Core Business
- Project Finance
- WestLB Policy for Business Activities Related to Coal-Fired Power Generation
- Minimum Criteria for Bioenergy
- WestLB Policy for Business Activities Related to Nuclear Power
- Sustainability criteria for deep-sea oil exploration
- Sustainable Investment
- Extra Financial Research
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- Links
Project Finance
As Germany’s largest provider of project finance worldwide, we take very seriously our corporate responsibility in the funding of projects in fast-growing sectors such as commodity production, energy generation and infrastructure, as they frequently interfere with nature and habitats. If these projects are not managed responsibly, the investments may have considerable adverse effects on people and the environment. In our assessment, we take the criteria of both the Financial Institutions Initiative of the United Nations Environmental Programme (UNEP FI) and the United Nations’ Global Compact into account. Since 2003, we have only financed project sponsors who comply with the social and ecological minimum standards of the Equator Principles, which we developed and are continuously updating together with other commercial banks and in dialogue with the World Bank subsidiary IFC.. Where projects in the fast-growing biofuels market are concerned, we maintain a regular exchange with the international Roundtable on Sustainable Palm Oil (RSPO) and take suggestions by the World Wide Fund For Nature (WWF) into account. In the case of projects which are especially problematic from a sustainability point of view, we decide against them, if this should prove necessary, at an early stage.
WestLB Policy for Business Activities Related to Coal-Fired Power Generation
As a leading bank financing projects in the energy sector, WestLB feels especially committed to pushing ahead the change towards a sustainability-oriented energy supply. This change requires high investments in the energy infrastructure, which must be made within a short period of time and must be aimed at achieving a balance between energy and food security and climate protection. Against this background, WestLB, in 2009, was the first large international bank to develop a “Policy for Business Activities Related to Coal-Fired Power Generation” and to define a set of minimum standards. Several major banks followed this approach and defined similar minimum criteria. WestLB is currently in the process of revising its Policy. It is possible, for instance, that in countries where a project is to be financed, the per-capita greenhouse gas emissions are set in relation to the gross domestic product and the state of development. With a view to climate change and the state of development of a country, this would enable a more effective assessment as to which criteria should be applied in which countries and in what cases knock-out criteria should be applied.
Minimum Criteria for Bioenergy
In cooperation with other banks and with non-governmental organisations, WestLB has made important preparations for a Bioenergy Policy in 2010/2011. Besides a general Biofuels Policy, the aim is to define minimum criteria for specific commodities such as palm oil, soy, wood and sugar cane. In this context, the new sustainability standards imposed by the EU (7 “systems”) for bioenergy could be taken into account, e.g. with the bank’s clients applying the most widely accepted standards. Until the Policy is adopted, the Bank will scrutinise each individual case.
WestLB Policy for Business Activities Related to Nuclear Power
WestLB classed nuclear power as a high-risk technology even long before the nuclear accident in Fukushima/Japan. For many years, the Bank has declined to finance projects involving nuclear energy and its military use. Other forms of finance for the civil use of nuclear energy are possible only in those countries that have joined the International Atomic Energy Agency (IAEA) and signed the Treaty on the Non-Proliferation of Nuclear Weapons and only if the transaction does not entail material reputational risks for the Bank. The latter requirement is met only very rarely, as there is usually insufficient social acceptance. The Policy is up for review with a view to improving the lending criteria, e.g. for corporate bonds in the capital market business or for loans serving general corporate purposes. Besides the respective purpose for which the funds would be used, the relative share of revenues generated by a company in the nuclear energy sector could be taken into account as a possible criterion.
Sustainability criteria for deep-sea oil exploration
In 2010/2011, we developed minimum and knock-out criteria for the deep-sea oil exploration business, which is critical from a sustainability point of view. Apart from the already existing demands for the best available technology and proven maximum safety and environmental management standards, “no-go areas” could be defined in future. The Bank’s partners in this field include Greenpeace and the Federal Institute for Geosciences and Natural Resources.
Sustainable Investment
We are convinced that investments in sustainably operating companies pay off for investors. We therefore offer our private clients various capital market products and services allowing them to incorporate sustainability aspects into their investment decisions. Basket certificates such as “Open-End New Energy-Active”, “Solarthermie-Plus-Active” or “Klimawandel-Active”, for instance, give them the opportunity to invest in the renewable energy sector. Another example is the “Open-End ESG-Sustainability” certificate (ESG: Environmental, Social, Governance), which is based on high sustainability standards as defined in our Extra Financial Rating system and therefore covers only those companies that are the ESG leaders in their respective sectors. Corporate clients are supported by WestLB in analysing potential ESG investors and approaching them, e.g. in the context of ESG roadshows or conferences.
Extra Financial Research
WestLB offers research services that take a look at the long-term opportunities and risks of listed companies with regard to sustainability aspects. Our Extra Financial Research unit uses a proprietary rating process to identify and evaluate factors such as political, socio-economic and technological trends, environmental and social issues or corporate governance risks that may have an impact on the valuation and the share price of a company but are not yet explicitly addressed in traditional equities analysis. In addition, we publish our own studies which analyse in what way certain sectors and regions are challenged by sustainability issues. The WestLB Extra Financial Research got awarded by the Enhanced Analytics Initative.