KfW Green Bond Portfolio
Since April 2015, KfW has been actively investing in Green Bonds on a global scale. KfW’s Green Bond portfolio is backed by a promotional mandate from Germany’s Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. The initial target volume of the portfolio of EUR 2 billion was reached in February 2021. Going forward, KfW will continue investing in green bonds and will maintain the portfolio volume at a level of EUR 2 – 2.5 billion.
Motivation and Goals
Building up a Green Bond portfolio advances KfW’s sustainable investment strategy in global capital markets, also in terms of the (PRI). By investing in Green Bonds, KfW seeks to contribute to the realization of environmental and climate protection projects, e.g. in the areas of renewable energies, energy efficiency, environmentally friendly transportation, pollution prevention and control, sustainable water and wastewater management and biodiversity. In addition to setting high quality standards as a Green Bond issuer, KfW actively supports the qualitative development of the Green Bond market as an investor – contributing to market initiatives and directly engaging with market participants.
- Clear description of the projects to be financed (including goals and projected impacts),
- Competent project selection as well as a fully transparent process of the management of proceeds,
- A regular public reporting including project description, allocation of funds and environmental impacts,
- A verification of the project selection and use of funds from an independent third party prior to issuance.
In addition, KfW includes the climate action and sustainability focus of the issuers themselves in its investment decisions. KfW will continuously develop and advance its minimum requirements to be in harmony with the and current market developments.
Key Portfolio Figures
KfW will invest in the following fixed income securities:
- Supranationals, Sub-Sovereigns and Agencies (e.g. multilateral development banks)
- Covered bonds and Pfandbriefe
- ABS (Senior tranches only)
An Investment-grade rating is mandatory. Eligible currencies include USD, EUR and a range of selected other currencies.