E1-SBM-3 – Material impacts, risks and opportunities related to climate change and their interaction with strategy and business model

Climate risks, as a subgroup of ESG risks, may affect Rentenbank’s credit or investment portfolio in the form of transition risks or physical risks.

Rentenbank ensures its resilience to climate change through its risk management processes. The starting point is the annual risk inventory, which Rentenbank uses to obtain an overview of all risks that could affect its financial position, capitalisation, earnings or liquidity. Climate-related factors are considered as potential risk drivers in this context. The analysis covers vulnerability, financial impact and possible transmission channels. Risks identified as material as part of the risk inventory are incorporated into the risk appetite statement and into risk measurement, monitoring and management.

The processes described above for analysing creditworthiness as part of the bank rating and for conducting climate stress tests strengthen resilience to climate risks. The bank rating is reviewed on an ad hoc basis, but at least once a year. The climate stress test is likewise updated annually and reviewed for any changes to the reference scenarios.

Exclusion criteria applied to special promotional loans and to investments in bonds and bearer bonds issued by banking business partners may be used to further mitigate transition risks in particular. This is done, above all, by excluding the direct financing of activities related to coal-fired energy and certain forms of oil extraction.