Deutsche Bank still an important financier for fossil fuels

The “Banking on Climate Change 2018” report analyzes the financing of fossil furels.

Deutsche Bank has been accredited as an implementing entity of the Green Climate Fund (GCF) since July 2015. NGOs criticized its inclusion as sending the wrong signal, since Deutsche Bank is one of the world’s largest financiers of the fossil fuel industry. We have been providing regular insights into Deutsche Bank’s current coal and fossil fuel financing activities in a series of blog posts in cooperation with the environmental and human rights organization urgewald.

In March 2018, the environmental organizations Banktrack, Honor the Earth, Indigenous Environmental Network, Oil Change International, Rainforest Action Network and Sierra Club published the ninth edition of their “Banking on Climate Change” report. In it, the organizations have been following policy developments and the financing of fossil fuel sources for years. While its original focus was on coal, the report has been expanded to cover “extreme” fossil fuels such as tar sand, arctic and deep-sea drilling and liquefied natural gas (LNG) exports. The 30 most important companies in each sector, as well as six tar sand pipeline companies, were studied.

The report analyzes the financing of these companies by 36 private banks from Australia, Canada, China, Europe, Japan and the United States from 2015 to 2017. The good news is that financing dropped from US$ 126 billion in 2015 to US$ 104 billion in 2016. The bad news is that it has once again risen to US$ 115 billion in 2017.

With regard to overall trends, “Banking on Climate Change 2018” notes

• positive developments in terms of policies that restrict the financing of fossil fuel projects and to some extent companies, particularly among European banks
• that coal power and coal mining was being supported most heavily by Chinese banks, but that Western banks were also more active again in this field last year, and
• that Canadian banks had a particularly poor record with regard to tar sand financing, with US banks also heavily active in this field.

Tar sand (companies) in the Deutsche Bank portfolio

Above all, the very strong increase in lending and bond issuance for companies in the tar sand mining and pipeline construction sector are responsible for the negative trend of banks once again allocating more money for extreme fossil fuels in 2017. The amounts increased by more than 100 percent in this sector. This is due to Canadian tar sand companies buying up the tar sand reserves of large corporations like Shell, ConocoPhillips and Statoil. In addition, international banks provided US$ 3 billion to Kinder Morgan to build the Trans Mountain Pipeline to transport oil from Alberta to British Columbia.

Deutsche Bank is ranked number 12 among the largest tar sand financiers. With a volume of US$ 1.45 billion, it is well behind the Royal Bank of Canada, which ranks first with US$ 21.7 billion. Among European banks, however, it is in third place behind HSBC and Barclays. At US$ 406 million in 2017, Deutsche Bank provided less to the sector than in 2016 (US$ 679 million), but still more than in 2015 when it funded tar sand companies to the tune of US$ 366 million. The broad protests around the Dakota Access Pipeline in 2016 underscored the sector’s massive problems: The extraction of tar sand causes wholesale landscape destruction and water pollution, and the planned pipelines cross or touch indigenous land in Canada and the USA, where they are slated to be realized against the expressed will of the affected peoples. In October 2017, one bank – France’s BNP Paribas – responded to the criticism and protests by banning project financing in the tar sand sector. In addition, it has ruled out financing for companies doing more than 30 percent of their business in the tar sand sector and has stated that it will not provide direct financing for the controversial planned Keystone XL, Trans Mountain or Line 3 pipelines. The Dutch bank ING had previously ruled out project financing for tar sand production and transport as well as concrete projects such as Keystone XL. These are positive examples that should inspire Deutsche Bank. So far, it has not specifically addressed tar sand in its environmental policies.

Deutsche Bank still finances coal mining companies

In January 2017, Deutsche Bank made headlines by revising its coal finance policy, according to which it will no longer finance new coal-fired power plants and new projects to mine coal for power generation. The move was very welcome, but environmental organizations criticized the fact that coal companies themselves were not excluded, as they can also finance their projects through general corporate loans or bonds. So far, Deutsche Bank has only said that it will “gradually reduce its existing exposure to the thermal coal mining sector”.

A look at the figures in the “Banking on Climate Change 2018” report now confirms the concerns of the critics. For the years 2015-2017, Deutsche Bank is still in sixth place with a total of US$ 2.58 billion earmarked for coal mining. Although most of this amount dates back to 2015 (US$ 1.868 billion), and only US$ 35 million went to finance coal mining in 2016, the figure rose again to US$ 678 million in 2017, which is unacceptable for an implementing entity of the Green Climate Fund (GCF) in the second year after the Paris Agreement. Deutsche Bank still has a long way to go before it contributes to the transformative change for which the Green Climate Fund stands.

Guest post: Regine Richter/urgewald