Our Clearly Defined Processes for Sustainable Lending
DZ BANK is aware of its responsibility to people, the environment and corporate governance. Lending is one of DZ BANK's most important core activities. In this area in particular, the topic of responsibility is of great importance: As a lender, we systematically check loan requests for relevant sustainability aspects as part of the loan review process.
The sustainability check in DZ BANK's lending business is carried out both for traditional lending and credit substitute business and for debt capital market business and treasury's own investments (excluding asset-backed securities). Every commitment, including corporate, project, export, foreign trade, acquisition, real estate, leasing and asset financing, must be checked for sustainability aspects.
The basis for the sustainability check in the lending process consists of five elements: our exclusion criteria, our sector policies, our RepRisk DZ BANK ESG checklist, our ESG credit risk score, and the overall assessment of sustainability risks.
Exclusion Criteria
The DZ BANK Group has adopted strict standards for its business activities in order to meet its corporate social responsibilities toward people and the environment, and comply with the principles of sustainable corporate governance. The exclusion criteria for specific business practices and sectors are an integral element of its commitment to sustainability. They are designed to ensure that the minimum requirements relating to ESG topics are met and to prevent increased risk of damage to the DZ BANK Group’s reputation.
The general exclusion criteria are enshrined in the group credit standard of the DZ BANK Group, which provides rules on the consideration of risks associated with ESG factors. Depending on the business model of the group entity concerned, the scope of application or justified exceptions (for example exceptions for cooperative banks, for DZ BANK group companies, where there is credible evidence of the borrower’s willingness to transform, or for higher-level decisions in exceptional cases) can be defined.
We do not fund activities connected with the construction, operation, or maintenance of nuclear power stations.
We do not fund coal-fired power plants – whether new or existing.
We do not fund upstream activities in the thermal coal value chain – especially extraction and trade, and directly associated activities.
We do not fund companies that operate coal-fired power plants, extract thermal coal, trade in thermal coal, or have a direct association with it, unless
- the possibility of the funding being used in connection with these activities can be ruled out; or
- there is a clear willingness to transform; or
- thermal coal accounts for less than 5 percent of the business (for operators of coal-fired power plants, this is the proportion of power generation; for others, the share of revenue).
We do not fund oil extraction activities (upstream) and oil/gas extraction activities that involve fracking, oil shale / oil sand, Arctic drilling, or deep sea mining.
We do not enter into new business (other than refinancing) that increases the lending volume with companies involved in oil and gas extraction (upstream), unless evidence is provided that the funds are to be used for a purpose other than oil/gas extraction.
Controversial weapons
We do not fund the production or trade of controversial weapons, i.e. weapons that have indiscriminate effects, are excessively injurious, have a devastating impact on the civilian population, or have been internationally outlawed, including – but not limited to – nuclear, biological, and chemical weapons, land mines, anti-personnel mines, cluster bombs, autonomous weapons, and depleted uranium munitions.
We do not fund companies involved in the development, production, maintenance, operation, or trade of controversial weapons or their core components if it cannot be ruled out that the funding may be used for these activities.
Conventional weapons
We do not fund companies that are linked to the development, production, maintenance, or operation of conventional weapons or their material parts, pursuant to the definition in the German Weapons Act (WaffG) and that have their registered office outside NATO or EEA/EFTA countries, unless there is proof that the weapons will be used exclusively by NATO, EEA, or EFTA countries.
We do not fund transactions involving the supply of weapons in/to countries outside NATO, the EEA, or EFTA or areas of conflict, unless a government export authorization has been issued.
We do not fund companies or projects that pose significant environmental risks, particularly uranium extraction, mining activities involving the mountain-top removal method, asbestos extraction, projects/assets or activities that pose a high risk of nuclear, biological, or chemical contamination (excluding biogas facilities), and hazardous goods with insufficient measures to minimize risk.
We do not fund activities with a direct link to illegal deforestation, slash-and-burn, and/or the conversion of tropical forests, primary forests, and protected areas.
We do not fund companies from the pornography industry or similar sectors (sex industry).
We do not fund companies that are involved in controversial forms of gambling. Companies involved in controversial forms of gambling are defined as companies whose original business purpose is gambling, except where operated or supervised by public-sector entities.
We do not fund companies that demonstrably contravene internationally recognized standards of human rights and labor rights. Internationally recognized standards are the UN Global Compact, the UN Guiding Principles on Business and Human Rights, and the fundamental conventions of the International Labour Organization (ILO).
We do not fund activities involving the trading of endangered animal or plant species in accordance with the CITES (Convention on International Trade in Endangered Species) list.
We do not fund trade activities involving materials extracted in conflict regions by a conflict party in a way that breaches human rights, and which may be used to finance the conflict.
Sector Principles
DZ BANK assesses loan applications from companies in sectors that are particularly vulnerable from a sustainability perspective using its sector principles in addition to the sustainability assessment. These lay down general principles for lending and ensure that minimum ESG standards are taken into account. They are applied to projects, transactions and companies that fall within the ESG scope of application and that generate more than 50 per cent of total revenue, both directly and indirectly, in the respective sector and that act as credit recipients of DZ BANK.
Sector policies are in place for the following sectors: dams and water infrastructure, extractive industries, forestry, fisheries, maritime industry, palm oil and agriculture.
The sector policies are listed in detail in the Sustainability Report 2024 and in the DZ BANK policy on exclusion criteria, sector policies and sustainability checks.
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