Classification of DZ BANK's Business Activities

In 2020, the SDG classification and technology mapping were applied for the first time at DZ BANK. Since then, the corporate client credit business, hereafter referred to as the classified portfolio under review, has been primarily analyzed by the business units "Corporate Clients" and "Structured Finance." This portfolio includes working capital financing and project financing, representing only a selective snapshot of DZ BANK's total assets. The selection of the portfolio emphasized long-term nature as a core aspect in the sustainability context. Accordingly, transactions with an inherently short-term nature (e.g., money market loans) were excluded, except for overdraft facilities. Transactions where DZ BANK does not directly act as the financier (e.g., passthrough transactions) were also excluded. Transactionswith a volume below the materiality threshold were not classified, provided a heightened manual classification effort would have been necessary. For the reporting year 2024, the SDG classification of the portfolio under review was fully conducted using a software tool developed by DZ BANK for the first time. The transition of the existing policies into the new tool allowed for further development and, in part, appropriate tightening of the classification methodology. This leads to improvements in the quality of results in general, as well as a more stringent recognition of positive SDG contributions from trade financing. The classified portfolio under review shows predominantly positive contributions regarding the SDGs.

As of December 31, 2024, approximately 63 percent of the examined volume within the portfolio under review has at least one positive contribution. It's important to note that a classified economic activity can simultaneously have positive and adverse SDG contributions; therefore, the respective contributions or positions are not additive. Positive contributions especially result from the strengthening of critical infrastructures (SDG 9) and enhancing global prosperity (SDG 8). Furthermore, financing of renewable energy makes a positive contribution to combating climate change (SDG 13). The adverse contributions primarily result from financings related to the climate SDG (SDG 13). Additionally, further adverse contributions arise regarding clean water usage (SDG 6) and marine ecosystems: oceans, seas, and marine resources (SDG 14). DZ BANK continuously analyzes the adverse contributions and actively supports the transformation processes of its clients to work towards avoiding adverse contributions. The illustration shows the aggregated positive and adverse contributions of the classified portfolio under review to the 17 SDGs.