KfW promotes climate protection with purchase of green bonds – planned portfolio in the amount of EUR 1 billion
Press Release from 2015-04-09 / Group, Sustainability
- Federal Ministry for the Environment supports invest-ments for environmental and climate protection via capital market instrument
- KfW consistently expanding its sustainability strategy on the capital market
- High standards to enhance quality
In the future, KfW is to promote environmental and climate protection by purchasing green bonds. It is introducing a EUR 1 billion green bond portfolio to expand its promotional activities for climate protection with a capital market instrument. Portfolio investments are scheduled to start in Q2 2015.
The project is supported by the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB). Federal Environment Minister Barbara Hendricks explains: "By purchasing green bonds, KfW will help finance suitable climate and environmental protection projects, for instance in the fields of resource efficiency, renewable energies, waste management, (waste) water management, biodiversity and non-polluting transport systems".
By implementing a green bond portfolio KfW consistently expands its sustainability strategy on the capital markets. "Sustainability on the capital markets has been a long-standing focus of ours, and we have gained expertise and a high degree of credibility in this field. We regard climate protection as one of the most significant challenges of our time. The green bond market is an alternative capital market-based source of financing for environmental and climate protection measures that calls for expansion. The green bond portfolio is our way of making another contribution to environmental and climate protection, in addition to our credit activities and our own green bond issues", explains Dr Günther Bräunig, member of the Executive Board of KfW Group in charge of capital markets.
In addition, by getting involved as an investor, KfW intends to promote the quality-based development of the green bonds market, which is still in its infancy but posting dynamic growth rates. Therefore, KfW and the Ministry (BMUB) have jointly defined minimum requirements for the quality of green bonds that are worthy of promotion. In particular, quality requirements regarding the transparency of projects to be financed and the use of funds are essential to ensure that appropriate climate and environmental protection projects are supported with the funds to be raised via the "green bond" instrument. In the long run, detailed and regular reports on the financed projects as well as the involvement of external experts and the publication of their opinions are set to strengthen market participants' trust in this market segment. Along with the further development of the market, the minimum requirements will be gradually raised to meet even higher quality standards.
KfW also plans to support the development and establishment of sophisticated green bond market standards by way of market initiatives and by seeking direct discussions with third parties.
In recent years, KfW has not only become one of the largest financers of climate and environmental protection worldwide; it is also paving the way for responsibility and sustainability on the capital markets. KfW has been a member of UN-PRI (Principles for Responsible Investment) since 2006 and has been applying ESG criteria (Environment, Social, Governance) in managing its liquidity portfolio since 2008. In July 2014, KfW issued its first "Green Bonds - Made by KfW", simultaneously setting high standards regarding transparency and reporting that have been recognised by market participants and have received several awards.
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