Philippe van Hoof: “Sustainable finance will advance carbon neutrality goals”

ING has a goal to mobilise €150 billion (KRW 222.2040 trillion) in sustainable finance on a global scale and completely eliminate fossil fuels from its loan portfolio by 2040. Hankyung ESG met with Philippe Van Hoof, country manager for ING Korea and chairperson of the ECCK, to hear his thoughts on sustainable finance. 

"We are confident that sustainable finance will help companies reach carbon neutrality." 

Philippe Van Hoof, country manager for ING Korea and chairperson of the ECCK, reinforced that it will be important for companies to achieve carbon emission targets through sustainable finance and by expanding its capabilities. He also emphasised that if awareness of sustainable finance increases at the management level, carbon emission goals can be achieved more quickly. 

He said, “It’s not just about financing—it means investment, and a shift in focus from management and strategy across the firm.” 

Philippe Van Hoof was appointed country manager for ING Korea in June 2021 and has served in the role for the past three years. He is a veteran banker with over 30 years of experience. Last year, he was also appointed chairperson of the European Chamber of Commerce in Korea (ECCK), helping Korean companies enter the European market. 

Globally, ING plans to mobilise €150 billion in sustainable financing by 2027. Next year, the firm plans to increase its financing for renewable energy to €7.5 billion—a threefold increase. He also emphasised, “In 2015, ING decided to end new coal mine financing, which was a difficult decision at the time, and it was challenging to convince clients. However, it’s the road we need to take, and we are still on that road. It is important for companies to develop a plan and take it step by step to achieve long-term goals.” 

Philippe Van Hoof also mentioned ING’s Terra Approach, an internal strategy developed to help reach carbon neutrality by 2050. This methodology guides ING’s portfolio towards sustainability, involving green loans, bonds, and proactive engagement with clients to support their transition to low-carbon technologies. ING is planning to reduce the amount of financed emissions linked to its portfolio to zero by 2040. This will be achieved through a long-term strategy implemented step by step. I met with Philippe Van Hoof at ING’s Korea office to hear more about his ESG-related strategies. 

I heard that European financial companies are active in providing sustainability-linked loans. What effect do you think this is having? 

We believe that sustainable finance has a huge impact. When we provide financing through a sustainability-linked loan, for example, we link it to a parameter—such as the reduction of CO₂ per tonne of cement. This creates a synergistic effect for companies, helping them raise the funds they need while also driving changes in overall management, strategy, and investment. Financing is only one part of the equation; through dialogue, we also raise awareness within Korean companies, changing their perception of achieving carbon neutrality through sustainability-linked financing. 

What kind of synergies are you seeing? 

At ING, it’s not just about speaking to the CFO or finance department of a client, but having an open dialogue on a comprehensive strategy that will benefit the company. I think this is having a positive effect on our clients. It’s better for Korean companies to start early so they can make the transition gradually, step by step. We believe that sustainable finance will positively influence the direction of a company’s management, just as Korea is developing its sustainability-related disclosures and the supply chain guidelines that are taking shape in Europe. 

Can you talk a bit about ING’s ESG-related activities? 

We are helping Korean companies with both the environmental (E) and social (S) aspects. We've been very active, for example, with KHFC (Korea Housing Finance Corporation), where we've issued 14 social bonds since 2016. We have also helped Kookmin Bank issue a covered bond. 

The environmental aspect typically involves helping carbon-emitting companies reduce their emissions and transition to greener operations. In green finance, this includes offshore wind and solar power, but we also support data centres in becoming more sustainable. At ING, we use the Terra Approach to assist companies across various industrial sectors and track how much CO₂ will be reduced by 2050. 

A sustainability-linked loan, which differs from a bond with a fixed interest rate, ties its interest rate to how well a company achieves its sustainability goals. At ING, we offer loan products to promote sustainability. We also support Korean companies operating in Eastern and Central Europe, providing expertise in establishing ESG standards, increasing the proportion of renewable energy usage, and offering consultation for community engagement. 

How is sustainable finance being practised through the Terra Approach? 

The Terra Approach is an open platform where we share our expertise and experience with Korean financial institutions. Beyond competition, I believe there is a shared commitment to advancing corporate finance and ESG principles at ING and among Korean financial institutions. Korean financial institutions have also visited our headquarters, and we’ve received very positive feedback from those sessions. 

What should finance companies do to improve green finance? 

Financial companies should strive for sustainability. At ING, we support sustainability-related financing for many clients, but it’s important that those companies also adhere to ESG principles. In addition to sustainability-linked financing, we focus on reducing our carbon footprint and promoting the use of electric vehicles. 

Is ESG in Korea heading in the right direction? 

We are particularly encouraged by the recent announcement from MOTIE regarding offshore wind. We believe it can drive significant change, increasing capacity from 1.5 GW per year to 7–8 GW over the next two years. The details are still to be clarified, but the announcement itself is a strong step in the right direction, as Korea aims to reach 14.3 GW by 2030. 

It’s also worth noting that Korea has pledged KRW 420 trillion towards green funding. That’s very impressive. In December last year, we had the opportunity to discuss the Terra Approach and sustainable finance at a conference with Korean financial authorities. 

What type of ecosystem is needed to provide sustainable finance? 

We offer various sustainable financing options, including social bonds and sustainability-linked loans. Additionally, we assess how much risk our loan portfolio is exposed to due to climate change. What happens if the global temperature rises by one degree, one and a half degrees, or two degrees? We must also examine our portfolio, as we sometimes lend money over a span of 20 years—not only to corporates but also for mortgages. As an institution, we must strive for sustainability while providing sustainable financing. We need to be able to review our credit portfolio and monitor risks. 

What kind of strategy is ING implementing for sustainable finance? 

ING’s strategy is built on three pillars: global reach, sector expertise, and leadership in sustainability. Through our global network, we support Korean companies overseas. We also bring deep sector expertise, which is crucial as ESG becomes increasingly technical. It is important for us to carry out sustainable activities based on these three pillars, with consistency. ING is among the top 10 global financiers of renewable energy, and we plan to reach €7.5 billion in renewable energy financing by 2025. At the same time, we are phasing out fossil fuels by 2040. 

What effect are sustainability-linked loans having? 

Sustainability-linked loans are innovative financial products. Efforts must be made to ensure these products lead to meaningful innovation across industries, and I believe they contribute to continuously improving the financial landscape. Moreover, new innovative activities are likely to lead to job creation. Over the past 50 years, Korea has developed its export industry under government leadership. If sustainability-related industrial activities are promoted, they will also drive job creation. 

As the chairperson of the ECCK, do you have anything you want to say to Korean companies? 

It will be important to align domestic standards with international standards. When regulation is highly domestically oriented, it creates a standard market locally—but exporting can become challenging in regions such as Europe. 

What are your plans for the future? 

Korea has a geographical advantage when it comes to offshore wind energy, with seas on each of its three coasts—each with different wind patterns and depths. The decorrelation of wind is a very positive factor. You may have wind on one side but not on the other, so reforming the grid is necessary. However, the country’s geographic position is excellent. We see Korea as a highly attractive market and want to share the expertise we’ve built in overseas markets such as North America, Australia, Taiwan, and Japan. We aim to bring that experience to Korea and help develop these types of projects with Korean institutions. 

What role should Korean companies play to achieve green finance? 

The South Korean financial sector has already made impressive progress in advancing green finance. Earlier this year, a significant pledge of USD 313 billion (KRW 420 trillion) was made towards green funding, marking a major commitment to supporting South Korea’s climate goals. The banking sector is also playing a key role in driving this change. The South Korean financial sector is demonstrating a collaborative spirit that is vital for innovation in green finance. By continuing to enhance their product offerings and fostering collective efforts, South Korean financial institutions are well-positioned to lead the way in making green finance the norm. 

From an E, S, G perspective, how do you view Korean companies? What should Korean companies do to improve in each category? 

South Korean companies are making commendable progress in the areas of Environment, Social, and Governance (ESG), and their efforts are increasingly aligned with global standards. From a governance perspective, the proposed revisions to Article 382 of the Commercial Act aim to strengthen corporate governance and enhance the protection of minority shareholders. These developments are encouraging, and at ING, we are optimistic about the potential for meaningful improvements in corporate governance in South Korea. 

As global warming continues to be a pressing issue, many countries are making efforts to reduce carbon emissions. How much carbon does Europe emit? What kind of efforts is Europe making to reduce carbon emissions? 

Europe is at the forefront of global efforts to combat climate change, with the European Union (EU) setting ambitious targets to become the world’s first climate-neutral continent by 2050. Since 1990, the EU has reduced its greenhouse gas emissions by 32.5%. It is targeting a 55% reduction by 2030 and a 90% reduction by 2040. To meet these goals, the EU is heavily investing in renewable energy, significantly expanding its wind and solar power capacities. ING is actively contributing to this energy transition—for example, through our financing of Northvolt’s gigafactory, one of the largest green financing deals in Europe, totalling USD 5 billion. 

Just as with the Brussels effect, various international orders in human rights and the environment are being pushed by the EU. What are your thoughts on the international orders being established by the EU? 

The EU has undeniably taken a leading role in shaping the global landscape of sustainability and human rights. Initiatives such as the Carbon Border Adjustment Mechanism (CBAM) and the Corporate Sustainability Due Diligence Directive (CSDDD) exemplify the EU’s commitment to high environmental and social standards. These regulations not only protect the EU’s internal market but also send a strong signal to the rest of the world that sustainable business practices are essential for long-term success. While the EU’s approach is commendable, it’s important to recognise that a one-size-fits-all solution may not be universally applicable. Different regions face unique challenges and opportunities in their transition to a low-carbon economy. 

Originally published in Hankyung ESG: Opens in a new tabhttps://www.hankyung.com/article/202408308094i