The objective is clear: by 2050, the German economy should be climate-neutral. The Federal Government has committed itself to this. In this way, the Government wants to ensure that the objective defined in the Paris Agreement of limiting global warming to less than 2 degrees or, better yet, to a maximum of 1.5 degrees compared to the pre-industrial age is achieved.
Ambitious climate protection targets for 2030 have therefore been set for the building sector, which, depending on the respective calculation, accounts for between 30 and 40 per cent of CO2 emissions in Germany. By then, the sector should have reduced its emissions by two thirds compared to the base year 1990. The idea behind this is that here, in view of the longevity of real estate, the course must be set quickly in order to achieve a “virtually climate-neutral” building stock in Germany by 2050.
Berlin Hyp's Set of Measures Defines Ambitious Steps Up to 2025
“Basically, every company can deduce for itself what contributions need to be made to achieve this objective”, says Matthias Arnheiter, head of the Corporate Strategy department at Berlin Hyp. “In the challenges associated with achieving these climate targets, we see a completely new dimension of evaluation criteria and standards facing us and our customers. That is why we have not only set ourselves a new sustainability target, but also a far-reaching sustainability agenda. In view of the increasing statutory pressure, we will not make “green” selections, but will make our contribution as a financier of transformation and thus continue to be a strong partner for our customers in the future."
Far-reaching sustainability agenda
We are committed to the Paris Agreement and the Climate Paths of the Federal Republic of Germany.
Our big objective: continuous CO2 reduction until climate neutrality in 2050.
To achieve that...
“With our commitment to the Paris Agreement and the Climate Paths of the Federal Republic of Germany, the Bank has therefore defined a whole set of measures in 2020 to support the path to a successful transformation of the building sector”, explains Sascha Klaus, Chair of the Board of Management of Berlin Hyp.
The key elements are: by 2025, Berlin Hyp aims to achieve a green-building share of one third for its entire loans portfolio. “To achieve this objective, about half of our new lending must meet green criteria in the future”, explains Oliver Hecht, head of Portfolio Management, pointing out the scale of the task.
Also by 2025, the Bank wants to have full transparency on the climate performance and climate risks of its loans portfolio. It will successively use this transparency to support its customers in their transformation efforts. In line with this, the Bank is developing a loan product to finance energy-related refurbishments – the “Transformationskredit” (transformation loan).
Further Progress Built on Transparency
“For us as a financier, transparency, in particular, is the most material basis to position ourselves in a climate-friendly manner”, says Arnheiter. “It is only on the basis of reliable data that CO2 reduction targets, for example, can be defined in concrete terms and their achievement monitored”.
In addition, physical risks resulting from climate change, such as damage caused by extreme weather, should be taken into account in risk management, as should transitory risks. The latter result, for example, from stricter regulation or higher prices for CO2 emissions. This also includes the risk that a property may lose value because it no longer meets the sustainability standards of its users and can therefore no longer be let or can only be let at discounted rates.
Furthermore, the contribution of its own activities for protecting the climate is also to be reflected in Berlin Hyp’s reporting in future. “We want to make it as specific and measurable as possible”, says Arnheiter. There are still some tasks to be performed before the time comes. Thus, the answer to the question of how the climate performance of a portfolio – whose composition changes continuously due to additions and disposals – can be tracked over a longer period of time is yet to be found.
A New Chapter
With its climate targets for 2025, Berlin Hyp is beginning a new chapter in its green transformation. The topic areas of “green building” and “green finance” have played a prominent role in the Bank’s development for many years. On the one hand, the Bank reached its target of 20% green lending by the end of 2020 one year earlier than planned. On the liabilities side on the other hand, it has a leading role when it comes to green Pfandbriefe and other covered bonds. The green Pfandbrief launched in June 2020 was the Bank’s ninth issue of this type. This means that Berlin Hyp remains the most active issuer of Green Bonds among European commercial banks.
At the end of June, Berlin Hyp issued its fifth green Pfandbrief and thus the ninth green bond in total.
The Bank thereby increased the volume of its green bonds (Pfandbriefe and covered bonds) to a total of € 4.5 billion. At the same time, the eight-year issue rated Aaa by Moody’s was the first green Pfandbrief to be issued on the German market in 2020. Demand among investors was high: after a good two hours, orders from more than 50 investors accounted for a total volume of € 1.2 billion – almost two and a half times the issue volume. Gero Bergmann, member of the Board of Management of Berlin Hyp responsible for markets, commented on the issue: “This shows the high regard in which Berlin Hyp is held, even in uncertain times, and that climate protection is now firmly anchored as a superordinate topic in the financial markets”. Berlin Hyp remains the most active issuer of green bonds in the European commercial bank segment.