Deutsche Bank to link pay with sustainable financing targets

German banking group to include sustainability ratings by third parties in compensation assessment

German banking titan Deutsche Bank will link top executives’ pay with sustainability criteria, including new annual growth targets for sustainable financing, starting next year. 

The bank has revealed it expects its sustainable financing and investments to increase tenfold to more than €200bn by 2025 and hopes that the linking of executive pay to sustainability will reinforce this. This year, Deutsche Bank expects its sustainable financing will top €20bn. 

It will use sustainability ratings from five “leading” unnamed providers in the assessment of executives’ compensation via a “a sustainability ratings index”, it said yesterday. 

Deutsche Bank’s Sustainability Committee of the Management Board was formed earlier this year, and is chaired by its CEO, Christian Sewing. 

“It is our ambition to be a leader on sustainability in the financial sector,” said Sewing. “We see a great opportunity for us to transform ourselves as well as to support our clients in their transformation towards greater sustainability.”

Staying with banking, the UN Environment Programme’s Finance Initiative today published an update on the 38 banking signatories to the Collective Commitment to Climate Action (CCCA), who pledged  last year to align their portfolios and business practices with the goals of the Paris Climate Agreement.

The signatories include BNP Paribas, Crédit Agricole, Société Générale, Natixis and National Australia Bank, and represent a more ambitious subset of Principle for Responsible Banking members. 

The report found “a growing use of scientific climate scenarios in banks’ strategies”, but noted that “most banks still have some way to go before they can publish a full assessment of their portfolios’ alignment and set and publish scenario-based targets” – a requirement of all CCCA signatories within three years of joining. 

Early next year, the banks will publish agreed principles and standards for assessing portfolio alignment and setting and reporting on targets.