Backed by a promotional mandate of the German Federal Ministry for the Environment, the KfW Group says it will remain committed to the green bond market as an ambitious investor, thereby contributing to the further development of this market segment.
Green bonds are an important instrument to mobilise capital for the transition to an environmentally friendly and climate-neutral economy.
Since 2015, KfW, a state-owned development bank based in Frankfurt, has built up a portfolio of green bonds which has now reached its €2 billion target and will be maintained at a level of €2 – 2.5 billion going forward. In its investments, KfW will keep up its commitment to high standards, for example with regard to transparency and good reporting on the use of proceeds and the impacts of financed projects. It will also take even greater account of the climate action and sustainability focus of the issuers themselves in its future investment decisions.
Jochen Flasbarth, State Secretary at the German Federal Ministry for the Environment said: “The trend of the past years has shown that investors have great interest in ecologically sustainable investments. Investors who wish to invest their funds with a view to impact need an offering that is truly in line with green ambitions.
“At the same time, green bonds are an important instrument for leveraging the enormous amounts we need to mobilise all over the world as we transition to an environmentally friendly and climate-neutral economy. The Ministry for the Environment therefore supports KfW in providing effective impetus as an investor to consolidate the green bond market on a high level in the future as well.”
Bernd Loewen, Board Member of KfW Group, in charge of Capital Markets, said: “Our green bond portfolio has now reached the initial target of €2 billion. We are therefore pleased to continue our comprehensive efforts to support the development of the green bond market, both as an ambitious investor and as one of the world’s largest issuers.
“Green bonds enable an in-depth dialogue between numerous stakeholders on the necessary transition of the economy towards climate neutrality in 2050. This is essential for mobilising the required capital. In order to move forward in the transition, we will integrate the overall sustainability and climate action focus of the issuers even more closely into our investment decisions in the future.”
Since April 2015, KfW has reportedly been promoting climate change mitigation and adaptation, resource conservation and environmental protection projects through investments in green bonds under a promotional mandate of the German Federal Ministry for the Environment. Green bonds have become established as a capital market-based instrument for financing climate action and environmental protection projects. They contribute to more firmly embedding ecological sustainability as a factor in the financial sector’s decision-making processes.
KfW is said to be active in numerous areas related to the qualitative green bond market development: It maintains a dialogue with a wide range of market stakeholders and acts as a point of contact for green bond issuers and other actors in the green bond segment such as financial intermediaries, investors, sustainability rating agencies and other stakeholders.