„Shaping the future“

KfW Research has calculated that we will need 5,000 billion euros by 2045 for climate transformation alone. Mr Wintels, is this dimension holding you back in your role as a motivator?

STEFAN WINTELS I am very confident, because in the 75 years that it has existed, KfW has repeatedly contributed to overcoming crises at home and abroad and emerging from them stronger. Our self-image is still “shaping the future”. As a driver, but above all as an “enabler” – “trailblazer” – we want to make it possible for people as well as companies to take responsibility. The enormous challenges can only be overcome if everyone fulfils their responsibilities. We are already seeing encouraging examples. Germany is reinventing itself once again. The transformation into a sustainable, digital and resilient Germany has begun!

What makes you say that?

WINTELS As KfW, we are close to market events at the interface between politics, business, finance and the general public. Both in the recognition of particularly innovative entrepreneurs and in our own financing practice, we experience that the inventive and entrepreneurial spirit of Germany is very strong. We also see crises as opportunities in Germany. A good example in two respects is the expansion of the LNG infrastructure in Brunsbüttel. On the one hand, the infrastructure was completed incredibly quickly and, on the other hand, the energy transition was directly taken into account. The infrastructure is designed in such a way that it will be able to process green hydrogen further down the line.

Mr Wintels, are green investments really profitable in the long-term?

WINTELS Absolutely. This is already the case today, for example with green bonds. The first green bond – it’s difficult to believe – was issued in 2007. It was 2014 when KfW launched the first Green Bond in Germany; the volume was only 43 billion US dollars, and last year we already had 630 billion US dollars in Green Bonds. This is an annual growth of almost 50 per cent. This suggests that there is incredible demand for green investments.

Why is this the case?

WINTELS Because sustainability removes risk. We are already seeing that companies with equally well-functioning business models without a credible sustainability strategy are traded at lower multipliers than companies with a clear sustainability strategy.

LINDNER We have a narrative in Germany that the ecological transformation necessarily involves abandoning growth and economic progress. My conviction is fundamentally different. Green investments or, in other words, investments in the environmental transformation can generate new growth themselves, because in the end we offer products and services with more efficient, more innovative methods. Because we develop system and technology know-how that we can export to the world. This environmental and digital transformation presents an enormous opportunity for our country to not only change itself, but also the world through top German products and services. And this brings good returns for all those who invest.

Mr Wintels, how does KfW contribute to this?

WINTELS 75 years of KfW means 75 years of experience in shaping change. Our aim has always been to provide investment incentives, stimulate private financing and mobilise private capital – both nationally and internationally. Up to now, the focus has been on mobilising private capital through debt capital – i.e. issuing loans. Now it’s all about the modular system to expand equity-like instruments and thus to help establish a self-sustaining ecosystem.

What’s already in your modular system?

WINTELS I would like to give you four examples. Firstly, we have funded a number of impact funds in developing countries and emerging economies, such as the eco.business Fund, which finances sustainably-producing companies in agriculture and fisheries. Here, one euro from the government budget raises more than 17 times the amount of sub-loans. Secondly, at the last COP27 climate conference, we launched the world’s first promotional platform for financing green hydrogen. It offers great potential for leveraging further public promotional funds, KfW’s own funds and private financing. Thirdly, I would like to mention our Venture Tech Growth Financing programme, which directly finances start-ups in Germany. It has recently been substantially expanded. By 2030, we will be providing 1.2 billion euros in revolving funds for joint financing with private lenders across all growth phases. And fourthly, we must remember to mention our subsidiary KfW Capital in this context. KfW Capital acts as an investor, investing in German and European venture capital funds …

Mr Wintels, you were an investment banker. How can you fall back on this experience now?

WINTELS Investment banks, especially if they are broadly based, offer their customers a financing mix of capital market and other financing offers. At its core, like all banks, it is about helping businesses, private and public sector budgets to implement their plans with tailored financing options. In the coming years, banks will have to accompany their customers in the transformation. Given the scale of the financing needs of this transformation, it will be important to take the requirements of investors, such as insurance companies, into account early on in larger projects. This mobilisation of private capital will be a key issue for KfW in the coming years in Germany, but also for our international activities.

How are you approaching the topic?

WINTELS We initiated the KfWplus transformation agenda at the beginning of 2022. By the end of this decade, we would like to further develop into the digital transformation and promotional bank. I strongly believe that we need to transform ourselves in order to support the transformation of the economy and society in a sustainable manner. In KfWplus, the mobilisation of private capital is the key factor in addition to optimising the impact. These two objectives are directly related. The mobilisation of private capital is not an end in itself. Instead, it primarily serves to make the desired promotional effect as efficient as possible. For the Federal Government, this means using budget funds sparingly, while for private investors it means reducing risks.