Responsibility to clients, shareholders, employees and society is the central concept of our cultural change program which underpins Strategy 2015+. It relies on understanding the impact of our business decisions, strengthening our approach to environmental, social, and governance (ESG) issues, and improving the direct and indirect impact of our activities on the environment and society.
Our objective is to deliver shared value for all our stakeholders by incorporating ESG issues throughout our businesses. In 2013 we continued to develop awareness of the business risks and opportunities arising from ESG factors.
Environmental and Social Risk
Effective risk management comes fundamentally from employees internalizing their responsibility for our success and reputation. We provide guidance and procedures to help employees to meet this responsibility.
In 2012 we have introduced the Environmental and Social Reputational Risk Framework (ES Risk Framework) within the Reputational Risk Management Program Policy (RRMPP) to focus closely on reputational risks for the bank that could arise from certain client relationships and associated business. In 2013, we developed a broader training concept to strengthen awareness of such ES risks which we will roll out globally in 2014.
The framework helps business divisions to assess environmental and social risks in certain sectors such as the extractive industry, utilities, agriculture, and defense. Before approving a proposed transaction potential environmental and social risks need to be assessed and where appropriate potential mitigation measures should be discussed with the client. In specific circumstances significant risks could arise for us. For such cases, special guidance including due diligence questions has been developed. Our guidelines refer to international standards whenever possible, for example, the Performance Standards of the International Finance Corporation. In circumstances where such standards do not exist or are still under development, we leverage internal and external experts for our due diligence process.
In 2013, the number of transactions reviewed under the ES Risk Framework increased significantly, demonstrating the increased awareness of these risks. Additionally, during the year, 106 transactions were escalated to Regional or Group Reputational Risk Committees (2012: 102), 7 of which involved environmental and social risks (2012: 16).
Responsible Investing in Deutsche Asset & Wealth Management
With the establishment of Deutsche Asset & Wealth Management (DeAWM) in 2013, we enhance our existing strategy to integrate and drive ESG across the entire DeAWM platform. The newly formed ESG Head Office is not only responsible for the implementation of the strategy, but also the coordination, development, and strengthening of our ESG investment capabilities. Three pillars define the new ESG strategy:
- Risk management: produce in-depth ESG research to support investment decisions and to reduce business risks.
- Governance: roll out consistent ESG policies and procedures for all DeAWM assets to ensure all employees are aware of available information and comply with processes.
- Value creation: identify existing product gaps and develop new ESG products and services.
At the end of 2013, DeAWM managed approximately € 5.1 billion of assets invested according to ESG criteria (2012: € 3.7 billion).
Funding Renewable Energy Projects in Corporate Banking & Securities and Global Transaction Banking
Despite only modest economic growth the importance of renewable energy continued to increase in 2013. In Corporate Banking & Securities, our Infrastructure and Energy Banking team structures financing solutions for the development, construction and operation of such projects. In 2013, we advised and/or provided financing to facilitate the construction of solar, wind, run-of-river hydro power and waste-to-energy projects with a total capacity of more than 1,185 megawatts, worth more than US$ 3.6 billion. Deutsche Bank allocated more than US$ 1.36 billion to its renewable energy projects. This makes us one of the top three private sector project financiers in clean energy in Europe, North America and the Middle East.
In our Global Transaction Banking business, 40 % of Trust & Agency Services project finance group deals were related to renewable energy in 2013. In total, we supported 15 renewable energy projects of 1,250 megawatts, worth € 2.3 billion.
We joined a coalition of 13 major financial institutions in supporting a set of voluntary guidelines for ‘green bonds’ to finance environmentally friendly activities. The guidelines will help ensure integrity and transparency for investors in this rapidly growing market. The principles suggest a process for designating, disclosing, managing and reporting on how capital raised from a green bond will be used.
Maintaining Carbon Neutral Operations
We continued to make our operations carbon neutral by investing in energy efficiency projects, purchasing and generating on-site renewable electricity, and offsetting remaining emissions by purchasing and retiring high-grade offset certificates. The broad range and effectiveness of our climate change activities earned us a place for the second consecutive year in the Carbon Disclosure Leadership Index.
Our corporate citizenship programs tackle key social challenges, working with non-profit organizations and leading institutions whenever possible. With a total investment of € 78.2 million in 2013 (compared to € 82.7 million in 2012), we continued to be among the world’s most active corporate citizens and more than 19,500 employees volunteered 25,000 days, making their time, expertise, and skills available to strengthen community programs. To recognize this commitment, we rolled out the Global Volunteer Award across the regions.