FRANKFURT (Reuters) - Deutsche Bank (DE:DBKGn) on Monday said it planned to join a small number of financial institutions that link management pay to environmental, social and governance-related (ESG) criteria.
Germany's largest bank said that from 2021 management compensation would be tied to reaching targets on sustainable finance investments, on the sustainability ratings it receives from five leading ESG ratings agencies and on succeeding in reducing the bank's own energy consumption.
Banks such as HSBC, BNP Paribas (OTC:BNPQY) and UniCredit also have varying models in place that link pay to ESG, as more investors look to invest in companies that perform better on ESG metrics.
It also comes as policymakers globally increasingly look to banks to help to promote a transition to a low-carbon economy and meet the goals of the Paris climate agreement.
"It is our ambition to be a leader on sustainability in the financial sector, and contribute to an environmentally sound, socially inclusive and well-governed world", Deutsche Bank Chief Executive Christian Sewing said.
The bank did not disclose how much of management pay is related to ESG. Banks such as BNP Paribas have tied around 20% of variable pay to meeting ESG criteria.
Deutsche Bank has said that it plans investments in sustainable financing worth more than 200 billion euros ($242.66 billion) by 2025, with more than 20 billion euros this year, and to be carbon-neutral itself by 2025.
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