Sustainable financing products at DZ BANK
Through our sustainable financing products, we take account of environmental, social, and ethical criteria in our investment decisions. This enables us to promote the sustainable development of our society and a responsible use of limited resources in a targeted way.
Investing in improved energy efficiency is becoming increasingly important for retail and corporate customers alike. Another focus is on action plans for coping with demographic change, including socially oriented programs that encourage the adaptation of housing and other buildings for older people. DZ BANK promotes environmentally and socially sustainable development by facilitating access to public-sector financial assistance at favorable interest rates, mainly in the form of development loans in the areas of environmental protection and sustainability. As the transmitting channel for loans from KfW and other public-sector financial institutions, DZ BANK, together with the cooperative banks, provided the companies with funds from the corona programs of the goverment.
In 2020, DZ BANK’s development lending amounted to €24.6 billion. The volume of new business generated by DZ BANK and the cooperative banks for development loans from Germany’s KfW development bank came to €20.3 billion. The total volume of development loans as of December 31, 2020 was approx. €67 billion.
In 2013, DZ BANK officially recognized the Equator Principles, which were drawn up by international project finance institutions, and made a voluntary commitment to act environmentally and socially responsible in its project financing business. As part of this acknowledgement and commitment, our already long-established practice of taking sustainability standards into account in project finance transactions was publicly formalized. This step also ensures that DZ BANK fulfills its duty to manage risks proactively, particularly in relation to high-volume project finance.
Our focus in the project finance segment is on the renewable energies sector in Germany. In 2020, the volume of project finance credit limits approved by DZ BANK for wind, solar, and biogas/biomass came to around €5.7 billion. Of these, wind power remains the most important renewable energy source.
Public Private Partnership
Partnerships between the public and private sector, known as public-private partnerships (PPP), have in recent years become one of the most successful ways to obtain funding for major public service projects in Europe. DZ BANK regularly works with partners in the cooperative financial network to facilitate, for example, the construction of roads and other transport infrastructure, schools, hospitals, and administrative buildings.
Sustainable investment products
Sustainable and successful: In December 2020 DZ BANK has issued its second Green Bond. The EUR 250 million issue was launched as a senior non-preferred bond. This met with intense interest among investors: With orders placed for approx. EUR 850 million, the seven-year bond was almost three and a half times oversubscribed. DZ BANK implemented the transaction itself on the basis of its extensive sustainability expertise and capital market experience, and aligned the bond with principles of the International Capital Markets Association (ICMA). Standard & Poor's Global Ratings (S&P), the rating agency commissioned to conduct an independent sustainability assessment, rates the bond as "E1" - the highest rating for such a green bond. The bond is directed to financing projects in the field of renewable energies, especially onshore wind turbines, in the US and Canada. The Bank has over 20 years of experience in the North American market. Two years ago, the Bank made its successful début on the Green Bond market. The first bond issue was also significantly oversubscribed.
More information can be found in the Green Bond Framework, the Green Bond Investor Report, and the S&P Green Evaluation.
DZ BANK has been active in the sustainable bonds segment since 2013 and is one of the leading European underwriters for these assets. Issuers can use these sustainable bonds to raise capital for socially responsible, environmentally friendly, or sustainability-oriented projects and markets. Issuance activity is focused on investment projects in the areas of renewable energies and climate change. In 2019, the total volume of bond issues with environmental, social, and/or sustainable objectives that were supported by DZ BANK as the lead underwriter amounted to €10.05 billion.
The finance industry plays a key role as a financing partner and catalyst for a greener economy
No products based on agricultural commodities
The entire DZ BANK Group stopped offering products based on agricultural commodities in spring 2013. However, DZ BANK, with its long tradition of serving the agriculture sector, continues to help its corporate customers to hedge prices through the use of standardized products.