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KfW Green Bond Portfolio

KfW has been building up a global green bond portfolio since 2015 with the support of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU). The original target volume of the green bond portfolio of EUR 2 billion was already reached in February 2021, which is why the level is to be raised again and stabilised at a volume of EUR 2 to 2.5 billion by 2023.

Motivation and Goals

With its investments in Green Bonds, KfW is pursuing the goal of consistently expanding the topic of sustainability as part of its capital market activities as well. The aim is to finance environmental and climate protection measures via a capital market-based instrument. In addition, KfW would like to contribute to the qualitative development of the green bond market. The aim is to advance the establishment of demanding market standards for green bonds in dialogue with market participants such as issuers, independent third parties or market initiatives. The Green Bond Principles (GBP) play a special role in this. As an investor, KfW is a member of the Executive Committee of the GBP, a coordinator of the "Impact Reporting" Working Group and a member of the "Climate Transition Finance" Working Group.

Minimum Criteria

KfW has defined minimum requirements for the quality of the green bonds to be purchased. The minimum criteria relate to the project categories (for example, renewable energy, energy efficiency, environmentally sound transport projects and biodiversity) including the presentation of the objectives and expected impacts of the projects, the process of project selection, the delimitation of funds, reporting and qualified verification by a third party (for example, in the form of a "second party opinion"). No funds are provided for measures for commercial power generation with nuclear energy or from coal and KfW's bank-wide exclusion list is adhered to. KfW also takes the sustainability ambitions of issuers into account in its investment decisions. The underlying minimum requirements for this, which are based on the Green Bond Principles, are regularly reviewed and qualitatively refined in line with market developments.

Key Portfolio Figures

As part of its liquidity portfolio, KfW invests in investment grade debt securities and includes only the following issues:

  • from public budgets
  • from supranational, governmental or parastatal institutions (such as multilateral development banks)
  • from banks
  • Covered bonds (Pfandbriefe)
  • ABS (exclusively investments in senior tranches)

In terms of currencies, there is a focus on USD and EUR as well as some selected currencies.