As a first among the big conventional banks in Germany, Commerzbank not only commits to ending coal energy by 2030; it also lays down the first more serious exclusion criteria for oil and gas. To a large extent, we can count these developments as a victory for civic engagement. Nevertheless, Commerzbank still misses the chance to put its portfolio on a clear and steady 1.5 °C course today.
Kathrin Petz, Climate Campaigner at Urgewald, said, “The policy’s details are a mixture of black and white, with lots of grey in between. Overall, we expected Commerzbank to be considerably bolder. The bank is much less sustainable than it claims. With a view to coal, the appropriate threshold of 20 percent comes much too late, and Commerzbank’s existing coal clients should have formulated their 2030 coal exit plans long ago. Worst of all, current coal clients can keep expanding their business for another four years! Existing oil and gas clients remain completely untouched and need not bother with transformation plans. This directly contradicts the Paris Agreement: We cannot allow any further fossil expansion of any sort if we want to meet the 1.5°C goal, according to data from the Intergovernmental Panel on Climate Change (IPCC), the United Nations (UN), and the International Energy Agency (IEA).”
Petz added, “We still hope that Commerzbank’s policy is a wake-up call for the other conventional banks in Germany, especially for Deutsche Bank and the savings banks. The German banking sector remains irresponsibly slow when it comes to fossil energy.”
Urgewald’s analysis of the policy requirements pertaining to coal:
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Urgewald welcomes the fact that, unlike the previous policy, the current one encompasses the complete value chain, and it relies on the Global Coal Exit List (GCEL). The uniform thresholds for German and international clients are also a positive development.
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Urgewald criticizes that, while potential new clients are affected by the threshold and exclusion criteria from the beginning of 2022, existing clients receive a generous grace period of four years. During this period, existing clients face neither exclusion nor the duty to provide coal exit plans if they stand above the 20-percent threshold.
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Urgewald is gravely concerned that existing clients may continue expanding their coal power plants and coal mines during this grace period. This directly contradicts the Paris Agreement: Fossil expansion of any sort must stop immediately if we want to meet the 1.5°C goal, according to data from the Intergovernmental Panel on Climate Change (IPCC), the United Nation (UN), and the International Energy Agency (IEA).
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Urgewald welcomes the Bank’s general commitment to a 2030 coal exit, in line with the call from the scientific community and civil society. However, the current policy decidedly cannot achieve “Coal Zero” by 2030.
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Urgewald further welcomes the new project financing guidelines that extend to coal mines and coal infrastructure projects. At the same time, it remains concerning that project financing is still available for what the bank deems necessary modernization of existing coal power plants. In such cases, an internal assessment process will determine whether, for example, a coal plant can receive financing for a switch to biomass, which many NGOs find controversial.
Urgewald is calling for a policy amendment: All existing Commerzbank clients with any coal business share may not pursue any further expansion in this area effective immediately. Existing clients must put forward their 2030 coal exit plans one year from now at the latest.
In the end, the big question remains about the form of Commerzbank’s “transformation support”. Urgewald asks for clarity on the number of coal companies that must present exit plans till end of 2025, followed by regular updates on when those are handed in, and how Commerzbank intends to support those companies along the way. Additionally, what should a 2030 transformation plan look like, so that Commerzbank can retain clients above the 20-percent threshold in 2026 and beyond? Last but not least, the point in time when every Commerzbank client must be fully coal-free also remains unclear.
Urgewald’s analysis of the policy requirements pertaining to oil and gas:
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Urgewald appreciates the fact that Commerzbank is the first German bank to officially adopt the Global Oil & Gas Exit List in its decision-making.
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Urgewald criticizes the policy’s exclusive focus on new business relationships and, consequently, on new clients only. Business relationships with existing clients are not subject to any requirements, except a “regular assessment of environmental and social risks that can potentially lead to an end of the business relation.” Commerzbank must definitely amend its policy to align with the transformation of the oil and gas industry needed to keep the 1.5°C target. Existing clients that develop new oil and gas fields or build pipelines and LNG terminals cannot continue enjoying unlimited access to financing. Urgewald’s Global Oil & Gas Exit List shows that practically all oil and gas companies are carrying out or planning new projects. If Commerzbank aims to become sustainable, it has to introduce thresholds and require an oil and gas exit plan from its existing clients, too.
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Urgewald welcomes the fact that Commerzbank will no longer provide project financing for the development of new oil and gas fields as well as oil-fired power plants. On the other hand, Urgewald criticizes the continued project financing of new gas-fired power plants, dual-fuel power plants, gas pipelines, and LNG infrastructure on a case-by-case assessment basis.
Urgewald is calling for a policy amendment: All of Commerzbank’s existing oil and gas clients must curb their expansion effective immediately and end it as soon as possible. The bank should also require a transformation plan for a complete fossil exit.
Subsidiaries are not subject to the policy
A basic shortcoming of the policy is that it does not apply to Commerzbank’s subsidiaries. For instance, its Polish subsidiary MBank intends to continue financing coal companies for as long as the Polish government allows. In Poland, there is no coal exit date in sight.
Notes
Commerzbank’s policy in detail: https://www.commerzbank.de/en/nachhaltigkeit/nachhaltigkeitsstandards/positionen_und_richtlinien/positionen_und_richtlinien.html
Financing GCEL companies received from Commerzbank, October 2018 to October 2020, Urgewald: https://coalexit.org/investments-bank-ct?name=Commerzbank
About GCEL and GOGEL
The Global Coal Exit List (GCEL) was first released in November 2017 and is updated every autumn. It includes the biggest coal power plant operators with installed capacity greater than or equal to 5 GW, as well as the biggest coal producers with an output greater than or equal to 10 million tons per year. Enterprises that generate more than 20 percent of their electricity output or 20 percent of their turnover from coal are also part of the GCEL, as are businesses that plan expansion into coal mining, coal power plants or coal infrastructure. Investors representing a total wealth of over 16 billion US dollar are currently using one or more of GCEL’s three divestment criteria to exclude coal enterprises from their portfolios.
The Global Oil and Gas Exit List (GOGEL) is the first comprehensive public database of oil and gas enterprises worldwide. Currently, GOGEL includes 887 enterprises and thus reflects nearly 95 percent of global oil and gas production. Users of the database, especially from the financial sector, can easily identify the oil and gas companies with the most extensive expansion plans and the most controversial approaches to oil and gas development. GOGEL’S first official user was the French La Banque Postale, the eleventh largest bank in the Eurozone. In October 2021, it announced it would no longer provide financial services to any enterprise involved in the development of the oil and gas industry. The bank will sever all ties to the sector by 2030.
