Deutsche Bank has announced the launch of a new Sustainable Finance Framework, outlining the methodologies and procedures, including the environmental and social criteria and categories, used by the bank to classify transactions and financial products as “sustainable”.
The new framework is the second to be launched by Deutsche Bank, following the initial sustainable finance framework launched by the bank in July 2020, after the bank committed earlier that year to a goal of growing its sustainable finance and portfolio of ESG investments under management to over €200 billion by the end of 2025. Since then, the bank has increased this objective several times and is now targeting €500 billion in sustainable financing and investment volumes by 2020 and 2025.
Earlier this month, Deutsche Bank revealed that it has reached €279 billion to reach its sustainable financing and investment target by the end of 2023.
According to Jörg Eigendorf, Chief Sustainability Officer at Deutsche Bank, key updates to the new framework include improved eligibility criteria, the incorporation of evolving market practices with guidance from market associations such as ICMA, LMA, ISDA and greater transparency, with the framework including a commitment to publish progress in financing volume and sustainable investments with its quarterly and annual financial results, and as part of its annual non-financial report.
Eligibility criteria for sustainable financing and investments within activities classified as “environmentally sustainable” are based on the six guiding objectives of the EU Taxonomy, which include climate change mitigation, climate change adaptation, sustainable use and the protection of water and marine resources, transition to a circular economy, prevention and control of pollution and protection and restoration of biodiversity and ecosystems. For socially sustainable activities, the framework describes their classification according to objectives that include access to basic infrastructure, access to essential services, affordable housing, SME financing and microfinance, employment generation, food sustainability and sustainable food systems, and socioeconomic advancement and empowerment.
Deutsche Bank further stated that it received a second-party opinion from rating and consultancy agency ISS ESG, which confirmed that the framework “reflects market practices” and that its content is aligned with the bank's existing sustainability criteria.
In a social media post announcing the framework, Eigendorf said:
«279 billion euros – that is the amount of sustainable financing and ESG investment that we facilitate from 2020 to 2023. But what is sustainable, what do we classify as environmental and social?
“Our newly updated Sustainable Finance Framework gives the answer and is public for everyone. Comprehensively describes sector-specific classification thresholds and social classification criteria. It also defines the environmental and social requirements that are part of our due diligence process. It serves as a basis for achieving our ambitious sustainability goals, guided by credible criteria.”
Click here to access the Sustainable Financial Framework.
