Impact investments

In addition to integrating ESG factors in asset management, Deutsche Bank has a long history of working to enable disadvantaged communities to achieve economic success. Our efforts not only direct Deutsche Bank’s own capital for this purpose but also structure opportunities for like-minded investors that are not currently being served by conventional capital markets. We are a recognized leader in supporting microfinance institutions – which in turn provide financial services to microentrepreneurs – and in facilitating community development projects in distressed urban areas. Deutsche Bank’s funds under management in this impact investment portfolio exceeded US $ 1.5 billion in 2014. Whenever possible, the Bank cooperates with others to increase the scale of its activities and in certain instances involves employees as pro bono consultants for community partners. Within the Bank’s Corporate Community Partnership program, 79 employees have been seconded to microfinance institutions and other non-profit organizations on short-term assignments since 2008. In the course of their stay that lasts several weeks, they help establish self-sustaining social and economic structures. Typical tasks include project management, IT system improvement, finance and marketing.

Deutsche Bank was the first global bank to launch an investment fund supporting the microfinance sector in 1997. Since then, we have pioneered standards to promote ethical behavior in the industry and protect its clients. We have lent approximately US$ 330 million to over 130 microfinance institutions in 51 different countries, seeding an estimated 3.9 million loans for microentrepreneurs worth an estimated US$ 1.75 billion.

In addition to supporting microfinance institutions, we have created funds that pursue specific development goals. Deutsche Bank’s Essential Capital Consortium II, which closed in 2014, provides flexible debt financing that supports the growth of social enterprises in poor communities. The US$ 50 million fund, of which Deutsche Bank invested US$ 5 million, focuses on three sectors that can have a direct impact on the poor: energy, healthcare, and “Base of the Pyramid” financial services.

In 2014, for the first time, we launched an opportunity for employees to participate in our social finance activities, in partnership with the non-profit organization Kiva. We provided every US employee with US$ 25 to facilitate a loan to a microentrepreneur of choice. Kiva aggregates these loans – US$ 193,025 in total, based on 60 % participation – and delivers them to field partners in more than 70 countries. We have also extended the program to France, where almost 80 % of local Deutsche Bank employees have subscribed to the offer, and will roll it out globally in 2015.

In the UK, the Deutsche Bank Small Grants Fund has distributed over £750,000 to local initiatives since it began in 2006. In cooperation with our partners, the Community Foundation for Merseyside, Foundation Scotland and the London Community Foundation, Deutsche Bank employees decide on the recipients. In 2014, the Fund provided 31 grants to initiatives that benefit young people (e.g. WORLDwrite, Hackney and Sport 4 Life UK, Birmingham). Endowments that support local causes currently attract 50 % match funding from the Government.

The US $ 4 million Clean Cooking Working Capital Fund supports social enterprises that manufacture, sell, and provide safe fuels. In partnership with the Global Alliance for Clean Cookstoves, development finance institutions and private investors, the goal has been defined to facilitate the establishment of a US $ 100 million second stage fund that further helps these companies reach scale. The Alliance aims to replace traditional stoves and open fires in developing countries, which create indoor air pollution that is responsible for four million deaths a year. Similarly, the £10 million Impact Investment Fund helps to close the financing gap for social enterprises in the UK. In 2014, it invested £1 million in the UK’s first social impact bond fund which raised £25 million. The Fund supports early intervention schemes that aim to address the root causes of social disadvantage. In Italy, the new Fondazione Deutsche Bank launched its first social bond, raising € 100,000 for the food bank Banco Alimentare that collects and redistributes food free of charge every day to almost 9,000 charities.

In 2015, we plan to further increase our impact investments portfolio and to establish new conduits to support start-up enterprises.

Microfinance