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Exclusion Criteria

In addition to the so-called ESG criteria (environmental, social and governance), exclusion criteria are also integrated into our investment approach for the liquidity portfolio . Applying exclusion criteria ensures that, as a matter of principle, no funds provided by KfW to the issuers through the purchase of their bonds for the KfW liquidity portfolio can flow into projects which, from our perspective, are likely to have unacceptable negative impacts on the environment, social conditions and governance.

If the issuers are financial services providers, the exclusion criteria are applied indirectly, in the case of banks, for example, to their relevant equity participations. Exclusion criteria are not considered for bonds of sovereign issuers.

Indirect application of exclusion criteria to:

  • shares held by e.g. banks of at least 10 % in an enterprise
    • which generates at least 5% of its annual turnover on the basis of one or more of the products covered by the exclusion criteria, or
    • which exhibits a controversy factor of 4 or 5 as determined by our research partner Sustainalytics. A rating of 4 or higher on a scale of 1-5 means that controversies or serious violations have been repeatedly identified in an enterprise.
  • The amount of the equity participations must account for at least 0.5% of a bank's total assets.

The exclusion criteria of KfW

The exclusion criteria for producing enterprises and financial services providers are based on the "IFC Exclusion List" .

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1.Production or activities involving harmful or exploitative forms of forced labour or child labour as defined in the ILO core labour standards.
2.Production, use of or trade in pharmaceuticals, pesticides/herbicides, chemicals, ozone depleting substances and other hazardous substances that are subject to international bans.
3.Trade in animals or animal products that are subject to the provisions of CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora).
4.Production of cosmetics etc. involving testing on animals.
5.Commercial logging operations for use in primary tropical moist forests.
6.Production of wood or wood products other than from sustainably managed forests (enterprises with less than 50% FSC-certified production are excluded, FSC "Forest Stewardship Council").
7.Production or trade in controversial weapons or important components for the production of controversial weapons (anti-personnel mines, biological and chemical weapons, cluster bombs, radioactive ammunition, nuclear weapons).
8.Production or trade in tobacco.
9.Drift net fishing in the marine environment using nets in excess of 2.5 kilometres in length.
10.Controversial forms of gambling: operation of casinos, production of devices or other equipment for casinos or betting offices or companies that generate turnover via online betting. (So-called "short odds" are defined as "controversial forms of gambling").
11.Any business activity involving pornography.
12.Production or distribution of racist, anti-democratic and/or neo-Nazi media.


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