Deutsche Bank has adopted a new fossil fuel investment policy, which will end its activities in coal mining by 2025 at the latest, and kick off a review looking into limiting its financing in the oil & gas sector.
The German investment and financial services giant with immediate effect will no longer finance any new oil and gas projects in the Arctic region, oil sand projects, or fracking projects in countries with scarce water resources.
By the end of 2020, Deutsche Bank will review all its existing business activities in the oil and gas sector and plans setting limits for its overall business activities in the sector in coming years.
The bank by the end of this year will also review all its existing business activities in Europe and the US with regards to clients’ diversification plans, and begin a review in Asia in 2022. By 2025 at the latest, Deutsche Bank will end its global business activities in coal mining to help drive the transformation to a sustainable economy.
“Our new fossil fuels policy sets us a strict framework for our business activities in the oil, gas and coal sector,” said chief executive Christian Sewing, who also chairs Deutsche Bank’s sustainability council.
The new policy “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,” Sewing added.
Germany’s financial sector in June this year had made a collective commitment to climate action signed by Deutsche Bank, pledging to align its credit portfolios with the goals of the Paris Agreement.
In regards to coal, the bank’s new guidelines detail how it must treat business activities with energy companies that are more than 50% dependent on coal, measured either in terms of their energy generating capacity or the amount of energy they actually generate.
The bank said it will only offer financing to these companies in the future if they present credible diversification plans.
The new policy is a further blow to companies such as German utility RWE, which already has been excluded from investments by Norway's $1trn government Global Pension Fund in a decision that enacts new criteria drawn up by Norway last year.
The European Investment Bank also said it will stop backing new fossil-fuel power projects by the end of 2021, in a move by the EU Bank that analysts said raises questions over gas’s role in the energy transition.