ESG at portfolio level
We are aware of the environmental impact of our business activities and are committed to contributing to a green economy through our lending and investing in sustainable development. In addition to reducing our own carbon footprint, we also want to help our customers minimising their climate impact.
In the context of climate change mitigation, we have set medium-term decarbonization targets for our relevant business areas for the first time in 2024. By signing the Principles of Responsible Banking (PRB) in 2020, HCOB has already committed to the goals of the Paris Climate Agreement. Accordingly, in addition to the subsequent targets for 2026, the Bank has a long-term net-zero emissions target for 2050 at portfolio and corporate level.
Our portfolio decarbonization targets
| Asset Class | Metric used | Current value as of 12/31/2024 | Decarbonization target 2026 |
| Real Estate | Physical carbon intensity measured as kilograms CO2 per square meter per year (kgCO2/m2/a) |
43.3kgCO2/m2/a | 40.7 kg CO2/m2/a |
| Shipping | Physical carbon intensity measured as grams CO2 per ton mile (gCO2/t*nm) | 8.2 gCO2/t*nm | 7.73 g CO2/t*nm |
| Energy | Physical carbon intensity measured as grams CO2 per kilowatt-hour (gCO2/kWh) | 2.7 gCO2/kWh | 180 gCO2/kWh (maximum value) |
Real Estate
The reduction of the CO2 intensity for the Commercial Real Estate portfolio by 9% to 40.7 kgCO2/m2/a in 2026 (on the basis of 30 June 2024) is considered feasible due to the increasing power supply of buildings through renewable energies, energy-efficient refurbishments and the increase in the proportion of new buildings.*
Shipping
Reducing the CO2 intensity of the shipping portfolio by 9.5% to 7.73 gCO2/t*nm in 2026 (on the basis of 30 June 2024) is a realistic target due to the expected decarbonization of the shipping industry through e.g. biofuels and the continuous renewal of the global fleet.*
Energy (Power)
The upper limit of CO2 intensity for the Energy portfolio of <180 gCO2/kWh in 2026 is higher than today’s very low CO2 intensity. This allows for potential, more CO2-intensive transactions to support the energy transition (e.g. flexible gas-fired power plants). This upper limit is still 30% below the IEA Net Zero pathway in 2026.*
* The decarbonization targets, published as part of the Pillar 3 disclosure, are based on the current portfolio composition and will be adapted in case of portfolio reallocations.“
As a bank, we are aware of our environmental impact and are committed to sustainable lending and investments. To this end, we follow the following approach in all lending processes in accordance with the Paris Climate Agreement, the Sustainable Development Goals (SDGs), the PRB, the EU Taxonomy and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations:
Blacklist
The first step in our credit decision process is to classify new transactions using the blacklist. The current blacklist defines areas in which we are excluded from direct financing and is divided into three levels: Country, Sector and Company.
In this way, we ensure a thorough examination of new business. We take various factors into account, such as the location of a project, the borrowers or companies and donors, as well as their fundamental ethical principles and respect for human rights.
The ESG Decision Matrix
In order to enable systematic and standardised decisions at company level, we have introduced an ESG decision matrix as a guideline for our lending. This enables the valuation of companies and financing purposes, even if they are not sustainable in some cases. Our aim is not to exclude companies from funding, but to encourage improvements and support the transition to a greener economy.
The ESG Scoring
Our ESG scoring includes a thorough analysis of the climate, environmental, social and governance risk factors for each financing. For credit decisions, there are ESG scoring grades from one to six, with one being very good and anything after four leading to regular exclusion from the commitment.
Sustainable & Transformational Finance Framework
STFF is a classification system for categorising our lending business as “sustainable” or “transformational”. The assessment is carried out against the background of the requirements of the EU taxonomy, among other things, and creates transparency with its comprehensive and consistent approach.
Decision of the Credit Committee
Every credit decision goes through the Credit Committee at the end of the decision-making process. Every new business is presented to the committee and then either approved or rejected. In principle, an ESG scoring of 5 or 6 leads to exclusion from lending, unless risk-minimising factors are presented and the transaction is expressly accepted by members of the Credit Committee with voting rights.
For detailed information on ESG in the credit process click here
ESG is an integral part of our business processes. The respective ESG potentials are continuously analysed for each of the market areas. Find best practices for our sustainability-promoting lending here.
The former Postbahnhof has been transformed into a modern business location.
Investment loan 19,196 sqmThe automated processing of a large number of individual contracts for mobile leasing goods (bikes & e-bikes) is at the heart of this customer relationship.
Financing E-bikes EUR 60 millionThe financial sector is crucial for the transition to combate climate change. HCOB committed to measuring and disclosing its greenhouse gas (GHG) emissions by signing a commitment letter to the industry-wide standards set by the Partnership for Carbon Accounting Financials (PCAF), so enhancing transparency about the Bank’s climate impact. Below is an overview of the Bank’s financed emissions as per 31.12.2023.
Financed Emissions , Sector View (31.12.2023)
| Business segment | Covered loan amount total € million | Financed emissions t CO2e Scope 1 & Scope 2 |
| Real Estate | 7,974 | 206,615 |
| Shipping | 2,432 | 2,179,084 |
| Project Finance | 3,300 | 103,164 |
| Corporates | 2,874 | 262,611 |
| Treasury | 11 | 214 |
| Total | 16,592 | 2,751,688 |