Deutsche Bank has announced that from July it will make vendor sustainability ratings mandatory.

Under the new rules, every new or extended contract worth more than €500,000 a year will be forced to give an external vendor sustainability rating from EcoVadis, or another eligible rating agency, including: MSCI ESG; Sustainalytics; ISS ESG; S&P Global; and CDP.

The agency rating, which gives companies a score out of 100, is based on a confidential sustainability questionnaire and evidence.

From next year, it will only grant new contracts to those who have an adequately high sustainability rating. For EcoVadis, this means achieving at least 25 of 100 possible points.

The bank’s chief procurement officer said that he expects that the policy to “create a ripple effect” because each supplier also has a network of interconnected vendors.

“Sustainability is a collective responsibility,” said Alf Noto, Deutsche Bank CFO. “We want to collaborate with suppliers to help make a positive impact to extend the reach and impact of our ESG footprint.” 

Every year Deutsche Bank spends over €8 billion on products and services from third-party firms. The investment bank said that it wants to use this “purchasing power” to encourage better supply chain ESG accountability and transparency.

“Global Procurement is a great example of how we are moving from ambition to impact and partnering with our vendors to cover our whole value chain,” said Jörg Eigendorf, head of sustainability at Deutsche Bank.  “This is a big step to gradually improve the sustainability of our value chain.”

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