“ESG criteria are increasingly important for investors”
Environmental, social and corporate governance aspects – as a major financial institution Commerzbank is required by law to report once a year on its sustainability performance. It regularly scores above average in the associated ratings.
Those who make decisions need one thing above all else: information. That also applies to investors and other groups in society such as consumers. Should I invest in this company? Can I be responsible for buying this product? The environmental and social aspects of a company’s activities are highly relevant in such decisions.
Disclose facts – for greater transparency
In Germany, the CSR Directive Implementation Act therefore obliges large, capital-market-oriented companies such as Commerzbank to issue a non-financial report. CSR stands for corporate social responsibility, i.e. the social responsibility of companies in terms of doing business sustainably. Investors tie this primarily to ESG criteria. E stands for environment, S for social and G for governance.
“In discussions with investors and rating agencies, we regularly hear that ESG criteria are playing an increasingly important role,” says Dirk Bartsch, Head of Strategic Investor Relations. “In this respect, the non-financial report is also a kind of business card for us.” In view of climate change and its consequences, the environmental aspect in particular has been a focal point for many investors for some time, he continues. The report highlights not only the initiatives to which the Bank has subscribed but also the measures that have been taken as a result. That applies, for example, to the management of the loan portfolio: “As a concrete first step, we have identified the CO2-intensive industries in our overall portfolio and are gradually determining the level of CO2 pollution associated with these sub-portfolios.” “Sentences like this naturally make investors sit up and take notice,” explains Mr Bartsch. “After all, they want to know where we’re headed, and outlooks make them curious about the Bank’s new sustainability strategy.
Many investors are increasingly looking at issues such as diversity.Dirk Bartsch, Head of Strategic Investor Relations
ESG is about more than climate and environmental protection
However, it is not only the environment topic that attracts investors’ interest. “Corporate governance is a key issue. This includes, for example, the independence of the Supervisory Board,” says Dirk Bartsch. “Governance is homework that needs to be done carefully.” According to him, the “social” aspect is currently gaining momentum. “Many investors are increasingly looking at issues such as diversity, the proportion of women in leadership positions and the Bank’s actions for customers and employees in connection with the coronavirus pandemic. This, too, requires commitment and transparency.”
Also included in the non-financial report are awards and ratings, as these are important indicators for investors as well. Major sustainability rating agencies such as ISS ESG, MSCI, CDP and Sustainalytics regularly rate Commerzbank above the industry average. And rankings such as the Corporate Knights “Global 100” sustainability index, in which only seven German companies are represented – including Commerzbank – also help to make a good impression. Just a few days ago, Commerzbank’s 2019 non-financial report even made a top-flight ranking: In an analysis of the reports from 119 German banks conducted by Zielke Research Consult in collaboration with the consulting firm ZEB, Commerzbank came out sixth.
The non-financial report is produced at the end of each financial year by a number of Group units working together. A project team consisting of Group Sustainability Management, Investor Relations and the Supervisory Board is in charge of this. The report is audited by a certified public accountant and appears in the Annual Report.
Head of Strategic Investor Relations & Rating Agency Relations / ESG
A graduate in business administration, he joined cominvest, the asset management company of Commerzbank AG, in 2005 as a financial analyst and co-fund manager. In 2008 he moved to the head office and built up the Strategic IR division from scratch, which he has headed ever since. One highlight was the successful issue of Commerzbank’s first very own green bond. As a result, interest among ESG investors increased significantly.
The CSR Directive Implementation Act transposed the European directive into German law in 2017. In particular, large listed companies with more than 500 employees are obliged to produce an annual non-financial report. The following five aspects have to be covered: environmental protection, respect for human rights, treatment of employees, social responsibility and anti-corruption. Commerzbank also reports on a sixth aspect – treatment of customers – because customer orientation is a decisive non-financial factor in the Group’s success.