A Deutsche Bank sign and logo on the outside of their building in London, on July 8, 2019.Natasha Livingstone/The Associated Press
Deutsche Bank on Thursday tightened its coal financing policies but has yet to change its criteria for the oil and gas industries, drawing criticism from climate activists.
Financial firms are under pressure from policymakers and investors to reduce the scale of climate-damaging carbon emissions linked to their lending and underwriting.
Germany’s largest bank said it would not take as new clients corporations that generate more than 30 per cent of revenue from coal and that do not provide a “credible diversification plan.”
The level is down from a previous 50 per cent and is more in line with industry standards.
The bank said it will give existing clients until 2025 to convince it of their ability to shift to lower carbon business models, and that, after that date, it will stop financing clients who do not meet its criteria.
“Parting with a client after a transition dialog can only ever be a last resort,” CEO Christian Sewing said. “But in cases where we saw no willingness on the part of a client to embark on a credible transition, we would not shy away from exiting a relationship.”
The bank said it already does not provide project financing for thermal coal and that its exposure to the sector at the end of 2022 accounted for 0.09 per cent of its corporate loan book or €321-million ($340-million).
Shareholders and activists had called on Deutsche to introduce similar restrictions for oil and gas, but the bank only said it “plans to update its oil and gas policy” without giving a timeframe.
Around 20 of Europe’s banks have committed to phasing out financing for thermal coal power or mining and several, including NatWest and HSBC, have said they would similarly restrict that for oil and gas.
Regine Richter, a campaigner at NGO Urgewald said the policy was “too little too late” and the lack of update on the bank’s oil and gas policy “is pretty disappointing in the year 2023 when everyone can feel the effects of climate chaos.”
Deutsche Bank in recent years has marketed itself as a lender that firms can turn to as they move to a greener future, a strategy it views as central to its own turnaround and boosting profits.
“We are still financing the industry, because the world economy is still much too dependent on fossil fuels,” Deutsche Bank Chief Sustainability Officer Joerg Eigendorf said. “We acknowledge we need to change this quickly and are actively supporting our clients to move in the right direction.”
Climate activists fear that the financial industry enables industries such coal and oil to carry on polluting, and said Deutsche Bank in particular has not done enough.
Deutsche said its financing of the oil and gas sector declined by more than 20 per cent last year, which it attributed to the bank’s exit from Russia and its cessation of support for Russian gas companies as well as commitment reductions for “selected larger clients.”
This corresponded with a 28.9 per cent fall in the carbon emissions associated with the bank’s lending to the oil and gas sector, though this was partly a consequence of rising share prices, meaning that Deutsche’s overall share of financing and emissions fell.
The International Energy Agency said in 2021 that investment in new oil, gas and coal supply projects must be halted to achieve net-zero emissions by the middle of the century.