‘Accelerating sustainability starts with demanding it’

12/05/21

ABN AMRO imposes sustainability requirements on clients

Banking for better, for generations to come. ABN AMRO's purpose leaves no doubt about the sustainable route it wants to take. Caroline Oosterloo-Van 't Hoff explains how implementing sustainable finance regulation leads to a dialogue with clients on sustainability. ‘The COVID-19 pandemic has shown that under normal circumstances, strong measures are needed to achieve more sustainable behaviour.’

Caroline Oosterloo-Van ’t Hoff - Head of Central Risk Management at ABN AMRO

Caroline Oosterloo-Van 't Hoff is just coming out of her garden when we speak to her online. ‘One of the advantages of working from home’, she calls it. Around her undoubtedly busy job as head of Central Risk Management at ABN AMRO, Oosterloo tries to increase the biodiversity on her patch of land. ‘All gardens put together create the largest nature reserve, I read recently. This motivates me to make a small contribution.’

Profit for the climate

Sustainability is also the central theme of Oosterloo's role at ABN AMRO, at the heart of risk management. Her responsibilities include sustainability risk and the implementation of sustainable finance regulation across the organisation, for which PwC is currently helping the organization. She is working from home, and will likely continue to do so for part of the working week in the future. Oosterloo: ‘The number of business trips, which has fallen sharply due to COVID-19, is also unlikely to rise to previous levels. We have found that we can often effectively maintain our contacts remotely. The benefit to the climate is great, so let's keep it that way.’

Rules of the European Central Bank

The awareness of the importance of sustainability has increased through COVID-19, Oosterloo thinks, but: ‘It took the compulsion of a pandemic to drastically reduce the number of travel movements worldwide. I conclude from this that, under normal circumstances, strong measures are needed to achieve more sustainable behaviour.’

These measures are in place and they are becoming stricter. Oosterloo points to the European Green Deal and, more specifically in her field, to

the rules of the European Central Bank, ‘perhaps the strictest rules in the world in this area for the financial sector. The effect is not only that financial institutions report on how green their activities are, but also that a debate about this topic has ensued. The subject is very much on the boardroom tables.’

Impact Report

Banking for better, for generations to come. Based on this purpose, ABN AMRO wishes to accelerate the transition to sustainability. We support all SDGs, but as a financial institution we have the most impact on the following three SDGs: 8 – Decent work and economic growth, 12 – Responsible consumption and production and 13 – Climate action. Oosterloo: ‘In our Impact Report 2020, we report on our contribution to the SDGs. On SDG 8, we already have a predominantly positive impact.

Mission 2030

ABN AMRO is therefore taking a variety of initiatives in connection with SDG 13 – Climate action. In Mission 2030, for example, ABN AMRO states the objective of having an average energy label A on its own property and on all homes and offices for which it has provided a loan. This means that by 2030, the bank's clients will have achieved a carbon reduction of two megatonnes, equivalent to the emissions of eight hundred thousand cars on an annual basis.

Oosterloo: ‘To achieve this, we encourage private individuals with a rate reduction on the mortgage for a home with an A label. We also offer loans specifically for making homes more energy efficient, for example by improving insulation and installing a heat pump.’

Long-term risks

With regard to its own property, the bank has decided to sell the striking office along the Gustav Mahlerlaan and to largely abandon it for the old ABN building in Amsterdam Zuidoost. ‘Before we relocate there, the complex will be subject to a complete circular transformation to create a state-of-the-art sustainable location with a broad function for the neighbourhood.’

The focus on climate will also be translated into the bank's risk profile. By way of illustration, Oosterloo refers to the study ABN AMRO is conducting into the impact of climate change on its mortgage portfolio. ‘How many of our collateral properties are in flood-prone areas? Or have an increased risk of subsidence due to drought and associated pile rot? We are used to assessing shorter-term risks, but these kinds of issues are also about long-term risks, for example in 2050.’

Casy – client assessment on sustainability

‘ABN AMRO is specifically conducting a sustainability dialogue with its clients’, says Oosterloo. For corporate clients, the bank has been using the Casy tool, which stands for client assessment on sustainability, for several years. The tool is used to assess clients with credit facilities above an internally defined threshold. Oosterloo: ‘When business customers want credit, for example, we complete this sustainability dashboard to arrive at a score and make a comparison with other businesses in the sector.

The information from this tool also gives us insights at an aggregate level into how sustainable our clients and investments are. The EU taxonomy requires very specific supporting data. This data is not always available at the required level of detail, but as it is requested, we discuss it with the client. Accelerating sustainability starts with demanding it.’

Binding sustainability agreements

ABN AMRO already uses Casy to advise some ninety percent of its corporate & investment banking clients on making their business processes more sustainable. To what extent is the advice for these clients free of obligation? ‘Not entirely without obligation’, says Oosterloo. We link sustainability agreements to our loans. If there is not enough progress on the improvement plans, we will no longer accept the client in extreme circumstances. The good news is that ABN AMRO has also noticed that two-thirds of SME clients are already showing an interest in advice on how to become more sustainable.

Just like in her garden, Oosterloo concludes: ‘If everyone introduces native plants to provide space for insects, we will all increase biodiversity. Here too, every green square metre counts.’