Good business with bad climate

In light of investments worth several billion in leading greenhouse gas polluters FACING FINANCE urges banks and investors to effectively engage environmental and climate protection.

(Berlin/Durban 01.12.2011) On the occasion of the 17. UN climate conference held in Durban (28. November till 09. December), German banks and financial institutions are also increasingly under scrutiny. According to a recent investigation of the NGO campaign FACING FINANCE they have invested in Europe’s leading climate polluters with an investment volume of at least 32.5 billion euro. In total, German investors of the top 10 EU-climate offenders could account for dividends amounting up to at least 500 million euro.

According to the Environmental Investment Organisation (EIO), the top 10 European polluters caused CO2– emissions (direct and indirect) of more than 1.1 giga-tons (1,100 billion tons) during the previous year. The EIO-ranking is headed by the Dutch company ARCELOR/MITTAL followed by RWE and E.ON from Germany. Among the top polluters many are already involved in the field of renewable energy, but their main focus remains on fossil fuels.

Most of the big German investors and financial institutions have proclaimed their willingness to engage more in environmental and climate protection by now or participate in voluntary global environmental initiatives (such as Carbon Disclosure Project, the UN Principles for Responsible Investment / PRI or the Equator-Principles). These steps, however, have not yet led to a significant decrease in the companies’ CO2– emission levels.

„Unfortunately, experience shows that banks are not willing to stop financing CO2-intensive deals“, criticises Thomas Küchenmeister from Facing Finance. That is why environmental activists have repeatedly called upon banks to compile all emissions subject to their financing and adopt binding objectives on emission reduction.

Moreover, FACING FINANCE criticises the lack of initiatives displayed by banks with regards to invest in renewable energies and efficient technologies. In case they grant credits to firms, banks should take into consideration which impacts the financed deals might have on the environment, says FACING FINANCE. This could lead to generally less emission levels in the global economy. Financial institutions could influence the choice of companies in which energy supplier to invest. This does currently not occur to a sufficient extent, so the NGO campaign.

The Deka Bank stressed that it finances projects related to renewable energies with up to 350 billion euro and is planning to further increase its shares in such projects in its new business volume. Currently, Deka maintains business relations to Europe’s top 10 climate polluters reflecting around 850 billion euro.

Being an 100 % subsidiary of the UniCredit Group, the HypoVereinsbank (HVB) declared its ambitions to actively accompany the transformation process of the energy sector and use its potential to positively influence companies and their impact on the climate. According to the HVB, its financial portfolio in the field of renewable energies exceeds 5.3 billion euro. The HBV’s „Assets under Green Management“ amount up to 1.5 billion euro in 2010. Its business relations with top polluters however comprise around 1 billion euro.

The Commerzbank underlines that it wants to further develop its position as a driving force in the field of climate protection. Currently, the bank provides a credit volume amounting to 4.4 billion euro (around 3 billion being project related financing) to renewable energies and simultaneously maintains relations to leading environmental sinners accounting for 9.7 billion euro.

The LBBW considers the incorporation of ESC-issues (environmental, social and corporate governance standards) into their investment guidelines and states that among others sustainability also plays an important role in reaching decisions on financial operations. The LBBW’s investment in sustainable and ecological assets represents a share of 2 % (417.6 million euro) of the total portfolio of the LBBW’s Asset Management Investmentgesellschaft mbH.

Finally, the Deutsche Asset Management (DeAM), an affiliate of the Deutsche Bank, manages around 2.8 billion euro in assets subject to ESG-criteria as well as thematic funds in the field of climate change which amounts to 0.5 % of the DeAM’s total portfolio (550 billion euro). At the moment the Deutsche Bank maintains business relations to Europe’s top 10 climate offenders with a volume of 16.7 billion euro.

„On the one hand, our numbers confirm an increased interest of the banks in renewable energies, but on the other hand, investments in polluting industries clearly prevail. Banks need to change this substantially if they want to gain credibility in their role as a protector of the climate“, underlines Thomas Küchenmeister.

Environmental experts assume that the limitation of a temperature increase of less than two degrees until 2050 necessitates worldwide investments amounting to 50 billion dollar (nearly 37 billion euro) in environmental protective measures only within the next 5 years to come. Drawing on a report of the International Energy Agency (IEA), greenhouse gas emissions have reached an all time climax in the previous year. The report states that global CO2 emissions in 2010 showed a 1.6 giga ton increase. This is the highest interim increase since the data has been recorded. CO2– is by far the most prominent greenhouse gas with a share of 86 % of the global emissions in 2009.

Also Dirk Niebel, the German Federal Minister of Economic Cooperation and Development, had recently called Europe for more determination with regards to environmental protection, in particular in times when the BRIC countries, but also other industrial states such as the US show reluctance in adopting comprehensive measures.

Please click here to find the fact sheet „Investments deutscher Danken in Top 10 Klimasünder Europas“ (only available in German) and here on more information on the report Bankrolling Climate Change by banktrack and urgewald.