Deutsche Bank Special: leading financier of climate change

Banks and their coal finance – Source: The Coal Test

Deutsche Bank has been accredited as an implementing entity of the Green Climate Fund (GCF) since July 2015. NGOs criticized its inclusion to be sending the wrong signal, as Deutsche Bank is one of the world’s largest financiers of the coal industry and thus undermining climate finance. Regular blog posts in cooperation with the environmental and human rights organization urgewald on www.germanclimatefinance.de provide insights into Deutsche Bank’s current coal and fossil fuel financing activities.

One year on, it is apparent that the GCF accreditation has been good for the bank’s image, but has not prompted it to rethink its business policy in any perceptible way.

On the contrary: while many in the international finance industry are slowly turning their backs on coal, Deutsche Bank appears to be intent on holding onto its coal customers to the very end. The climate conference in Paris should have given it plenty of impetus to announce sweeping climate protection measures – particularly in its role as a bank acting on behalf of the GCF. This would not only have been a matter of adapting its own business policy, but also sending a clear signal to the finance industry. Others have done so, announcing reductions or substantial restrictions of their financing of the coal industry in the run-up to Paris or following the conference. Major investors such as the Norwegian pension fund, insurers Allianz and AXA and private banks such as the French Natixis and Credit Agricole or the American Wells Fargo updated their policies for financing the coal sector and will limit or phase out coal finance in future. European or American banks that have not spoken out critically about coal in recent months are few and far between. Deutsche Bank remains the exception: the “Corporate Responsibility” report it published in February only briefly notes that coal is “still necessary”.

In an international comparison, Deutsche Bank is bringing up the rear with its coal finance policy. Source: The Coal Test

The fact that Deutsche Bank has no problem with the coal industry is also reflected in its financing work. A particularly dramatic example is Blackhawk Mining, a US-based coal company. Blackhawk was founded in 2010 and has grown rapidly by acquiring the coal mines of bankrupt mining companies. By 2015, it had become the largest producer of coal using the highly controversial and particularly destructive mountaintop removal method. Deutsche Bank played a key role in Blackhawk’s rise: between 2012 and 2015, it organized eight loans to the company, amounting to more than €1.3 billion. At least in this area, the bank has started to move in the right direction: in February, it put a new policy on mountaintop removal in place that would not permit the financing of companies like Blackhawk in future. While this is a good first step, it does not undo the destruction the bank financed previously.

Recent figures further document Deutsche Bank’s unchanged business policy: In June 2016, the NGO report Shorting the Climate investigated the financing of fossil fuels by major banks and once again cast a negative light on Deutsche Bank. In the field of coal mining, it holds the negative top spot with financing to the tune of $6.73 billion between 2013 and 2015. In coal-fired power plants, it is in tenth place worldwide with $6.19 billion. In financing extreme forms of oil extraction (tar sands, Arctic oil, deep-sea drilling), Deutsche Bank holds ninth place with $14.55 billion; in extreme forms of gas extraction (expansion of North American LNG terminals), it is in seventh place with $15.69 billion.

Deutsche Bank’s clients in the coal power generation sector include India’s National Thermal Power Corporation (NTPC), which operates 18 coal-fired power plants and has major plans for expansion. NTPC is among the world’s top 10 companies in terms of plans for the construction of new coal-fired plants, including the Rampal plant in Bangladesh that threatens the nearby Sundarbans mangrove forest, a UNESCO World Heritage Site. While Deutsche Bank ruled out direct financing of Rampal at its general meeting, it still belongs to the banks that regularly provide NTPC with fresh funds. Any bank that finances a company like NTPC is acting in complete disregard of Paris.

In short, Deutsche Bank is one of the top 10 financiers of the fossil fuel industry. It is not restricting its coal financing, and its key clients include companies that are pursuing an aggressive coal expansion strategy. The bank’s behavior ignores the Paris climate agreement and shows no signs of new thinking. And while Deutsche Bank is damaging the image of the Green Climate Fund, it can congratulate itself on its successful greenwashing.

Kathrin Petz / urgewald