Marketing Report
Deutsche Bank publishes initial transition plan

Deutsche Bank publishes initial transition plan

Deutsche Bank has published its initial Transition Plan as well as net-zero pathways for three additional carbon-intensive industries in the bank’s corporate loan portfolio. The publication marks two further milestones in Deutsche Bank’s Net-Zero Banking Alliance (NZBA) commitments since joining the NZBA in Spring 2021.

The Transition Plan consolidates Deutsche Bank’s definitions, methodologies, targets and achievements on its path to net-zero by 2050 in a single publication. This Plan focuses on three dimensions of decarbonization: the bank’s own operations (Scope 1 and 2); supply chain (Scope 3, category 1-14); and financing provided to clients (Scope 3, category 15).

With the publication of additional sectoral targets for Coal Mining, Cement and Shipping, 55% of the financed emissions in Deutsche Bank’s € 107 billion corporate loan portfolio are now covered by net-zero pathways. Published financed emissions figures totalling 34.4 MtCO2e/y now cover approximately 60% of the bank’s total loan exposure of € 489 billion as of 31 December 2022.

Christian Sewing, Chief Executive Officer, Deutsche Bank: “We are committed to playing our part in fighting climate change, and we want to document transparently where we stand on our path to net-zero. We are convinced that it is imperative for a global bank headquartered in Europe to position itself as a sustainability leader if it is to have lasting success in serving its clients. Decoupling economic growth from CO2 emissions and the extensive use of natural resources will be decisive as our planet’s ecosystem comes close to tipping points.”

Jörg Eigendorf, Chief Sustainability Officer, Deutsche Bank: “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."

Pathways to net-zero in Deutsche Bank’s corporate loan portfolio

The Transition Plan outlines phase 2 of the bank’s programme of net-zero pathways in carbon-intensive industry sectors financed through the bank’s € 107 billion corporate loan book, which accounted for financed emissions (Scope 3, category 15) of 30.5 million tonnes of CO2e/y in 2022.

The additional targets for the three sectors are:

  • Coal Mining: 49% reduction in Scope 3 financed emissions by 2030, and 97% reduction by 2050
  • Cement: 29% reduction in Scope 1 and 2 physical emission intensity by 2030 and 98% reduction by 2050
  • Shipping: scope 1 scoring of 0% achieved by 2030 and 2050 based on the Poseidon Principles Portfolio Level Alignment Score

For the aviation sector, publication of the bank’s net-zero target is expected after the publication of an alternative net-zero-aligned decarbonization pathway by the Rocky Mountain Institute in Basalt (Colorado, USA), which is expected in January 2024. The bank will adopt a physical emissions intensity approach and a well-to-wake gCO2e/Revenue-Tonne-Kilometer metric.

The Transition Plan also documents the progress made during 2022 on its phase 1 net-zero pathways for financed emissions in the Oil & Gas, Automotive, Power Generation and Steel industries. The bank reduced financed emissions in all four phase 1 sectors in 2022.

Client engagement and new business monitoring

The Transition Plan sets out Deutsche Bank’s three-pronged approach to implementation. This includes financing the development and scale-up of clean energy technologies; engaging with high-emitting clients to support and finance their transition; and steadily phasing out business with not-to-abate industries such as thermal coal, and with clients not willing to align to the bank’s transition pathway.

Since its creation in November 2022, Deutsche Bank’s Net-Zero Forum reviewed 41 transactions in carbon-intensive industries. The Net-Zero Forum assesses incremental and renewed transactions for in-scope sectors above the threshold of € 25 million and which would lead to an increase of more than 1% in the sectoral financed emissions metric and/or the net-zero target metric for target sectors.

The document also summarizes Deutsche Bank’s strategy in Residential Real Estate, which was published in a white paper in May 2023. Of the bank’s € 175 billion European residential real estate portfolio, 90% comprises residential mortgages in Germany. In addition, to partner with clients that wish to reduce the emissions of their properties, the bank aims to leverage its presence in the German market and works closely on decarbonization pathways with corporate clients in ‘upstream’ industries. These provide energy and materials to the residential real estate sector such as cement, steel, and domestic utilities as set out above.

 The bank also aims to engage with public and private bodies to determine methodologies and priorities to support the reduction of emissions from residential real estate.

Decarbonizing Deutsche Bank’s own operations

The Transition Plan also sets out Deutsche Bank’s progress and targets in de-carbonizing its own operations (Scope 1 and 2 emissions), which have been cut by 64%, or more than 95,000 tonnes of CO2e/y, since 2019.

The bank has reduced Scope 1 emissions by 50%, or 25,000 tonnes of CO2e/y, and Scope 2 emissions by 70%, more than 70,000 tonnes of CO2e/y, through a series of measures including reducing its real estate footprint, cutting energy usage by 13% in 2022, and sourcing more energy from renewables. 96% of Deutsche Bank’s total electricity usage now comes from renewable energy, with a target of 100% by 2025. The bank is well ahead of its 2030 net-zero target of reducing its own emissions by 46%, enabling it to raise its ambition to reduce total energy consumption from 20% to 30% by 2025 compared to its 2019 baseline.