results of ING’s Climate Stress Testing, the potential materiality of more severe though plausible pathways, or how this is informing ING’s Internal Capital Adequacy Assessment Process.
With regards to the current pathway of c2.5˚C, we are unclear how the Board reached its stated conclusion that physical risks are unlikely to be material up to 2030 (p.180), and thus made no adjustment in ING’s financial statements, notably Expected Credit Losses (ECLs).
On transition risks, while we have been pleased to see ING increase its Post-Model Adjustment (PMA) to ECLs to EUR47mn in the latest accounts, this remains just 0.77% of total ECLs. No clear explanation is provided for how this figure was calculated, aside from high-level commentary that the risks are mitigated by the Bank’s Terra Approach.
We would welcome further explanation as to how this adjustment can be assessed as prudent when we are already seeing the economic and social consequences of climate change; scientists are warning of mounting physical risks; and low-carbon technologies continue to disrupt traditional carbon-intensive industries, which represent about 40% of ING’s loan book based on Pillar 3 disclosures. No mention is made of how refinancing risk is considered, which extends the duration of client relationships, and thus potential exposure. Moreover, the portfolio includes a gross carrying amount of EUR 450bn of loans collateralised by property (Pillar 3, ESG2 Table) — assets with typical remaining maturities of ten to twenty-five years. Even for corporate lending, a substantial 8.5% of loans in the high-risk sectors are for over 10 years (Pillar 3, ESG1 Table).
In terms of mitigation from client engagement under the Terra Approach, this may well be helpful but, overall, we calculate that this covers just 16% of the gross carrying amount of ING’s loan book. Moreover, even for Terra covered industries, we lack transparency over how engagement is driving meaningful risk reduction.
Given the high level of exposures and the elevated uncertainty associated with climate change and the energy transition, we would like to ask whether the Audit Committee can commit to providing investors with enhanced visibility in forthcoming reporting of:
Results from internal climate-related stress testing for capital adequacy;
Quantitative analysis underpinning the Board’s determination that a PMA of just EUR47mn is sufficient to cover transition risks;
Analysis underpinning the conclusion that physical risks are immaterial to the financial statements in the short to medium term; and
Sensitivity analysis for more severe climate-related scenarios in the Notes to the Financial Statements.
Question for ING’s incoming Auditor (Deloitte)
Deloitte’s appointment as ING’s auditor offers an opportunity to address limited investor disclosures on how decarbonisation and climate change might impact ING’s capital position.
We would like to ask Deloitte to commit to providing commentary in its forthcoming Auditor Report to shareholders on how it has determined management’s accounting assumptions to be appropriate given rising climate risks, and any potential sensitivities that could alter ING’s reported capital strength. We would encourage Deloitte to consider addressing climate risks as a Key Audit Matter, either on a stand-alone basis or integrated into relevant KAM(s), such as for ECLs, taking into account investor interest in this matter, which has been explicitly communicated in recent years.
How we are voting at ING’s 2026 AGM
Due to ING operating a staggered board structure, there are no available votes in 2026 for Sarasin to convey its concerns to the relevant directors. Likewise, ING does not offer an annual re-appointment of the auditor, which limits shareholders’ opportunities to express a view on auditor accountability each year.
This year, therefore, we are once again voting against ING’s financial statements, with the following rationale:
Financial statements – AGAINST – While we welcome the increase in the management adjustment to ING’s ECLs in FY2025 to reflect transition risk, the adjustment of EUR47 million remains small (just 0.77% of total 2025 ECL provisions). There is no clear explanation on how this figure was determined, and it makes no allowance for physical risks. However, ING’s Pillar 3 disclosures suggest material exposure to transition and physical risks. Mitigation of transition risk via ING’s Terra Approach covers just 16% of outstanding loans, against exposure to high-risk sectors representing 40% of the gross carrying amount of loans – excluding any further exposures that might be embedded within lending to financial institutions. Given the high degree of uncertainty and potential materiality, including in the medium term, we would expect a clearer description of how these risks are reflected in ECLs in keeping with recent updated guidance by the International Accounting Standards Board. We would particularly expect climate-related factors to be integrated into sensitivity analysis for ECLs.
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