Deutsche Bank joins Barclays, Apollo targeting energy transition deals

[LONDON] Deutsche Bank increased its environmental, social and governance (ESG)-related financing goals to target deals in high-carbon sectors.

Germany’s biggest bank said on Monday (Nov 17) that its new ambition is to provide 900 billion euros (S$1.4 trillion) of sustainable-linked financing for the period running from 2020 to the end of 2030.

The update replaces an earlier goal to deliver 500 billion euros of sustainable finance and ESG-related investments by the end of this year. Deutsche Bank said that it’s already achieved roughly 440 billion euros of sustainable finance and ESG investments since the start of 2020.

The revised target includes transition finance for the first time. Transition, a buzzword without a universally accepted definition, is supposed to convey the notion of transforming an asset to green from brown.

While regulators have not yet explicitly defined it, the finance industry continues to construct businesses around the concept, with firms such as Barclays and Apollo Global Management coming up with their own definitions.

The expanded target reflects “a fundamental shift into a new era by including transition finance offerings for our clients”, Jorg Eigendorf, Deutsche Bank’s chief sustainability officer, said.

Deutsche Bank also published its first version of a framework for transition finance that Eigendorf said will enable the lender to “mobilise capital at scale for technologies” that cut emissions.

The German bank defines transition finance as providing capital for “activities required on a credible path towards net zero”, as well as “sustainability-linked solutions”.

A loan to retrofit a gas-fired power plant for hydrogen co-firing would be an example of transition finance, the bank said.

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Deutsche Bank also said on Monday that it aims to facilitate 300 transactions by the end of 2027 that contribute to biodiversity, ecosystem conservation and restoration. BLOOMBERG