UPDATE: July 28, 2020: Deutsche Bank will cut ties by 2025 with companies that make more than half their revenues from coal mining, the bank said, according to Reuters.
Germany’s largest lender also said it would immediately stop financing new oil sand or Arctic projects.
The bank said it would review the diversification plans of its coal-connected U.S. and European clients by the end of this year, and conduct a similar review in Asia in 2022.
The new policy “sets us ambitious targets and enables us to help our long-standing clients with their own transformation,” Deutsche Bank CEO Christian Sewing said, according to Reuters.
The environmental nonprofit Urgewald called the policy a step forward but “still too little, too late.”
“Compared to international competitors,” such as BNP Paribas and NatWest, “the bank is still lagging behind on climate,” Urgewald said.
Deutsche ranked 19th globally in fossil-fuel financing from 2016 to 2019, with $68.9 billion, according to a study published in March by the Rainforest Action Network. BNP Paribas, by comparison, ranked 13th. NatWest, then known as the Royal Bank of Scotland, ranked 34th, according to the study.
Dive Brief:
- Citi has pledged to stop providing financial services to thermal coal-mining companies by 2030, the bank said Monday in a statement, according to Bloomberg.
- The bank has long held a progressive stance toward environmentally responsible lending. Last July, it became the first major U.S. bank to endorse the United Nations' Principles for Responsible Banking.
- Several banks, including Barclays and Goldman Sachs, have promised a greener lending profile in the past four months.
Dive Insight:
Banks are increasingly finding more responsible lending is not just good PR, it's good business. The global responsible loans market totaled $111.5 billion in July 2019, a 40% increase from a year earlier, according to S&P Global Ratings.
Citi set an intermediate benchmark for itself to hit its 2030 goal. The bank said it won't provide underwriting and advisory services to the thermal coal-mining industry and will cut its credit exposure in half by 2025.
"Citi recognizes that emissions from fossil-fuel sectors in particular must be drastically reduced in the coming decade," the company said in the statement. "The shift away from fossil fuels in pursuit of renewable and other sources of low-carbon energy will have a significant effect on clients in coal-fired power generation, coal mining and certain segments of the energy sector."
The bank included the new targets in its environmental and social policy framework Friday, and committed to rejecting financing for oil and gas exploration and production in the Arctic.
The company also pledged to stop providing project-related financial services for coal mines and coal-fired power plants.
The nation's third-largest bank has a history of following through on its green objectives. It was four years ahead of schedule in 2019, when it financed $100 billion of activities to address climate change.
Citi was one of 130 banks representing $47 trillion in assets that committed in September to align their business with the goals of the U.N.'s Paris Agreement on Climate Change.
Barclays last month took a step in that direction, vowing to reduce the carbon emissions it creates or funds to net zero by 2050. The U.K. lender has provided more than $118 billion in funding for fossil fuels since 2016, making it Europe’s top lender in that category and the seventh-biggest globally, data from the Rainforest Action Network showed.
Goldman Sachs in December announced a target to commit $750 billion in loans, underwriting, advisory services and investments over the next 10 years toward companies focused on renewable energy, sustainable transportation and affordable education.
