2023-06-30 07:35:52
Three years ago, 16 companies in the German financial sector signed a voluntary commitment to align their loans and investments with the goals of the Paris climate agreement. The citizens’ movement Finanzwende has analyzed the progress and goals published so far by the banks and fund companies as part of the voluntary commitment. Unsurprisingly, the club, which avowedly wants to be a counterweight to the financial lobby, is harsh on this self-commitment.
“A green lip service that cannot be checked” is the fundamental criticism of Finanzwende. In a study, the summary of which is available to the FAZ in advance, the association, which sees itself as a citizens’ movement, makes a more differentiated assessment.
Praise for ING
The major Dutch bank ING is praised for its transparency, and small banks like GLS and Triodos as well as church institutes for the concrete implementation because they completely exclude certain sectors for lending and investment business. Deutsche Bank and Commerzbank, on the other hand, are particularly criticized. A fairly general accusation reads: “In 2022, Deutsche Bank and Commerzbank were still financing companies that were further expanding their fossil fuel business.”
Deutsche Bank and Commerzbank do not want to completely withdraw from certain sectors overnight, but rather shape the green transformation with their customers. They make a different calculation for that. For example, according to Deutsche Bank, in 2022 its outstanding corporate loans in coal mining fell by 18 percent to 231 million euros. In the oil and gas sector, outstanding loans were still 6.5 billion euros at the end of 2022, a decrease of more than 20 percent compared to 2021. Oil and gas accounted for a 1.3 percent share of its total loan book, like Deutsche Bank already announced in March 2023.
Progress according to your own standards
The Commerzbank spokeswoman said of the allegation of a financial turnaround that the bank continues to finance companies that are expanding their fossil fuel business: “We are not entering into any new business relationships with companies that are active in coal mining, coal infrastructure or coal-fired power generation and generate more than 20 percent of their sales or generate electricity from coal or pursue expansion plans in this area. We also expect the same from our existing customers.”
For Finanzwende, the core problem with the self-commitment of the financial sector lies in the fact that the banks involved evaluate their progress themselves and according to their own standards. The signatories to the voluntary commitment – meanwhile 20 financial players – have now declared the methods they want to use to measure the carbon footprint of their loans and their investments in emission-intensive sectors – but the selection of sectors and the methods used vary greatly from bank to bank and so not comparable.
Jörg Eigendorf, Deutsche Bank’s chief climate officer, on the other hand, considers the self-regulation of the industry to be extremely important, as it can achieve a lot with little bureaucracy: “From Deutsche Bank’s point of view, the Net-Zero Banking Alliance and the climate commitment of the financial sector are important initiatives who have already achieved a great deal. The greatest value of these initiatives is that we have not only committed ourselves to binding milestones on the way to net zero emissions, but now also have to implement these targets operationally,” said Eigendorf of the FAZ. A lot has already happened.
Deutsche Bank also reports regularly and transparently on the progress made in the field of sustainability, for example in the non-financial report, which is subject to an audit by an independent auditor – albeit only with a limited attestation so far.
No checks and balances
Finanzwende, on the other hand, criticizes the fact that the 20 financial players do not check each other to what extent they are progressing with their plans to transform their loan and investment portfolios. In November 2022, many banks would have certified themselves as “green” in the traffic light system after the first steps had been taken. However, the industry guidelines are so lax at many banks that they do not seriously limit new business.
In addition, Finanzwende criticized the fact that the 20 financial players involved in the voluntary commitment had not set common goals. It therefore remains unclear whether the individual bank targets are sufficient to meet the Paris climate agreement of net-zero emissions in 2050. “The goals in the self-commitment must do justice to the Paris climate agreement and compliance with them must be monitored and independently checked,” calls for Finanzwende.
Mark Fehr Published/Updated: , Hanno Mußler Published/Updated: , Recommendations: 22 Hanno Mußler Published/Updated: , Recommendations: 24
The association also calls on the European institutions to create rules and laws that ensure that all banks are aligned with the 1.5 degree target. In fact, there are already a number of such initiatives. For example, the new Frankfurt balance sheet committee responsible for sustainable company reports, called ISSB, presented its first two standards this week, the examination of which by auditors could one day become binding. The EU sustainability guideline CSRD, which requires large listed companies in the EU with more than 500 employees to publish information on sustainability as early as the 2024 financial year, is more specific. It will even be hot for big banks this summer: In a few weeks, the results of the stress test on climate risks will be available, with which the ECB’s European Banking Authority has now put the big banks to the test for the second time.
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