Our approach to climate change
Sustainability covers a broad spectrum of environmental and social matters, with climate change being one of the defining challenges of our time. As a leading global financial institution, we recognize the role we have to play in addressing this challenge and helping to shape the global transition to a sustainable and climate-friendly economy. Our climate statement gives a compact overview of our approach in the fight against climate change.
By signing the Paris Pledge for Action in 2015, we demonstrated our commitment to contribute to the goals of the Paris Agreement. We reinforced this statement by joining the German Financial Sector’s collective commitment to Climate Action in June 2020. We welcome the European Union’s ambition of becoming carbon neutral and will support efforts in progressing with the European Commission’s action plan on sustainable finance as well as transitioning the economy, as laid out in the Commission’s EU Green Deal.
Our approach to climate change is strongly reflected in our sustainability strategy.
Managing climate risk
Deutsche Bank has been developing a holistic risk management framework for climate risks since 2018. An internal working group is combining existing risk management practices with innovative approaches to ensure that the bank understands, and is well protected against, potential negative impacts arising from climate-related physical or transition risk, reputational risk and/or business disruption risk.
A key component in climate risk management is the development of transition scenario analysis, enabling us to assess the potential impacts of policy and behavioural changes on our clients.
Our Environmental and Social Risk Framework contains several restrictions regarding carbon-intensive sectors to reduce our climate risk exposure.
Since 2016, we have had a policy in place prohibiting the financing of greenfield thermal coal mining and associated infrastructure. In 2020, we complemented this policy by committing to phase out coal exposure by 2025 worldwide (lending and capital markets).
Since 2016, we have had a policy in place prohibiting the financing of the development of new coal-fired power plants and the expansion of existing coal-fired power plants, irrespective of their location. In addition to this commitment, in 2020 we are reviewing our coal power exposure in Europe and the USA.
For all clients depending more than 50% on coal – be it energy capacity or energy output – we will subject the provision of financial services to the availability of credible diversification plans. If there are no diversification plans in place, we will aim at gradually phasing out the exposures. Starting in 2022, we will extend this review and phase out to Asia and selected developing markets.
Starting July 2020, we will not finance:
- Oil and gas projects via hydraulic fracturing in countries with extremely high water stress
- New oil and gas projects in the Arctic region
- New projects involving exploration, production, transport/processing of oil sands
In addition, we are systematically reviewing our entire existing exposure in the oil and gas industry worldwide by the end of 2020 in order to set upper limits for the total exposure in the coming years.
The outlined changes to our fossil fuel policies announced in July 2020 underline Deutsche Bank’s aspiration to contribute to climate protection and to the ambition of the European Union to become net-zero carbon by 2050. They are in addition to our commitment to align the carbon intensity of our lending portfolios with the targets of the Paris Agreement, which we have pledged by joining the German financial sector’s collective commitment on climate action in June 2020.