13 Jun 2024

NIB reviews Sustainability Policy to address emerging challenges

As approved by the Board of Directors, NIB is conducting a 30-day public consultation until 4 July for its reviewed Sustainability Policy. This revision aims to keep the bank’s policies aligned with current sustainability standards and respond to emerging geopolitical challenges.

“Since our last significant update in 2021, it has been clear that the pace of change in sustainability topics had increased significantly. So we’ve decided to shorten the review cycle to every three years to keep up with these rapid changes,” says Luca De Lorenzo, Head of Sustainability & Mandate at NIB.

The revised policy introduces several significant changes reflecting NIB’s commitment to sustainable financing. Additionally, it aligns with NIB’s owner countries’ priorities and broader European initiatives to enhance defence readiness in response to the evolving geopolitical landscape. The updated policy includes provisions for financing military goods and dual-use equipment that support regional security, excluding weapons and ammunition.

Why is public consultation important, and what do you expect from it?

“Public consultation is a vital and necessary process for this type of policy. For an international financial institution like NIB, the Sustainability Policy is crucial because it influences our decision making and serves as a reference document. The policy signals who we are, what we stand for, and what we stand against.”

“It essentially defines the soul of the bank, and we want to hear from other voices to ensure we are on the right path.”

In your view, what are the key policy changes?

“We’re focusing on two major areas. First, we are aligning the Sustainability Policy with our climate work, which has been a significant focus over the last three years. This culminated in the approval of the Climate Strategy by our Board of Directors and launched at COP28 in 2023. The policy now needs to reflect this progress.”

The policy also incorporates a stronger commitment to protecting nature and biodiversity, supporting the 2022 Kunming-Montreal Global Biodiversity Framework.

“We’re beginning a similar journey with nature and biodiversity, aiming to understand how nature affects our clients and is affected by them. We’re developing a framework for our operations regarding nature and biodiversity that has potential to set targets like those we have for climate. This review introduces the first building blocks of this nature journey.”

Could NIB have a separate biodiversity and nature strategy as it has for climate?

“It’s possible, but this is a more complex issue due to the local and regional nature of biodiversity, requiring many more metrics than just carbon. Whether it becomes a full strategy or a framework, we will have something robust in place. For now, we remain on a journey with nature and biodiversity, aiming to understand the impacts and dependencies across our portfolio.”

Broadened exclusions and new commitments

“We’ve broadened the exclusion from financing unconventional Arctic oil and gas activities to cover all upstream activities. This is a more stringent exclusion that is aligned with our climate strategy,” De Lorenzo says.

Furthermore, NIB has refined its stance on forestry, now prioritising the protection of primary forests, emphasising their importance for biodiversity and carbon storage. The Bank allows the financing of sustainable activities in secondary forests to support economic development.

“We are starting to position ourselves in forest operations, focusing on sustainable practices that minimise impacts on biodiversity. While we won’t engage with primary forests, we will support sustainable activities in secondary forests, which have already been logged once.”

The policy also excludes projects involving conflict minerals, seabed mining and certain agricultural products unless sourced from certified sustainable suppliers.

“These exclusions reflect current external dialogues and trends. We aim to support the green transition but responsibly.”

Has NIB’s stance on nuclear and radioactive material changed?

“We have clarified our policy on nuclear energy, reflecting a broader external recognition of its role in addressing climate challenges. The new wording confirms that NIB can finance the removal and disposal of radioactive materials and support existing nuclear assets for safety and life extension purposes. However, we still remain cautious about any new nuclear developments.”

Looking ahead, what is NIB’s focus for the next three-year policy cycle?

“Our priority is to continue riding the current wave of sustainability practices, ensuring we remain at the forefront,” Luca De Lorenzo says.