Deutsche Bank

Non-Financial Report 2017

Private & Commercial Bank

PCC Germany, PCC International, and Postbank

In PCC Mortgage Lending and Consumer Finance, we advise our private clients in responsible lending and borrowing. This includes options to protect against personal risks associated with repaying the loan. Our sales teams are regularly trained to comply with legal requirements and bank-internal policies on both advisory as well as underwriting procedures. We handle any payment difficulties of our clients with understanding and do our utmost to enable the repayment of the loan. To ensure high-quality credit advice, we submit our procedures to regular internal and external checks (e.g. mystery shopping campaigns).

In Germany, private clients receive, in cooperation with KfW bank, state-subsidized mortgage loans for the purchase and modernization of their own real estate. In 2017, a total of 4,150 KfW loans with a total volume of € 332 million were granted (2016: 5,864 loans with a volume of € 429 million). This includes 1,592 loans with a volume of € 204 million (2016: 2,392 loans with a volume of € 255 million) for construction and modernization projects that comply with higher energy standards than required by the German Energy Conservation Ordinance (EnEV).

The Commercial Clients division at PCC offers a complete range of standardized and tailor-made product solutions and services that support commercial clients in their day-to-day banking activities and help them to improve and optimize their cash and liquidity management. In addition, we offer a broad range of financing products that include loans for financing environmental and climate protection (e.g. energy efficiency, renewable energies, and clean technologies). In Germany, for example, we grant loans for energy-efficient building, sustainable energies and modernization that are subsidized by the KfW bank group. In 2017, we arranged 922 KfW loans for our commercial clients with a total volume of € 312.7 million (2016: 977 loans with a total volume of € 278.6 million). Of this, € 266.8 million was for company start-ups and general company financing, € 13.9 million for renewable energies, € 30.7 million for energy-efficient construction, and € 1.3 million for infrastructure.

Postbank, and its brands BHW and DSL Bank, has been a partner of co2online since 2005. The non-profit consulting firm promotes climate protection in the construction and housing sector. It is sponsored by the German Federal Ministry fo the Environment and the European Union.

In 2017, Postbank arranged a total of 13,317 KfW loans with a total volume of € 790 million (2016: 16,144 loans with a volume of € 919 million). Postbank arranges KfW loans not just under the BHW brand but also through third-party sales under the brand of DSL Bank, a partner bank for financial service providers. The data shown below cover both brands. Loans for the energy-efficient modernization and the first-time purchase of modernized buildings or residential homes were arranged for 1,127 applications with a total volume of € 65.5 million (2016: 1,368 loans with a volume of € 81 million). Furthermore, financing arrangements for the purchase or construction of low-energy housing were concluded for 2,696 applications with a total volume of € 285 million (2016: 3,534 contracts with a volume of € 311 million).

Wealth Management

Given the increasing level of interest from investors and wealthy clients, the expansion of our ESG offering in investment services is a key initiative for Deutsche Bank WM. Having initially been favoured by institutional investors such as churches and charitable organizations, then progressively adopted by pension fund trustees, ESG investments are now finding favor with a growing numbers of individual investors and hence entering the investment “mainstream“. So we believe we are only in the early stages of the ESG “story“ in terms of WM investment.

Our ESG investments are handled within the existing WM investment processes rather than outside them, with governance primarily done through existing structures within our discretionary portfolio management services.

Within Wealth Discretionary (WD), we exclude certain investment areas (e.g. cluster bomb munitions). We make our investment decisions (just as we would for non-ESG investments) on the basis of guidelines agreed with the client, which may specify the client’s desired ESG priorities. WM has experience in this area: Our first sustainability-themed investments were offered in 2002, and in 2009, WD launched an ESG management overlay.

When considering our product platform in this space, we concentrate on three areas: products identified as investing with an ESG or sustainable approach, impact investment products, and products that invest according to specific themes that correlate to environmental or social challenges.

WD is collaborating with one of the world’s leading rating agencies (oekom research AG) in the area of sustainable investment and therefore has access to research insights that provide a competitive edge, facilitating sustainable and responsible investments with a potential attractive rate of return. As of end 2017, WD manages assets in excess of half a billion euros based on this approach for our global investor base. In addition, dedicated teams are in place in both Germany and Italy that comprise portfolio managers with ESG expertise directly supporting relationship managers in the provision of ESG offerings to clients. The underlying assets are either segregated accounts or special funds, tailored to clients’ specific needs with regards to ESG criteria.

oekom’s ESG research analysis covers the world’s most important companies and countries in their role as securities issuer. The overall universe covers more than 6,200 issuers world-wide. Two different types of ratings are evaluated: a corporate rating and a country rating. The corporate rating assesses companies’ responsibility towards persons affected by corporate activities (social and governance sustainability) and the natural environment (environmental sustainability) across 5,500 issuers. The country rating uses about 100 individual criteria to evaluate countries’ sustainability-related efficiency. The universe comprises 700 countries and local authorities in total, including all EU, OECD, and BRICS states, as well as the most important Asian and South American countries.

WM also wants to improve our clients’ understanding of ESG-based investment approaches and ESG-related market developments. The Chief Investment Officer’s (CIO) first publication on the subject was released on November 8, 2017 (CIO Insights Special: “Act today to ensure our future – understanding ESG”). Further publications on this topic will follow, aimed not only at defining ESG as a topic and enhancing its understanding, but also to elaborate on the broad levels of ESG implementation that can be utilized to design a respective solution.