(Photo Credit: Can Pac Swire, Flickr Creative Commons)
Deutsche Bank plans to increase its volume of environmental, social, and governance (ESG) financing as well as its portfolio of sustainable investments under management to more than $216.4 billion by 2025.
Headquartered in Frankfurt, the bank says that these ESG business targets include loans granted by 2025 and bonds placed by Deutsche Bank during the six-year period. In addition, the financing covers sustainable assets managed by its private bank. The calculations do not include the roughly $75.7 billion in ESG assets that DWS manages.
The bank will use the European Union’s ESG standard, the EU Taxonomy, to define which activities can be classified as sustainable. If standards don’t exist, the bank would apply its own transparent criteria. Deutsche Bank anticipates reporting on progress annually.
“Deutsche Bank 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,” the global bank and financial services company said.
First Green Bond Framework Established
The bank also said this week that it has established a framework to issue a first green bond sometime this year. Deutsche Bank based the framework on the International Capital Market Association (ICMA)’s Green Bond Principles and guidance developed by European Union’s Technical Expert Group on Sustainable Finance.
Assets that qualify as “green” include ones that focus on renewable energy, energy efficiency, and buildings constructed according to environmental and sustainability standards, according to the bank.
Green bonds have become increasingly popular. During the first part of 2019, green bond issuance surpassed $100 billion. The telecom sector is active in the green bond market. Last October, Pepsi issued $1 billion in green bonds to fund its sustainability initiatives. More recently, Citi and Prudential Financial issued green bonds.
For Deutsche Bank, issuing green bonds is consistent with the UN Sustainable Development Goals. The bank signed the UN Principles for Responsible Banking last September.
“We are driven by a very strong conviction to help shape the global change to a sustainable, climate-neutral, and social economy,” said CEO Christian Sewing.