Policies & Commitments
Integration of environmental and social matters
The systematic integration of environmental and social matters into our decision-making processes is a key component of our understanding of responsible corporate behaviour.
We have a comprehensive set of rules and guidelines in place which define the procedures and responsibilities for environmental and social risk identification, assessment and decision-making. We apply enhanced due diligence in certain sectors based on their inherent elevated potential for negative environmental and social impacts.
Our environmental and social due diligence is guided by internationally recognized principles and standards, including:
International Labour Organization (ILO) Core Labour Standards
International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work
The UN Guiding Principles on Business and Human Rights
The Equator Principles
International Finance Corporation (IFC) Performance Standards
Environmental and Social Risk Framework
The Environmental and Social Risk Framework describes our standards for the identification, assessment and management of environmental and social (ES) risks. It defines sensitive sectors we pay attention to (e.g. oil and gas, metals and mining, activities with high carbon intensity or potential for human rights’ infringements), specifies the requirements for ES due diligence and includes criteria for mandatory referral to Group Sustainability. More detailed sectoral guidelines support the general provisions.
Deutsche Bank is also developing a holistic risk management framework for climate risks. An internal working group is combining existing risk management practices with innovative approaches to ensure 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.
Our Environmental and Social Risk Framework contains several restrictions regarding carbon-intensive sectors as part of our activities to contribute to climate protection.
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.
In July 2020 Deutsche Bank officially adopted the Equator Principles: an internationally recognised risk management framework, adopted by more than 120 financial institutions globally, for determining, assessing, and managing environmental and social (ES) risks in development projects.
The Equator Principles were launched in 2003 and were updated several times as part of an extensive stakeholder dialogue. The last update Equator Principles 4 came into effect in October 2020 with a range of amendments, including stronger focus on climate change, human rights, biodiversity and indigenous peoples.
Although our due diligence of client transactions has long reflected these principles and the underlying IFC Performance Standards, formally adopting and implementing the principles, underscores our commitment to managing ES risks in project finance.
Below you will find ongoing information on Equator Principles implementation at Deutsche Bank as well as related annual reporting.