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Deutsche Bank to get tougher with suppliers over sustainability from July
By Tom Sims and Elke Ahlswede
FRANKFURT (Reuters) – Deutsche Bank will require its vendors and suppliers around the world to have a sustainability rating from July, according to an internal memo seen by Reuters, a move that is unlikely to fully satisfy environmental activists.
The German bank’s chief executive officer, Christian Sewing, will highlight the plan in a speech to shareholders at the lender’s annual meeting on Thursday, said a person with knowledge of the matter.
Environmental groups plan to hold protests against the financing of oil companies at the bank’s headquarters while the shareholder meeting is taking place.
Financial firms are coming under increasing pressure from campaigners and investors alike to take environmental, social and governance (ESG) issues into account in their business.
Kate Cahoon, a campaigner with activist 350.org, called the Deutsche rating initiative “greenwashing”.
Last year, Deutsche announced it would require suppliers with contracts of more than 500,000 euros ($525,000) a year to have a sustainability rating.
The bank, which spends 8 billion euros a year on vendors, is now detailing the timing of that move for the first time.
In the memo, Deutsche details eligible rating agencies as EcoVadis, MSCI ESG, and others.
From next year, ratings will have to be “adequately high”, which translates to a score of 25 out of 100 points from EcoVadis.
Tilman Massa, an activist with the Association of Ethical Shareholders, said a “rating is a first step, but it can’t be the entire story”.
Ratings can still conceal environmental destruction and human rights abuses, he said.
In recent years, Deutsche Bank has marketed itself as a bank that companies can turn to as they move to a greener future.
On Sunday evening, activists demanded at Deutsche Bank’s headquarters in central Frankfurt that it stops financing a pipeline in Africa that they say will displace thousands of families and disrupt nature reserves.
Deutsche Bank is not financing the pipeline, known as the East African Crude Oil Pipeline (EACOP), a person with knowledge of the matter told Reuters.
Cahoon of 350.org said Deutsche’s sustainability plan was an important step in the right direction and the result of sustained public pressure on the bank, but called on it to stop financing big oil companies.
($1 = 0.9529 euros)
(Reporting by Tom Sims and Elke Ahlswede; Editing by Miranda Murray and David Clarke)
Frequently Asked Questions about Deutsche Bank to get tougher with suppliers over sustainability from July
1What is sustainability?
Sustainability refers to the ability to maintain or improve certain essential processes or systems over time without depleting resources or causing harm to the environment.
2What is ESG?
ESG stands for Environmental, Social, and Governance. It is a set of criteria used to evaluate a company's operations and performance in relation to sustainability and ethical impact.
3What is a sustainability rating?
A sustainability rating is an assessment that evaluates a company's environmental and social practices, often used by investors to determine the sustainability of their investments.
4What are vendors?
Vendors are individuals or companies that sell goods or services to other businesses or consumers. In finance, they can refer to suppliers providing services to banks or financial institutions.
5What is greenwashing?
Greenwashing is a deceptive marketing practice where a company exaggerates or falsely claims its environmental benefits to appear more environmentally friendly than it actually is.
