Deutsche Bank has published the scope 1 and 2 emissions of its corporate industry loan book for the first time, revealing that just 1% of its clients are responsible for 70% of emissions in the portfolio.
The bank, reporting against PCAF standards, said that the scope 1 and 2 financed emissions of its corporate loan book were 30.8m tonnes of CO2 a year at the end of 2021. Just over two thirds of these emissions came from three sectors: oil and gas, utilities and steel, metals and mining. The bank has €8.2bn loan exposure to oil and gas companies, who account for a third of financed emissions, with exposures of €4.5bn to utilities, accounting for a quarter of emissions, and €4.3bn to steel, metals and mining, who account for 11% of emissions. The three sectors between them form 16% of Deutsche Bank’s corporate industry loan book and 3.5% of total loans.
The loan portfolio will be rebalanced towards clients who are “well advanced” in developing decarbonisation plans and who are focused on less carbon-intensive technologies, the bank said, although supporting clients to define Paris-aligned decarbonisation pathways “forms a core element of [its] sustainability strategy”.
Labelled and transition financing will also feature heavily in the bank’s decarbonisation plans. It already provides green and sustainability-linked loans to clients, and RI understands that it is working on expanding its sustainable financing framework to include transition financing, with the expanded framework due to be published later this year.
RI understands that the bank has been measuring its financed emissions data internally for a number of years, but has only recently felt confident enough in its data to publicly disclose it. Further disclosures of scope 3 and facilitated emissions are likely to follow towards the end of this year, although PCAF is still consulting on a standard for facilitated emissions.
The bank has already excluded financing for new Arctic oil and gas and oil sands from its lending books as well as financing for new coal power plants. It is reviewing lending to energy companies with more than 50% coal in their energy mix to ensure they have credible diversification plans in place, and plans to completely exit thermal coal mining by 2025.