Deutsche Bank is intensifying its restrictions on financing coal, one of the primary energy sources in Germany, as part of a broader effort to crack down on high-emitting sectors.

The bank has stated that companies lacking "credible plans" to reduce thermal coal's contribution to their revenue below 50% by 2025 will see their financing discontinued. For companies operating outside the OECD, the revenue threshold is 30% by 2030.

Deutsche Bank also aims to ensure that "at least 90% of the high-emitting clients in the most carbon-intensive sectors who seek new corporate lending transactions with us shall have a net-zero commitment in place from 2026 onwards."

This move by Deutsche Bank is part of a larger trend among major banks to reassure investors and regulators that they are working toward eliminating financed emissions by 2050. Other banks, such as BNP Paribas and ING Groep, have also expanded their restrictions on fossil finance.

Deutsche Bank faces its "biggest challenge" in achieving its 2050 net-zero goal through reducing the carbon footprint of its loan portfolios, particularly in European residential real estate and global corporate loans.

The bank has already set targets for reducing financed emissions in sectors such as oil and gas, automotive, power generation, and steel. Along with coal, new restrictions affecting cement and shipping are being introduced, and aviation will be included once a net-zero-aligned decarbonization pathway is published by the Rocky Mountain Institute.

Financed emissions are associated with a financial institution's loans and investments in companies that generate greenhouse gases. Deutsche Bank published emissions data covering approximately 60% of its total loan exposure, which amounted to 34.4 million tons of CO2 equivalent per year at the end of 2022. Most of these emissions, 89%, came from the corporate loan portfolio, while the remainder resulted from loans secured by European residential real estate.

The banking sector plays a significant role in enabling greenhouse gas emissions by providing capital for polluting activities. While many major banks have committed to eliminating their financed emissions, progress has been limited.

Deutsche Bank's target for coal includes both thermal and metallurgical coal and builds on its existing thermal coal policy. The bank aims to achieve a 49% cut in absolute terms in the broadest measure of financed emissions (known as Scope 3) by 2030, with a goal of a 97% reduction by 2050. In cement, the bank is targeting a 29% reduction in Scope 1 and 2 physical emissions intensity by 2030, and a 98% reduction by 2050.

The bank stated that state-owned enterprises in countries with "Just Energy Transition Partnerships" could still be eligible for financing if they have a phase-out trajectory for thermal coal aligned with the host country's commitments, even if those deviate from the bank's other coal policies.

Deutsche Bank established a "net-zero forum" late last year, consisting of senior sustainability, risk, and coverage bankers, to assess potential transactions over €25 million that would increase financed emissions in relevant sectors by more than 1%. In its first year, the forum assessed 41 transactions and recommended that clients take further actions before any loans are agreed in about 25% of cases.