Common press release of KfW and BMUV: Mandate from Federal Environment Ministry to promote green bonds successfully completed

• Environment Ministry and KfW meet green bond support targets

The German Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) and KfW have met the targets enshrined in the promotional mandate to develop a green bond portfolio since 2015. KfW’s Treasury has since then invested in green bonds to finance environmental protection and climate action measures on behalf of the BMUV. The goal was to contribute to the qualitative and quantitative development of the young green bond segment of the capital market.

Federal Environment Minister Steffi Lemke:

“A sustainable finance system and sustainable capital market are key levers to make our economic system fit for the future. Socio-environmental transformation requires immense financial resources for the necessary investments. This will require public money and, above all, private funds. Green bonds are an effective tool to make the relevant resources available. I am pleased that we can advance the green bond market with the help of KfW and contribute to establishing ambitious market standards. The BMUV will continue its active involvement in the green bond market in the future.”

Stefan Wintels, KfW Chief Executive Officer and Executive Board member in charge of capital markets:

“With our investments in green bonds, we have raised additional capital for global environmental and climate protection. Green bonds have now become a widely accepted and transparent capital market instrument." KfW wants to make the economic, environmental and social impact of its financings even more transparent in the future for its global investors, Wintels added.

Since it was initially commissioned by the BMUV, KfW has mobilised a total of EUR 3.4 billion with 122 investments and contributed to supporting green projects of 64 issuers from 16 countries. The investments focused on measures aimed at increasing energy efficiency and expanding renewable energy. Over the same period, the outstanding volume in the green bond market has grown substantially from well below EUR 100 billion to a scale of around EUR 2,000 billion, while the annual global green bond issuance volume has grown from a few billion euros in 2015 to around EUR 500 billion this year and in the two previous years. This development shows that investors are increasingly interested in knowing how their invested capital is used. Issuers use the green bond market to create more transparency on their business activities.

Under its promotional mandate, KfW has also contributed to the qualitative development of the market by supporting issuers in setting up their green bond issuance programmes and relevant reporting. During its many years as a member of the Executive Committee of the Green Bond Principles, KfW has also participated actively in the development of globally accepted, ambitious standards and placed particular emphasis on the development of recommendations for impact reporting for green bonds. Transparency und verifiability regarding investments and their impacts are key concerns for the credibility of green bonds and, thus, for investors as well.

KfW’s work, especially in the development of guidelines for reporting, benefits not just the global green market but also KfW itself. The lessons learnt will flow into the set-up of a group-wide impact management system which KfW is intensively pursuing to use it as a basis for its future impact reporting, not least for its global investors.

Even after its promotional mandate expires, KfW will remain active in the green bond market as a sustainable investor and will also invest in green bonds in its liquidity portfolio. The BMUV will also continue to actively support the development in the green bond market.

You can find further information on KfW’s green bond portfolio here.