Impact Report on “Green Bonds – Made by KfW” issued in 2015 and 2016
Press Release from 2018-07-03 / Group, Investor Relations
- Second report on the environmental and social impact of KfW green bonds based on external evaluation provides utmost in transparency and comprehensible calculations
- KfW green bonds contribute to the United Nation’s Sustainable Development Goals (SDG) 7 and 13
- Reporting in line with the Green Bond Principles, as revised in June 2018
Today, KfW discloses its report on the environmental and social impact of „Green Bonds – Made by KfW“ for the years 2015 and 2016. With its now second impact report – following the inaugural report for the year 2014, which was honoured for its transparency - KfW demonstrates reliability and continuity.
„Transparency and credibility are key to a successful contribution of the capital markets to climate protection. Our latest impact report offers investors in “Green Bonds – Made by KfW” issued in 2015 and 2016 the opportunity to exactly retrace the environmental and social impact attributable to each investment. The respective impact is calculated on the basis of the evaluation results provided by an independent research institute”, explains Dr Günther Bräunig, Chief Executive Officer of KfW Group.
With 17 green bonds and an outstanding volume of EUR 13.5 billion, KfW is the largest green bond issuer in Germany holding a market share of 61%. KfW’s green bonds contribute to reaching the United Nation’s Sustainable Development Goals (SDG) 7 “Affordable and Clean Energy” and 13 “Climate Action”. Moreover, in its role as green bond investor and as member of the Green Bond Principles, KfW actively participates in the development of market standards, such as the “Harmonized Framework for Impact Reporting”. It goes without saying that KfW has always been focusing on transparency and external evaluation in its green bond programme.
The latest impact report includes comprehensive information on the green bonds issued in 2015 and 2016, as well as on their environmental and social impact. It shows the installed electrical power and the projected annual renewable energy production related to the plants financed through KfW’s promotional loans. In this period, KfW issued nine green bonds and thereby funded financings totalling EUR 6.5 billion (2015: EUR 3.7 billion; 2016: EUR 2.8 billion) under its promotional loan programme “Renewable Energies – Standard”.
The independent non-profit research institute Center for Solar Energy and Hydrogen Research Baden-Württemberg, Germany (ZSW) evaluated the actual environmental and social impact of projects financed in 2015 and 2016. In 2015, KfW committed 2,887 loans under the “Renewable Energies – Standard” programme with an aggregate volume of EUR 4.3 billion and thereby triggered investments in the amount of EUR 5.4 billion. This corresponds to a financing share of the promotional bank equal to 79%. In the subsequent year, loan commitments of EUR 4.5 billion, dispersed among 3,138 individual projects, led to investments amounting to EUR 5.7 billion – KfW’s financing share amounts to 80%.
The ZSW evaluation reveals the specific environmental and social impact, the installed electrical power and the renewable energy produced attributable to KfW’s green bonds issued in 2015 and 2016 respectively. The evaluated impact relates to an underlying 20-year lifetime of the plants. An investment of EUR 1 million in any of KfW’s green bonds of 2015 or 2016, respectively, leads to:
|Reduction of GHG emissions (CO2-equivalents) p.a.||859 tons||794 tons|
|Installed electrical power||0.66 MWel||0.63 MWel|
|Renewable energy produced p.a.||1,236 MWhel||1,182 MWhel|
So far, the environmental and social impact was calculated considering the total investments co-financed by KfW. In the report at hand, however, the impact reflects KfW’s financing share for the first time. Nevertheless, the green bonds fulfil the previously estimated greenhouse gas emissions reduction of 800 tons CO2-equivalents per annum – which is based on the evaluation results of the previous five years and did not take into account the financing share.
Furthermore, the impact report shows the savings for energy imports and avoided costs for fossil fuels, the created and/or secured jobs and the savings in external costs, e.g., by avoiding environmental and health damage – each per year.
With its green bond programme and the related reporting, KfW fulfils the recommendations of the newly updated Green Bond Principles and the “Harmonized Framework for Impact Reporting” to their full extent.
Besides the concluding impact report, KfW has always been reporting on the use of proceeds quarterly during the year. Following the disclosure of its report on the use of proceeds for 2017 in January 2018, and the one for the first quarter of 2018 in May 2018, KfW intends to publish the respective report for the first half of 2018 by the end of July. The impact report including the environmental and social impact of KfW’s green bond issuances in 2017 and 2018 will be computed once ZSW has evaluated the impact of the underlying loan programme “Renewable Energies – Standard” for the respective years – presumably by 2020.
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