Dive Brief:
- Deutsche Bank raised 500 million euros ($594.1 million) for its first European green bond, issued under the European Union’s updated standards for such bonds, according to a Tuesday press release.
- The bond will be used to refinance assets in the bank’s green buildings portfolio. The bond will mature in four years and is callable after three years, with a 2.875% annual interest rate, according to the release.
- The issuance comes shortly after Deutsche Bank updated its framework for sustainable financing instruments last month. The bank also has a goal to invest over $1 billion in sustainable and transition financing and ESG investments between 2020 and 2030, according to its sustainability strategy.
Dive Insight:
Deutsche Bank’s sustainability strategy also includes a goal to reach net-zero emissions by 2050, with interim 2030 targets and additional 2050 targets to reach net-zero across the eight sectors in its corporate loan portfolio that are most carbon-intensive. After releasing an initial transition plan in 2023, the Frankfurt, Germany-headquartered bank released an updated plan in November to achieve its net-zero targets.
Deutsche Bank’s green building portfolio, as defined in its updated sustainable instruments framework, consists of residential real estate loans and financing “related to the construction, acquisition, operation, and renovation of new and existing buildings.” The category also includes financing for individual building energy efficiency projects, according to the framework.
Deutsche Bank Group Treasurer Richard Stewart called the issuance “a clear demonstration of [the bank’s] commitment to the highest standards of sustainable finance.”
“By aligning with the European Green Bond Standard, we are providing investors with a transparent, high-quality investment opportunity that directly supports the green transition in the real estate sector and underscores our role in financing the transition to a net-zero economy,” Stewart said in the release.
The EU’s Green Bond standard was updated in 2023, and over $26.1 billion in bonds were issued under the standards in the first year of implementation, according to a Tuesday briefing note from the Institute for Energy Economics and Financial Analysis.
Sovereigns, financial institutions and corporations have been among “a broad diversity of issuers” to date, but so far, energy and utility companies have been “prominent early adopters,” according to the note by Kevin Leung, a IEEFA sustainable finance analyst for European debt markets. Energy and utility companies made up over half of the documented green bonds issued under the new standard and “a large majority of corporate issuances,” according to the note.
