ESG Risk Management
How Commerzbank manages ESG Risk
Managing ESG 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, ESG risks are also an essential part of risk management.
ESG risks refer to Environmental (including Climate and Biodiversity risk), Social and Governance risk. The Bank considers ESG risks to be a horizontal risk driver. This means that they influence conventional risk types, such as credit risk.
ESG risks are steered according to the “Three Lines of Defense” concept and we have anchored the 2nd line of defence oversight 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 ESG risks
Within the risk inventory, we conduct a comprehensive and cross-risk-type materiality analysis for ESG risks on a yearly basis.
This is in line with Commerzbank's consistent strategic orientation towards "Net Zero" as well as with the other sustainability targets related to social and governance topics. And it is in line with the high supervisory focus on ESG risks.
For the risk types materially affected by ESG risks, we ensure ICAAP consideration within the overall risk strategy. More detailed information on the methodology and results of the materiality analysis can be found in the ESG Annex of the disclosure report.
Individual risk analysis at customer level
, Climate taken into account when granting loansWe combine findings from scenario analyses with an individual risk analysis for managing the effects of climate risks in our lending business. At customer level, we consider the specific impact of climate risks and the resilience to them.