Deutsche Bank has become the latest central bank to revise its policy on lending money to fossil fuel projects in sensitive regions. Effective immediately, it won’t finance any new oil and gas projects in the Arctic or the oil sands, as well as projects that use hydraulic fracturing in countries with water scarcity problems. And it reinforced its commitment not to finance coal-fired power plants.
It also plans to review all its existing energy companies that are dependent on coal, oil, and gas – European and American businesses by the end of 2020, and Asian one by 2022 (since the continent still relies too heavily on coal).
Part of this initiative involves the signing of the Equator Principles and an updated Fossil Fuels Policy that sets a new framework and stricter limits on financing business activities that involve fossil fuels. Included is a pledge to end its global business activities in coal mining by 2025 to help spur the transformation to a sustainable economy. The Equator Principles is a scheme designed to ensure that strict social and environmental standards are applied during the development and construction process of a project – and it even includes follow-up monitoring.
CEO Christian Sewing, who also chairs Deutsche Bank’s Sustainability Council, said:
Our new Fossil Fuels Policy sets us a strict framework for our business activities in the oil, gas, and coal sector. In its current form, the Policy sets us ambitious targets and enables us to help our long-standing clients with their own transformation. It will allow us to play our part in protecting the climate and helping the EU to achieve its goal of being climate neutral by 2050.
The signing of the Equator Principles and the revised Fossil Fuels Policy are both components of the bank’s sustainability strategy, which includes other ambitious targets. For example, by the end of 2025, Deutsche Bank will increase its financing and investment of sustainable projects to 200 billion euros and have all its operations powered by 100% renewable energy.
Sewing said:
We are driven by a very strong conviction to help shape the global change to a sustainable, climate-neutral, and social economy. The target of 200 billion euros in sustainable financing and ESG investments is ambitious compared to our peers. However, we are starting from a good base because, as a globally active financing house, we can serve the growing demand of our clients for sustainable investment products by ourselves.
Transitioning to clean power shouldn’t be too tricky since nearly 80% of its electricity worldwide has come from renewable energy sources since 2019. And since 2012, the bank’s business operations have been climate neutral (energy efficiency measures reduced its energy consumption by over 25%, and the rest was offset by purchasing Verified Emission Reduction certificates).
Deutsche Bank wrote in a press release that it is convinced that:
…the banking sector has a decisive role to play in the transformation of the economy in order to achieve the targets of the Paris Climate Agreement and the UN Sustainability Goals.
Recently, many banks have faced increased activist pressure to stop funding fossil fuel projects. Other banks have also announced reconsiderations to finance new coal, oil, and gas developments.
In the US, JPMorgan Chase (the world’s largest financier of fossil fuel companies) published a report warning its bank clients about the dangerous global conditions that could result from the continued extraction of fossil fuels. The paper places the fate of the world in the borrower decisions and implicates the lender (itself) in the catastrophic events of climate change.
