Overarching ESG standards for all business activities
We have defined overarching ESG standards for all of BayernLB's business activities. In them, we determine which business activities we exclude as a matter of principle.
BayernLB categorically excludes the following business activities:
- Business activities with persons or with companies run by persons who have been legally declared bankrupt or insolvent or convicted of serious offences against property, or financial crimes
- Business activities connected with illegal forms of business (such as arms/drugs/human/organ trafficking and slavery)
- Business activities connected with prostitution, sexual exploitation and pornography
- Business activities connected with exploitative (child) labour or forced labour
- Business activities that serve to evade and/or reduce duties or taxes or to conceal and/or unfairly and significantly encourage such actions in its own or a foreign country
- Business activity connected with the intentional breach of copyrights and industrial property rights (e.g. piracy).
Sustainability standards in the context of finance
World Bank standard as a basis
BayernLB takes into account the recognised environmental and social standards of the World Bank in all relevant financing where the intended use is known. They specify comprehensive requirements for the protection of the environment and compliance with labour law and human rights in large infrastructure projects, for example.
Since very comprehensive regulations apply in Germany with regard to the responsible handling of the environmental and social impacts of projects, assessing compliance with the relevant national legislation counts as the minimum standard for project finance in Germany. More extensive checks relating to international standards, e.g. World Bank requirements and the Equator Principles, may be carried out on a case-by-case basis.
Provisions and exclusion criteria for controversial sectors and issues
BayernLB has developed guidelines which exceed World Bank standards for particularly sensitive sectors and issues. BayernLB's specific exclusion criteria mean that certain types of finance are excluded, such as finance for building new coal power plants, extraction of crude oil from tar sands or fracking. For other forms of finance, there are clear guidelines that specify requirements. The requirements relate both to earmarked financing, for example in the context of project financing, and to general corporate finance, for example working capital loans. Earmarked financing must also take into account the infrastructure directly linked to the projects.
Guidelines are reviewed regularly and updated as necessary, for example in response to new technological developments. BayernLB also carries out ongoing analysis to determine whether any corresponding regulations are needed for other sectors and issues.
Finance experts at BayernLB are currently drafting guidelines for the following sectors and issues. Implementation of the guidelines will be supported by the Sustainability Executive Unit.
- Armaments Policy
- Gambling Policy
- Nuclear Power Policy
- Coal Policy
- Oil & Gas Policy
- Offshore Policy
- Forest Policy
- Food Policy
Sustainability standards for commercial and capital market business
BayernLB has also defined strict rules for trade and capital market transactions. They relate to the handling of foodstuffs and controversial weapons as well as institutional foreign exchange trading.
Exclusion criteria: no speculation with foodstuffs
BayernLB does not conduct any speculative transactions in relation to staple foodstuffs. To this effect, the Group does not invest either directly in basic foodstuffs, or indirectly in derivatives which directly replicate or speculate on the price performance and/or shortages of staple foodstuffs. The BayernLB Group has also excluded the financing of speculative trading in staple foodstuffs.
The subsidiary BayernInvest invests in actively managed mandates and funds, not in individual commodity exposure to foodstuffs. This exclusion extends to the management of the in-house investment fund and the third-party initiator investment fund administered by BayernInvest.
Exclusion criteria: no investments in controversial weapons
As a matter of principle, BayernInvest refuses to invest in companies which produce controversial weapons. These include weapons such as anti-personnel mines and cluster munitions, which are outlawed by international conventions.
Transparency in foreign exchange trading
By signing the FX Global Code, BayernLB is supporting an initiative to globally promote integrity in institutional foreign exchange trading. This is yet another way in which we are commit-ting ourselves to the standards of fair and transparent foreign exchange trading and sending a further positive signal to our customers and business partners.
The FX Global Code was developed by central banks and market participants from 16 different countries. The result is a set of uniform standards and guidelines that ensure integrity in institutional foreign exchange trading and are based on such principles as ethics, governance, transparency and compliance.