Deutsche Bank is pledging to roughly double its green financing activities over the coming five years, to a total of €200bn by 2025, committing itself for the first time to a quantitative sustainability target as pressure mounts on banks to play a more active role in fighting climate change.
Chief executive Christian Sewing will outline the new targets at the bank’s annual general meeting next week. “ is an area where we as Deutsche Bank have a social responsibility, but also see opportunities,” he will say, according to a preview of his speech published by Germany’s largest lender late on Tuesday.
While fighting the coronavirus pandemic overshadows the transition to a greener economy at the moment, the issue “is bound to come back into the spotlight — and all the more intensely”, Mr Sewing will argue.
Deutsche, which has €1.5bn in total assets, is planning to issue its first “green bond” to raise funds for investments in renewable energy later this year.
Compared with international peers such as Goldman Sachs, Citi and HSBC, Deutsche is a laggard in unveiling binding sustainability targets. According to data from the World Resources Institute, last year 23 of the 50 largest private sector banks in the world had quantitative sustainability targets in place.
Environmental campaigners have been criticising the German lender for years. At its 2019 AGM in Frankfurt, Fridays for Future activist Luisa Neubauer called Deutsche a “companion in crime” with regard to climate change, arguing that it was a big lender to Europe’s coal industry and was funding oil exploration in the Arctic. Last July, Fridays for Future organised a protest in front of the bank’s Frankfurt headquarters.
Deutsche’s €200bn target covers loans granted, bond placements and sustainable assets that it manages for private clients, but excludes green assets in its money managing division, DWS. In defining sustainability, the bank is following the EU’s standards.
According to data from the Rainforest Action Network, Deutsche’s financing of fossil fuel investment projects almost halved between 2016 and 2019 to $12bn. It is the 19th-largest financier of such projects.
Regine Richter, a campaigner at German environmental lobby group Urgewald, said that while Deutsche was talking about “more green” investments, it did not mention retreating from activities that are harmful for the climate. “Deutsche Bank is still very active in financing fossil energy,” he said. “If this does not change, the bank leads its sustainability activities to absurdity.”
Deutsche said on Tuesday it was currently revising its oil and gas policy, adding that it would “provide a clear framework for financing and investments in this area” by the end of next month.
The bank is also going to sign up to the “Equator Principles”, a joint risk management framework for conducting due diligence on environmental and social risk in project finance.
In his speech to shareholders, Mr Sewing will describe the lender’s new target as “ambitious”. At face value, Deutsche’s target of €200bn by 2025 is at the upper end of its rivals’ commitments. For example, in 2017 Citi pledged $100bn by 2025 to support projects aimed at reducing carbon emissions, while JPMorgan Chase promised $200bn between 2017 and 2025.
However, the headline amounts are difficult to compare as they refer to different financial products. JPMorgan and Citi exclude assets managed for private clients.