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Deutsche Bank, one of the two European banks granted access to the Chinese central bank's green finance funding pool, is actively seeking partnerships with Chinese institutions to drive transactions aligning with European climate standards. The German bank's objective is to aid Chinese companies selling to the European market in meeting the most stringent sustainability and climate transition standards globally.
Kamran Khan, Deutsche Bank's Head of Environment, Social, and Governance (ESG) for Asia-Pacific, stated, "Deutsche Bank is looking to partner with local Chinese financial institutions so that they can lead on the financing side, while Deutsche Bank can lead on the advisory side. This way, the Chinese companies can show that their products are sustainably procured and manufactured, with key performance indicators built into their financing that allow them to substantiate those claims."
The advisory services are appealing to Chinese clients, and Deutsche Bank is also set to provide support for their foreign exchange and other cross-border transactions.
A year ago, the People's Bank of China (PBOC) granted Deutsche Bank and Societe Generale access to its green finance scheme, which offers subsidized loans with a 1.75% interest rate. This initiative benefits major banks by allowing them to lend to qualified carbon-reduction projects at the prime lending rate, followed by the opportunity to borrow up to 60% of the project loan principal from the PBOC at a more favorable interest rate.
Deutsche Bank recently unveiled its climate transition plan, which includes additional net-zero targets for coal mining, cement, and shipping sectors. The bank aims to reduce financed emissions by 49% for coal mining clients by 2030, rising to 97% by 2050. Similarly, the goal for cement clients is a 29% reduction in greenhouse-gas emissions per unit of output by 2030, increasing to 98% by 2050.
This plan marks the bank's second phase of efforts to establish net-zero pathways for carbon-intensive industry sectors funded through its €107 billion corporate loan book.
Joerg Eigendorf, Deutsche Bank's Global Chief Sustainability Officer, emphasized the bank's engagement with clients to define key performance indicators and targets aligned with the bank's decarbonization objectives. He mentioned, "Now we can have a dialogue with these clients based on clear indicators. That means we can start to manage down [our financed emissions] via emission budgets."
Deutsche Bank is also assisting clients in raising financing to adapt to the impacts of climate change, particularly in Asia, where it has been involved in projects to address receding shorelines due to storms and floods in collaboration with real estate firms and government entities.
Khan added, "On our part, this involves adjusting the financing and setting up the repayment plan so that the costs are manageable." This collaboration underscores Deutsche Bank's commitment to promoting sustainability and addressing climate-related challenges in the financial sector.
By fLEXI tEAM