Deutsche Bank publishes initial Transition Plan and further net-zero targets for high-emitting sectors

New net-zero targets for high-emitting industries in corporate loan portfolio (Scope 3, Category 15):

Additional net-zero targets for the coal mining, cement and shipping sectors
As of year-end 2022, 55% of total financed emissions of the corporate loan portfolio are covered by net-zero pathways
Published financed emissions figures totaling 34.4 million tonnes of CO₂ equivalent per year (MtCO₂e/y), covering ~60% of total loan exposure

Supply chain emissions (Scope 3, Category 1-14):

80% of total vendor spend expected to submit greenhouse gas emissions to the Carbon Disclosure Project (CDP) by 2025

Own operations emissions (Scope 1 and 2):

Raised ambition to reduce total energy consumption from 20% to 30% by 2025 compared to 2019 baseline, following outperformance against original targets from 2019-2022

Enhanced focus on nature and biodiversity

Creation of Nature Advisory Panel to explore potential risk indicators

Deutsche Bank today published its initial Transition Plan as well as net-zero pathways for three additional carbon-intensive industries in the bank’s corporate loan portfolio. Today’s publication marks two further milestones in Deutsche Bank’s Net-Zero Banking Alliance (NZBA) commitments since joining the NZBA in Spring 2021.

The Transition Plan consolidates Deutsche Bank’s definitions, methodologies, targets and achievements on its path to net-zero by 2050 in a single publication. This Plan focuses on three dimensions of decarbonization: the bank’s own operations (Scope 1 and 2); supply chain (Scope 3, category 1-14); and financing provided to clients (Scope 3, category 15).

With today’s publication of additional sectoral targets for Coal Mining, Cement and Shipping, 55% of the financed emissions in Deutsche Bank’s € 107 billion corporate loan portfolio are now covered by net-zero pathways. Published financed emissions figures totalling 34.4 MtCO₂e/y now cover approximately 60% of the bank’s total loan exposure of € 489 billion as of 31 December 2022.

“We are committed to playing our part in fighting climate change, and we want to document transparently where we stand on our path to net-zero,” said Christian Sewing, Chief Executive Officer. “We are convinced that it is imperative for a global bank headquartered in Europe to position itself as a sustainability leader if it is to have lasting success in serving its clients. Decoupling economic growth from CO₂ emissions and the extensive use of natural resources will be decisive as our planet’s ecosystem comes close to tipping points.”

Jörg Eigendorf, Chief Sustainability Officer, added: “Our Transition Plan sets out what clients and the public can expect from us as we scope out our role in decarbonizing the economy. As the economy progresses toward net-zero, regulations, reporting standards, and the role of the banking industry will evolve. This will allow us to continuously refine our own Transition Plan."

Pathways to net-zero in Deutsche Bank’s corporate loan portfolio

The Transition Plan outlines phase 2 of the bank’s programme of net-zero pathways in carbon-intensive industry sectors financed through the bank’s € 107 billion corporate loan book, which accounted for financed emissions (Scope 3, category 15) of 30.5 million tonnes of CO₂e/y in 2022.

The additional targets for the three sectors are:

Coal Mining: 49% reduction in Scope 3 financed emissions by 2030, and 97% reduction by 2050
Cement: 29% reduction in Scope 1 and 2 physical emission intensity by 2030 and 98% reduction by 2050
Shipping: scope 1 scoring of 0% achieved by 2030 and 2050 based on the Poseidon Principles Portfolio Level Alignment Score

For the aviation sector, publication of the bank’s net-zero target is expected after the publication of an alternative net-zero-aligned decarbonization pathway by the Rocky Mountain Institute in Basalt (Colorado, USA), which is expected in January 2024. The bank will adopt a physical emissions intensity approach and a well-to-wake gCO₂e/Revenue-Tonne-Kilometer metric.

The Transition Plan also documents the progress made during 2022 on its phase 1 net-zero pathways for financed emissions in the Oil & Gas, Automotive, Power Generation and Steel industries. The bank reduced financed emissions in all four phase 1 sectors in 2022, as set out in its 2022 Non-Financial Report.

Client engagement and new business monitoring

The Transition Plan sets out Deutsche Bank’s three-pronged approach to implementation. This includes financing the development and scale-up of clean energy technologies; engaging with high-emitting clients to support and finance their transition; and steadily phasing out business with not-to-abate industries such as thermal coal, and with clients not willing to align to the bank’s transition pathway.

Since its creation in November 2022, Deutsche Bank’s Net-Zero Forum reviewed 41 transactions in carbon-intensive industries. The Net-Zero Forum assesses incremental and renewed transactions for in-scope sectors above the threshold of € 25 million and which would lead to an increase of more than 1% in the sectoral financed emissions metric and/or the net-zero target metric for target sectors.

The document also summarizes Deutsche Bank’s strategy in Residential Real Estate, which was published in a white paper in May 2023. Of the bank’s € 175 billion European residential real estate portfolio, 90% comprises residential mortgages in Germany. In addition, to partner with clients that wish to reduce the emissions of their properties, the bank aims to leverage its presence in the German market and works closely on decarbonization pathways with corporate clients in ‘upstream’ industries. These provide energy and materials to the residential real estate sector such as cement, steel, and domestic utilities as set out above. The bank also aims to engage with public and private bodies to determine methodologies and priorities to support the reduction of emissions from residential real estate.

Decarbonizing Deutsche Bank’s own operations

The Transition Plan also sets out Deutsche Bank’s progress and targets in de-carbonizing its own operations (Scope 1 and 2 emissions), which have been cut by 64%, or more than 95,000 tonnes of CO₂e/y, since 2019. The bank has reduced Scope 1 emissions by 50%, or 25,000 tonnes of CO₂e/y, and Scope 2 emissions by 70%, more than 70,000 tonnes of CO₂e/y, through a series of measures including reducing its real estate footprint, cutting energy usage by 13% in 2022, and sourcing more energy from renewables. 96% of Deutsche Bank’s total electricity usage now comes from renewable energy, with a target of 100% by 2025. The bank is well ahead of its 2030 net-zero target of reducing its own emissions by 46%, enabling it to raise its ambition to reduce total energy consumption from 20% to 30% by 2025 compared to its 2019 baseline.

Decarbonizing Deutsche Bank’s supply chain

Deutsche Bank has also made progress in decarbonizing its supply chain (Scope 3, category 1-14 emissions), where around three quarters of emissions arise from purchased goods and services. The bank has cut emissions by around 290,000 tonnes of CO₂e/y, or 15%, between 2019 and 2022, and is on track to meet its target of 46% reduction by 2030. The Transition Plan explains the bank’s 4-phase approach for dealing with external vendors and outlines its CDP Supply Chain Programme and the sustainability clauses in the bank’s Supplier Code of Conduct.

Enabling transition

Deutsche Bank’s net-zero transition is supported by enabling structures, processes and frameworks. These include:

Governance structures, centrally and within each business and region, and the integration of sustainability targets into the bank’s Key Deliverables
A transition and climate risk management framework which is designed to enable the bank to identify, monitor and manage downside risks, preserve capital, and support portfolio rebalancing in order to fund the bank’s net-zero transition
Deutsche Bank’s Sustainable Finance Framework, Environmental and Social Policy Framework and Green Financing Framework
Financial planning, steering and reporting, including the bank’s product-driven, client-driven and impact-driven reporting and links between performance against sustainability targets and executive compensation
Data and technology, including the bank’s approach to the quality and availability of source data incorporation into the bank’s core systems
External engagement, including Deutsche Bank’s engagement with regulators as well as governmental or policymaking bodies or its membership in industry initiatives, global climate forums and other bodies

Broadening the scope of Deutsche Bank’s net-zero strategy

The document also sets out Deutsche Bank’s ambitions to broaden the scope of its net-zero strategy for achieving net-zero by 2050. This includes:

Expanding decarbonization efforts in financed emissions in the corporate loan portfolio, including setting net-zero targets in additional industry sectors according to the guidelines of the Net-Zero Banking Alliance, of which Deutsche Bank is a Founder Member
Reporting and, as the next step, reducing facilitated emissions relating to capital market activities, which the bank carries out on behalf of clients
Supporting nature and biodiversity: on October 10, 2023, Deutsche Bank announced the formation of a Nature Advisory Panel, designed to assess nature-related risks
Contributing to a socially just transition, including support for efforts to mitigate the impact of the transition to a lower-carbon economy on developing nations
Expanding the bank’s offering in ESG assets under management, notably for private clients

Deutsche Bank’s Transition Plan is available for download on the bank’s website together with additional graphics and information.

About Deutsche Bank

Deutsche Bank provides retail and private banking, corporate and transaction banking, lending, asset and wealth management products and services as well as focused investment banking to private individuals, small and medium-sized companies, corporations, governments and institutional investors. Deutsche Bank is the leading bank in Germany with strong European roots and a global network.

Disclaimer

The transition to a sustainable economy is a long-term undertaking. In its current stage, we are confronted with the limited availability of climate related data. Use of estimates and models is inevitable until improved data becomes available. Our expectations for increasing data quality are based on reporting obligations as currently developed. New regulations on reporting will likely become effective in the coming years. Harmonized standards and calculation methods are expected to be developed and will also improve data quality.

This release includes metrics that are subject to measurement uncertainties resulting from limitations inherent in the underlying data and methods used for determining such metrics. The selection of different, but acceptable measurement techniques can result in materially different measurements. The precision of different measurement techniques may also vary. The information set forth herein is expressed as of end of December 2022, and we reserve the right to update its measurement techniques and methodologies in the future.

We have measured the carbon footprint of our corporate loan portfolio in accordance with the standards we discuss in our report on corporate loan portfolio financed emissions and net-zero-aligned pathways for focus sectors (Towards net-zero emissions). Furthermore, we have measured the carbon footprint of our European Real Estate loan portfolio in accordance with the standards we discuss in our report on Residential Real Estate – Leading to Net-zero. In doing so, we partly used information from third-party sources that we believe to be reliable, but which has not been independently verified by us, and we do not represent that the information is accurate or complete. The inclusion of information contained in this document should not be construed as a characterization regarding the materiality or financial impact of that information.

If emissions have not been publicly disclosed, these emissions may be estimated according to the Partnership for Carbon Accounting Financials (PCAF) standards. For borrowers whose emissions have not been publicly disclosed, we estimate their emissions according to the PCAF emission factor database. Since there is no unified source of carbon emission factors (including sustainability-related database companies, consulting companies, international organizations, and local government agencies), the results of estimations may be inconsistent and uncertain.

Past performance and simulations of past performance are not a reliable indicator and therefore do not predict future results.

This release contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about our beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates, and projections as they are currently available to the management of Deutsche Bank Aktiengesellschaft. Forward-looking statements therefore speak only as of the date they are made, and we undertake no obligation to publicly update any of them in consideration of new information or future events. By their very nature, forward-looking statements involve risks and uncertainties. Several important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include the conditions on the financial markets in Germany, in Europe, in the United States, and elsewhere, from which we derive a substantial portion of our revenues and in which we hold a substantial portion of our assets; the development of asset prices and market volatility; potential defaults of borrowers or trading counterparties; the implementation of our strategic initiatives; the reliability of our risk management policies, procedures and methods; and other risks referenced in our filings with the U.S. Securities and Exchange Commission. Such factors are described in detail in our most recent SEC Form 20-F under the heading “Risk Factors.” Copies of this document are readily available upon request or can be downloaded from our website.