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Exclusion Criteria for KfW's Liquidity Portfolio

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.

Exclusion Criteria for the Liquidity Portfolio of KfW

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

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 pesticides/herbicides or 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.Investments which could be associated with the destruction** or significant impairment of areas particularly worthy of protection (without adequate compensation in accordance with international standards).
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 radioactive material. This does not apply to the procurement of medical equipment, quality control equipment or other application for which the radioactive source is insignificant and/or adequately shielded.
9.Nuclear power plants (apart from measures that reduce environmental hazards of existing assets) and mines with uranium as an essential source of extraction.
10.Prospection, exploration and mining of coal; land-based means of transport and related infrastructure essentially used for coal; power plants, heating stations and cogeneration facilities essentially fired with coal, as well as associated stub lines***.
11.Non-conventional prospection, exploration and extraction of oil from bituminous shale, tar sands or oil sands.
12.Production or trade in tobacco.
13.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").
14.Any business activity involving pornography.

** "Destruction" means (i) the destruction or severe deterioration of the integrity of an area caused by a major and prolonged change in the use of land or water, or (ii) the alteration of a habitat which leads to the inability of the affected area to perform its function.

*** Investments in power transmission grids with significant coal-based power feed-in will only be pursued in countries and regions with an ambitious national climate protection policy or strategy (NDC), or where the investments are targeted at reducing the share of coal-based power in the relevant grid. In developing countries, heating stations and cogeneration facilities (CHP) essentially fired with coal can be co-financed in individual cases based on a rigid assessment, if there is a particularly high sustainability contribution, major environmental hazards are reduced, and if there demonstrably is no more climate-friendly alternative.


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