Deutsche Bank to ramp up ESG financing and issue inaugural green bond

Sustainability targets announced during recently concluded AGM

Deutsche Bank, Germany’s largest lender, plans to allocate more than €200bn to finance sustainable activities by the end of 2025 and will report its progress towards achieving this target annually.

The figure will include green loans granted and bonds placed by Deutsche, and also sustainable assets held by its private banking arm. ESG assets managed by its asset management unit DWS – currently valued at €70bn – will not be included in this target.

Sustainable activities will be defined according to the EU Taxonomy – a catalogue of green and sustainable activities developed by the EU to underpin its Sustainable Finance Action Plan – and the Bank’s internal criteria in areas not covered by the Taxonomy.

This and a raft of other sustainability targets were announced during Deutsche Bank’s recently concluded virtual AGM by CEO Christian Sewing who described them as “ambitious, even compared to our peers”.

According to Sewing, the Bank is also due to issue its inaugural Green Bond later this year “as soon as market conditions are right” to finance renewable energy or energy efficiency projects. The bank has already developed a green bond framework – based on the Green Bond Principles of the International Capital Market Association (ICMA) and the EU Taxonomy – which has been endorsed by ISS ESG, the ESG arm of proxy advisors ISS.

Finally, Deutsche Bank has indicated that it will sign up to the Equator Principles – a set of voluntary rules to manage environmental and social risks in project financing. Currently, 101 banks from 38 countries are signatories, although the Principles themselves have repeatedly come under criticism over a perceived lack of ambition.

The news comes as a growing number of major banks are attempting to reposition themselves as sustainability leaders. In recent months, Goldman Sachs, Morgan Stanley and Citigroup have each announced policies to restrict lending to new oil and gas development in the Arctic – the first steps taken by Wall Street to withhold financing to the oil industry.

Last month, Deutsche Bank announced the establishment of a dedicated sustainable finance team within its capital markets division which will be led by Head of Sustainable Finance Trisha Taneja, a new hire from Sustainalytics.

Separately, DWS has rebranded three fixed income ETFs to integrate ESG criteria.