Environmental Studies
Deutsche Bank of Germany is a globally powerful banking and financial institution. It has been recognized in both the financial and the environmental sectors for environmentally positive actions. The eco-friendly activities include both internal and external ‘green’ actions. The Deutsche Bank’s mission statement claims that the goal of the company is to find long term financial solutions for everyone who needs financial services.
“The bank competes to be the leading global provider of financial solutions, creating lasting value for its clients, shareholders, people and the communities in which it operates.” (Mission Statement, Deutsche Bank, 2013)
Deutsche Bank has successfully changed the internal culture of the bank into one that accepts environmental sustainability as one of its goals. The Deutsche Bank building in Berlin has been retrofitted for sustainability. Externally the bank has supported clean technologies. The bank has expressed at some levels the intention of supporting investments that benefit the local community as opposed to stealing the local resources. Environmental sustainability refers to efforts to improve the environment for the long term on local and global levels. Therefore environmentally sustainable investments are beneficial holistically from the local level to the national level to the global level by definition.
Deutsche Bank has had some successes but the activities of the bank are not always green. The recognition the bank has received is noted below because both the financial and the environmental communities have recognized environmental friendly actions. In terms of investments, firstly the bank was involved in supporting a solar company. Since that time the solar company had developed impressive advanced solar technology. Secondly the bank has been promoting farmland investments in Africa although not everyone feels the rhetoric is
genuine. This essay argues that Deutsche Bank has made positive changes that are environmentally sustainable but has not integrated the concept 100 percent into its financial activities.
Carbon Neutrality
Both the financial sector and the environmental sector have recognized Deutsche Bank for its green activities. Each year Bloomberg News ranks the forty greenest global banking institutions; Deutsche Bank has been included on the list for two years. In April, 2013 DB was ranked as the seventh greenest bank in the world. Last year, it was ranked fifteenth. According to Bloomberg News Deutsche Bank is doing well when it comes to reaching eco-friendly goals. For example the bank reached carbon neutrality in 2012. The environmental sector’s index, the Carbon Disclosure Project’s Carbon Performance Leadership Index (CPLI) included Deutsche Bank on the index. Deutsche Bank is one of only thirty three other global companies featured on the index. Deutsche Bank has also been listed on the Dow Jones Sustainability World and Europe Indices (DSJSI) (DB Global 2013).
Clean Energy
Bloomberg News took into account not only carbon neutrality but also the Deutsche Bank’s financing of clean energy and infrastructure projects to award a higher ranking this year’s greenest global banking list. Deutsche Bank has noted that the bank invested in SunPower Corporation (SPWR) in California “despite challenging market conditions” (DB, 2013). Clean energy is still not a popular investment. Oil drilling (off and on-shore), fracking and tar sands are still profitable while clean alternative energies have not interested many investors. Meanwhile in April, 2012 SPWR introduced a new series of residential solar panels. The X-Series Solar Panels for homes offer 21.5 percent energy efficiency. If SPWR had not found investors these notably high efficiency solar panels would not have made to the marketplace. Deutsche Bank was asked also to be on the fairness committee when SunPower purchased Tenesol SA, a French solar product company. The bank judged the deal as fair from SPWR’s point of view. (Martin 2013) It is fortunate that SPWR and Tenesol SA are still open when solar energy products are needed more than ever. The Deutsche Bank chose to invest in clean energy when other investors would not. Although the investment has not paid off yet the solar energy business is developing new products. The investment should pay off in the long term.
Farmland
A Deutsche Bank researcher Schanaffit-Chatterjee has written a detailed research paper on the positives and negatives of investing in farmland around the world. Land is a high interest investment now due to “long-term trends such as growing consumption of food and biofuels in a context of limited availability of arable land, water and energy” (Schanaffit-Chatterjee, 2012: 1). Two-thirds of investors in are interested in African land. Interested investors include China, India Brazil and Malaysia. (Schanaffit-Chatterjee, 2012: 1) Although investing in farmland is risky there are positive strategies that can be used that will benefit the local community so the profit can be shared. Schanaffit-Chatterjee may be expecting to much from Deutsche Bank at this stage. On the one hand her report was not censored. Her analysis includes fair treatment and respect of local populations, preservation of the environment, enhancing environmental sustainability, and making sure land development is equitable. She also suggests that benefits should be gained not only by the investors but also by the local people. Her approach to agricultural land investment is very different from the colonial or neo-colonial view of natural resources. Schanaffit-Chatterjee (2012) that when small farmers and investors collaborate the results “can be mutually beneficial, boosting agricultural productivity (while at the same time) reducing poverty and hunger, without necessitating transfer of land” (1). Not many people are aware that there are employees of the Deutsche Bank that are taking this type of position. On the other hand the Institute for Agriculture and Trade Policy in Minnesota published an article by Steve Suppan who does not expect positive change in the German bank’s attitude to Africa. Suppan (2012) suggested that the bank is still pushing for loser regulations rather than tightening regulations. Therefore the fair treatment of local people may not be a priority when investing in African farmland.
Schanaffit-Chatterjee (2012) notes that European countries are targeting farmland investments in Russia, Madagascar, Ethiopia, Liberia, Ukraine, Brazil and in nine countries on the African continent. Raising beef is the type of agricultural production that leaves the largest water footprint, degradation of the largest areas of farmland, and needs the most energy. The production of milk creates the most air pollution, even more than raising Egg production and raising chickens, wheat and rice all need a lot of water. Schanaffit-Chatterjee (2012) explains that land degradation results in natural capital being lost so it is not a sensible activity. Types of natural capital are fertile soil, forests, water and the biodiversity in local and regional areas. Environmental sustainability is the goal of smart investors because instead of ruining the land (which can turn the land into an African desert) the land will be able to support agriculture and therefore feed people for centuries.
Social justice is important in making successful investments in agricultural land. Schanaffit-Chatterjee (2012) makes the point that “although large farms are usually regarded as more efficient, the importance of unlocking the potential of small holder farming in order to sustainably increase food production and reduce poverty is now widely recognized” (Schanaffit-Chatterjee, 2012:14). Her concluding discussion under the subheading” opportunities from investing in farmland” also demonstrate green activities to ensure (a) good returns to investors, (b) advantages and benefits for the local communities, (c) strengthening nation-level infrastructure and (c) strengthening world food security. In order for agricultural activities to be regarded as environmentally sustainable all four of the above-mentioned green activities must take place.
Conclusion
The facts presented in this case study have demonstrated some convincing evidence of Deutsche Bank accomplishing serious goals especially reaching carbon neutrality. There is some evidence of the serious intent of Deutsche Bank to be a leader in financing sustainable projects. The Deutsche Bank research on what to except from farmland investors included logical reasons why environmental sustainability and social justice should be integral parts of the financial process. Whether Deutsche Bank would hold investors to the high standards mentioned in the research by the bank employee remains to be seen. Deutsche Bank does not support stronger banking regulations so that does not demonstrate a high priority on following ethically motivated practices. The capability of carbon neutrality is a great achievement that required both structural and strategic changes and that effort needs to be recognized. Whether or not the Deutsche Bank will continue to follow an environmentally sustainable path particularly in the financial sector remains to be seen. Positive changes have made by Deutsch Bank so there is some hope that more will follow. The bank’s actions are more important then their rhetoric.
References
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DB (Deutsche Bank). 2013. Deutsche Bank on 7th position of the world’s “greenest” banks. Deutsche Bank Berlin [online] available from https://www.db.com/cr/en/concrete-7th-position-of-the-worlds-greenest-banks.htm [29 April 2012]
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Schanaffit-Chatterjee, C. 2012. Current Issues Natural Resources. Deutsche Bank DB Research, DB research paper.. [online] http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000296807/Foreign+investment+in+farmland%3A+No+low-hanging+fruit.PDF [28 April 2013]
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Suppan, Dr. Steve. 2013. Deutsche Bank and the Fine Art of Self-Exoneration. Institute for Agriculture and Trade Policy [online] http://www.iatp.org/blog/201301/deutsche-bank-and-the-fine-art-of-self-exoneration [9 May 2013]
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