ESG on Portfolio Level

HCOB is fully aware of its impact and takes an active role by making key contributions to the management of sustainable development and the transition to a green economy through its lending and investment activities.

The goal is to structure the Bank’s portfolio and support clients on the basis of HCOB’s conviction to support the green energy transition. The Bank wants to be a guiding partner and active supporter in this process. HCOB not only wants to reduce its own carbon footprint, but also to support its customers in limiting their climate impact.

In its actions, HCOB is in the process of increasing alignment with the Paris Climate Agreement, the UN SDGs, the PRB and the recommendations of the TCFD, and for the second time complies with the disclosure regulation regarding the EU Taxonomy. The Bank intends to monitor and steer its business even more closely in terms of ESG conformity.

It is important for HCOB to support the sustainable transformation of the economy and society through its business. In doing so, the Bank not only pays attention to ecological aspects, but also consciously includes social and governance aspects.

To meet this requirement, HCOB has developed a comprehensive evaluation system based on three core elements – the Black List, the ESG decision matrix and ESG Scoring. With the help of these comprehensive and forward looking ESG risk management instruments, the Bank aims to contribute to the long-term sustainability and performance of its loan book, described below, and its investment portfolio.

The Sustainable & Transformational Finance Framework (STFF) of Hamburg Commercial Bank is a classification system designed to categorize the bank's financings as 'sustainable' or 'transformational'. The assessment process includes considerations such as the requirements of the EU Taxonomy, creating transparency through a comprehensive and consistent approach.

As a first step in HCOB’s decision process in loan origination, the Black List must be used as a basis for classifying new transactions. The Black List consists of the following three levels: country, industry and company. Based on this first step, HCOB ensures a thorough screening process for new business. The use of proceeds, the borrower or company, and the location of the project and sponsor are all taken into consideration, including basic ethical principles such as the respect for human rights. A more detailed overview of the Black List can be found here.

To be able to make decisions at company level in a systematic manner and to create a uniform and standardized basis for decision-making, HCOB has created an ESG decision matrix as a guide for lending. With this process, HCOB has created a basis for evaluating companies and respective financing purposes that are partly unsustainable. The Bank’s goal is not to exclude companies from financing, but to reward the impulse to improve and encourage the move towards a greener economy.

HCOB’s ESG Scoring approach is based on the EBA Action Plan for Sustainable Financing and the BaFin Guideline on Dealing with Sustainability Risks, published end of 2019. It encompasses a thorough analysis of climate, environmental, social and governance risk factors for every financing, and a solid minimum ESG grade of ’4’ is required for the credit decision.