Dutch lender ING has announced plans to stop funding oil and gas exploration and production projects by 2040 and triple new lending to renewable energy projects over the next two years.

The announcement comes as investors and regulators are compelling banks to reduce financing for projects that cause climate-damaging emissions, reported Reuters.

According to ING’s CEO, this decision has been made in the wake of an agreement this month at the COP28 climate talks in Dubai for countries to transition from fossil fuels and focus more on renewables.

As per the new plan, ING will cut down loans to upstream oil and gas projects by 35% by the end of this decade.

This move would reduce absolute emissions from its portfolio by 50%.

ING CEO Steven van Rijswijk said: “Climate change is one of the world’s biggest challenges. The world needs energy but still too much of that is coming from fossil fuels. Building on the progress made by world leaders at the COP28 conference and the most recent scientific insights and scenarios, we are today announcing our next impactful actions to contribute to the acceleration of the energy transition.

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By GlobalData

“We significantly increase our commitment to renewable energy and at the same time give a clear, accelerated path for the complete phasing out of oil and gas extraction from our financing portfolio.” 

Currently, its lending to upstream oil and gas sector is around €4bn ($4.39bn), an ING spokesperson told the news agency.

ING intends to triple the financing of renewable power generation to €7.5bn, up from last year’s €2.5bn, by 2025.

This target would imply that the Netherlands’ biggest lender would touch its tripling target five years prior to the pledge made by governments at COP28, the company added.

Meanwhile, a spokesperson for environment group Extinction Rebellion told Reuters that ING’s move was a step in the correct direction but “not enough”.

Extinction Rebellion has been targeting ING as the country’s largest lender of fossil fuels.

Its spokesperson, Tessel Hofstede, said: “Existing projects extracting oil, coal and gas are already enough to take us over two degrees of warming.”

Hofstede added that the lender should rule out financing new oil projects.