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Press Release from 2021-02-04 / Group, Investor Relations, Sustainability

KfW to continue investing in green bonds under mandate of the German Federal Ministry for the Environment

  • KfW’s green bond portfolio has reached its EUR 2 billion target

Backed by a promotional mandate of the German Federal Ministry for the Environment, KfW Group will remain committed to the green bond market as an ambitious investor, thereby contributing to the further development of this market segment. Green bonds are an important instrument to mobilise capital for the transition to an environmentally friendly and climate-neutral economy. Since 2015, KfW has built up a portfolio of green bonds which has now reached its EUR 2 billion target and will be maintained at a level of EUR 2 – 2.5 billion going forward. In its investments, KfW will keep up its strong commitment to high standards, for example with regards to transparency and good reporting on the use of proceeds and the impacts of financed projects. It will also take even greater account of the climate action and sustainability focus of the issuers themselves in its future investment decisions.

Jochen Flasbarth, State Secretary at the German Federal Ministry for the Environment: “The trend of the past years has shown that investors have great interest in ecologically sustainable investments. Investors who wish to invest their funds with a view to impact need an offering that is truly in line with green ambitions. At the same time, green bonds are an important instrument for leveraging the enormous amounts we need to mobilise all over the world as we transition to an environmentally friendly and climate-neutral economy. The Ministry for the Environment therefore supports KfW in providing effective impetus as an investor to consolidate the green bond market on a high level in the future as well.”

Bernd Loewen, Board Member of KfW Group, in charge of Capital Markets: “Our green bond portfolio has now reached the initial target of EUR 2 billion. We are therefore pleased to continue our comprehensive efforts to support the development of the green bond market, both as an ambitious investor and as one of the world’s largest issuers. Green bonds enable an in-depth dialogue between numerous stakeholders on the necessary transition of the economy towards climate neutrality in 2050. This is essential for mobilising the required capital. In order to move forward in the transition we will integrate the overall sustainability and climate action focus of the issuers even more closely into our investment decisions in the future.”

Since April 2015, KfW has been promoting climate change mitigation and adaptation, resource conservation and environmental protection projects through investments in green bonds under a promotional mandate of the German Federal Ministry for the Environment. Green bonds have become established as a capital market-based instrument for financing climate action and environmental protection projects. They contribute to more firmly embedding ecological sustainability as a factor in the financial sector’s decision-making processes.

Active engagement for qualitative market development

KfW is active in many different areas related to the qualitative green bond market development: It maintains a dialogue with a wide range of market stakeholders and acts as a point of contact for green bond issuers and other actors in the green bond segment such as financial intermediaries, investors, sustainability rating agencies and other stakeholders.

The German promotional bank is also a strong supporter of various initiatives. For example, it has provided its expertise to the Technical Expert Group on Sustainable Finance established by the EU Commission. Among other things, this expert group formulated recommendations on the creation of a common voluntary EU Green Bond Standard in the years 2019 and 2020. KfW has also been a member of the Executive Committee and participant in working groups of the internationally recognised Green Bond Principles since 2015; it has been involved in the further development of these voluntary guidelines as well as of further recommendations for a science-based, climate-friendly and sustainable focus of capital market activities.

Further information on KfW’s green bond portfolio can be found here.