How Commerzbank manages Environmental Risk
Managing risks holistically
The task of risk management is to protect the bank's equity and to keep liquidity risks manageable at all times. In this context, environmental criteria are also an essential part of risk management.
The Bank considers Environmental Risk to be a horizontal risk type. This means that they materialise in conventional risk types, such as credit risk.
2022, the bank has sharpened the "Three Lines of Defense" concept for ESG risks. For Environmental Risk ("E"), we have anchored the 2nd line of defence overview function in the risk control function. It is operationalised via the Environmental Risk Control line function. Operational risk control remains the responsibility of the risk type managers concerned.
Measuring climate and biodiversity risks
Within the 2022 risk inventory, we significantly enhanced the comprehensive and cross-risk-type materiality analysis for climate risks. We have expanded an initial expert-based materiality assessment of biodiversity risks.
This is in line with Commerzbank's consistent strategic orientation towards "Net Zero". And it is in line with the high supervisory focus on Environmental Risk including climate and other environmental risks, such as biodiversity in particular. In this context, we have determined that biodiversity risks are material for credit risk.
For the risk types considered materially affected by climate risks, we ensure ICAAP consideration within the overall risk strategy. These include credit risk, market risk, operational risk including compliance risk and cyber risk, as well as business risk and reputational risk. More detailed information on the results of the materiality analysis can be found in the non-financial report.
Individual risk analysis at customer level
Climate taken into account when granting loans
We are consistently developing our processes and methods for managing the effects of climate risks in our lending business. The credit decision for companies and institutions also includes the impact of climate risks and resilience to them. This is done within the individual risk assessment, insofar as they are relevant for the decision.