Sector Guidelines – Financing in line with the Paris Agreement

The transformation towards a sustainable society is one of the central challenges of our time. As digital transformation and promotional bank KfW Group bears a special responsibility to provide targeted support to ensure its clients and partners can tap into the of the economic and societal opportunities throughout this profound structural change.

To this end, KfW Group uses forward-looking Paris-compatible sector guidelines for greenhouse gas-intensive sectors, an exclusion list as well as high environmental and social standards in its financing activities. Supported by a group-wide impact management system, KfW Group systematically pursues its goal of advancing the transformation of the economy and society to improve economic, ecological, and social living conditions worldwide.

Limiting global warming requires special attention to greenhouse-gas-intensive sectors that are facing particular challenges in reducing their carbon footprint. Therefore, KfW Group’s Paris-compatible sector guidelines systematically focus on greenhouse gas-intensive sectors and define sector specific minimum investment requirements. These minimum requirements are science-based building on the internationally recognized “Net Zero Emissions by 2050 (NZE)” scenario of the International Energy Agency (IEA). They identify the mix of transition and future technologies needed to successfully achieve the transformation toward greenhouse gas neutrality. For its new financing activities to remain consistently “Paris compatible” while ensuring that the minimum requirements remain achievable for clients and partners, KfW gradually increases its climate-compatibility requirements over time.

The Paris-compatible sector guidelines were introduced in 2021 for the shipping, automotive and aviation sector, iron and steel production, buildings and electricity generation, and were revised for the first time a year later. In December 2023, the existing framework was supplemented by a sectoral guideline for the oil and natural gas sector. In 2026, the sectoral guidelines will be updated to reflect the IEA’s latest climate scenario while maintaining their alignment with the 1.5-degree-target.

Below you will find the current version of the sector guidelines as well as the previous version. For new commitments in the domestic promotional business, new versions of the sector guidelines will take effect after a transition period.