Deutsche Bank has indicated it will immediately stop financing for any new oil and gas projects in the Arctic region as it plans to cut ties to coal mining in the next five years.
The moves have come as the bank has tightened its fossil fuels policy, which has covered financing as well as capital market transactions.
Deutsche Bank has planned to end its global business activities in coal mining by 2025, as part of its effort to drive the transition to a lower-carbon economy.
Meanwhile, it has decided to no longer finance new oil and gas projects in the Arctic, as well as projects that use hydraulic fracturing in countries with scarce water supplies and new oil sand projects (involving exploration, production, transport or processing).
Further, the organisation is set to conduct a systematic review of all its current business activities in the global business sector by the end of 2020, with the aim of cutting it down.
The bank had met its previous three-year goal of reducing loan exposures to coal-fired plants by 20 per cent at the end of 2019.
It has also signed the Equator Principles, a management framework for assessing the environmental and social risks of financing projects – with standards for project development and construction, as well as following monitoring.
Deutsche chief executive Christian Sewing said the new fossil fuels policy has set a strict framework.
“In its current form, the policy sets us ambitious targets and enables us to help our [longstanding] clients with their own transformation,” he said.
“It will allow us to play our part in protecting the climate and helping the [EU achieve] its goal of being [climate-neutral] by 2050.”
The new policy has stated the bank will only offer financing to energy providers that are more than 50 per cent dependent on coal (in terms of energy generating capacity or the amount of energy they generate) if the companies present “credible diversification plans”.
Deutsche is set to review its client relationships in the energy sector in Europe and the US by the end of 2022, with Asia to also be assessed from that year.
“By starting later in Asia, the bank is allowing for the fact that the transformation in Asia will take longer owing to the region’s high dependency on coal power,” Deutsche Bank stated.
The bank has recommitted to its previous pledge to not finance any new coal-fired plants.
The German financial sector collectively committed to climate action last year with Deutsche being one of the signatories pledging to align its credit portfolios with the goals of the Paris Agreement.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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