Andrei Babiy


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Paul Orij


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Andrei Babiy


Read More

Paul Orij


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31 August 2023

ESG in the Dutch banking sector

  • Briefing

In a similar way to many other sectors, the finance industry is now placing more and more value on environmental, social, and governance (ESG) factors. In light of this, the importance of ESG is increasingly reflected in finance documents and banks have started to recognise the need to focus on ESG in their business practices. Banks in the Netherlands are keeping up with the trend, with conscious efforts to integrate ESG into their operations.

Production of LMA draft model provisions for Sustainability-Linked Loans 

The importance of ESG considerations in the banking sector has been increasing in recent years. Many banks have made commitments to align their lending portfolios with the goals of the Paris Agreement and have introduced ESG criteria into their lending processes. Sustainability-linked loans (SLLs) are an example of how banks can encourage their clients to adopt sustainable practices and support the transition to a low-carbon economy.

SLLs are a relatively new type of loan that link the cost of borrowing to a borrower's sustainability performance. If a borrower meets pre-agreed sustainability targets, the interest rate on the loan may be reduced. The purpose of SLLs is to encourage companies to improve their sustainability performance and to drive positive change.

The Loan Market Association (LMA) recently published draft model provisions for SLLs; a move that highlights the growing importance of and focus on ESG considerations in the banking sector. The model provisions were created by a task force made up of experienced financial institutions and law firms who specialise in sustainable finance.

The publication of the model provisions by the LMA is an important step towards standardising the use of SLLs, promoting sustainable finance and helping to protect the integrity of the SLL market. The provisions provide a useful resource for banks and borrowers alike, helping them to navigate the complex world of sustainable finance and to drive positive change.  They help facilitate the integration of sustainability objectives and performance targets into the loan structure, fostering a commitment to responsible lending practices.  

Contents of the LMA's draft model provisions for SSLs

The LMA's draft provisions for SSLs are designed to provide a framework for incorporating sustainable finance principles into loan documentation to reflect current market practices. The provisions include detailed drafting notes that can assist parties in negotiating the document.

One key aspect of the LMA's model provisions for SSLs is the inclusion of sustainability-linked pricing mechanisms. These mechanisms allow for adjustments to the loan's pricing based on the borrower's achievement of predefined sustainability targets. By linking financial terms to sustainable performance, these provisions incentivise borrowers to enhance their sustainability practices and contribute positively to ESG goals.

The model provisions also emphasise the importance of reporting and disclosure. They typically require borrowers to provide regular sustainability reports, allowing lenders to monitor and assess the borrower's progress towards achieving sustainability objectives. This promotes transparency and accountability, enabling lenders and other stakeholders to evaluate the impact of the borrower's sustainability initiatives.

Furthermore, the LMA's model provisions for SSLs address the need for flexibility and adaptation to different industries and jurisdictions. They recognise that sustainability goals and metrics can vary across sectors and regions. As such, the provisions allow for customisation and tailoring to align with specific sustainability frameworks, regulations, or industry standards relevant to the borrower.These model provisions reflect the industry's recognition of the importance of sustainability and the integration of ESG factors into financing activities. They provide a standardised framework that can be used as a starting point for negotiations between lenders and borrowers, reducing transaction costs and facilitating the adoption of sustainable practices.

ESG Factors in Banking

A company's long-term sustainability and profitability is undoubtedly affected by ESG factors:

  • E: Environmental factors can include resource depletion, climate change, pollution, and biodiversity loss. 
  • S: Social factors include human rights, community relations, labour practices, and customer satisfaction. 
  • G: Governance factors relate to the transparency and accountability of processes and management structures used by companies.

In the context of banking, ESG factors can have a significant impact on a bank's risk profile and profitability. For example, a bank that lends to companies with poor environmental or social practices may face reputational risks, regulatory sanctions and/or litigation. Similarly, a bank with weak practices in terms of governance may be more vulnerable to fraud or corruption. On the other hand, a bank that integrates ESG considerations into its lending decisions and operations can create long-term value for both its shareholders and society at large.

ESG Integration at Dutch Banks

The Dutch banking sector has a long history of being socially responsible and sustainable. Many banks in the Netherlands have been at the forefront of integrating ESG considerations into their operations. In recent years, several Dutch banks have made commitments to becoming more sustainable and have implemented ESG integration strategies.


ABN AMRO is one of the largest banks in the Netherlands, with a history dating back over 300 years. The bank has been a leader in sustainable banking and has been integrating ESG considerations into its operations for many years. 

ABN AMRO has a clear sustainability strategy that aims to create long-term value for all stakeholders.

  • This strategy includes several targets related to ESG factors, such as sustainable lending and a commitment to supporting the transition to a circular economy by financing circular business models and investing in circular innovation. 
  • The bank has committed to the following:
    • being CO2 neutral by 2030
    • ensuring that 27% of its loan portfolio consists of sustainable loans by 2024
    • ensuring that 42% of its investments are ESG based by 2024
    • investing € 4 billion in renewable energy by 2025; and
    • investing € 3.4 billion in circular financings by 2024. 
  • Furthermore, the bank has pledged to integrate sustainability into all aspects of its business, including lending practices and investment decisions.

Among its sustainability initiatives, the bank supports its clients’ transition to sustainability by offering green loans and green mortgages which offer favourable interest rates for sustainable investments:

  • ABN AMRO offers a sustainability discount on its client’s mortgage interest rates. This way ABN AMRO aims to attain an average energy label A for all residential and commercial properties financed by the bank by 2030. 
  • The bank also offers sustainability advice and financing for sustainable projects and has introduced various sustainability products for retail customers such as green loans.


ING is another large Dutch bank that has made significant efforts in integrating ESG considerations into its operations. 

The bank has a sustainability strategy that includes several targets related to ESG factors.

  • One of ING's aims is to future-proof its clients and to fund the fight against climate change in order to help the world and society to move forward. 
  • The bank aims to achieve this by aligning its lending to clients (over €700 billion) with the United Nations Environment Program Finance Initiative (UNEP) net zero target. 
  • ING is also committed to the Dutch climate agreement (Klimaatakkoord), which is an agreement between many organisations and companies in the Netherlands to fight global warming.
  • ING has furthermore committed to aligning its lending portfolio with the Paris Agreement's goal of limiting global warming to well below 2 degrees celsius. 
  • The bank has also set targets for reducing its own carbon footprint, including reducing its energy consumption by 40% by 2023. The bank aims to reduce its own carbon emissions to zero by 2050, and to work with its clients to reduce their emissions as well. 
  • The bank is also working to develop new financial products and services that promote sustainability, such as green bonds and sustainability-linked loans.

In addition to these targets, ING has also implemented several initiatives to promote sustainable finance:

  • The bank has launched a Sustainable Investments platform that allows customers to invest in companies that meet certain ESG criteria. 
  • ING has also developed a Sustainable Finance Desk that provides advice and support to clients on sustainable finance. 

Apart from its own sustainability initiatives, the bank is also working to promote sustainability among its employees and customers by offering discounts on public transportation, promoting telecommuting, and providing advice on sustainable business practices. 


Rabobank is a Dutch cooperative bank that has a strong focus on sustainability and social responsibility. The bank has been integrating ESG considerations into its operations for many years and has developed several initiatives to promote sustainability.

One of Rabobank's key sustainability initiatives is its pledge to be carbon neutral – it has implemented various measures to achieve this goal including:

  • Reducing energy consumption in its buildings
  • Increasing the use of renewable energy sources; and
  • Reducing business travel.

Rabobank is also committed to promoting sustainable agriculture and food production:

  • The bank has set up various funds to support sustainable agriculture practices.
  • It has introduced the "Rabo Sustainable Agriculture Guarantee Fund", which offers financial support to farmers who use sustainable farming methods. 
  • It also offers sustainability advice and provides green bonds and sustainability-linked loans to its clients.

Furthermore, Rabobank has introduced various initiatives to promote green real estate practices:

  • It offers financing for sustainable projects, such as renewable energy projects and sustainable building projects, including energy-efficient and sustainable buildings. 
  • Rabobank has also implemented green leases for its own real estate portfolio, which incentivise building owners and tenants to implement sustainable practices. 

Triodos Bank

Triodos Bank is a Dutch bank that specialises in sustainable banking. The bank was founded in 1980 with the goal of using finance to promote positive social and environmental change. 

Triodos Bank has been at the forefront of sustainable banking for many years and has developed several innovative initiatives to promote sustainability: 

  • The bank's lending portfolio is exclusively focused on sustainable sectors, such as renewable energy, organic farming, and social housing. 
  • It has also developed several initiatives to promote sustainable finance, such as the Triodos Green Fund (Triodos Groenfonds), which invests in renewable energy projects, and the Triodos Microfinance Fund, which provides microfinance loans to entrepreneurs in developing countries. 
  • It is committed to reducing its environmental impact and has set a goal to be carbon neutral. The bank has implemented various measures to reduce its carbon footprint.

Triodos Bank also supports social and cultural initiatives through its financing activities including:

  • providing loans to cultural institutions and social enterprises. 
  • the use of its crowdfunding platform which enables individuals to support social and sustainable initiatives directly.

In 2023, the Science Based Target initiative (SBTi) verified Triodos Bank's short-term emission reduction targets and validated them as being scientifically based. The emission reduction targets apply to a large part of its loans and investments and also cover its own operational activities.  Triodos Bank is seeking to bring all greenhouse gases relating to its own operational activities in line with the most ambitious goal of limiting global warming to 1.5 degrees Celsius by 2030 at the latest. For emissions related to Triodos Bank's loans and investments, the target year is 2035. 

ESG Reporting and Transparency

One of the biggest challenges in integrating ESG considerations into banking operations is ensuring transparency and accountability. Investors and stakeholders need reliable and comprehensive ESG data to accurately assess a bank's sustainability performance.

In response to this challenge, several Dutch banks have developed ESG reporting frameworks and are actively reporting on their sustainability performance, for example:

  • ABN AMRO publishes an annual Sustainability Report that provides detailed information on the bank's sustainability strategy, targets, and performance. 
  • ING publishes an annual Sustainability Report that provides detailed information on the bank's sustainability performance, plus a quarterly ESG update.
  • Rabobank has developed a comprehensive ESG reporting framework, which includes an annual Sustainability Report, a Carbon Footprint Report, and a Human Rights Report. It also publishes regular updates on its sustainability performance on its website.
  • Triodos Bank is a leader in ESG reporting and transparency and publishes an annual Impact Report that provides detailed information on the bank's sustainability performance. The report includes information on the bank's impact on the environment, society, and culture, as well as information on the bank's financial performance.


The publication of the model provisions for SLLs by the LMA underscores the growing importance of ESG considerations in the banking sector. These provisions provide a comprehensive framework for incorporating sustainability objectives into loan documentation and encourage borrowers to improve their sustainability performance. 

By linking loan pricing to predefined sustainability targets, SLLs incentivise responsible lending practices and contribute to the transition to a low-carbon economy. The provisions also emphasise the importance of reporting and disclosure, promoting transparency and accountability. Overall, these model provisions offer a valuable resource for banks and borrowers, facilitating the adoption of sustainable practices. As more and more banks commit to sustainable finance, SLLs are likely to become an increasingly popular tool for promoting sustainability and driving positive change.

Furthermore, the Dutch banking sector has made significant progress in integrating ESG considerations into its operations in recent years.  Many of the country's banks have developed comprehensive sustainability strategies and have set ambitious targets related to ESG factors. The banks have also developed several innovative initiatives to promote sustainability, such as sustainable finance products and certification programs.

In addition, banks in the Netherlands have developed comprehensive ESG reporting frameworks and are actively reporting on their sustainability performance. This level of transparency and accountability is essential for investors and stakeholders to evaluate a bank's sustainability performance and make informed decisions.

Overall, the integration of ESG considerations into banking operations is essential for creating long-term value for both shareholders and society. The Dutch banking sector is leading the way in sustainable banking and is setting an example for banks around the world to follow.

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