10. Innovation and Product Management

The company discloses how innovations in products and services are enhanced through suitable processes which improve sustainability with respect to the company’s utilisation of resources and with regard to users. Likewise, a further statement is made with regard to if and how the current and future impact of the key products and services in the value chain and in the product life cycle are assessed.

Promoting sustainability within Rentenbank’s special promotional loans business
We support sustainable investments in agriculture with special promotional programmes and an interest rate bonus (best rates). As part of our Sustainability, Forestry and Environmental and Consumer Protection programmes, we support a broad spectrum of measures to improve animal welfare and energy efficiency, and to reduce emissions. These programmes aim to promote organic farming, sustainable forest management, such as restructuring forests into mixed forests which are suited to climate change, and the direct or regional marketing of agricultural products. Our Rural Energy promotional programme promotes the expansion of renewables. We focus on promoting investments made by farmers in wind and photovoltaic power stations and biogas plant funding and community wind farms in rural areas. Quantitative effects from our special promotional loans business for the end borrower are currently not collated as local banks are in contact with the end borrowers. However, we are working with scientific partners on a system which could collate and assess such impacts, such as cost savings effects through the switch from old to new machinery. Impacts on our special promotional loans business are captured and categorised qualitatively into SDG categories (cf. criterion 2)

Promoting innovation
Innovation and technical progress are key to tackling the challenges agribusiness faces in becoming more sustainable. These factors will safeguard the sector’s competitiveness and, at the same time, facilitate the careful use of resources, particularly where more stringent standards are being imposed regarding animal welfare, product quality and environmental protection. That is why we support the entire innovation process from development to delivery and the wider use of these innovative processes and products.

The innovative projects we financed in 2020 include those which are aimed at improving animal welfare, increasing the use of state-of-the-art mechanical weed control with the aim of reducing the use of pesticides, increasing the biodiversity of agricultural landscapes, and reducing microplastics. Further information and examples of projects we support are outlined in our Annual Report

Commitment to climate and species protection through ecological forest management
We also initiate and undertake projects which make an important contribution to sustainability and climate protection. This is in addition to our special promotional loans business and our focus on sustainability in our promotion of innovations. Our innovation projects are making an important contribution to sustainability and are closely linked to agriculture, forestry and rural areas. 

Rentenbank’s forest project, which started in 2016 in collaboration with the Institute for Federal Real Estate (Bundesanstalt für Immobilienaufgaben, BImA), is such an example. The long-term ecological cultivation of 550 hectares of forest in the district of Wetterau in Hesse is at the heart of a framework agreement. In addition, BImA runs several projects on this land to further enhance habitats. Six projects have already been launched. The achievements made so far were awarded the 'Tree of Diversity' prize on 13 October 2020 as a 'UN Decade Project'.

Innovations for sustainable funding
Rentenbank issued its first EUR 50 million Renewable Energy Bond back in 2013. Since then, the Bank has established a close connection between its sustainable promotional programmes and its funding on the international capital markets with additional issuances of green bonds.

Rentenbank issued its first public Green Bond in autumn 2020. We allocated the benchmark bond’s entire issuance volume of EUR 1.75 billion to promoting renewable energy. Rentenbank’s Green Bond Framework is consistent with the ICMA Green Bond Principles (International Capital Market Association). The Framework is backed by a loan portfolio which currently comprises more than 2,000 financed wind power projects and around 21,500 financed photovoltaic projects. These investments are mostly carried out by agricultural companies. In 2020 alone, the Center for Solar Energy and Hydrogen Research (Zentrum für Sonnenenergie- und Wasserstoff-Forschung Baden-Württemberg, ZSW) calculated a saving in CO2 of almost 5 million tonnes through the investments we supported within the loans portfolio in our Green Bond Framework.

Credit portfolio
In addition, Rentenbank provides funding for other banks, savings banks, cooperative banks and local authorities operating in rural areas through registered bonds, promissory notes and securities. It is purely a portfolio of bonds. Rentenbank's risk policy requires a prudent selection of business partners and products in all business activities, although in accordance with its core competencies, Rentenbank focuses on banks and public sector borrowers. Transactions with banks or other counterparties which could harbour major risks to Rentenbank’s reputation are not entered into.

Involvement of additional actors for innovation and product management
At workshops, seminars and presentations, we present our promotional offering to our business partners, borrowers and advisers on agricultural matters at banks and savings banks. Our training sessions at commercial banks, federal states’ development banks (Landesförderinstitute) and intermediary institutes are received with keen interest.