Sector Guidelines – Steering KfW’s new financing activities in particularly greenhouse gas-intensive sectors according to the targets of the Paris Climate Agreement
The transformation process towards a sustainable society is the most pivotal challenge of our times. As a transformative promotional bank, KfW Group therefore takes a particular responsibility for the successful transformation. KfW’s objective is to successfully provide the best targeted support to its clients and partners in the transformation process, to ensure the economic and societal opportunities of this profound structural change can be embraced. Thus, KfW Group focuses on forward-looking Paris-compatible sector guidelines for greenhouse gas-intensive sectors, an as well as high in its financing activities. Further supported by a group-wide , KfW Group systematically contributes to its primary objective of sustainable promotion which is defined as the transformation of the economy and society with the aim of improving economic, ecological and social living conditions around the world.
Limiting global warming requires a profound transformation towards a climate-neutral society. This can only succeed if people stand behind the climate goals. This furthermore requires attractive funding and financing activities so clients and partners can purposefully invest in the structural opportunities of this transformation process. It is especially important to support the advancement of the transformation process in greenhouse-gas-intensive sectors that are facing particular challenges with regard to climate change and are therefore of essential importance to achieving the targets set in the Paris Climate Agreement.
Against this backdrop, KfW Group’s sector guidelines systematically focus on greenhouse gas-intensive sectors for which sector specific minimum requirements for the climate compatibility of technologies financed by KfW are defined. These minimum requirements are scientifically derived from highly recognized Paris-compatible climate scenarios published by the International Energy Agency (IEA) and concretely point out with which combination of use of transitional and technologies of the future the transformation process towards greenhouse gas neutrality can successfully be implemented. For its new financing activities to remain consistently “Paris compatible” while ensuring that the minimum requirements remain realistically achievable for clients and partners, KfW gradually increases its climate-compatibility requirements.
The first Paris-compatible sector guidelines were introduced on 1st July 2021 and define guidelines for the greenhouse gas intensive shipping, automotive and iron and steel production sectors. As of 1st September 2021, the scope of the sector guidelines will be expanded to include further Paris-compatible guidelines for the building and aviation sectors as well as for power generation.
In KfW’s domestic promotional business the respective programme specific requirements (e.g. in the programme information sheet) remain decisive and will gradually (e.g. when introducing new programmes or extending existing programmes) be reviewed for compatibility with the sector guidelines and, if necessary, will be adapted accordingly.
An outlook on the possible further development of the sector guidelines can be found in the background paper forthcoming.