Deutsche Bank

Corporate Responsibility
Report 2016

Managing environmental and social risks

  • Published our Environmental and Social Risk Policy Framework
  • Revised our position on coal financing
  • Delivered ES risk training to employees in the US and Asia

As a global bank, we have clients across all sectors, including those whose activities might inherently have a risk of causing a negative impact on the environment and society. We need to understand these risks, whether they are associated with an industry, a client, or an individual transaction.

This is essential to avoid any negative impacts on the environment or society, and to endorse our commitments to international standards. Failing to do this may also lead to reputational and financial risk for Deutsche Bank, and affect potential business opportunities. Systematic evaluation of ES risks is therefore an integral part of our risk management process.

Environmental and Social (ES) Risk Policy Framework

We have defined sensitive sectors1 with high potential for significant ES impacts. These include:

  • Chemicals
  • Energy utilities
  • Infrastructure projects in certain countries
  • Metals and mining
  • Monocultures in agriculture and forestry
  • Oil and gas (including hydraulic fracturing and exploration in the Arctic)
  • Other activities with either high carbon intensity and / or potential for human rights infringements

Our ES Policy Framework specifies our approach to manage ES impacts associated with these sectors in our client relationships and transactions. The Framework specifies responsibilities, processes, and requirements for ES due diligence, and the criteria for mandatory referral to the bank’s sustainability team. For all sectors requiring involvement of our sustainability team, we provide detailed sector guidelines with further guidance on the scope of ES due diligence, and outline good industry practice and principles. To further increase transparency, we published the ES Policy Framework on our website in 2016.

We aim to continually review and validate our risk management processes. As part of the regular review cycle, in 2016 we revised and strengthened our referral criteria to focus escalations to our sustainability team on transactions in sectors with high ES impact. We have also improved the rollout of the ES Policy Framework via training. These developments contributed to a decline in client and transaction reviews by the sustainability team from 1,346 in 2015 to 727 in 2016.

Transactions and clients assessed under the ES Policy Framework
Transactions and clients assessed under the ES Policy Framework per sector

If ES risks are deemed to pose a material reputational risk, or meet mandatory referral criteria, transactions are referred to one of our Reputational Risk Committees.

Matters assessed through the Reputational Risk Framework

Number of transactions (on which final decisions have been made) reviewed

2016

2015 (June–December)1

1

2015 full year data not comparable due to changes in the Reputational Risk Framework

2

ES issues where the reputational risk is deemed to be moderate or above

To Unit Reputational Risk Assessment Processes only

 

 

Total

83

53

Those with ES issues2

4

4

To Regional Reputational Risk Committees

 

 

Total

59

35

Those with ES issues2

2

6

To Group Reputational Risk Comittee or above

 

 

Total

6

6

Those with ES issues2

1

0

Total number

148

94

Thereof with environmental and social issues

7

10

Coal financing

By signing the Paris Pledge for Action, we welcomed the universal climate agreement made at the 2015 Climate Summit in Paris. This emphasizes our commitment to protect the climate and to contribute to the overall targets set by the Paris Agreement to limit global warming to 2°C above pre-industrial levels.

With this in mind, in 2016 we revised our approach to coal financing and amended our internal guidelines governing coal power and mining, effective from December 2016. The revised guidelines are integrated into our ES Policy Framework and clearly state that Deutsche Bank and its subsidiaries will not grant new financing for Greenfield thermal coal mining and new coal-fired power plant construction. Moreover, we will gradually reduce our existing exposure to the thermal coal mining sector.

1 Previously, we defined aerospace and defense as sensitive sectors covered by our ES Risk Framework - we continue to review our clients and transactions on this basis. However, responsibility for these issues moved to Compliance.