Deutsche Bank published its initial Transition Plan last week (October 19), including new net-zero targets for three high-emitting industries in its corporate loan portfolio: coal, cement and shipping.

Deutsche Bank has previously said its “biggest challenge to achieving our 2050 net-zero target is decarbonizing our lending portfolios”. As a result, it will be “steadily phasing out business with not-to-abate industries such as thermal coal.”

This “phasing out” will build on the bank’s thermal coal policy, which was updated in March 2023 to specify that clients failing to reduce thermal coal’s contribution to their revenue by 50% by 2025 will have their financing cut. For companies outside of the OECD, the revenue threshold is 30% by 2030.

The initial Transition Plan is the most recent reassurance of climate action from a major lender, following ING’s 2023 Climate Report, which committed to “reducing the financing of coal-fired power plants to close to zero by 2025 and stopping the dedicated project financing of new oil & gas fields”, and BNP Paribas’ “exit from thermal coal, definitive by 2030 in the European Union and the OECD and by 2040 in the rest of the world”.

These come against a backdrop of falling confidence among employees in the environmental, social and governance (ESG) strategies of companies, according to a recently published GlobalData survey.

The Thematic Intelligence: ESG Sentiment Polls Q3 2023 survey found that only 7% of 364 respondents across GlobalData’s network of B2B websites during the third quarter of this year believed that most businesses were fully committed to ESG, down from 12% in the previous quarter. Meanwhile, 52.7% said they believed that, for most businesses, ESG is just a marketing exercise.

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By GlobalData

Deutsche Bank net-zero targets

Deutsche Bank’s new targets will apply to three carbon-intensive industry sectors in the bank’s corporate loan portfolio. The coal mining sector will be required to achieve a 49% reduction in Scope 3 financed emissions by 2030 and a 97% reduction by 2050. In cement, the bank wants to see a 29% reduction in Scope 1 and 2 physical emission intensity by 2030 and a 98% reduction by 2050. Whilst in shipping, the sector will need to achieve a scope 1 scoring of 0% by 2030 and 2050, based on the Poseidon Principles Portfolio Alignment Score.

The introduction of the targets will raise the percentage of financed emissions covered by net-zero pathways to 55% of Deutsche Bank’s €107bn ($114bn) corporate loan portfolio. The plan also states that Deutsche Bank will support the transition of high-emitting clients and will look to finance the development and upscaling of clean energy technologies.

Jörg Eigendorf, Chief Sustainability Officer at Deutsche Bank, said: “Our Transition Plan sets out what clients and the public can expect from us as we scope out our role in decarbonizing the economy.  As the economy progresses toward net zero, regulations, reporting standards, and the role of the banking industry will evolve. This will allow us to continuously refine our own Transition Plan.”

Environmental concerns

According to analysis by GlobalData, Energy Monitor’s parent company, filings by Deutsche Bank reveal that 2020 and 2021 saw an increase in environmental concerns in the company. However, discussion of climate concerns slipped in 2022, likely because other factors dominated the stage. The 2022 Non-Financial Report notes that "The Russian war of aggression in Ukraine, the energy crisis and the rapid rise in inflation have dominated the year 2022."

It is notable that mentions of coal experienced a major spike in mentions in Deutsche Bank’s filings in 2020, although they have seen a decrease in frequency since then. The company tightened its Fossil Fuels Policy in July 2020 which included a new framework for business activities involving oil, gas and coal, and a commitment to reviewing all activities and diversification plans in Europe and the US by the end of the year.  It also committed to reviewing the business activities of clients in Asia, starting in 2022.

Our signals coverage is powered by GlobalData’s Thematic Engine, which tags millions of data items across six alternative datasets — patents, jobs, deals, company filings, social media mentions and news — to themes, sectors and companies. These signals enhance our predictive capabilities, helping us to identify the most disruptive threats across each of the sectors we cover and the companies best placed to succeed.