Deutsche Bank (DB), Germany’s largest bank, said on Monday that it will cease its involvement in the global coal mining industry by 2025 and reduce its exposure to other fossil fuel activities.
Effective immediately, the bank said, it will cease to finance any new energy projects in the Arctic region or oil sand projects. By the end of this year, the Frankfurt-based bank will review all its existing business activities in the oil and gas industry.
Deutsche Bank has already committed to avoid financing any new coal-fired power plants.
Deutsche Bank also said it signed an agreement called the “Equator Principles” which it describes as a “risk management framework for assessing the environmental and social risk of financing projects. The principles ensure that strict environmental and social standards are applied during the project development and construction process, including follow-up monitoring.”
Deutsche Bank also indicated it will stop financing any oil and gas projects that use hydraulic fracturing in countries with limited water supplies and new oil sand projects — involving exploration, production, transport or processing.
“Our new fossil fuels policy sets us a strict framework for our business activities in the oil, gas and coal sector,” said Chief Executive Officer Christian Sewing. “In its current form, the policy sets us ambitious targets and enables us to help our longstanding clients with their own transformation. It will allow us to play our part in protecting the climate and helping the EU to achieve its goal of being climate neutral by 2050.”
In June of this year, Deutsche Bank pledged to match its credit portfolios with the objectives of the Paris Agreement on fighting climate change.
However, Urgewald, a non-profit environmental and human rights organization, was unimpressed with Deutsche Bank’s new policies.
“When it comes to coal power companies, [Deutsche Bank] has not specified any concrete exclusion plans yet,” the group stated. “Instead, the bank announced it would assess coal power companies’ transition plans by the end of this year. However, this will only apply to companies with a coal share of power generation or coal-powered capacity of more than 50%. This means that companies such as [German energy firm] Uniper are not affected. It also gives major coal power companies such as Europe’s largest [carbon dioxide]emitter RWE and Poland’s biggest coal company PGE a chance to convince Deutsche Bank that their transition plans are sufficient to remain in the bank’s portfolio.”
In February of this year, JPMorgan (JPM) said it would stop all its business activities with coal companies and limit financing to companies that drill in the Arctic.
Business Insider reported that last year The Institute for Energy Economics and Financial Analysis said more than 100 financial institutions will scale back their investments in coal.