Landesbank Baden-Württemberg

RATING

SECTOR

Financial Services 

WEBSITE

CONTACT

Am Hauptbahnhof 2
Stuttgart 70173
Germany

Tel: +49 711 127-0
Fax: +49 711 127-43544
Email: kontakt@lbbw.de

STOCK EXCHANGE

N/A

LISTING

  • #489 Fortune Global 500
  • ISS ESG gave LBBW an overall grade of C+ on a scale of A+ to D-. LBBW placed third out of 277 banks analyzed internationally in the »Financials/Public & Regional Bank« sector. It ranks number two in Germany (as at November 2020)
  • LBBW was awarded 82 out of 100 points in Sustainalytics‘s 2020 sustainability rating update, putting it 19th out of 362 rated at international level in the banks sector. LBBW is ranked first among its peer group (as of July 2020).
  • In the imug rating, LBBW is rated as “positive” (BB) overall and thus ranks no. 1 of 10 banks rated within the state and savings bank sector. LBBW comes in second place within the European state bank sector. In addition, LBBW was assessed very positively as an issuer of public-sector bonds (A) and positively for mortgage-backed covered bonds (BBB) (as of March 2020).
  • LBBW was rated AA (on a scale from AAA- AAA) in the MSCI ESG’s 2020 rating update (as of August 2020).

EMPLOYEES

11,117

CHIEF SUSTAINABILITY OFFICER

Frank Damerow

AWARDS

  • On 28 November 2019, the rating agency Scope Analysis GmbH presented LBBW with the “Special Award” for the issue of the first stepped coupon sustainability bond. This award recognizes accomplishments on behalf of the certificate market, especially the setting of new standards for transparency, quality, or service, as well as sustainability-relevant innovations for the market.

CONTENT SOURCE

FURTHER READING

Report created by Youmna Abdallah

Landesbank Baden-Württemberg

SECTIONS :  Sustainability Targets   Evaluation  •  Key Points  •  Overview

Company Activity

Landesbank Baden-Württemberg (LBBW) is a universal bank and the Landesbank for some Federal States of Germany (Baden-Württemberg, Rheinland-Pfalz, Sachsen). As of 2018, it is Germany’s biggest state-backed landesbank lender.

LBBW is a full-service and commercial bank and central bank for savings banks in Baden-Württemberg, Rhineland-Palatinate and Saxony. The company focuses on industrial technologies, information technology, software, telecommunication, innovative services and life science

It prefers to invest in Southern Germany, but also considers investments in other regions of Germany, Austria and Switzerland.

Company Sustainability Activity

LBBW understands that doing business goes beyond just the financial aspects to include responsibility for all of their actions: that is how they define sustainability. They are firmly convinced that sustainable development is the only way to create a secure future for coming generations.

The economy, the environment and the lives of each of us individuals are inseparably entwined – in their immediate surroundings, across borders, and around the world. Progress and economic success can be achieved for individuals and society as a whole far into the future only by creating stable and sustainable societal and ecological conditions

This applies equally to LBBW: They view sustainability as synonymous with the ability to cope with future challenges.

Highlights

  • LBBW actively supports the substitution of low-emission business practices for practices that generate large quantities of greenhouse gases – not just in other companies but in their own business operations, too. They had reached their CO2 goal for 2020 by the end of 2017 – a 25% reduction in absolute carbon dioxide emissions versus 2009 levels. They are constantly making technical and organizational improvements to reduce CO2 emissions even more.
  • As a member of the international community, LBBW is committed to the United Nations’ Universal Declaration of Human Rights. LBBW is also committed to the UN Guiding Principles on Business and Human Rights. They endeavor not to work with any company or institution known to disregard basic human rights. This applies to all types of business, transactions, projects, products, operating decisions, strategies, and plans of the LBBW Group.
  • The “LBBW Global Warming” thematic fund primarily invests in companies offering products and services that counteract or mitigate the consequences of global warming. The fund follows a low-carbon risk strategy and is also subject to exclusion criteria based on sustainability. The individual securities are put through a “climate change filter” that eliminates investments in companies with weak ratings in terms of climate-relevant issues. This analysis is based on the “Carbon Risk Rating”, which evaluates the climate performance of companies based on 100 mainly industry-specific indicators as well as sector-specific climate risks. The fund meets the minimum exclusion criteria of the UN Global Compact. It has been awarded the FNG transparency logo with two stars and the European transparency logo for sustainable mutual funds.
  • In the financial institution market segment, LBBW is the second-largest issuer of ESG bonds (“sustainability bonds”) outside China (as of 2019). The outstanding transaction volume of LBBW’s green and social bond programs is EUR 3.7 billion (as of 31 December 2019). They aim to continuously expand the financing capacity for the UN Sustainable Development Goals (SDGs) and to support climate policy objectives.
  • Retail customers of LBBW can help finance community and environmental projects with the BW Zukunft Sparbrief savings bond. Each euro invested promotes lending to sustainable projects and innovations that contribute greatly to ensuring a bright future and good quality of life in the Stuttgart region and throughout Baden-Württemberg. These include investments in energy-efficient construction and renovation, renewable energies, environmental technologies, organic food, green IT, green mobility, forest management, and natural cosmetics as well as projects by non-profit organizations. The selection criteria for awarding assistance to projects were developed along with prominent environmental, community, and scientific organizations in the public sector. The BW Zukunft Sparbrief gives customers a secure annual return over a term of three and three-quarter years.
  • In 2019, their customers invested new funds totaling EUR 0.3 million in the BW ZukunftsSparbrief, meaning that the total volume was EUR 23.5 million as of 31 December 2019. The funds were primarily used to grant loans for energy-efficient construction and renovation.
  • Since October 2019, the “LBBW Stufenzins-Anleihe Nachhaltigkeit” stepped coupon sustainability bond has given investors access to “green” forms of investment starting from an investment amount of EUR 1,000. It is the first structured bond on the German market to make the sustainable use of funds available for smaller private investment volumes. The proceeds are invested in sustainable projects such as energy-efficient buildings and renewable energies in accordance with LBBW’s green bond framework. This provides customers with regular interest income that increases over time while allowing them to support environmental goals
  • LBBW is the first German public-sector bank (“Landesbank”) to offer savings banks and BW-Bank customers a broad range of sustainability research as an aid for making investment decisions in cooperation with the rating agency ISS ESG (formerly ISS oekom). Some 350 issuers of equities and bonds are evaluated not only on the basis of criteria including returns, risk, and liquidity, but also in terms of their social, ecological, and ethical performance.

Targets

  • Implement sustainability as an integral component of its business policy, striving for an active focus on projects, products, and services with a positive impact on sustainability.
  • Offer sustainable investment products to all customer groups and in all asset classes to the greatest extent possible.
  • Increase the share of sustainable investments in all business areas – including in its investment portfolio. The bank considers sustainability risks and earnings potential for customers and the Bank into account in its lending advice and lending decisions. Landesbank treats customers fairly, collaboratively, and respectfully, ensures data protection and transparency, and provides high-quality advice.
  • Promote the health and performance of its employees with specific measures for this purpose. At LBBW, we ensure a good work-life balance and promote diversity and equal opportunity.
  • Maintain and further raise the high education and training level in the Bank.
  • Optimize the use of resources within our organization.
  • Create efforts to reduce the CO2 emissions generated by its business focus on energy usage and business-related travel and apply sustainability criteria in the selection of products and service providers when procuring materials and awarding contracts.
  • In addition to providing banking services, Landesbank wants to actively contribute to adding value to society. LBBW is therefore active as a donor and sponsor. In the regions in which we do business, we support education initiatives and various other social projects.

Progress

Social & Green bonds

  • The following green bonds were issued in 2020:
    • GBP 500 million of green senior non-preferred (term of five years).
    • GBP 250 million of green senior non-preferred (term of five years).
  • LBBW issued a EUR 500 million social bond with a term of eight years for the first time in September 2019.
  • In 2018, LBBW became the first European commercial bank to obtain certification from the Climate Bonds Initiative (CBI) for a green bond transaction for the development of a method of recording and qualifying commercial properties in Germany. This certification enjoys special recognition among sustainably oriented investors. Among other things, it signifies that a green bond conforms to the goals of the Paris Agreement. Future issues will also comply with this standard, as certification signifies the conformity of an investment with the goals of the Paris Agreement.

Renewable energy

  • LBBW issued its first unsecured green bond with a volume of EUR 750 million in December 2017, thus expanding its investor base to include leading international ESG investors. This was the largest green bond issue to date by a European commercial bank. The proceeds were initially used to finance energy-efficient commercial properties. It was followed by further issues. Green bonds were also issued in Pfandbrief format and in US dollars.
  • As of 31 December 2019, they further increased the issue base of this program from EUR 5.9 billion to EUR 6.4 billion. Renewable energies have been included in the green bond portfolio since 2018. The share attributable to renewable energies increased by EUR 700 million to EUR 2 billion in 2019. The utilization rate of the program is 49.7% with EUR 3.2 billion in outstanding green bonds.

Sustainable Investing

  • There is growing demand for sustainable options in the area of asset investments. In 2019, for example, a fund serving foundation purposes with an environmentally certified property was successfully concluded with invested equity amounting to EUR 30 million.

Society & Employees

  • At the end of 2019, 304 young people were being trained in the LBBW Group (previous year: 278). Each year, LBBW provides at least 110 training positions and 38 places for students in the bank management and business information sys-tems programs at Baden-Württemberg Cooperative State University (“Duale Hochschule”). The apprentice hiring ratio in 2019 was 100%.
  • In 2018, LBBW signed up to the “Chefsache” initiative, a network aimed at achieving gender balance in management positions. LBBW (Bank) has also been a member of the “Diversity Charter” initiative since 2008. This involves a commitment to ensure a workplace free of prejudice for all employees.
  • At the end of 2019, women accounted for 52% of the total staff at the LBBW Group (LBBW (Bank): 52%). The proportion of women in the top four management levels of LBBW (Bank) came to 19.3% (previous year: 18.7%). They are aiming for a proportion of women in management positions of at least 25%. According to a study by the German Institute for Economic Research (DIW), women accounted for around 9% of managing board members at the 100 largest German banks and 60 largest insurance companies (in terms of total assets or premium income) at the end of 2017. At least one woman serves on the managing board at 32 of the 100 banking institutions analyzed. 
  • As of 31 December 2019, LBBW (Bank) had 419 employees with severe disabilities or who held the equivalent status. This corresponds to 5.1% of the workforce (previous year: 5.0%).
  • In 2019, the LBBW Group assisted 360 charitable institutions with total donations of around EUR 919,000. As in the previous year, it supported the groundbreaking Streetwork project in the Europaviertel district of Stuttgart, where librarians from the city library and the “Mobile Jugendhilfe Stuttgartyouth organization work together to engage young people in a dialog and facilitate attractive leisure activities. As it has become traditional, LBBW helped people in need via the relief campaigns organized by Stuttgart’s two daily newspapers and the “Weihnachtsmann & Co.” corporate Christmas charity.

Certificates

UN Sustainable Development Goals

UN SDGs Compliance

SDG 1: No Poverty

  • Donations are an important part of LBBW’s commitment to society. Donations are primarily focused on social, cultural, and scientific projects. In keeping with their strong regional roots, grants are typically extended to recipients in their regional core markets. As a rule, LBBW does not make any contributions to political parties, politicians, or governments.
  • In 2019, the LBBW Group assisted 360 charitable institutions with total donations of around EUR 919,000. As in the previous year, it supported the groundbreaking Streetwork project in the Europaviertel district of Stuttgart, where librarians from the city library and the “Mobile Jugendhilfe Stuttgartyouth organization work together to engage young people in a dialog and facilitate attractive leisure activities. 

SDG 4: Quality Education 

  • Training the younger generation is an important success factor for LBBW’s future. For this reason, they offer first-rate graduate trainee programs to optimally foster talented young people and develop their professional and personal skills. The number of graduate trainees at the LBBW Group at the end of 2019 was 83.

SDG 5: Gender Equality

  • In 2018, LBBW signed up to the “Chefsache” initiative, a network aimed at achieving gender balance in management positions. LBBW (Bank) has also been a member of the “Diversity Charter” initiative since 2008. This involves a commitment to ensure a workplace free of prejudice for all employees.

SDG 7: Affordable and Clean Energy 

  • LBBW’s business practices are aligned with the prevailing political view on the use of nuclear power as a bridging technology. In Germany, the decision to end the use of nuclear power precludes the construction of new nuclear power plants. There is therefore no need for rules regarding this scenario. LBBW does not support projects that are identifiably related to the construction of new nuclear power plants or expansion of existing nuclear capacity in other countries

SDG 8: Decent Work and Economic Growth 

  • As a major corporation, LBBW maintains business relationships with more than 1,600 suppliers and service providers with long-term contracts. The products externally sourced by “Group Purchasing” in 2019, such as hardware and software, advisory, marketing and other services, office supplies, fleet vehicles and other means of transportation, travel, logistics, and buildings/technology, had a total volume of around EUR 627.2 million (previous year: around EUR 618 million).

SDG 10: Reduced Inequalities 

SDG 13: Climate Action 

  • LBBW’s climate strategy forms part of their “Principles and Guidelines for Implementing LBBW’s Sustainability Policy and Goals”. They aim to reduce the CO2 emissions of their business operations and to support low-emission business activity through their banking services. In this way, they are contributing to UN SDG 13 on combating climate change and its impacts. They currently expect to achieve their CO2 target for 2020 (minus 25% in terms of absolute CO2 emissions compared with 2009) and are continuously working to further reduce CO2 emissions through technical and organizational optimization.

SDG 14, 15: Life below Water and Life on Land 

  • LBBW does not support projects that clearly lead to large-scale destruction of biodiversity without adding ecological value. This is particularly true of projects in areas with international protected status (e.g. High Conservation Value Areas (HCVA), IUCN protected areas, UNESCO World Heritage Sites, wetlands according to the Ramsar Convention) and endangered species (e.g. the Washington Convention (CITES)). 
  • With regard to wildlife and species protection, they expect their customers and their suppliers to avoid negative impacts on populations or numbers of plant and animal species included on the IUCN Red List of endangered species. LBBW also considers trading in the endangered plant and animal species included on the CITES lists to be critical. 
  • Living genetically modified organisms should only be produced or traded with the approval of the importing country and subject to all of the requirements of the Cartagena Protocol being fulfilled. LBBW also places emphasis on ensuring that activities in the area of genetic material and genetic engineering only take place in accordance with the approval and processing requirements set out in the United Nations Convention on Biological Diversity and the associated Bonn Guidelines and Nagoya Protocol.

SDG 16: Peace, Justice, and Strong Institutions 

  • LBBW is aware of the need to protect indigenous population groups and their connection to the land of their ancestors. In their project finance, they therefore take particular care to protect indigenous peoples and their cultural heritage. Where business has an impact on indigenous peoples, LBBW takes into account factors such as compliance with human rights, the ecological consequences for the affected region, and land rights.
  • If resettlement is unavoidable, they expect their corporate customers to act in accordance with national laws and regulations and – where applicable – with International Finance Corporation (IFC) Performance Standard PS 5 (“Land Acquisition and Involuntary Resettlement”). Where they identify potential impacts on indigenous peoples in project finance, they expect their corporate customers to act in accordance with the goals and requirements of IFC Performance Standard PS 7 (“Indigenous Peoples”). They expect them to obtain free, prior, and informed consent (FPIC) from the affected groups and to actively involve the groups in their decision-making and implementation processes. 

Secondary SDGs: 2, 3, 6, 9, 11, 12, 17

Evaluation

LBBW is evidently working towards numerous sustainable development strategies in most areas it operates, and publishes a comprehensive report on their achievements and progress.

As the second-largest issuer of ESG bonds outside China (as of 2019), and as the first European commercial bank to obtain certification from the Climate Bonds Initiative (CBI), LBBW is paving the way to sustainable financing.

The various global initiatives they commit to, such as the Green Bond Principles, the Clean Air Alliance and the United Nation’s PRI (Principles for Responsible Investment), as well as their numerous sustainability certificates are noteworthy.  

Lastly, LBBW complies with numerous UN Sustainable Development Goals.

LBBW has been rated a B. 

Analyst Outlook: Neutral

Whilst LBBW’s achievements in their sustainable development strategy are noteworthy, the bank could benefit from indicating clear targets and goals as part of their sustainability report, in order to better evaluate their progress. 

Key Points

  • LBBW issued its first unsecured green bond with a volume of EUR 750 million in December 2017, thus expanding its investor base to include leading international ESG investors. This was the largest green bond issue to date by a European commercial bank.
  • There is growing demand for sustainable options in the area of asset investments. In 2019, for example, a fund serving foundation purposes with an environmentally certified property was successfully concluded with invested equity amounting to EUR 30 million.
  • At the end of 2019, women accounted for 52% of the total staff at the LBBW Group. The proportion of women in the top four management levels of LBBW (Bank) came to 19.3% (previous year: 18.7%).
 
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