Deutsche Bank announces additional measures to reinforce net zero commitment
Deutsche Bank has presented its path to a more sustainable Global Hausbank at its 2nd Sustainability Deep Dive.
This includes a number of measures to support clients on their path to realign their business model towards more sustainability. The bank also reaffirms its commitment to net zero CO2 emissions by 2050.
Christian Sewing, Chief Executive Officer, Deutsche Bank: “Despite the present political and economic challenges, we have no time to lose regarding the sustainable transformation of our society. We want to support our clients as a strong partner on their path to a more climate friendly economy. Given our progress in sustainability, we are confident that we can achieve our € 500 billion target in cumulative ESG financing and investment volumes also in a volatile environment.”
Closer partnerships with clients in the fight against climate change
The bank aims to contribute to the fight against climate change by engaging deeply with its corporate, institutional, and private clients.
Last autumn, Deutsche Bank announced net zero pathways for four CO2-intensive sectors. The bank now intends that at least 90% of its high emitting clients in the most carbon intensive sectors that engage in new corporate lending transactions shall have a net zero commitment in place from 2026 onwards. At present, this figure is around 50%.
Christian Sewing: “We want to encourage our clients around the world to join us in tackling this necessary transformation.”
In addition to the net zero targets already defined for the carbon-intensive sectors of oil & gas (upstream), power generation, steel and automotive, the bank aims to publish net zero pathways for at least four more sectors in 2023, aiming to reduce the emissions that the bank indirectly finances in its lending business.
Sewing also reaffirms the bank’s position that it is vital to support clients in their efforts to become more sustainable and to end individual client relationships only in exceptional cases:
Sewing: "At Deutsche Bank we are convinced that parting with a client after a transition dialogue can only ever be a last resort. In most cases we can contribute more to reducing greenhouse gas emissions by working with our clients. But in cases where we saw no willingness on the part of a client to embark on a credible transition, we would not shy away from exiting a relationship."
Additional financing announced for energy-efficient homes in Germany
Deutsche Bank plans to expand its support to private clients in its German home market as they contribute to climate protection. By 2025, the Private Bank Germany aims at providing between € 7 billion and € 10 billion in financing means for energy-efficient home construction and renovation.
The aim is to substantially increase the range of retail services in this area available to clients.
Sewing: "Climate commitments and energy efficiency requirements make construction and renovation in Germany increasingly complex projects. As a bank, we play an important role here. Today, homeowners already need more sophisticated advice and a network of energy experts, craftsmen and banks. Only by doing this can Germany achieve its climate targets by 2045."
1.5 degrees Celsius target: annual investment of $ 1.4 trillion required by 2030
Based on a model developed jointly with Bain & Company, the planned net-zero measures of companies and households worldwide will require significant investments. According to this model, an additional investment volume of $ 1.4 trillion per year will be required, by the end of 2030, to meet the target of limiting global warming to 1.5 degrees Celsius by 2050. According to the model additional annual revenue potential for banks is more than $ 40 billion worldwide. While most of these revenues will arise in Europe and America by 2030, the growth potential thereafter is likely to be increasingly concentrated in Asia.
Jörg Eigendorf, Chief Sustainability Officer, Deutsche Bank: "For us, sustainability is both a matter of responsibility and opportunity. As a bank in the center of Europe with a strong presence in the US and in Asia, for example with our ESG Center of Excellence in Singapore, we are well positioned for this transformation both globally as well as in many local markets."
€ 500 billion volume target by the end of 2025: additional details on financing initiatives
From the beginning of 2020 to the end of 2022, Deutsche Bank exceeded its target of € 200 billion in sustainable financing and investments by € 15 billion, even after bringing this target forward by three years. Deutsche Bank’s target is to enable a total of € 500 billion in sustainable financing and investments¹ by the end of 2025. Based on in-house model calculations, the bank estimates that revenues from the ESG business will increase from around € 800 million in 2022 to approximately € 1.4 billion per year by the end of 2025.
To meet the € 500 billion volume target by year-end 2025, Deutsche Bank intends to implement several measures. These include the conversion of traditional supply chain financing of international companies to a supply chain financing linked to environmental and social criteria.
These solutions will support the bank’s € 5 billion sustainability-linked working capital financing commitment by the end of 2025. In addition, the Investment Bank plans to provide at least € 3 billion in ESG financing in developing economies and emerging markets by the end of 2025. The planned additional financing for energy-efficient construction and renovation in Germany will also contribute to the overall volume target.
Approximately 5% carbon footprint reduction in corporate loans
Deutsche Bank was able to reduce its carbon footprint in corporate loans by around 5% in 2022, with a total of 56.7 million tons of CO2 equivalent in financed emissions (Scope 1 and 2) for committed loans. Reductions of financed emissions or emission intensities in all sectors with net zero targets were achieved. The emissions financed in the oil and gas sector were reduced by 28.9% year on year in 2022. In addition to a reduction in loans, this figure is also based on the internationally customary assessment method, which uses the Enterprise Value including Cash (EVIC) for calculation.
Moreover, Deutsche Bank published how it reduces its Scope 1 and 2 emissions plus emissions from business trips. Since 2012, emissions from its own operations have been reduced by a total of approximately 273,000 tons of CO2 or 79%. Going forward, the bank will be increasingly focused on reducing Scope 3 emissions, reinforced by vendor management.
Oil & Gas: reductions in lending in 2022
Having updated its thermal coal policy, the bank plans to update its oil & gas policy. In the oil and gas sector, outstanding loans amounted to € 6.5 billion at the end of 2022, a decrease of more than 20% from 2021 and accounting to approximately 1.3% of the bank’s total loan book.
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