On this last day of the EU Green Week 2021, the EACB puts in the spotlight the Sustainable Report of our German member, the DZ Bank.
- Management of the lending business according to measurable sustainability targets
- Phasing out direct financing of coal
- Tightening of criteria for weaponry and mining
- New sustainability report published on 30/03/2021
In future, DZ BANK AG will manage its lending business more strongly on the basis of sustainability criteria and measurable targets. To this end, the Cooperative Central Institution has developed a comprehensive analytical framework that provides the necessary data basis for portfolio management. In the first step, the Bank measured the impact of its lending business on the 17 United Nations (UN) Sustainable Development Goals (SDGs). The result: Two-thirds of DZ BANK's loan portfolio already shows a positive impact. The data will also enable the Bank to provide customers with more targeted support during the transformation process in the future. The Bank has also tightened its exclusion criteria for sustainable lending. In the coal sector, DZ BANK AG is now completely withdrawing from the direct financing of coal-fired power along the entire value chain – from mining to coal-fired power generation. The Bank will also rule out indirect financing in conglomerates in future if no exit plan from coal is apparent. The Bank provides information on these and other activities in the Sustainability Report of the DZ BANK Group, which was published today.
Uwe Fröhlich, Co-Chairman of the Board of Managing Directors of DZ BANK, said: "For business to act responsibly, the financial industry plays a central role. As a financing partner, we provide capital for investments in sustainable development and growth. We see significant opportunities in this for our Bank and the entire cooperative financial network."
Promoting sustainable engagements in the lending business
For example, DZ BANK AG's €66 billion loan portfolio is to be managed more closely in line with the UN sustainability goals in future. The analysis and classification of the lending business for the 2020 financial year provides concrete key figures for this for the first time: 64 percent of DZ BANK's portfolio is contributing to at least one of the UN's 17 Sustainable Development Goals. For the year 2021, this share is set as a minimum value. The positive impact of the portfolio on climate, infrastructure and innovation as well as on economic growth is particularly strong. The main drivers are the financing of renewable energies, trade, electricity, transport and energy-efficient real estate. At €5.7 billion (2019: €5.4 billion) loan volume, DZ BANK is already one of the most important financing partners for the energy transition in Germany. The Bank has set itself the goal of increasing this volume to €6.0 billion by the end of 2022. "We want to accompany our customers on their transformation process towards a more sustainable economy. To do this, we first need well-founded data and transparency in order to be able to provide customers with targeted support," says Uwe Fröhlich. The Bank also plans to expand its range of ESG-related products and services in all business areas.
In addition to the exclusions in coal sector financing, DZ BANK is also tightening up the existing criteria in the areas of weaponry and mining: In addition to the existing ban on financing controversial weapons, the Bank ensures through agreements with its clients that it does not directly or indirectly co-finance components that could be incorporated into controversial weapons. Additionally, it expands the definition of controversial weapons to include autonomous weapons. In addition, the Bank undertakes not to finance oil and gas production by means of fracking or mining using the "mountain top removal" process. The Bank also excludes financing in other areas, such as trade transactions with endangered animal and plant species.
Sustainability is part of governance
Anchored in the strategy and Group development, the topic of sustainability has strategic priority at DZ BANK: Sustainable aspects are therefore part of the company's objectives; the remuneration of the management also depends on the achievement of sustainability goals. At the level of the DZ BANK Group, the strategic sustainability programmes are orchestrated under the leadership of the two Co-Chairmen of the Board of Managing Directors. "The framework developed and the baseline analysis for our corporate lending business are key building blocks of our sustainability strategy. At the same time, the DZ BANK Group is also making consistent progress in its other business activities, such as asset management at Union Investment or insurance business at R+V. Together, we will systematically develop our ESG profile,” said Dr. Cornelius Riese, Co-Chairman of the Board of Managing Directors of DZ BANK. With the classification framework, DZ BANK is already setting the course for taxonomy-compliant reporting. Although the requirements of the EU taxonomy for banks have not yet been fully defined, it is already foreseeable that the proportion of sustainable business will have to be reported in future.
About the Sustainability Report 2020
For the first time, DZ BANK is combining various reporting formats into a holistic Sustainability Report. It contains the non-financial Group report for the DZ BANK Group and DZ BANK AG and is based on the standards of the Global Reporting Initiative (GRI). With the new reporting, DZ BANK Group fulfils its obligation to report regularly on progress made in implementing the 10 principles of the UN Global Compact in the four areas of human rights, labour standards, environmental protection and corruption prevention, as well as on activities to promote sustainable development. In addition, the Bank based the development of the new reporting format on the requirements of the 'Principles for Responsible Banking' (PRB), which it joined in April 2020.