Frankfurt — Deutsche Bank plans to join a small number of financial institutions that link management pay to environmental, social and governance-related (ESG) criteria.

Germany’s largest bank said on Monday that from 2021 management compensation would be tied to reaching targets on sustainable finance investments, on the sustainability ratings it receives from five leading ESG ratings agencies, and on succeeding in reducing the bank’s own energy consumption.

Banks such as HSBC, BNP Paribas and UniCredit also have varying models in place that link pay to ESG, as more investors look to invest in companies that perform better on ESG metrics.

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

“It is our ambition to be a leader on sustainability in the financial sector and contribute to an environmentally sound, socially inclusive and well governed world,” Deutsche Bank CEO Christian Sewing said.

The bank did not disclose how much of management pay is related to ESG. Banks such as BNP Paribas have tied around 20% of variable pay to meeting ESG criteria.

Deutsche Bank has said that it plans investments in sustainable financing worth more than €200bn by 2025, with more than €20bn this year, and to be carbon-neutral itself by 2025.


Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.