Coal and mountaintop removal

Deutsche Bank supports a well-balanced overall energy mix that takes account of economic conditions as well as environmental and health and safety considerations and is, at the same time, future-oriented.

Coal power is still necessary to close the energy gap until renewable sources have grown sufficiently. In doing business with the coal industry, we expect companies to use the latest technologies to limit environmental impacts, meet sustainability criteria such as the IFC Performance Standards, and implement certification such as ISO 14001.

Mountaintop removal

Mountaintop Removal (MTR), while an established and regulated mining method, continues to be subject to political, judicial, and regulatory scrutiny. Along with other mining industry participants, we have noted the steady decline in MTR production since 2008 and are of the view that MTR is likely be phased out in the near to medium-term future. In recognition of this ongoing industry trend, we updated our policy position in relation to MTR. Accordingly, Deutsche Bank and its subsidiary undertakings have begun to phase out the provision of credit and the underwriting of debt/equity to mining companies that use MTR as an extraction method and which make a material contribution to the total annual MTR coal production in the USA.

Deutsche Bank is ranked as the #10 coal bank by BankTrack in their report “Banking on Coal” dated December 2014; why does Deutsche Bank support this industry?

Deutsche Bank supports a well-balanced global energy system that is forward-looking and that takes account of economic conditions as well as environmental and health and safety considerations.

At present, it is still not possible to meet the substantial global energy demand solely through renewable energy sources. For this reason, we will continue to finance a diversified range of energy. Given the increasing energy demand, in some regions of the world coal cannot be avoided.

All transactions involving financial services for construction of a new or expansion of an existing coal-fired power plants require environmental and social (ES) due diligence and potential discussion in a respective regional Reputational Risk Committee.

Our ES due diligence will focus on the following:

  • Current energy situation of the region and future energy demand,
  • Local government energy strategy including electricity generation objectives,
  • CO2 context of the region,
  • Availability of alternative fuel and studies / research conducted to evaluate the options,
  • Technology choice and emission performance of the project, especially if the project is designed to use the best appropriate available technology to allow for high efficiency and, therefore, lower GHG emissions intensity (also benchmarking against the current average emissions of the country).

For certain developing countries the World Bank Group Screening Criteria will be applied as additional review guidelines.

How can Deutsche Bank be involved in the mining sector given its controversial environmental and social impacts?

All transactions involving financial services for mining industry (extraction of minerals and metals and related activities) require enhanced environmental and social (ES) due diligence. In addition, for transactions involving financial services for green-field mining projects discussion in the respective regional Reputational Risk Committee might be required.

ES due diligence for mining industry consists of evaluating clients’ compliance /performance with regard to:

  • local environmental and social laws and regulations and all applicable permits,
  • Quality of existing Environmental and Social Risk Management incl. Governance structure, availability of Policies and Key Performance Indicators related to e.g. GHG emissions and energy efficiency, health and safety track record etc.,
  • the level of transparency on Stakeholder Engagement and contribution to development of local communities,
  • the level of transparency on key environmental, social including security-related and governance issues associated with the client and approach taken to resolve these issues,
  • In addition and where applicable the ES evaluation will include clients’ adherence /performance with regard to best industry practices/standards such as but not limited to:
    • The OECD Guidelines for Multinational Enterprises,
    • The IFC Performance Standards,
    • The WB/IFC Environmental, Health, and Safety (EHS) General Guidelines,
    • The WB/IFC EHS Guidelines for Mining,
    • The International Council on Mining and Metals Sustainable Development Principles,
    • The Voluntary Principles on Security and Human Rights.

Through the active engagement process, Deutsche Bank encourages clients to move toward and apply good industry practices.

A case study

infographic coal mining
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