Project Charta NET ZERO BANKING ALLIANCE GERMANY - June 2021
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NET ZERO BANKING ALLIANCE GERMANY Project Charta June 2021
Green and Sustainable Finance Cluster Germany e.V. Adickesallee 32- 34 60322 Frankfurt am Main Germany info@gsfc-germany.com www.gsfc-germany.com
Table of contents Introduction 1 1. Antitrust Guidelines 3 2. Scope of work 5 3. Goals 6 4. Fields of work 8 5. Governance 11
Introduction
We all need to move swiftly given the progressing climate crisis. In 2015, the global community com-
mitted to developing a sustainable future through the Paris Agreement and the United Nations Sustainable
Development Goals (SDGs).
These commitments create the framework for a fundamental transformation of existing economic struc-
tures. Policymakers and private actors have set specific sustainability goals. For example, the European
Union and China have committed to becoming carbon neutral by 2050 and 2060, respectively.
Against the backdrop of this policy shift, companies are also starting to set their own climate targets,
and financial institutions are becoming increasingly proactive in taking self-directed climate actions.
At international level, five banks signed the Katowice Commitment in 2018, driving the banking sector‘s
transformation toward climate neutrality. Additionally, by the end of 2020, banks from Spain, the Nether-
lands and Germany have made national commitments.
Climate action is increasingly recognized as a key development in the German banking sector. In 2020,
16 banks operating in Germany took action and signed the Climate Self-Commitment of the Financial
Sector. It sets the stage for the methodical operationalisation of climate ambitions by the German banking
sector until the end of 2022. The signatories aim to develop methodologies, targets and implementation
processes that enable the transformation of their portfolios in line with the goals of the Paris Agreement
and net zero emissions by 2050 at the latest.
The Net Zero-Banking Alliance Germany (NZBAG) supports the financial center pre-competitively in
the methodical implementation of the climate protection ambition and ensures a science-based ap-
proach. The NZBAG is coordinated by the Green and Sustainable Finance Cluster Germany e.V. (Cluster).
1 GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021Teilnehmende Institutionen Net Zero Banking Alliance
1 Antitrust Guidelines
The Green and Sustainable Finance Cluster Germany e.V. is a platform that brings together stakeholders
from the private and public finance sector, regulators, policy makers, NGOs and academia. The Cluster
supports the NZBAG with basic research and coordination to develop methods and processes to fulfil the
Climate Self-Commitment of the Financial Sector.
The following antitrust guidelines are to be followed in the Cluster‘s activities. The Cluster‘s guidelines
follow Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and Section 1 of the Act
against Restraints of Competition (GWB).
„The positioning of Frankfurt as a financial center focussed on climate-friendly and sustainable financial
investments“ as well as „the formation of a network [...] in which expertise regarding financial and risk
issues related to sustainable and climate-related financial products is bundled“ is the statutory purpose
of the Cluster. This purpose is fulfilled by the constitution and subsequent basic research of the NZBAG
on decarbonization at the interface of (real) economy and banks. The aim of the antitrust guidelines is to
prevent behaviour that could potentially lead to market distortion with respect to innovative technologies
and companies or to a reduction in pressure to innovate.
Within the scope of the NZBAG‘s activities, only activities that are precompetitive and comply with the
rules of the German Federal Ministry for Economic Affairs and Energy for the promotion of joint industrial
research are undertaken. In this context, the entire financial sector is expected to benefit from this.
All official meetings of NZBAG related activities shall be attended by an employee of the Cluster or, in
individual cases, a comparably trained substitute. The employees shall, together with all participating
companies and individuals, ensure compliance with antitrust rules.
3 GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021Discussions within the NZBAG shall only take place regarding the research project. There shall be no
exchange or coordination between the participating financial institutions about:
• A possible individual and concrete utilization of the results of the individual research projects, e.g.,
the transfer of findings and knowledge into products or processes relevant for competition.
• Confidential information on the activities of the participating companies; as opposed to information
that is generally known to the public.
• Costs of research projects if they were carried out by the companies themselves.
• Individual technical know-how of a company that is not generally known (secret) and essential, and
that is relevant for the further development or exploitation of the presented research results.
• Potential or planned own research and development of the respective companies, which builds on
the presented results, as well as own comparable research.
• A limitation of a company‘s own research and development in an area outside the specific research
project, as well as a limitation of a company‘s own research and development in the area of the
specific research project after its completion.
• Aspects that would provide competitive advantages to a single company or multiple companies.
• The adaptation and competitive implementation of the results in products, processes or services
takes place in the companies following the project.
• Disclosure of the results of the NZBAG‘s work, e.g. via publications and specialist conferences is
planned beyond the group of participants.
• Within the framework of the NZBAG, there must – of course – be no exchange or agreements on
topics that are illegal under antitrust law.
GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021 42 Scope of Work
The NZBAG will support the implementation of the Climate Self-Commitment of the Financial Sector and
the general climate ambitions in the German banking sector into practicable and methodologically sound
approaches and processes. All measures are based on the Paris Agreement. .
Prerequisites for successful cooperation
The success of the initiative depends on the extent and quality of the cooperation between the participating
financial institutions. The contribution of the individual institutions should be as balanced as possible
over the duration of the project.
• The NZBAG will receive as much institutional structure as necessary.
• The NZBAG does not intend to develop its own regulatory and policy activities.
• The NZBAG is intended to complement other activities and initiatives to achieve climate mitigation
goals.
• The challenges are urgent and thus require high attention by all participants in this initiative. The
results and findings of the NZBAG need to transition into broader processes.
• The NZBAG will complete its work by the end of 2022.
• Tasks can be shared and worked on in parallel. Redundancies should be avoided, and the contributions
of the participating institutes should be used purposefully.
• There is a free choice of methods in the collaboration. In this context, scientific findings provide
orientation for the minimum requirements in implementation and reporting.
5 GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 20213 Goals
Participating institutions will jointly develop the necessary methods for measuring the climate impact of
the credit and investment portfolios and managing them in line with national and international climate
targets. In this way, the NZBAG contributes to operationalizing climate mitigation ambitions in the
banking sector. The climate ambitions are defined along the lines of the Paris Agreement, i.e. global
heating shall be limited to well-below 2°C - if possible, to 1.5°C. The targets must be science-based and
transparent.
The NZBAG builds on the goals of the Climate Self-Commitment of the Financial Sector:
• Align credit and investment portfolios with the goals of the Paris Agreement [...] [i.e.] limit global
warming to well-below 2 degrees and aim for the 1.5 degree target.
• Basis: The climate targets of the Federal Republic and its international commitments under the Paris
Agreement, including the interim targets applicable in each case, and climate neutrality by 2050.
• Focus: Concentrate on areas and infrastructures where the signatories have or can achieve the
greatest impact.
• Jointly develop the necessary methodologies to measure the climate impact of the loan and
investment portfolios and manage them in line with [...] climate targets.
• Formulate sector-specific, scenario-based climate targets for portfolios no later than the end of 2022.
• Implement and report on initial actions within 12 months of signing.
The basis of the NZBAG‘s ambitions is the Climate Self-Commitment of the Financial Sector and aims to
„mutually support each other in building the necessary capabilities among each financial actor involved“.
The scope of the cooperation goes beyond fulfilling the voluntary commitment and is intended to streng-
then Germany as a financial centre.
GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021 6• The NZBAG aims to strengthen Germany and Europe as
Securing financial centers through private-sector action.
competitiveness • The members are to be supported in making their business
models more resilient.
Reducing • The methodological challenges are comparable across markets.
transaction costs • The participants bring along complementary competence profiles.
• The cooperation makes it possible to proactively meet the
Countering growing regulatory requirements.
supervision and
• Pre-competitive harmonization of methods facilitates dialog
regulation
beyond the technical design of regulations.
7 GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 20214 Fields of work
NZBAG focuses on four fields of work:
• Consistency with climate targets: total portfolio emissions
(absolute and relative), exclusion of harmful activities, temperature
KPIs on portfolio
scores.
level
• Positive impact: share of activities compliant with EU taxonomy,
promotion of existing activities.
• Climate scenario selection: selection of portfolios for decarboni-
zation pathways (IPCC SR1.5°C P1-P3, IEA SDS1.5-1.6, NGFS, etc.),
Target setting along determination of relevant variables (CDR, BECCS, AFOLU, etc.).
KPIs • Implementation at sub-portfolio level: relevance to products,
sectors, and asset classes if applicable.
• Parameters for implementation: frequency, coverage, suspension.
• Clients: questionnaire, checklists, risk matrix, mobilization asset
allocation.
Operational • Employees: education and training requirements, developing
implementation of speaking skills.
the goals • Governance: responsibilities, incentive systems (monetary and
non-monetary), MRV approaches.
• Data: link to FBDC / ESAP, data provider requirements.
• Minimum requirements: quantitative and qualitative data points.
• Anchoring: supplementing existing reporting, data collection
Reporting
on the website of the Climate Self-Commitment of the Financial
Sector, part of NFRD.
GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021 8The activities are linked to existing climate mitigation initiatives and focus on preparation for operational
implementation.
Operationalization takes place at the portfolio management level. This is to bring portfolios onto a Paris-
compatible path and to better understand the interaction of KPIs.
NZBAG builds on existing expertise, drives knowledge building, and aims to achieve the highest possible
level of market harmonization. To this end, dialog with relevant stakeholders and –where appropriate –
collaborations is to be sought.
One example is the cooperation with Pathways to Paris (P2P project), a project of the World Wide Fund for
Nature (WWF) Germany and PricewaterhouseCoopers Germany (PwC), which focuses on operationalizing
decarbonization in the (real) economy. The close cooperation with the NZBAG enables a direct link
between banks and companies.
The projects are designed to complement each other and build upon each other’s findings.
• The P2P project focuses on the development of sectoral transfor-
Pathways to Paris
mation pathways with participants from industry and the (real)
(P2P)
economy.
• NZBAG‘s focus is on implementing the Climate Self-Commitment
of the Financial Sector. The climate impact of credit and invest-
NZBAG
ment portfolios shall be measured to align them with the Paris
Agreement.
9 GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021• Synchronize scenarios as a basis: Market harmonization of
usage helps to integrate strategies, product developments,
sustainability departments and risk management (integration
of climate analyses to enable comparability, more precise
analyses, knowledge about and creation of improved access
Together:
Connection (Real) to data (at least the requirements).
economy / financial • Derivation of a structure and trajectory of transformation
economy pathways: sectoral indicators to progress check possible.
Market-facing departments use targeted KPIs in lending.
• From scenario framework, to KPI level, to dialog with customers:
consistent operationalization will be possible. Concrete recom-
mendations for action at the interface to customers.
The targeted cooperation between both projects creates synergies. Timelines are aligned, enabling
sector-specific work at the same time. The sectoral input of the P2P project is brought into the NZBAG
without overlap. Redundancies are avoided and a higher (sectoral) coverage is created. A closely
coordinated cooperation with regard to focal points, goals, contents, timing and resources will avoid
double work for participants.
GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021 105 Governance
The governance of the NZBAG follows the principle of imposing as few institutional structures as possible
while supporting the work of the participating financial institutions in terms of content.
The following structure has been devised.
Net Zero Banking Alliance Germany
Sounding Board
Participants: WG Leaders, Cluster Management
& Project Management, WWF and guests
Project management and secretariat NZBAG
up to 3 FTE of the Cluster, with direct participation in the WGs
WOR K I NG A R E A S
KPIs on portfolio level WG KPIs + Scenarios
Target setting along
WG Target Setting Protocol
KPIs
Sectoral KPIs „Sektorale Daten“ and „Pathways to Paris“
Operational implemen- WG Operational implementation
tation of the goals (approach, knowledge bases, governance, incentivization, data)
Reporting WG Reporting
11 GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021Sounding Board The Sounding Board discusses results and provides direction to the WGs. It fulfils cross-sectional tasks. It is composed of at least one representative of the participating financial institutions, the leads of the WGs, the Cluster’s management and the WWF. The personal combination of (co) leading a WG and representing one participating bank is particularly desirable. Guests may be invited, provided they contribute to the objectives. Decision-making is based on a simple majority approach. A need for decision may arise, e.g. if the NZBAG aims to launch publications. The Sounding Board may meet on an ad-hoc basis, usually every four to six weeks. Working Groups (WGs) The participating banks organize the WGs independently (content planning, organization and capacity / expertise). This is done through the contributed expertise and leadership of the participating financial institutions. The Cluster supports the WGs and their management in terms of content and organization with a maximum of three FTEs. In order to work on topics in a more focused manner, a working group can decide – if necessary – to split into different teams. Working results are approved by a simple majority. If an agreement is not possible, a discussion takes place within the sounding board. A distinction between mandatory („must“) and recommendations („should“) is sought. The NZBAG has started with the WGs „KPIs“ and „Operational Implementation“. Documentation All standards of the German banking industry will be followed for the documentation of the work. In addition, the requirements of the project sponsors Hessian Ministry of Economy, Energy, Transport and Housing and the European Climate Foundation will be met. The NZBAG secretariat prepares the appropriate templates for use. The NZBAG secretariat stores documents and working versions centrally. The WGs find independent agreements for the course of cooperation and the exchange of documents. Costs and efforts The participating institutes bear their own costs. Depending on funding, the Cluster provides up to three FTEs and bears the costs for potential publications. Admission of further banks The admission of further banks to the NZBAG is desired. Joining is equivalent to a clear commitment to the goals of the Paris Agreement. GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021 12
List of abbreviations
AFOLU Agriculture, Forestry and other Land Use
WG Working group
BECCS Bioenergy with Carbon Capture and Storage
CDR Carbon Direct Removal
Cluster Green and Sustainable Finance Cluster Germany e.V.
ESAP European Single Access Point
FBDC Financial Big Data Cluster
FTE Fulltime Employee
IEA International Energy Agency
IEA SDS IEA Sustainable Development Scenario
IPCC Intergovernmental Panel on Climate Change
IPCC SR1.5 IPCC Special Report on Global Warming of 1.5°C
KPI Key Performance Indicator
MRV Monitoring, Reporting and Verification
NGFS Network for Greening the Financial System
NZBAG Net Zero Banking Alliance Germany
P2P Pathways to Paris
PwC PricewaterhouseCoopers
WWF World Wildlife Fund
13 GSFC Germany e.V | Net Zero Banking Alliance | Projektcharta | June 2021Green and Sustainable Finance Cluster Germany e.V. Adickesallee 32-34 60322 Frankfurt am Main www.gsfc.germany.com The Cluster would like to thank the Hessian Ministry of Economy, Energy, Transport and Housing and the European Climate Foundation for the financial support of the project.
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