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 target volume of the portfolio was doubled to EUR 2 billion in May 2017.
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, resource efficiency, environmental 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.
Prior to each investment decision, KfW evaluates Green Bonds by applying the following minimum criteria:
- 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 frequent public reporting including project description, allocation of funds and environmental impacts (quantified where feasible),
- A verification of the project selection and use of funds from an independent third party.
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.