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Integration of ESG criteria
ESG criteria play an important role in the investment approach for KfW's liquidity portfolio
Since 2008, KfW has included not only the credit rating of the issuers but also their sustainability rating based on ESG criteria (Environmental, Social and Governance) in the investment decisions for the liquidity portfolio.
The sustainability ratings of the issuers in the liquidity portfolio are provided by the sustainability rating agency ISS ESG. ISS ESG takes into account a large number of individual criteria that are assigned to the environmental, governance and social categories. When compiling the sustainability ratings, a sector-specific weighting of these criteria is usually used.
Examples of ESG criteria for companies:
| Environment | Social | Governance |
|---|---|---|
| Climate strategy | Equal opportunities | Business ethics |
| Environmental management | Freedom to organise | Compliance |
| Environmental impact of the product portfolio | Health and safety | Independence of the Supervisory Board |
| Eco-efficiency: CO2, water, waste, energy | Product responsibility | Compensation |
| Energy management | Social impact of the product portfolio | Shareholder democracy and shareholder structure |
| Water risks and impacts | Supply chain management | Taxes |
