Deutsche Bank to link executive compensation to sustainability goals

FILE PHOTO: The headquarters of German Deutsche Bank is pictured in the early evening in Frankfurt, Germany on January 26, 2016. REUTERS / Kai Pfaffenbach / File Photo

FRANKFURT (Reuters) – Deutsche Bank on Monday announced plans to join a small number of financial institutions that link executive compensation to environmental, social and governance (ESG) criteria.

Germany’s largest bank said that from 2021 executive pay will be linked to meeting targets for sustainable finance investments, the sustainability ratings it receives from five major agencies ESG rating and success in reducing its own energy consumption.

Banks such as HSBC, BNP Paribas and UniCredit have also implemented various models that link pay to ESG as more investors seek to invest in companies that perform better in terms of metrics. ESG.

It also comes as policymakers around the world increasingly look to banks to help them promote a transition to a low-carbon economy and meet the goals of the Paris climate agreement.

“Our ambition is to be a leader in sustainability in the financial sector and to contribute to an environmentally friendly, socially inclusive and well governed world,” said Christian Sewing, Managing Director of Deutsche Bank.

The bank did not disclose how much of executive compensation is linked to ESG. Banks like BNP Paribas have linked around 20% of variable compensation to compliance with ESG criteria.

Deutsche Bank said it plans to invest in sustainable finance worth more than € 200 billion ($ 242.66 billion) by 2025, with more than € 20 billion this year. , and to be itself carbon neutral by 2025.

($ 1 = 0.8242 euros)

Report by Arno Schuetze. Editing by Jane Merriman

Harry D. Gonzalez