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Deutsche Bank Tightens Lending Criteria For Coal Firms

Deutsche Bank is implementing a stricter policy for coal financing as part of additional measures to reinforce its net-zero commitment, Germany's top lender said on Thursday, adding that it would also update its oil and gas policy at some point.

The bank, however, didn't announce any tighter criteria for oil and gas financing today. It only said it had recently updated its thermal coal policy that lays out the revenue threshold that determines if a corporate client is considered a thermal coal company. Deutsche Bank said it had lowered this revenue threshold from a revenue dependency of 50% to 30%.

Deutsche Bank also said that "For clients to access baseline funding, the bank requires credible diversification plans from companies in scope of the updated thermal coal policy. Existing clients are required to present such plans in 2025, while for new clients such plans are a precondition for any lending."

The bank reaffirmed its commitment to end financing for thermal coal companies with a thermal coal revenue dependency of more than 50% which have no credible plans to reduce this dependency to below 50% by 2025 in OECD countries or below 30% by 2030 in non-OECD countries.

After the update on the coal policy, Deutsche Bank plans to update its oil and gas policy, too.

"Further disclosures will be included in the bank's Non-Financial Report which will be published on March 17, 2023," it said.

Deutsche Bank is the latest bank to tighten lending criteria for fossil fuel projects.

Last month, Barclays said it would no longer provide financing to oil sands companies or oil sands projects and tightened conditions for thermal coal lending in an updated policy, which fell short of announcing overall pledges or targets in funding oil and gas. 

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Pressured by ESG trends and shareholders, other banks have already started to announce cuts to lending to the oil and gas industry. Credit Agricole, the largest retail lender in France, said in early December that it targets to have no new financing granted for oil extraction projects by 2025, and to cut its oil exploration and production exposure by 25% by 2025 compared to 2020. HSBC announced in December that it would stop funding new oil and gas field developments and related infrastructure as part of a policy to support and finance a net-zero transition. 

By Tsvetana Paraskova for Oilprice.com

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