Deutsche Bank Now Only Works with Vendors having a High ESG Rating
Deutsche Bank is taking another step toward incorporating sustainability into its entire business. Beginning in July of this year, any new or extended contract worth more than 500,000 euros per year will be required to have an external vendor sustainability rating from EcoVadis or another approved rating agency. Among them are MSCI ESG, Sustainalytics, ISS ESG, S&P Global, and CDP.
Deutsche Bank spends more than 8 billion euros on third-party products and services each year, and it wants to use its purchasing power to improve ESG accountability and transparency throughout the supply chain, ensuring that all suppliers meet the highest environmental, social, and governance (ESG) standards.
Alf Noto, Chief Procurement Officer at Deutsche Bank, said:
"Sustainability is a collective responsibility. We want to collaborate with suppliers to help make a positive impact and extend the reach and impact of our ESG footprint.”
To undergo an ESG review, suppliers must first register with EcoVadis. The agency's comprehensive assessment is based on evidence and a confidential sustainability questionnaire. Companies receive a score of 100 as a result of the process. It will assist suppliers in identifying areas for development and enable them to share their ESG ratings with other customers.
It will no longer be sufficient for Deutsche Bank suppliers to have undertaken an ESG evaluation as of January 1, 2023. From now on, the bank will only grant new contracts worth more than 500,000 euros per year to vendors who have a sufficiently high sustainability rating—in the case of EcoVadis, this means earning at least 25 out of a possible 100 points.
The EcoVadis agreement comes on the heels of the bank's recently revised Supplier Code of Conduct, which outlines the bank's expectations for suppliers and incorporates ESG concepts. The bank said in May 2020 that it plans to enable more than 200 billion euros in sustainable finance and investments by the end of 2022, three years earlier than initially envisaged.
Jörg Eigendorf, Head of Sustainability at Deutsche Bank, said:
"Global Procurement is a great example of how we are moving from ambition to impact and partnering with our vendors to cover our whole value chain. This is a big step to gradually improving the sustainability of our value chain.”
The bank's work has lately been recognised by several ESG rating agencies. It was praised by EcoVadis for being proactive in sustainable procurement, and CDP improved the climate change score for the bank from C to B. S&P Global gave Deutsche Bank 60 points. Both Sustainalytics and the WWF have raised their ratings.
Source: Deutsche Bank