Positions and Policies Positions and Policies

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As a leading commercial bank in Germany, Commerzbank has an obligation to act responsibly, in both economic and socio-political terms, in the areas where it has an influence. It respects the rights and expectations of its various stakeholders and of society at large and ensures they are factored into company decisions.

In the light of this responsibility, the Bank is committed to the UN Global Compact and has adopted positions and policies concerning environmental and social issues. You can also find all positions in the Commerzbank policy framework for handling environmental and social risks in its core business.

The positions can be divided into three categories:

  1. General exclusionary criteria

  2. Cross-sectoral requirements

  3. Sector-specific requirements

1. General exclusionary criteria

The following exclusionary criteria apply to all products, transactions or business relationships of Commerzbank:

General exclusionary criteria

MiningNo project financing for coal mining by means of mountain top removal mining (MTR); no business relationships with companies engaging in MTR

No financing of new coal mines

No financing of uranium mines
EnergyNo financing of new coal-fired power plants

No new business relationships with companies in the energy supply sector for which the share of electricity generated from coal (based on their production performance) is higher than 30% (clients based in Germany) or higher than 50% (clients based outside Germany)

No financing of nuclear power stations
Food staplesNo new issues of exchange-traded investment products based on food staples (especially corn, soy, wheat, rice, potatoes and palm oil)
Oil and gasNo financing of projects related to tar sands exploitation or similar controversial processes for extracting oil and gas

No financing of projects related to Arctic drilling

No financing of projects related to fracking
Palm oilNo transactions or business relationships with companies with dealings in palm oil that are not members of the Roundtable on Sustainable Palm Oil (RSPO)
ArmamentsNo financing of the supply of weapons or armaments intended for conflict zones or areas of tension

No financing of controversial weapons

No financing of the supply of weapons to non-governmental end recipients such as arms dealers

No financing of the supply of weapons unless all applicable laws, embargoes and regulations are complied with
Ship breakingNo involvement in transactions with shipyards not able to furnish proof of certification under EU standards or internationally recognised environmental and social standards (ISO 14001, ISO 30000, OHSAS 18001 or the Hong Kong Convention)

2. Cross-sectoral requirements

As a rule, Commerzbank assesses products, transactions and business relationships in terms of possible violations of human rights or the concerns of indigenous peoples.

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Human Rights

1 Definition of Human Rights

States have the primary responsibility for the protection and enforcement of human rights. However, in the preamble of the Universal Declaration of Human Rights by the United Nations (UN), all organs of society are called upon to strive for the realisation of these rights. Financial institutions are also expected to take responsibility for the protection of human rights.

Commerzbank’s Position on Human Rights

Commerzbank is committed to respecting human rights. Commerzbank’s position on human rights is derived from the internationally accepted human rights standards, including the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights (ICCP), the International Covenant on Economic, Social and Cultural Rights (ICESCR), and the International Labour Standards of the International Labour Organization (ILO). As a company headquartered in Germany, Commerzbank is tied to the Guidelines for Multinational Enterprises of the Organisation for Economic Co-operation and Development (OECD). Furthermore, the Bank follows the United Nations Guiding Principles for Business and Human Rights.

Commerzbank has been committed to the UN Global Compact since 2006 and undertakes to

  • support and respect the protection of international human rights,
  • ensure that it does not become complicit in human rights violations,
  • uphold the freedom of association and the effective recognition of the right to collective bargaining,
  • promote the elimination of all forms of forced and compulsory labour,
  • work towards the abolition of child labour, and
  • strive to eliminate discrimination in respect of employment and occupation.

2 Implementation of our responsibility for human rights

Within its sphere of influence, Commerzbank makes a differentiated contribution to the protection and promotion of human rights. This relates primarily to the following relevant stakeholder groups:

  • employees
  • suppliers
  • customers

2.1 Employees

Commerzbank respects and supports the human rights of its employees. The overwhelming majority of Commerzbank employees work in member states of the European Union (approximately 97 percent at the end of 2016). These countries have already enshrined the UN and ILO human rights standards in their laws.

As a matter of course, Commerzbank implements the requirements of national laws. In addition, all employees worldwide are required to safeguard human rights in accordance with the Bank's Code of Conduct. The Code of Conduct is part of Commerzbank's corporate culture and documents the obligation to make integrity part of everyday life within the Bank. The guidelines clearly formulate existing rules of conduct and thus provide all employees with a binding guidance framework for acting with integrity – also in relation to human rights. The guidelines apply without exception to all Commerzbank employees, from senior management to apprentices.

Other initiatives include, for example, agreements stipulating fair conduct in a spirit of partnership and the integration of people with disabilities. Commerzbank has also implemented the right to freedom of thought, conscience, and religion within the scope of the Diversity Charter for Germany. The individuality and diversity of the workforce is also promoted through comprehensive diversity management.

2.2 Suppliers

Commerzbank also strives to respect and promote human rights to the greatest possible extent when selecting service providers and suppliers. Commerzbank’s Code of Conduct requires the Bank to respect human and personal rights as fundamental rules of society worldwide and expects its business partners to do the same. The adherence to social standards by our suppliers is an integral part of Commerzbank’s Purchasing and Procurement Guidelines.

The Sustainable Procurement Standard clearly regulates the ecological, social, and ethical requirements for Commerzbank’s suppliers and service providers. All suppliers and service providers maintaining business relations with Commerzbank must comply with the specific social requirements of that standard (Subsection 4.2 of the Sustainable Procurement Standard) and ensure compliance on the part of their own suppliers and service providers. Compliance with social standards is addressed in annual supplier meetings. When selecting suppliers, special analysis is also carried out by Reputational Risk Management as needed. Violations of the Sustainable Procurement Standard by a supplier or service provider may result in termination of the business relationship.

2.3 Clients

Commerzbank also takes human rights into account in its dealings with clients.

Universal human rights are protected by national and international laws. The Bank's employees, and in particular the Compliance department, monitor compliance with all national and international laws and directives by the Bank and its business partners. The Compliance employees thus help to ensure that Commerzbank lives up to its corporate responsibilities, for example by ensuring compliance with embargoes and sanctions against regimes committing human rights violations as well as preventing money laundering and terrorist financing.

In addition, the Reputational Risk Management department performs intensive research and analysis on transactions and business relationships in which human rights play a significant role (for example in mining, resource extraction and the cotton sector) and arrive at differentiated assessments. This may lead to the rejection of the relevant transaction or even the termination of a business relationship.

3 Complaint mechanism

Commerzbank is committed to its responsibility to respect human rights. All stakeholders can contact the Bank if they feel that it has not adequately lived up to its responsibility. Various channels are open to clients, employees, shareholders, the public and all other persons and groups. For example, they can approach Commerzbank with their concerns locally at the branches, by telephone, through the website or by regular mail.

4 Transparency and review

Commerzbank reports annually on developments and improvements in the field of human rights in its UN Global Compact progress report, which is published in the Corporate Responsibility Report.

5 Further Information and links (in alphabetical order)

Indigenous peoples

As a signatory to the UN Global Compact, Commerzbank is committed to upholding and promoting fundamental human rights, ensuring fair working conditions, combating corruption, and protecting the environment. This includes the protection of indigenous peoples, who are often subjected to coercive measures such as involuntary resettlement or dispersion.

Indigenous peoples warrant special protection. In its transactions and business relationships, Commerzbank takes into account the potential impact on indigenous peoples, in particular:

  • compliance with their human rights,
  • observance of their land rights,
  • dispersion and forced resettlement,
  • environmental impact on the region.

3. Sector-specific requirements

Some areas are particularly susceptible to social and ecological risks. They are therefore subject to additional requirements above and beyond those applicable to all sectors and activities. As a general rule: Commerzbank performs an intensive and critical assessment of all transactions and business relationships with connections to the following areas, possibly resulting in outright rejection.

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Cotton and textiles

The textile and cotton industry is frequently associated with child labour and forced labour, violations of labour regulations and workers' rights, and with dangerous working conditions. Commerzbank therefore tracks these issues closely, in particular with regard to

  • human rights compliance and the adoption of measures aimed at combating discrimination against women,
  • compliance with International Labour Organization (ILO) standards on working conditions,
  • child labour and forced labour,
  • the use of environmentally harmful chemicals.

Mining

Mining extracts raw materials such as coal, gold and diamonds. Although these materials are essential in many economic sectors, mining projects often have a negative impact on the environment and local populations.

When making decisions on transactions and business relationships in the mining sector, Commerzbank therefore generally takes into account:

  • the mining methods used by the company (e.g. environmental pollution from toxic chemicals, processing of mining waste);
  • protection of High Conservation Value Areas (HCVAs) and UNESCO World Cultural Heritage sites or similar protected areas (if applicable, with the involvement of local specialists or NGOs);
  • compliance with human rights, and especially the rights of local communities and indigenous peoples;
  • compliance with minimum standards for occupational health and safety and the International Labour Organization (ILO) standards for working conditions;
  • implementation of environmental restoration measures.

Precious metals

Commerzbank has adopted the guidelines of the Organization for Economic Co-operation and Development (OECD) for responsible handling of precious metals from conflict regions and implemented them throughout the Bank. Raw materials are purchased only from suppliers who implement these or comparable regulations.

Diamonds

When trading diamonds the bank checks that the origin of diamonds is in accordance with the Kimberley process.

Coal mining

For the coal sector, Commerzbank has implemented a binding guideline that was adopted by the Board of Managing Directors. It covers the main elements of the process chain, from coal extraction to coal-fired electricity generation at power plants. The guideline sets forth the following exclusion criteria:

  • Commerzbank does not finance projects for new coal mines.
  • Commerzbank does not finance any mining projects involving mountaintop removal mining (MTR). In this method, mountaintops are removed by blasting in order to gain access to the coal below. Mountaintop removal mining is the subject of criticism due to its impact on nature, animals and the health of residents. Companies that employ this method to produce coal are not permitted to maintain or establish a business relationship with Commerzbank.

Uranium mining

Commerzbank does not finance uranium mines.

Energy

Energy production is associated with various risks. Apart from the risks to people and the environment inherent in the various energy sources, problems frequently arise with regard to the expulsion of indigenous peoples or the destruction of conservation areas to build new power stations.

Commerzbank therefore generally takes into account the following factors in connection with transactions and business relationships involving the energy sector:

  • implementation of environmental impact assessments;
  • protection of High Conservation Value Areas (HCVAs) and UNESCO World Cultural Heritage sites or similar protected areas (if applicable, with the involvement of local specialists or NGOs);
  • compliance with human rights (especially the rights of local communities and indigenous peoples).

In particular, Commerzbank investigates energy production involving coal-fired, nuclear and hydroelectric power.

Coal power

Coal remains an important energy source in many regions of the world. However, coal mining has negative effects on the environment and the health of workers and local residents. Moreover, the burning of coal has a substantial impact on climate change. Germany intends to abandon coal-fired electric power generation almost entirely by 2050.

To support this development, the Board of Managing Directors of Commerzbank has passed a binding guideline on coal. It covers the main elements of the process chain, from coal extraction to coal-fired electricity generation at power plants. It applies in addition to the positions and policies generally applicable to the mining and energy sectors.

Coal-related infrastructure projects

  • Coal-related infrastructure projects (e.g. the expansion of rail networks or transshipment ports) are reviewed on a case-by-case basis in regard to environmental and social risks. The review can lead to the rejection of a transaction.

Coal-fired power plants

  • Commerzbank does not finance the construction of new coal-fired power plants.
  • Transactions related to the delivery of individual power plant components, in particular modernisation measures, are possible. They are subject to a critical review on a case-by-case basis that may lead to the rejection of a transaction. Be-sides environmental and social risks, the review is based, among other sources, on the regulations of the Organisation for Economic Co-operation and Development (OECD), for example with regard to the efficiency level of the power plant and the recipient country concerned.

Energy suppliers

  • Commerzbank expects German clients from the energy supply sector to limit the share of electricity generated from coal (based on their production performance) to below 30 per cent by the end of 2021.
  • A corresponding cap of 50 per cent is expected for clients based outside Germany.
  • Commerzbank will assist its clients with this strategic shift.
  • For new clients, the above criteria have been in effect since 1 August 2016.

Moreover, Commerzbank also assesses all business activities and relationships in the coal sector that are not covered by this guideline.

Nuclear power

Power production in nuclear power stations is associated with many problems and risks. The operation of nuclear power stations harbours the risk of a release of radiation. The problems of proper long-term storage of nuclear waste also remain largely unsolved. After the reactor disaster in Fukushima, Japan, Germany decided to complete a phase-out of nuclear power by 2022. Commerzbank therefore does not finance nuclear power stations.

Hydro-electric power

Hydro-electric power accounts for a substantial share of global energy production. However, hydro-electric projects – especially dams – can involve risks and harm to the environment and the local population.

Consequently, in addition to all general positions and policies for the energy sector, Commerzbank takes into account the following aspects for transactions and business relationships related to hydroelectric power:

  • potential conflicts over competition for water resources (e.g. between neighbouring countries) and
  • compliance with the recommendations of the World Commission on Dams (WCD).

Food staples

The United Nations has set the goal of ending hunger, achieving food security and improved nutrition and promoting sustainable agriculture by 2030.

In November 2011, Commerzbank made the decision not to issue any new exchange-traded investment products based on food staples.

Since then, Commerzbank has not issued any new products based on food staples such as wheat, corn, soy, rice or potatoes. In addition, all food staples have been removed from the only exchange traded fund referencing them (WKN ETF090).

Commerzbank has also implemented this decision throughout its private client business. Commerzbank does not issue products that contain staple foods, nor does it actively market or recommend them. This of course applies to third-party products as well.

Agriculture and forestry

Agriculture and forestry are an important source of income and play a major role in the overall economy, especially in developing countries. However, the positive effects are often offset by negative environmental and social impacts. These are taken into account by Commerzbank in its decisions on transactions and business relationships.

In case of proposed business activities connected to agriculture or forestry, Commerzbank investigates

  • human rights compliance (especially the rights of local communities and indigenous peoples) and the adoption of measures aimed at combating discrimination against women;
  • compliance with International Labour Organization (ILO) standards on working conditions;
  • protection of High Conservation Value Areas (HCVAs) and UNESCO World Cultural Heritage sites or similar protected areas (if applicable, with the involvement of local specialists or NGOs);
  • illegal or uncontrolled clear-cutting of forests by companies.

In addition, Commerzbank has defined further assessment criteria for transactions and business relationships involving wood and palm oil.

Wood

Forests are home to a very large share of the Earth's flora and fauna. They store carbon dioxide and regulate the climate. Deforestation can endanger threatened plant and animal species and accelerate climate change. Consequently, in addition to the general positions and policies applicable to agriculture and forestry, Commerzbank examines the following factors when assessing proposed transactions and business relationships in the wood industry:

  • illegal logging by companies;
  • compliance with requirements in the wood industry, e.g. the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification Schemes (PEFC);
  • the protection of plants included in the Red List of Threatened Species by the International Union for Conservation of Nature (IUCN).

Palm oil

Palm oil is the most important plant oil worldwide and is contained in about one in two products sold in supermarkets. The creation of palm oil plantations is a major factor in the elimination of rainforests. According to a study by the World Wide Fund for Nature (WWF, 08/2016), however, there is no environmentally preferable alternative.

Commerzbank wishes to help ensure that sustainability criteria are applied to the greatest possible extent in palm oil production. It has therefore been a member of the Roundtable on Sustainable Palm Oil (RSPO) since 2014. It assesses palm oil transactions and business relationships with companies in this sector in a multi-stage process. Companies connected to palm oil that are Commerzbank clients must meet several criteria:

  • membership of the Roundtable on Sustainable Palm Oil (RSPO): Among the requirements for membership is the disclosure of concession maps to avoid illegal logging. In addition, the members undertake to prepare land through burning only in certain special cases and with prior approval. RSPO members must also commit themselves to ethical principles for all business relationships and transactions;
  • information on sustainable production: Commerzbank expects palm oil companies to provide information on how they have already implemented sustainable palm oil production within their process chain and which targets they have set in this regard (e.g. through relevant certifications).

If one of these criteria is not met, the company cannot enter into a business relationship with Commerzbank or be supported in supply transactions. These criteria apply in addition to the general positions and policies applicable to agriculture and forestry.

Oil and Gas

Oil and gas remain important energy sources and are therefore still essential to the global energy supply. However, the extraction of oil and gas is associated with special risks for the environment, climate, indigenous peoples, workers and local populations. Commerzbank takes these risks into account in its decisions on transactions and business relationships in the oil and gas sector. Specifically, it takes into account:

  • how the company will conduct the exploration of oil and gas fields;
  • protection of High Conservation Value Areas (HCVAs) and UNESCO World Cultural Heritage sites or similar protected areas (generally with the involvement of local specialists or NGOs);
  • compliance with human rights, and especially the rights of local communities and indigenous peoples
  • compliance with minimum standards for occupational health and safety and the International Labour Organization (ILO) standards for working conditions.

Oil sands/tar sands

Oil sand or tar sand is a mixture of sand, water, clay and oil. The extraction of oil from this mixture is much more energy-intensive and environmentally damaging than conventional oil extraction methods. Consequently, Commerzbank does not participate in project financing in this sector.

Arctic drilling

The extraction of oil and gas in the Arctic (Arctic drilling) is subject to intense criticism due to its effects on nature, the animal world and indigenous peoples. Commerzbank does not participate in project financing related to Arctic drilling.

Fracking and liquefied natural gas (LNG)

Fracking is highly controversial in particular due to the pollution of groundwater. Commerzbank is monitoring this issue very closely. In general, project financing related to fracking is not possible. Commerzbank is also highly aware of the related issue of liquefied natural gas (LNG), and takes a critical approach to transactions and business relationships involving companies in that sector.

Armaments

For business relationships and transactions from the arms sector, Commerzbank implemented its own mandatory Group-wide policy in 2008 that was approved by the Board of Managing Directors. The policy is based on positions adopted by the German government, the European Union, the United Nations, other international agreements, and various NGOs.

Commerzbank recognizes the basic right of states to defend themselves. However, whether Commerzbank agrees to support transactions involving arms depends on the countries involved and the type of goods being financed. In addition, Commerzbank assesses other political, ethical and environmental criteria. If the fundamental principles of the arms policy as stated below are violated, Commerzbank will reject the transaction.

The four fundamental principles of the policy

1. No financing of the supply of weapons or armaments to conflict zones or areas of tension

To avoid the escalation of conflicts, Commerzbank does not involve itself in the supply of weapons or armaments to conflict zones or areas of tension. When assessing the country for which the shipment is intended, it also takes into account factors such as type of government and the current human rights situation.

2. No financing of controversial weapons

Commerzbank does not involve itself in transactions related to controversial weapons. The following weapons are currently classified as “controversial”: cluster bombs, anti-personnel mines, incendiary weapons, laser weapons with the capacity to blind, nuclear weapons, uranium core ammunition, biological and chemical weapons.

3. Supply solely to clearly identifiable government bodies

Commerzbank only involves itself in financial transactions where the final recipient is a clearly identifiable governmental body.

4. Compliance with all applicable laws and regulations

Commerzbank requires its business partners to comply with all applicable laws, embargoes, and regulations and performs any checks that it requires itself.

The policy covers weapons and armaments such as firearms and all military devices as defined in the German War Weapons Control Act (KrWaffKontrG), which covers all means for the application of force in internal or international armed conflicts, including spare parts and other components (in particular electronic components).

Ship breaking

Hundreds of ships are broken up every year, above all in Asia. This is an important source of income for local economies and covers a substantial portion of the regional demand for steel. However, ship breaking often involves poor working conditions that frequently lead to workplace accidents and fatalities. Moreover, this activity often pollutes coasts and seas.

To address these dangers, Commerzbank requires certification of shipyards under EU standards or internationally recognised environmental and social standards (ISO 14001, ISO 30000, OHSAS 18001 or the Hong Kong Convention) when entering into business relationships or supporting transactions related to ship breaking.

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