Environmental and climate change commitments of German banks

Saturday, July 1, 2017

Germany - „Alles im grünen Bereich – Umweltschutz auf dem Abstellgleis deutscher Banken?“ illustrates with three specific examples of the extractive and energy industries in how far German banks contribute to environmental damage and exacerbate climate change.


The cases were chosen to link German banks to one example of a longstanding and well-known issue (riverine tailings disposal by the Grasberg Mine in Papua New Guinea of Freeport-McMoRan), one example of a currently ongoing and highly climate-relevant project (project finance for a new coal-fired power plant in Vietnam’s Mekong Delta) and one example of a potential future issue (the planned extraction and cement facility of German HeidelbergCement in Indonesia against the protests of local indigenous communities). These cases were researched in close collaboration with local organizations in Indonesia and Vietnam to provide first-hand information on the social, environmental and governance issues to the involved German banks. For each particular case, the German bank that was providing the most finance to the responsible entity was identified to analyze whether/ in how far this case represented a violation of this bank’s own policies. Additionally, the environment- and climate-related policies of the top 5 German banks were analysed in detail, to show which ones are laggards, especially in relation to their international peers. The findings of the cases have been shared with the German banks in the form of in-depth background papers before the publication, recommending to the financial sector specific improvements of their policies and asking for comments.

Main findings

For Deutsche Bank, the report found that while it has a policy clearly stating that no activities are financed that have negative impacts on UNESCO World Heritage Sites, they were involved with Freeport-McMoRan, the operator of the Grasberg mine in Indonesia. The mine is believed to be contaminating waterways in the Lorentz National Park, a unique UNESCO World Heritage Site. The study therefore concluded that Deutsche Bank’s due diligence process is insufficient, as the bank merely relies on the information provided by the company itself. For the case of the financing for a new coal-fired power plant in Vietnam, the report shows that the EIA provided by the operator was insufficient and environmental protection measures (i.e. to avoid dust) are usually installed, but not in operation. Therefore, financiers – among them DZ Bank – should not rely on the documentation provided by project operators, but seek their own validation that the financed project is in accordance with all applicable social and environmental norms. The final case with the proposed cement extraction/production plant in Indonesia was used to illustrate to banks the magnitude of industries that are not yet sufficiently taken into account by them with regards to their negative social and environmental impacts.



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