Operational risks, such as systems disruptions or failures, breaches of security, cyberattacks, human error, changes in operational practices, inadequate controls including in respect of third parties with which we do business, natural disasters or outbreaks of communicable diseases may adversely impact our reputation, business and results’ above.
Rights Directive, known as ‘SRD II’, which came into effect on June 10, 2019, ING is required to hold a shareholder advisory vote on ING’s remuneration policy for directors (including members of the executive board and the supervisory board) and on the annual remuneration report for such directors. This may restrict our ability to offer competitive compensation compared with companies
Risks relating to our use of quantitative models or assumptions to model client behaviour for the purposes of our market calculations may adversely impact our reputation or results.
P&L effects, and unanticipated cash needs to collateralise or settle such transactions. Adverse market conditions can limit the availability and increase the costs of hedging instruments, and such costs may not be recovered in the pricing of the underlying products being hedged. In addition, hedging counterparties may fail to perform their obligations, resulting in unhedged exposures and losses on positions that are not collateralised. As such, our hedging strategies and the derivatives that we use or may use may not adequately mitigate or offset the risks they intend to cover, and our hedging transactions may result in losses.
In addition, because we rely on customer deposits to fund our business and operations, the confidence of customers in financial institutions may be tested in a manner that may adversely impact our liquidity and capital position. Consumer confidence in financial institutions may, for example, decrease due to our or our competitors’ failure to communicate to customers the terms of, and the benefits to customers of, complex or high-fee financial products. Reduced confidence could have an adverse effect on our liquidity and capital position through withdrawal of deposits, in addition to our revenues and results. Because a significant percentage of our customer deposit base is originated via Internet banking, a loss of customer confidence may result in a rapid withdrawal of deposits over the Internet.
German regulations impose separate liquidity requirements that restrict ING’s ability to move a liquidity surplus out of the German subsidiary.
ING’s policies, programmes and targets in response to sustainability-related risks and opportunities, in line with our global Sustainability Direction. Progress on identified priorities is communicated regularly to the Management Board Banking and to external stakeholders through ING’s
The responsibility for our various sustainability targets lies either with the MBB member responsible for that specific area, or with the MBB as a whole. For example, responsibility for reduction of our own operational environmental footprint, managed via the Environmental Programme, lies with the Chief Operating Officer (COO). The COO sponsors the Environmental Programme and oversees our performance interests, including policies, implementation and continuous improvement.
In 2018 we conducted an extensive assessment, consisting of global peer, media, trend and regulatory analyses, combined with surveys across seven external stakeholder groups and engagements with ING’s senior management and subject matter experts. The process was aligned with the guidelines and standards of the Global Reporting Initiative (GRI) and the Sustainability
The 2018 materiality analysis outcomes served as the basis for our 2019 analysis. The core of this year’s process was a validation using internal and external data sources while ensuring the principles of completeness, accuracy and relevance. The process included the following inputs: • Internal and external stakeholder perspectives; • The results of an internal risk assessment conducted in 2019; • ING’s Think Forward strategy; • Industry trend reports from think-tanks and thought leaders; • Regulatory developments.
As a result, the topic Business ethics and culture’ was renamed ‘Culture, ethics and integrity’, to emphasise the element of ‘integrity’. Furthermore, we adjusted the scope of the topic ‘Financial performance’ including systemic risk in the definition.
In the World Around Us chapter, we link the material topics with relevant trending themes and our approach. Our disclosures of key performance indicators along our material topics are referenced in
We remain committed to social impact finance through lending to projects that lead to, for example, basic infrastructure or essential services. The tables below provide a breakdown of our direct lending for environmental and social activities as at 31 December 2019.
The Environmental and Social Risk (ESR) team issued 304 advice reports in 2019. Of these, 45 percent were positive, 25 percent positive subject to conditions and 30 percent negative. Conditions can play an important role in helping clients transition towards improved environmental and social performance on the ground. The graph below breaks down the positive ESR advice reports with conditions into policy sectors. For a full breakdown of all ESR advice reports please refer to the Risk
The 2019 growth in SI services outpaced the financial markets average as we expanded our service offering and benefitted from increasing customer interest.
Principle 2: Impact and Target Setting 2.1 Show that the bank has identified the areas in which it has its most significant (potential) positive and negative impact through an impact analysis.
United Nations Guiding Principles (UNGP) in 2018. In 2019, ING conducted client engagements on the salient issues identified in 2018 –Salience chapter, HR
report 2018, and Summary of engagement findings chapter, HR Update 2019; - ING’s annual materiality analysis is in line with the IIRC
▪ ING has set sector-level climate alignment goals; ▪ ING commits to close to zero coal-fired power generation and thermal coal mining by 2025; ▪ ING targets an increase in the number of customers who feel financially empowered (SDG 8); ▪ Our SDG target-related metrics are disclosed on our website.
Principle 1: Alignment 1.1 Describe (high-level) the bank's business model, including the main customer segments served, types of products and services provided, the main sectors and types of activities, and where relevant the technologies financed across the main geographies in which the bank has operations or provides products and services.
▪ ING at a Glance; ▪ ING Purpose & Strategy; ▪ Lending portfolio overview (NACE 2 level); ▪ Overview legal entities per country; ▪ How we create value.
2.4 For each target separately, show that the bank has implemented the actions it had previously defined to meet the set target
3.2 Describe how the bank has worked with and/or is planning to work with clients and customers to encourage sustainable practices and enable sustainable economic activities. This should include information on actions planned/implemented, products and services developed, and, where possible, the impacts achieved.
▪ 2˚ Investing Initiative (2˚ii) on our climate approach; ▪ Overview of partnerships, memberships & endorsements; ▪ Stakeholder groups consulted in our materiality analysis; ▪ Materiality analysis process; ▪ More information on how we engage.
Report 2018); ▪ Data Ethics Council: - ESR Framework; - Whistleblower policy.
▪ ING’s sustainability performance is assessed in determining the Executive Team’s variable compensation; ▪ ING runs a number of employee engagement programmes. This includes ESR training for risk officers and online Equator Principles training; ▪ In 2019, ING and labour unions agreed on an all-staff annual compensation payable in 2020 and 2021 and dependent on the sustainability performance of ING.
▪ In the past year, ING has devised a TCFD action plan and appointed a TCFD Steering Committee; ▪ In the past year, ING has identified a new SDG impact priority linked to targets under SDG 13; ▪ In 2019, ING updated its materiality analysis results, following a 2018 integration of the materiality analysis processes by Group Risk, Strategy and Sustainability; ▪ In the past year, ING has conducted client engagements on its salient human rights issues following the UNGP
Our people in EUR million Per FTE in EUR million Per FTE in EUR million Per FTE
System (EMS). Our EMS has helped us to make progress against our 2020 targets and to integrate the programme throughout our business activities and operations. We are currently defining our new targets which will be announced in 2020.
Our progress: ▪ We achieved our 2020 CO2e emissions target in 2019. Our extrapolated CO2e emissions decreased by 57 percent in 2019 relative to our base year. This was achieved, by reducing business travel and by reducing global energy consumption, including heating oil, natural gas and district heating.
▪ Our water consumption was reduced by 13 percent in 2019 relative to our base year
REDD+ Portfolio in Brazil. This collection of three projects prevents deforestation across 105,000 hectares of pristine rainforest in the Amazon basin by promoting sustainable economic livelihoods.
The portfolio is verified and validated to the Verified Carbon Standard (VCS), and has achieved Gold
4 Scope 3 comprises emissions from our business travel by air and car. There is a decrease in both car and air travel kms leading to lower emissions. Part of the decrease is attributed to data correction and improvement in car travel emissions.
The project is considered of strategic interest by the European Commission as it ‘contributes to the
Energy Union's key objectives of energy security by diversifying routes and sources’. The project furthermore contributes to the EU’s climate goals. The European Investment Bank stated that “gas
ING recognises that commodity traders such as those listed in the Amazon Watch report face supply chain risks, which is why in our 2019 Environmental and Social Risk (ESR) policy revision we enhanced the due diligence of supply chains. As part of our due diligence processes, ING reassesses clients running high risks on a yearly basis, and clients with normal risk profiles every three years. During engagements in the soft commodities sector ING addresses sector best practices including soft commodity certifications.
Read more about our ESR policy framework and Our Stance on deforestation.
“an innovative approach towards measuring, target-setting and steering the bank’s climate impact”, and “a positive development”.
In July 2019, NGO Friends of the Earth Netherlands and its Indonesia and Liberia affiliates notified the Dutch NCP that ING may be in breach of the OECD Guidelines by financing palm oil-related activities. In its initial assessment published January 2020, the NCP did not express an opinion on either the accuracy of the allegations made by the NGOs or the response provided by ING.
In accordance with its procedures, the Dutch NCP has offered to facilitate a dialogue between ING
In addition, Friends of the Earth state that ING’s client relationships with palm oil producing companies constitute a situation of ‘contributing to’ adverse impacts under the OECD Guidelines.
finance and investments in ten chemicals, oil and gas producers responsible for a large part of the global plastics supply. The report makes a link between the production of shale gas, ethane and plastics. The report then highlights the societal debate and controversy around shale gas extraction, an unconventional extraction method which makes use of hydraulic fracturing. The report further claims that of all Dutch banks ING is the largest investor in plastics made of shale gas.
Commitment by the Ellen MacArthur Foundation. This is a joint effort by the industry and governments to tackle plastic waste and pollution and increase the recycled content of plastic packaging from 2% now to an average of 25% by 2025.
ING Group evaluates its results using a financial performance measure called underlying result.
Special items include items of income or expense that are significant and arise from events or transactions that management consider distinct from the regular operating activities. These may either be recurring or non-recurring in nature but must be of a significant size to qualify as a special item. Disclosures on comparative periods also reflect the impact of current period's divestments.
The items excluded from the GAAP measures in 2018 are: ▪ The EUR -775 million settlement agreement with the Dutch authorities on regulatory issues.
ING Group's underlying return on equity (b / c) 9.4% 11.2% 10.2%
▪ Annual Report on Form 20-F, in English (in accordance with SEC guidelines)
introduction of, changes in or discontinuation of ‘benchmark’ indices, (7) inflation and deflation in our principal markets; changes in conditions in the credit and capital markets generally, including changes in borrower and counterparty creditworthiness, (8) changes in laws and regulations, including those governing financial services or financial institutions, and the interpretation and application thereof, (9) changes in compliance obligations, (10) geopolitical risks, political instability and policies and actions of governmental and regulatory authorities, (11) ING’s ability to meet minimum capital and other prudential regulatory requirements, (12) the outcome of current and future legal and regulatory proceedings, (13) changes in tax laws, (14) operational risks, such as system disruptions or failures, breaches of security, cyberattacks, human error, changes in operational practices inadequate controls including in respect of third parties with which we do business, natural disasters or outbreaks of communicable diseases (15) risks and changes related to cybercrime including the effects of cyberattacks and changes in legislation and regulation related to cybersecurity and data privacy, (16) changes in general competitive factors, (17) the inability to protect our intellectual property and infringement claims by third parties, (18) changes in credit ratings, (19) business, operational, regulatory, reputation and other risks and challenges in connection with climate change, (20) the inability to attract and retain key personnel, (21)
conclusions with regard to purchase accounting assumptions and methodologies, and other changes in accounting assumptions and methodologies including changes in valuation of issued securities and credit market exposure, (22) changes in investor and customer behavior, (23)