Germany's green finance key actors at a glance
Sparkassen
骋别谤尘补苍测鈥檚 Sparkassen (Savings Banks) and Landesbanken (Federal State Banks) are part of the country鈥檚 public credit institutions and together with cooperative banks and commercial banks form the nation鈥檚 three-pillar banking system. The Sparkassen are divided into about 400 local sub-institutes and have one of the most widespread branch office networks in the country, with high market shares, particularly in the private savings deposit business. As part of the public sector, they are explicitly not profit-oriented and their main is to provide small savers with the possibility to safely invest their deposits at an interest and to cover the local demand for credit. The DekaBank is the Sparkassen Group鈥檚 asset management branch.听
The Sparkassen鈥檚 umbrella organisation, DSGV, it fully supports a more coherent and widespread approach to sustainability. Its asset branch, DekaBank, that it has included sustainable financial products and service in its code of ethics and 鈥渇ilters鈥� possible investment options according to their environmental or social impact. The DSGV warns that not all 鈥済reen鈥� investments bear fewer risks than conventional ones and that a preferential treatment of the former could lead to greater instability of the finance system in general.
NGO Facing Finance analysed two Sparkassen regional branches, the Stadtsparkasse D眉sseldorf and Sparkasse K枚lnBonn, and concluded that their sustainability practices remained largely wanting. Considerations for climate action in their investment and lending practices not only lacked a coherent framework, they were practically absent altogether. Even though the Sparkassen are supposed to work towards public welfare and are often engaged in promoting regional social initiatives, they take far less account of ecologic aspects along their chain of operations.
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Total assets*: 1.2 trillion euros
(+ Deka Bank: 283 billion euros)
Customers: 50 million
Number of Sparkassen: (with roughly 13,000 branches)
Employees: 210,000
Market share: Company loans 28.4% / Private loans 28.4%
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(Correction: an earlier version of this factsheet erroneously stated that the Sparkasse's total assets stood at 1.2 billion euros. We apoligise for the mistake.)
Landesbanken
The Landesbanken act as the credit institutions for Germany's federal states. They are comprised under one organisational umbrella with all Sparkassen within their geographic area of operation, with currently five Landesbanken serving all of 骋别谤尘补苍测鈥檚 16 尝盲苍诲别谤, the federal states. They carry out the states鈥� banking operations, including loans, and support regional business development investments and small and middle-sized companies in alliance with the local Sparkassen. In 2017, the Sparkassen handled 17 percent of the of 骋别谤尘补苍测鈥檚 banking sector,听 while the Landesbanken chalked up another 11.6 percent, making these publicly owned banks the largest actors in the country鈥檚 banking market.
The two biggest Landesbanken, LBBW from Baden-Wurttemberg and BayernLB from Bavaria, are also among the largest banks by asset size in the country. LBBW says that it aims to 鈥渃onsistently contribute to sustainable and balanced economic, environmental, and social development鈥� and has codified its efforts in its and in its internal climate strategy.
It received the of all banks in the Fair Finance Guide ranking published by NGO Facing Finance thanks to its pledge to install a comprehensive sustainability framework and for demanding compliance with environmental, social and governance (ESG) criteria along the supply chains of projects it is invested in. It also scores well regarding its respect of human and labour rights but receives a lower rating on climate action for its continued acceptance of coal and oil-related activities.
BayernLB, along with its DKB credit branch, also positions itself as a bank that has internalised sustainability in all of its operations, both as a guiding principle of its and a well of future business opportunities, ranging from to climate-risk assessment. However, the Bavarian state institute is for a lack of concrete social and environmental evaluation principles in all of its operations that would underpin these aspirations and for financing a range of emission-intensive operations like coal-fired power production and hydraulic fracking.
:
Total assets: 861 billion euros
No. of Landesbanken: 5
Employees: 31,100
Market share: Company loans 13.1% / Private loans 1.7%
Volksbanken
The Volksbanken (Cooperative Banks) are cooperative financial institutions and, along with the Sparkassen, the main banking service providers in Germany, with a dense network of thousands of branches. A large share of their customers are members of the cooperatives that own the banks, which gives them a higher degree of influence on their operative focus. The Volksbanken and other banks from the cooperative sector together accounted for 12.6 percent of the total banking business volume in Germany in 2017.
DZ Bank is the cooperative banking sector鈥檚 central institution and investment bank and the second biggest bank in the country by asset size. Its asset management activities are bundled under its Union Investment subsidiary. DZ Bank has committed to international business guidelines, such as the UN Global Compact on sustainable company governance, and installed a to streamline the group鈥檚 sustainability efforts. It also began issuing its own green bonds in 2018.
In the Fair Finance ranking, however, the bank and its climate action credentials fail to convince observers. While conceding that DZ Bank鈥檚 promise to cease funding of new coal plants points in the right direction, the Fair Finance Guide takes the bank to task for no longer revealing its exclusion criteria for investment funds and failing to take a clear stance against further oil and gas exploration.
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Total assets 2018: 935 billion euros
Customers 2018: 18.6 million
Number of Volksbanken: 875 (more than 10,000 branches)
Employees 2018: 142,850
Market shares: Company loans 18.1% / Private loans 24.1%
Deutsche Bank & Commerzbank
Privately owned commercial banks are the third pillar of the German financial system. The (Bundesverband deutscher Banken), the umbrella organisation of all private banks and branches of foreign banks in Germany, consisted of 180 members as of mid-2019. However, among all private banks, 骋别谤尘补苍测鈥檚 骋谤辞脽产补苍办别苍 (Large Banks), Deutsche Bank and Commerzbank, stand out as the most important private institutions in the country due to their asset size, capitalisation and market share.
Deutsche Bank, the largest private bank in the country, offers a wide range of financial services and operates through subsidiaries, such as its DWS Group asset management unit, in different sectors of the capital market. The bank adopted an 鈥溾�� in 2011 to review the risks and consequences of investment decisions. It distances itself from activities that undermine sustainability criteria and has also begun to partially ban coal investments. Deutsche Bank has also developed an for asset management operations that it says is at the heart of its attempts to establish a clear sustainability methodology for its entire investment portfolio.
The Fair Finance Guide nevertheless Deutsche Bank鈥檚 internal evaluation criteria for not being transparent enough, stressing that efforts to curb investments in the fossil fuel and arms industries and to boost low-carbon and environmental projects remain inadequate. It scores particularly low on climate and environmental action and slightly better on energy and mining activities.
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Total assets: 1,348 billion euros
: 20 million (worldwide)
: roughly 1,360 (in Germany)
Employees: 91,000 (41,000 in Germany)
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Commerzbank is 骋别谤尘补苍测鈥檚 second largest commercial bank, ranking fourth in asset size. The German state became the bank鈥檚 largest shareholder in 2009 to prevent a takeover in the wake of the global financial crisis. Its activities are more focussed on German and European credit markets than that of Deutsche Bank and it also does not operate a major asset management service on its own.
The bank has also adopted a and says ecologic, social and ethical criteria are key principles of its work, backed by the application of several international sustainability guidelines.
While the bank is ranked high by the Fair Finance Guide in terms of its anti-corruption efforts, it scores considerably worse on climate and environment due in part to the lack of carbon disclosure figures and unclear exclusion criteria for unsustainable investments. However, the report acknowledges that Commerzbank is committed to a clear coal investment reduction path and that it has set itself measurable targets for low-carbon energy funding.
:
Total assets: 503.2 billion euros
: 18 million (worldwide)
: about 1,000 (in Germany)
Employees: 48,900
Stock Exchange
The Deutsche B枚rse AG is the leading operator of 骋别谤尘补苍测鈥檚 stock market and manages the trading of shares and securities in the country. The group provides trading infrastructure, regulation and financial services to other market participants and is itself listed on the German stock market. It also operates the leading stock market index, DAX (similar to the UK鈥檚 FSTE 100 or the US鈥� S&P 500), which gives investors an overview of the stock price performance and other market data of companies listed on the German stock exchange. Deutsche B枚rse Group likewise operates the European Energy Exchange (), the biggest trading platform for energy and related products in Europe.
It helped launch the Green and Sustainable Finance Cluster Germany industry network and also established its own . Deutsche B枚rse says it applies a so-called materiality analysis to monitor developments that could impact the company鈥檚 business or that of its clients in the future. It also states that its customers have access to a range of sustainability .
Allianz & Munich Re
Like banks, insurance companies are a central pillar of the financial system. They act as stabilising agents by pooling risks and as investors by providing large sums collected as insurance contributions to capital markets.听Important insurers in Germany include Allianz, Talanx AG, Generali and the cooperative-owned R+V.
Allianz SE is by far the largest insurer in Germany and also a leading global insurance provider. Through its asset management branch, Allianz Global Investors, it鈥檚 also one of the largest capital providers in Germany and worldwide. Allianz has vowed to make all of its investments climate-neutral by 2050 and to no longer sell insurance coverage to coal companies, not least because the company itself is greatly exposed to the damages caused by rising global temperatures. Allianz has said climate change, environmental destruction and natural disasters figure among the most important international 鈥溾�� that will shape its future business.
Allianz :
Revenues: 130 billion euros
Customers: 92 million (worldwide)
Employees: 142,000 (26,700 in Germany)
: 1.9 trillion euros
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Other important actors in 骋别谤尘补苍测鈥檚 financial system are re-insurance companies, which can be described as 鈥渋nsurers of the insurers鈥�. They assume part of the risks held by regular insurance companies to ease the potential burden of large financial claims.
Munich Re is among the world鈥檚 leading reinsurance companies, ranking ahead of competitors like Swiss Re, Berkshire Hathaway and Hannover Re, according to . Munich Re calls itself a specialist in managing 鈥渃omplex risks鈥� and has already been as a potential liability for several decades. Apart from the risk posed by extreme weather events, Munich Re also explicitly classifies political 鈥渋ntervention in the markets鈥� and regulatory changes in line with climate action efforts as factors that could confound its projection and warns against potential geopolitical risks associated with rising temperatures. Munich Re has introduced new insurance approaches for a low-carbon energy system, such as battery performance insurance, and vowed to reduce its exposure to coal risks.
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: 49 billion euros
Employees: 41,000 (worldwide)
: 254 billion euros
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In a 2019 ranking that assessed German insurances鈥� commitment to sustainability efforts, Allianz and Munich Re scored well in comparison to national competitors. However, both have also been criticised for inconsistencies in their investment patterns, such as their persisting activities in the Polish coal industry.
Regulators / State institutions
Germany is a member of the Eurozone and signatory to other international agreements and conventions and as such its financial markets and institutions are subject to a wide range of norms and regulations that are beyond immediate national control. However, national institutions in Germany still have a large influence on the industry鈥檚 functioning as they often assume executive roles and implement international rules.听
The Bundesanstalt f眉r Finanzdienstleistungsaufsicht (BaFin), 骋别谤尘补苍测鈥檚 federal financial supervisory authority, is responsible for ensuring regulatory compliance within the financial industry. Launched in 2002 under the aegis of the finance ministry, the BaFin in 2018 acted as the watchdog for well over 2,000 banks, pension funds and insurance companies in the country.
The agency it follows an 鈥渋ntegrated鈥� approach that identifies connections and interdependencies between different sectors to apply 鈥渃onsistent and concerted鈥� supervision. However, it only started integrating sustainability on a broader basis in 2018 by agreeing on a 鈥渇irst concept鈥� for sustainability based on 鈥渋nformation, risk management and regulation鈥� and establishing an expert network across its various areas of operation. The BaFin defines as part of its mandate assessing the risks of climate change and consequences of the energy transition at the 鈥渕icroprudential鈥� level, meaning the impact on individual financial companies.
The Bundesbank is 骋别谤尘补苍测鈥檚 central bank. With the end of its former national currency, the Deutsche Mark, and the full introduction of the Euro in 2002, the Bundesbank became an integral and very influential part of the European System of Central Banks, with the European Central Bank (ECB) assuming most of the national banks鈥� former roles. Nevertheless, the Bundesbank is still involved in ensuring price stability in the Eurozone, manages 骋别谤尘补苍测鈥檚 financial reserves and handles the flow of physical currency.
It also acts as a banking supervisory institution and evaluates the annual reports of the country鈥檚 banks, provides metrics about their solidity and coordinates regulatory intervention along with the BaFin.
The Bundesbank joined () in 2018 as a member of the steering committee. As such, it vowed to commit to the promotion of climate objectives, risk management and accountability. The NGFS, which is co-steered by the Bank for International Settlements, represents a large fraction of global GDP and greenhouse gas emitters and is growing rapidly as more and more countries and international institutions join it or align with it as observers.
The Kreditanstalt f眉r Wiederaufbau (KfW), 骋别谤尘补苍测鈥檚 public development bank, is a key driver of green and sustainable finance in the country. The state-owned institute was launched after World War II in order to finance reconstruction works and today is among the country鈥檚 largest banks by asset size.
Its functions include facilitating small and medium size business start-ups, helping to fund investments in public infrastructure works and housing construction, and financing energy saving schemes across the board. The development bank is especially active in the funding of energy-efficient construction and low-emission heating by granting preferential credit lines to home owners.听 In 2018, of its total development funds went into climate action and environmental protection projects.
The KfW also actively supports climate and energy investments abroad, notably in developing countries, with both public and private partners. It plays a key role in the country鈥檚 economic cooperation and development policy and has as a result faced criticism for maintaining abroad.
KfW Figures 2018:
Total assets: 485 billion euros
Development funds: 76 billion euros
Employees: 6,370
Clerical / Alternative banks
Green and sustainable finance practices in Germany were not pioneered by the largest financial market actors in the country, but rather by small and less commercially driven institutions that mostly acted out of an ethical impetus, including several banks run by the church and those emanating from the peace and ecology movement of the 1970s. Despite their small market share, these banks today continue to act in many respects as best-practice setters in green finance.
One of the first alternative banks that focussed on sustainable investments and an important institution today is the GLS Bank, founded in 1974 on a cooperative banking model. A 2017 by Stuttgart University found that the bank had developed 鈥渞emarkable and outstanding concepts and financial products鈥� that served as a template for many renewable power funding contracts that were later used by other banks, mainly the Sparkassen and Volksbanken. It also in the Fair Finance Guide.
GLS Bank :
Total assets: 5 billion euros
Customers: 48,000
Employees: 580
Other important alternative banks active in Germany include the Umweltbank, Ethikbank and Dutch bank Triodos.
Clerical banks comprise yet another special sector with their long history of applying investment criteria that prohibit investment in activities that run counter to its stated religious principles. Both the of Germany and the have issued guidelines that stipulate management of the churches鈥� considerable financial assets along sustainability principles.
Rating
Given the lack of an internationally or nationally agreed upon regulations and standards for what constitutes green or sustainable investors, one of the best approximate measures of their environmental and social impact is offered by various sustainability rating agencies. Just like regular rating agencies gauge the creditworthiness or solvency of given actors, sustainability ratings measure their adherence to sustainability criteria and evaluates them accordingly.
One of the first companies to offer this kind of rating service was Munich-based . It was founded in 1993 and acquired by US shareholder service provider ISS in 2018. It rates more than 6,200 international emitters of shares and other investment products and has gradually expanded its presence to various countries in recent years. The ratings by oekom and its competitors have become an important benchmark for most major banks and other financial actors in Germany and beyond and regularly figure in their annual report to prove the companies鈥� sustainability credentials. Other important raters include Dutch agency , Hannover-based and US firm , which does not specialise exclusively in ESG ratings but is nevertheless seen as a significant index provider.
