Dr. Benno Kammann
Head of ESG & Business Development
ContactHCOB 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.
HCOB’s detailed ESG-Embedded Lending Process
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.
The current Black List 1, which defines the areas in which HCOB will not become involved in any direct financing arrangements, consists of the following three levels:
Country level:
No business will be conducted in countries with
Industry level:
No business will be conducted in the following industries and economic activities negatively impacting sustainability aspects:
1. Energy production – Avoiding fossil fuels and nuclear energy connected to risks and negative impact on climate and environment
2. Mining – Avoiding controversial mining activities connected to significant negative environmental, social and health impact
3. Shipping – Avoiding controversial shipbreaking activities connected to significant negative environmental, social & health impact
4. Social – Avoiding activities with significant risks for human rights, health and social peace
5. Agribusiness – Avoiding activities with negative impact on climate, environment, biodiversity and animal welfare
Company level:
No business will be conducted with companies that violate human dignity, human rights or any other global norms in general.
1 As per 31. December 2022; 2 Corruption Perception Index <30, source: Transparency International; 3 Rating >2800, source: Global Peace Index, The Institute for Economics & Peace
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.
ESG-Scoring