Our SUMANI team had the privilege of working for ING Group’s wholesale lending practice
based in Amsterdam, Netherlands. The goal of the project was to develop an enhanced due
diligence process for ING’s clients in the agriculture sector, specifically to allow the bank to
assess the biodiversity loss associated with their operations. Simply put, ING could use this tool
to screen producers and brokers of agricultural commodities for their potential to cause
biodiversity loss before deciding to make them a loan.

Our first task was to investigate which agricultural sub-sectors pose the greatest threat to
biodiversity. Once we had that information, our second task was to create a step-by-step
screening process that an ING risk analyst could use to assess clients. The initial approach we
took was to conduct a literature review and interviews with industry practitioners to determine
if there are existing protocols for biodiversity risk assessment. However, since this concept is
relatively new, we did not come upon tools that easily allowed us to directly translate
biodiversity loss to financial metrics. It became clear that we had to come up with a brand-new

The first major challenge of our engagement was to define the scope of the project, since both
“biodiversity” and “agriculture” are broad topics. We began by establishing the scientific
meaning of “biodiversity” and narrowed it down to the two elements most relevant to the
bank: species loss and land degradation. Next, we determined which agricultural sub-sectors
pose the greatest risk to biodiversity based on that definition. Relying on existing research by
the World Wildlife Foundation, CDP, and TRASE Finance, we found five commodities that are
the “worst offenders” in agriculture: dairy/meat, soy, palm oil, timber, and rubber.

Our next challenge came during the development of the step-by-step risk assessment tool.
Since all agricultural sub-sectors interact with the land differently, there was no appropriate
one-size-fits-all process to assess their impact on biodiversity. At this point in the engagement,
we spoke to the client about prioritizing the riskiest sub-sectors and doing a deep dive on them.
Based on our discussion, we agreed that dairy/meat and soy warranted the creation of a
step-by-step assessment tool.

The final deliverable was a 25-page memo on the five agricultural sub-sectors that pose the
biggest threat to biodiversity. We provided a background overview on every sub-sector,
including high-risk locations, existing regulations, and industry certifications that could protect
against biodiversity loss. For dairy/meat and soy production, we went a step further and
developed a customized due diligence process by outlining the “red flags” for companies that
ING should steer clear from. For example, dairy/meat producers doing business in the Amazon or Cerrado biomes of Brazil are likely contributing to deforestation in protected areas, and
should be subjected to greater scrutiny by ING.

For our team, the main takeaway was that it is challenging to codify threats to biodiversity
using traditional banking methods. While a bank seeks to create scalable risk assessment
procedures without limiting business opportunities, the myriad rich and unique ecosystems
across the globe require a custom approach. Going forward, the financial sector will have to
balance its profit-oriented motives with promoting sustainable sourcing practices. We are
excited about the growth of biodiversity-aware investments at ING, a pioneer in the sustainable
banking space.

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