Deutsche Bank says its DB Advisors institutional asset management arm has been awarded its first environmental, social and governance (ESG) corporate bond mandate – from a German utility company.
The unnamed client has awarded a total of €125m to the mandate, taking €105m from an existing traditional corporate bond mandate with DB Advisors and adding a further €20m of assets.
DB Advisors, which has more than €173bn under management, says it shows that “some of Germany’s biggest businesses are now becoming interested in sustainable investing”.
Deutsche says the client is one of Europe’s leading utility companies and a long-standing client.
The decision comes as electricity producers in Germany are having to rethink their strategies for meeting clean-energy targets because the government has ruled out nuclear power.
Germany’s four nuclear power firms – E.ON, RWE, Vattenfall and Energie Baden-Württemberg – are decommissioning their nuclear plants and investing heavily in renewables as part of the “Energiewende” switch. Industry sources said that both RWE and E.ON have Deutsche as their house bank.
Frank Klein, Deutsche’s Head of ESG Europe, said: “This is a perfect example of how non-financial factors can have a significant impact on businesses and, by extension, investment decisions. It is even clearer that incorporating ESG factors into the investment process makes sense from a risk/return perspective.“The fact that a major company like our client has switched to an ESG approach will, in our view, increase the momentum of the sustainable investment movement in Germany.”
“A perfect example of how non-financial factors can impact on business”
The move also comes as the Germany’s new sustainability code, which contains guidelines for reporting on ESG issues, is gaining traction. Indeed, RWE became the first DAX-listed corporate to sign up, in May. This heralded a flurry of other blue-chip signatories, including insurance giant Allianz, pharma and chemicals group Bayer, automaker Daimler and engineering firm MAN AG.
Deutsche already manages, and is an investor in, the Global Climate Partnership Fund on behalf of development bank KfW and the German environment ministry and other European public investors. The fund is a Luxembourg-domiciled SICAV with total investor commitments of over €200m which launched in 2010.
And Deutsche was part of the ‘Green Growth Action Alliance’ announced in June this year. This alliance aims to address the $1trn annual shortfall in green investments.
With reporting by Jan Wagner