New KfW promotional programme helps SMEs to invest in climate change mitigation and sustainability

• Climate action campaign for SMEs launched on 15 March
• Low-interest loans in combination with grants for investment in climate-friendly products, technologies and processes
• The EU’s definition of sustainable development (“EU taxonomy”) sets the standard for eligibility for promotion

KfW and the Federal Ministry for Economic Affairs and Energy (BMWi) are supporting German SMEs in their efforts to transition to greater climate change mitigation, environmental protection and resource conservation with a new promotional programme: the Climate action campaign for SMEs (“Klimaschutzoffensive für den Mittelstand”), offers low-interest loans to medium-sized private and municipal enterprises with annual sales of up to EUR 500 million in combination with attractive grants for investments in the manufacture and use of climate-friendly systems and products that will have a significant effect on climate change mitigation. These include a wide range of measures to reduce greenhouse gas emissions in the areas of industry, transport, electricity and heat generation, waste and wastewater management, and green IT. In the framework of the climate action campaign for SMEs , KfW will provide up to EUR 100 million per year, initially over a period of three years.

At the launch of the programme, KfW Executive Board member Dr Ingrid Hengster said: “The German Federal Government and the European Union have set ambitious climate targets. They can only be achieved if companies follow the road to greater environmental protection, climate change mitigation and resource conservation. This requires a far-reaching transformation process, which poses financial challenges especially for small and medium-sized enterprises and which we, as a sustainable promotional bank, will support and help shape in the coming years.”

The measures to be financed must be based on the EU-wide definition of environmentally sustainable economic activities (EU taxonomy) in order to be eligible for funding from the Climate action campaign for SMEs. The EU taxonomy, which comes into force at the end of 2022, defines the future standards for sustainable economic activities. Compliance with this classification system will become a key factor in access to capital and the competitiveness of businesses in the years to come.

“The term “EU taxonomy” sounds academic and abstract, but it sends a clear message: business activities and climate action can only go hand-in-hand in the future. This also represents a great opportunity for small and medium-sized enterprises: by acting early, they can enhance their pioneering role and contribute to achieving the climate targets,” says Hengster.

An overview of the measures eligible for funding is available on KfW’s website at www.kfw.de/klimaschutzoffensive. KfW uses the “climate grant”, which can only be applied for in connection with the loan, to pass on its funding conditions, which are currently particularly favourable, to its customers. At the start of the programme, the climate grant is up to 6% of the loan amount to offer pioneering investors a special incentive.