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Entrepreneurship

The global revolution in climate finance started in The Hague

In 2019 over 50 global financial institutions representing trillions in assets committed for the first time to measure and disclose the carbon emissions of their loans and investments across their lending and investment portfolios. What not many people know is that the standardized accounting method these institutions will be using to measure their climate impacts was initiated and developed in The Hague, by the Dutch ASN Bank. “We are very proud that we originated this global standard which we believe will make a major contribution to reducing greenhouse gas emissions,” say Remko de Bie and Emiel van Zwet, account managers at ASN Bank, in an exclusive interview.

The next step was to reach out to banks and financial institutions outside of the Netherlands, resulting in the formation of a global Partnership for Carbon Accounting Financials (PCAF-Global). Officially launched on 23 September 2019, it now has 57 members from all over the world, representing $3.5 trillion in investments and loans.

PCAF is now widely regarded as the premier international accounting standard for the carbon impact of financial investments. It is already having a major impact on the investment and loan strategies of its members. For example, Kees van Dijkhuizen, CEO of ABN Amro, noted at the launch of PCAF-Global that thanks to the new methodology his bank had come to the unexpected conclusion that “our 800,000 residential mortgages had the biggest climate impact of all our activities.” ABN Amro has now started “greening” its portfolio by linking its mortgages to energy efficiency measures.

  • International acceptance

For the small ASN Bank in The Hague, the international acceptance of PCAF is quite an achievement, says Van Zwet. “It exactly fits with the task we have set ourselves. We regard ourselves as pioneers in sustainable financing. We want to lead by example.”

This is exactly what ASN Bank has been doing for many years. The bank was among the first to invest in solar and onshore wind and later in the offshore wind market. “Today these are all mature markets, in which all the major banks are active,” say Van Zwet. De Bie notes that other banks still like to see ASN Bank participate in new offshore wind projects. “They know we have a lot of experience. We have seen a couple of cycles already. We don’t panic easily.”

At the same time ASN Bank keeps pushing the envelope. “We have very high sustainability standards,” says De Bie. “For instance, we don’t just invest in any solar or wind project. Renewable energy can also have adverse impacts on the environment. In solar we prefer rooftop PV. We would not invest in a large solar park that displaces forests or nature. Similarly, in onshore wind, we look at the impact the turbines have on the natural environment, for example how they may affect migratory routes of birds.”

In addition, ASN Bank invests in new technologies where other banks are still reluctant to go, such as in energy storage. De Bie: “Storage is the next big renewable energy sector. It is still at an early stage. The amounts of money involved are modest, the risks are relatively high. For us this is an ideal market. We are paving the way for the big banks which are bound to step in later.”

  • Pivotal role

The two account managers say they intend to keep on playing their pivotal role – and they will keep doing this from their offices in The Hague, where ASN Bank was founded in 1960 by the socialist labour union movement. In the first decades of its existence, it focused mostly on socially responsible projects. In more recent years the emphasis has been on sustainability.

The bank deliberately chose to renovate an existing building, since renovation has less environmental impact than building new office space.

Its origin and location help to explain why ASN Bank has a down-to-earth company culture which is a far cry from the fast and trendy companies that you see in the financial district in Amsterdam. Van Zwet and De Bie like working in The Hague. De Bie: “Here we are surrounded by NGOs, policymakers and major knowledge institutions, such as the Netherlands Environmental Assessment Agency PBL, the government’s institute for strategic environmental policy analysis, which is located right across the street from us.”

Being outside of the financial bubble in Amsterdam may have even helped ASN Bank to come up with the PCAF methodology. It can hardly be a coincidence that it was a small idealistic bank in The Hague got the global financial world to adopt a key climate metric.

  • ASN Bank’s high sustainability standards

ASN Bank lends some €200 million a year to sustainable energy projects, using money from savings deposits and investment funds. All projects must be approved by the bank’s Sustainability Committee, which employs very strict sustainability standards. Roughly half of the projects are in the Netherlands, the other half are in other countries in North West Europe.

Emiel van Zwet, who joined ASN in 2014 and has a civil engineering as well as a business background, is account manager for the bank’s Green Projects Fund (GPF), one of ASN’s major domestic investment vehicles. GPF invests in projects that are officially earmarked as “sustainable” by The Netherlands Enterprise Agency RVO, a government agency responsible for allocating renewable energy subsidies and supporting companies with funding and know-how.

Senior account manager Remko de Bie, who joined ASN in 2017, having worked for many years in structured finance at ABN Amro and other major financial institutions, is responsible for all projects outside the GPF both in the Netherlands and abroad. De Bie says he would like to see the government to start earmarking energy storage projects as sustainable. “Then we could include them in the Green Projects Fund.”

ASN Bank, founded in 1960 in The Hague by socialist labour organisations, has 175 employees and over 700,000 customers. In 2012, the bank undertook a complete renovation of its headquarters, to make the building conform to the highest energy efficiency and recycling standards, even going as far as using only local suppliers and building companies to keep transport activities to a minimum. The bank deliberately chose to renovate an existing building, since renovation has less environmental impact than building new office space.

In 2014, ASN Bank committed itself (“as the first bank in the world”) to a climate-neutral investment and lending portfolio. In August 2019, the bank announced that its investment portfolio was “118% climate neutral”, in other words, its investments achieved a net saving of greenhouse gas emissions of 18%. ASN’s mortgages include a special lending facility with which customers can finance energy efficiency investments against favorable conditions.

  • Summary

ASN Bank, founded in The Hague in 1960 by the socialist labour union movement, is widely recognised as the leading sustainable financial institution in the Netherlands. Account managers Remko de Bie and Emiel van Zwet explain how their lending and investment practices help to create a cleaner world. And they tell the remarkable story of how their small idealistic bank managed to convince the global financial world to follow their example and make their investment and lending portfolios more sustainable.

 

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