KfW

Overview of climate mainstreaming approach and goals:

The transformation process towards a sustainable society is the most pivotal challenge of our times. As a transformative promotional bank, KfW Group therefore takes a particular responsibility for the successful transformation. Thus, KfW Group focuses on forward-looking Paris-compatible sector guidelines for greenhouse gas-intensive sectors, an exclusion list as well as high environmental and social standards in its financing activities. Further supported by a group-wide impact management system, KfW Group systematically contributes to its primary objective of sustainable promotion which is defined as the transformation of the economy and society with the aim of improving economic, ecological and social living conditions around the world.

Against this backdrop, KfW Group’s sector guidelines systematically focus on greenhouse gas-intensive sectors for which sector specific minimum requirements for the climate compatibility of technologies financed by KfW are defined. These minimum requirements are scientifically derived from highly recognized Paris-compatible climate scenarios published by the International Energy Agency (IEA) and concretely point out with which combination of use of transitional and technologies of the future the transformation process towards greenhouse gas neutrality can successfully be implemented. For its new financing activities to remain consistently “Paris compatible” while ensuring that the minimum requirements remain realistically achievable for clients and partners, KfW gradually increases its climate-compatibility requirements.

The first Paris-compatible sector guidelines were introduced on 1st July 2021 and define guidelines for the greenhouse gas intensive shipping, automotive and iron and steel production sectors. As of 1st September 2021, the scope of the sector guidelines was expanded to include further Paris-compatible guidelines for the building and aviation sectors as well as for power generation. KfW revised the guidelines already in place regarding the 1.5°C target in 2022 and implemented them at the start of 2023. KfW is guided in this respect by the 1.5°C-compatible “Net Zero by 2050” scenario of the International Energy Agency (IEA). The IEA scenario also represents our baseline scenario. In recognition of the special importance of climate change, the target environmental share of financing has been set at ≥ 38% of total new commitment volume. In order to identify its own sustainability performance, KfW has also set itself the goal of determining its contribution to the Paris climate targets and SDGs, as well as being listed on average among the top five promotional and development banks in global sustainability ratings.

In addition to our traditional promotional business, KfW expands its green-bond activities, which are pursued to raise capital for the transition to an environmentally sustainable and climate-neutral economy. This commitment encompasses KfW’s dual role as an issuer and green-bond investor.

Principal Strategic Documents:

• Sustainability Report 2022
• Sustainable Finance Project KfW Group
• Sustainability Guideline: Assessment and management of Environmental, Social and Climate Aspects: Principles and Procedures

Principal Tools and Methodologies:

• SDG Mapping
• KfW Group’s impact management
• Paris-compatible sector guidelines
• Background paper Paris-aligned sector guidelines 

Key reports and other materials published by the institution:

• 2022 Sustainability Report
• Exclusion List of KfW Group (EN) – The exclusion list of KfW Group is valid group-wide. On the one hand, it excludes financing for new projects or purposes in predetermined areas (exclusion list). On the other hand, in selected sectors, KfW Group ties its direct financial commitment for concrete new projects to qualitative conditions (supplementary requirements).