#HIDDENCHAMPIONS INSUSTAINABILITY

LANDESBANK BADEN-WÜRTTEMBERG

Read about Germany's universal bank LBBW's commitment to #sustainability and what they are doing to achieve green financing.

Climate protection: fewer emissions, more investment.

From 2021, LBBW will be completely climate-neutral. The bank will achieve this goal by continuing to systematically reduce its CO2 emissions and offsetting all remaining unavoidable emissions. The bank’s strategy here is not to buy emissions certificates, but instead to invest in forestation itself.

Specifically, LBBW is investing USD 3.5 million in the global forestation fund Arbaro Fund. The fund’s resources are used for long-term forestation projects in Latin America and Africa. In addition to the positive effect on the climate, the investments help protect the environment and the social needs of populations near the projects. The UN’s Green Climate Fund (GCF), the central and biggest multilateral international tool for funding environmental protection, also invested in Arbaro Fund together with LBBW.

By going climate-neutral, LBBW has reached another milestone in its commitment to sustainability. Thanks to investing its own capital in a forestation fund as opposed to buying certificates, LBBW is going significantly further than its peers. This underpins LBBW´s aspiration of being one of the most sustainable universal banks in Europe.

The trees planted with the help of LBBW’s investment during the fund’s 15-year term will remove a total of around 350,000 tons of CO2 from the atmosphere. The project will also create 2,000 jobs with fair wages in western Africa alone. The Arbaro Fund project represents a great example of how the private sector can play a pivotal role in managing forests sustainably in developing countries. The project aims to reduce greenhouse gas emissions by decreasing pressures on natural ecosystems, while empowering local communities by providing employment opportunities.

LBBW active since 1992

Climate protection has a long history at LBBW. As early as 1992, it was one of the first banks to release an environmental report. In 2013, it adopted a climate strategy and in 2019 it was one of the first to sign the voluntary commitment to climate protection in the German financial sector. As part of its climate strategy, LBBW commits to limiting CO2 emissions when using resources in its operations as much as possible, for example by optimizing building technology and IT hardware and opting for regional products and suppliers. This has already reduced the bank’s carbon footprint by around a quarter in the last ten years. Since 2019, a specialist team of dedicated employees has been responsible for continuing to shrink this footprint. The bank also wants to use its services to promote low-carbon business practices, for example by funding renewable energies. Last year, almost 90% of project financing in the energy sector went towards renewables. With investment in international forestation projects, an additional element will be added from 2021.

Take advantage of the bank’s key role in the economic cycle

In addition to environmental protection, there are numerous other dimensions to LBBW’s commitment to sustainability. Sustainability has been one of the four central pillars of the business strategy since 2017. Since then, the bank has been systematically working on incorporating sustainability into all divisions and business areas. For example, it is steadily expanding its advisory services and product range for both sustainable investments and green financing.

It already manages customer funds of around EUR 23bn in line with sustainability criteria. Only recently, a consultancy team was launched that helps companies develop sustainable business models and use suitable financing tools.

LBBW is also increasingly gearing its issuing business towards sustainability and is one of Germany’s forerunners when it comes to green and social bonds, with an outstanding volume of over EUR 5bn. We understand the challenges faced by the industry and by society as a whole. This is why we want to take advantage of our key role in the economic cycle to gear cash flows towards a sustainable economy and promote this issue to our customers.

We believe that green, socially oriented financing will become the norm in the not too distant future, and our aim is to play a leading role in this process. This is why we have long supported companies with sustainability-linked loans, green Schuldscheins, and green bond issues.

In November 2020 LBBW acted as a joint lead manager for the EUR 8.5bn social bond issued by the European Union as part of the SURE program. As a longstanding partner of the EU and the first Landesbank, it thus supported such a strategically important bond as an issuing bank for the first time. LBBW’s appointment as an issuing bank for this transaction is a major sign of confidence from the EU and proof of our high expertise and strong national and international placement ability in the sustainable investment segment. At the same time, this is also the biggest bond transaction by volume that LBBW has supported as a lead manager to date.

Also our employees are a key element of our sustainability strategy. This includes encouraging talented employees. Our goal is to attract and retain the brightest minds for our Bank. The right combination of young talents and experienced professionals will allow us to remain a stable and dynamic partner for our customers in the long term. To help achieve this, we are creating the working conditions to allow our employees to work productively and consistently while ensuring an appropriate balance between their private life, health, and efficient work results.

Although the coronavirus pandemic has occupied us extensively and its consequences remain un-clear, it is important for companies to continue to pursue the transformation processes they have already initiated in many areas, as otherwise our society will not succeed in getting global warming under control. At LBBW, sustainability remains one of our key strategic objectives and we intend to systematically press ahead with the positive develop­ments we have made in recent years.

     

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