INVEST IN THE EVERLASTING. GREEN BONDS - MADE BY KFW.
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Invest in the everlasting. Green Bonds – Made by KfW.
Haftungsausschluss / Disclaimer
Die in diesem Dokument enthaltenen Informationen stellen kein Angebot zum Kauf von
Wertpapieren in den USA dar. Wertpapiere dürfen in den USA nur mit vorheriger Registrierung
oder ohne vorherige Registrierung nur aufgrund einer Ausnahmeregelung verkauft oder zum Kauf
angeboten werden. Ein Angebot zum Kauf von Wertpapieren wird in den USA nur auf Grundlage
eines Prospekts erfolgen, der von der KfW zur Verfügung gestellt wird und detaillierte
Informationen über KfW, ihre Geschäftsleitung, ihre Jahresabschlüsse sowie Informationen über
die Bundesrepublik Deutschland enthalten wird.
The information contained in this document does not constitute an offer of securities for sale in the
United States. Securities may not be offered or sold in the United States absent registration or an
exemption from registration. Any offering of securities in the United States will be made by means
of a prospectus that may be obtained from KfW and will contain detailed information about KfW
and its management, financial statements and information about the Federal Republic of
Germany.
Green Bonds - Made by KfW / June 2020 2
Agenda
1. KfW – Commitment to sustainability
KfW at a glance and the importance of its holistic sustainability approach
2. Green Bonds – Made by KfW
KfW’s green bond framework and the green bonds’ mode of operation
3. Green Bond issuances
Overview, experiences and reporting of all KfW green bonds issued
4. KfW at debt capital markets
KfW as an issuer of bonds and notes
5. Green Bond portfolio of KfW
KfW as an investor in green bonds
Green Bonds - Made by KfW / June 2020 3
KfW – Commitment to sustainability KfW at a glance and the importance of its holistic sustainability approach Green Bonds - Made by KfW / June 2020 4
KfW in brief
Germanyʼs Shareholders
Professionally
flagship
German credit supervised and German
development federal
regulated states 20%
agency
Federal
› The promotional bank of the Federal Republic of Rating(1) Republic
of Germany
Germany, established in 1948 as a public law 80%
institution.
Credit
› Benefits from explicit and direct statutory
guarantee and institutional liability by the Aaa Moody‘s
Federal Republic of Germany. Headquarters: Frankfurt am Main
AAA Scope
Branches: Berlin, Bonn
› Regulated by the "Law concerning KfW" and
exempt from corporate taxes. AAA S&P
› Zero risk weighting of KfW’s bonds.(2) Sustainability
› Supervision by the German Federal Ministry of out of
Finance and the German Financial Supervisory TOP 2 19 imug
Frankfurt Berlin
Authority "BaFin". ISS ESG
"Prime"
› Subject to certain provisions of German and out of
European bank regulatory laws by analogy, in large TOP 3 77
Sustainalytics
part with effect from January 1, 2016. AAA MSCI
(1)
A rating is not a recommendation to buy, sell or hold securities. Ratings are subject to revision or withdrawal at any time by Bonn Cologne (DEG)
the assigning rating organization. Each rating should be evaluated independently of any other rating.
(2)
According to the standardized approach of the Capital Requirements Regulation (CRR)
Green Bonds - Made by KfW / June 2020 5
Worldwide presence Number of KfW employees 6,376
About 80 representative offices
1948 1950 1960 1970 1980 1990 2000 2010 2016 2017 2018
Bonn
Cologne Moscow
London Berlin
Brussels Chişinău Kyiv
Frankfurt Belgrad
Mazar-e-Sharif Ulan Bator
Sarajevo Priština Tiflis
Istanbul Taschkent Bishkek
New York Podgorica Baku Beijing
Tirana Skopje Ankara Yerevan Dushanbe
Tunis Islamabad
Rabat Beirut Kabul
Ramallah-Al-Bireh Amman
New Delhi Kathmandu
Cairo
Abu Dhabi
Dhaka Hanoi
Mexiko City Mumbai
Rangoon Vientiane
Tegucigalpa Niamey Sanaa
Guatemala City Dakar Bamako Manila
Managua Abidjan Bangkok
San Salvador Ouagadougou Phnom Penh
Addis Abeba Ho Chi Minh City
Cotonou
Bogotá Lomé Yaoundé Kampala Singapore
Accra
Quito Kigali Nairobi
Kinshasa Bujumbura
Daressalam Jakarta
Lima
Lusaka Lilongwe
La Paz Brasilia
Windhoek
São Paulo Pretoria Maputo
Johannesburg
Green Bonds - Made by KfW / June 2020 6
KfW Group’s business activities
New business 2019: EUR 77.3bn (+2% yoy)
SME Bank & Private Clients Customized Finance & Public Clients KfW Capital
Standardized financing products for SMEs, Individual financings for municipal & social Subsidiary (100%, est. 2018) to carry out KfW’s
Domestic
business founders, start-ups, self-employed infrastructure, customized financing for FI & entire private equity & venture capital business
professionals and private individuals promotional institutes of German federal states
46% 9%
Proven and successful business model
KfW involves commercial banks in its domestic activities
Backed by Understanding II
reached with EU Commission
Green Bonds - Made by KfW / June 2020 8
Sustainability has been and remains one of KfWʼs top priorities
Manifold activities to improve sustainabilty and to act as vocal advocate - examples
Setting new corporate targets:
KfW shall remain among top-performer in ESG ratings by renowned int’l ESG rating agencies
Improving lending business:
Development of a group-wide KfW Roadmap Sustainable Finance by 2020:
‒ Improvement of impact evaluation of KfW’s business (e.g. SDG mapping)
‒ Assessment of sustainability control elements in bank steering
‒ Consideration of ESG and climate risks
in internal risk management process "Sustainability has always been an
important part of our DNA. KfW is
Financing landmark projects: sustainable in a holistic sense,
Clean Ocean Initiative (KfW, EIB and AFD; 2018) i.e. our understanding of
sustainability goes far beyond
– EUR 2bn for sustainable projects to reduce the pollution environment and climate protection. "
in the world’s ocean within the next 5 years
Dr. Günther Bräunig, CEO
– Focus on river and costal areas of developing countries
in Asia, Africa, and the Middle East
Engaging in global initiatives:
‒ PRI – Principles for Responsible Investments signatory
‒ Green Bond Principles Executive Committee member
– TCFD – Task-Force on Climate-related Financial
Disclosure supporter
Green Bonds - Made by KfW / June 2020 9
Holistic sustainability approach at KfW
Since 2019 with explicit reference to SDGs, Paris Agreement and German Governmentʼs
sustainability strategy
KfW Bankengruppe
Declaration on the respect for human rights in its business operations
KfW sustainability mission statement and areas of action
Sustainability Banking Sustainability
management Banking
Banking business
business Employer
Employer Banking operations
communications
operations
‒ Sustainability ‒ Sustainability report
organisation: Financings
Financings Employer
Employer attractiveness Corporate governance
Corporate governance &
‒ Chief Sustainability (in line
line with
with the
the megatrends
megatrends attractiveness ‒ Sustainability portal
(in &compliance
compliance
Officer ofofclimate
climate changeand
change &
‒ Group officer for environment; globalisation, ‒ Stakeholder
environment; globalisation,
sustainability socialsocial
change, digitalisation management
change,
‒ Netw ork of decentralised and innovation; social Equality
Equality (dialogue and
digitalisation & innovation)
sustainability officers change) communication)
In-house
In-house environmental
‒ Sustainability guidelines environmental
protection
for banking business protection
and operations Capital market
Reconciling
Reconciling of work
of work and
private life
and private life
‒ Sustainability ratings
and rankings
Procurement
Procurement
‒ Inclusion in strategic Risk management Social commitment
Social commitment
objectives
Green Bonds - Made by KfW / June 2020 10KfWʼs business activities focus on four megatrends
A contribution to all of the United Nationsʼ Sustainable Development Goals
The heart of KfWʼs
business activities:
SDG-MAPPING
of entire KfW Groupʼs new business 2019
PROMOTION Focal SDGs are: 7, 8, 11, 13
38%
Climate Change
& Environment
3%
Digitisation
& Innovation
SDG 13:
26% Climate
Action
Globalisation
15% SDG 11:
Sustainable
SDG 7: Affordable
Cities and
and Clean Energy
Social Change Communities
SDG 8: Decent Work and
Numbers represent the share of new commitments in 2019 Economic Grow th
Green Bonds - Made by KfW / June 2020 11Spotlight 2: Sustainable own operations
In-house environmental protection
Fields of activities In-house targets (samples)
Energy consumption and Car policy with binding
green electricity criteria that promote
Energy-efficient buildings ecological vehicles
Business travel and Conversion of the heating
commuting and cooling supply in
Water and wastewater head quarter (Frankfurt).
Recycled paper Target: reduce GHG
emissions by around
Charging stations for
1,500 t/a
electric cars & e-bikes
KfW GHG emissions
2015 2016 2017 2018 2019
(in tons)
Energy consumption 6,294 6,734 7,070 7,570 6,879
Total business travel 7,394 7,411 8,208 8,665 7,753
Total 13,628 14,145 15,278 16,236 14,632
Ø per employee 2.2 2.1 2.1 2.1 1.9
Reporting
Environmental reporting/accounting since 1998
Sustainability report since 2006
Comprehensive sustainability reporting on www.kfw.de
100% of KfW’s GHG emissions from energy consumption and business travel are offset by purchasing Clean Development
Mechanism certificates.
Green Bonds - Made by KfW / June 2020 12Spotlight 3: Sustainable investment approach
As PRI member KfW manages fixed-income investments in a sustainable manner
KfWʼs Liquidity Portfolio Sustainable Investment Approach for the Liquidity Portfolio
€28bn
securing KfWʼs liquidity ESG Integration Exclusion Criteria Engagement
- Only investments - Investments only - The sustainability
Strategy in bonds of issuers in bonds from rating of an issuer
whose issuers who are in is crucial for a
Pure fixed income portfolio sustainability compliance with potential bond
score is among the IFC exclusion investment
Buy-and-hold strategy the best 50% of list - Dialogue with the
Exclusively investment-grade bonds the respective issuers on a
sector regular basis
Asset Classes - Sustainability
assessment of
issuers performed
Government bonds, covered bonds by an external
Financials provider (ISS
Bonds issued by government-related ESG)
issuers and agencies
ABS
Green Bonds - Made by KfW / June 2020 13Top ESG ratings confirm KfW’s holistic sustainability approach
Renown international rating agencies assign KfW to be among top-performers in ESG
AAA A+ 10 0
KfW is among KfW is among KfW’s rating is KfW is #3 out Leader
5.2
the 2 best out Leader the best-rated at the highest 7.9
of 77 develop-
of 19 develop- BB
institutions in Leader level possible ment banks
ment banks its peer group Industry C+
BB D
Prime D-
AAA 0
Top 3 100
KfW’s strengths KfW’s strengths KfW’s strengths KfW’s strengths
Profound measures regarding the Comprehensive policy regarding In 2018, KfW received a rating of KfW is rated in the lowest ESG
management of ESG issues. the respect for human rights. AAA (on a scale of AAA-CCC) in Risk Rating category (="negligible
Development and implementation the MSCI ESG Ratings risk") within its peer group and
Performance regarding assessment. rated banks globally.
environmental and governance of an approach to calculate GHG
criteria is above average and on emissions in the corp. value chain. KfW continues to demonstrate
average regarding social criteria. Code of conduct covering impor- strong sustainability performance.
Specifically striking is the positive tant aspects of business ethics.
performance in the area of Reasonable integration of environ-
environmental business mental and social aspects into the
operations. own investment portfolio.
Last update: March 1, 2020 Last update: Oct 16, 2018 Last update: Sep 4, 2018 Last update: June 2, 2020
KfW has set a new strategic objective of achieving top sustainability rankings among its peers.
A rating is not a recommendation to buy, sell or hold securities. Ratings are subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated
independently of any other rating.
Green Bonds - Made by KfW / June 2020 14Green Bonds – Made by KfW KfW’s green bond framework and the green bonds’ mode of operation Green Bonds - Made by KfW / June 2020 15
Why issuing “Green Bonds – Made by KfW”?
Overarching Strategy and Motivation
Sustainability Profile New Investors
We want to enhance We want to attract
ENHA our sustainability DIVER new investors and
profile amongst our thereby diversify
NCE stakeholders SIFY our investor base
Green Investments
We want to boost Low Carbon Economy
INCR environmental We want to actively
EASE
investments via
capital markets by
SUP support the
transition to a low
being a catalyst PORT carbon economy
KfW’s mission: Performing promotional tasks to, among others, protect the environment.
Green Bonds - Made by KfW / June 2020 16Increasing investors’ willingness to engage in green finance
KfW is one of the most active participants in the green bond market
Green Bonds Issuance Volume
(EUR in billions per year, excl. ABS & U.S. municipalities)
€500bn
threshold
in Green Bonds
1st Green Bond by a state ever issued
by Poland
?
1st Green Covered Bond 181
1st Green Bonds by BerlinHyp
by EIB Launch of the
and World Bank 110
Green Bond Principles 100
208
Launch of the 1st Corporate Green Bond 68
Climate Bonds by Vasakronan/Sweden
Initiative 24 32
4 2 10 COP 21
0.1 0.1 1 United Nations’ SDGs Paris agreement
2007/8 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1st Green Bond – Made by KfW
€14.5bn
Launch of KfW Green Bond Portfolio KfW Green Bonds
KfW becomes ExCom-Member of Green Bond Principles
issued under
1st Framework “Green Bonds – Made by KfW” 2nd Framework
Source: Bloomberg
Green Bonds - Made by KfW / June 2020 17How do “Green Bonds – Made by KfW“ work?
Liquidity management
Renewable Energy &
Energy Efficiency
2 Loan Programmes
~ 43,000 loans
2019
Socially Lender On-lending bank Final borrower
responsible
investors
Other renewables
SSD EUR2m 10y Other OECD
Solar countries
0.2%
0.0% Wind 5.6%
Funding USD2bn 10y Sweden
EUR4bn 8y energy
22.3% 4.5%
14.9% France
Other 1.9%
3.4%
buildings
NOK6bn 4y €8.1bn 49.4%
0.2%
€10.9bn
7.3%
HKD300m 2y 2019 2019
0.4%
8.9%
GBP650m 7y 90.2% Germany
3.5% Residential 79.1%
AUD450m 5y 8.1%
buildings
SEK7bn 3y
Green Bonds – Made by KfW Underlying assets
Green Bonds - Made by KfW / June 2020 18What are the net proceeds of KfW Green Bonds used for?
Use of Proceeds: all projects (co-)financed under two KfW loan programmes
Renewable Energy Energy Efficiency
KfW loan programme "Renew able Energies – Standard" (no. 270) KfW loan programme "Energy-efficient Construction" (no. 153)
Use: Renewable energy plants for electricity Use: Construction and acquisition of new energy-
generation, combined electricity and heat generation efficient residential buildings with low energy
and measures to integrate renewable energy into the consumption and reduced carbon emissions.
energy system, in particular photovoltaic panels, Eligible buildings, including passive houses, must be at
wind mills (on/offshore), hydropower (Case studies on renewable energy & energy efficiency projects
Renewable Energy Energy Efficiency
KfW loan programme "Renew able Energies – Standard" (no. 270) KfW loan programme "Energy-efficient Construction" (no. 153)
Windpark „Dretzen II“ by NOTUS
New construction of a family home
energy GmbH
Brandenburg/Germany Bavaria/Germany
34,000 MWh p.a. renewable energy Energy-efficient measures:
produced wooden construction, clay plaster,
reed insulation, biomass heating,
17,799 tons p.a. estimated GHG
ventilation with heat recovery
reduction
EUR 22.5m total project costs KfW Efficient house 55
Project costs: 1,465€/m²
KfW financing share: 88%
PV system by HP-T Höglmeier
Apartment building in a backyard
Polymer-Tech GmbH
Bavaria/Germany Munich/Germany
945 MWh p.a. renewable energy Energy-efficient measures:
produced passive-house components, compact
building shape, controlled
127 tons p.a. estimated GHG reduction
ventilation, district heating
EUR 420,000 total project costs
KfW Efficient house 40
KfW financing share: 95%
Project costs: 2,460€/m²
Green Bonds - Made by KfW / June 2020 20How will the eligible green projects be selected?
Process for project evaluation & selection
Project Selection Project Evaluation
KfW’s environmental & social risk
management framework
High level of environmental protection and
social regulations applicable by the
Germany responsible authorities.
No further ESG assessment by KfW.
EU & High- High level of environmental protection and
social regulations applicable by the
KfW loans are extended to final borrowers via interme- Income-
OECD responsible authorities.
diaries such as commercial banks or local saving banks.
countries No further ESG assessment by KfW.
Intermediaries apply their regular loan procedure, assume
the liability for repayment to KfW and screen against the
KfW’s lending department assesses possi-
specific programmes’ eligibility criteria KfW defined.
ble negative environmental or social impact.
In a 2nd step, the KfW lending department reviews the KfW’s Competence Centre for Environment
loan application and compliance with the eligibility criteria and Sustainability reviews projects that are
of the specific KfW loan programme. All other
countries considered relevant.
All projects approved by KfW’s lending department for All projects must comply with int’l regula-
eligible loan programmes immediately qualify for KfW tions incl. those of EU, World Bank, and the
Green Bonds w/o further selection or approval process. International Labour Organisation (ILO).
Green Bonds - Made by KfW / June 2020 21How will the proceeds of KfW Green Bonds be managed?
Management of proceeds
Transparent tracking
Loans for
Net
renewable
proceeds Green bond
energy &
from register
energy
issuance
efficiency
Amount equal to
Separate euro
Green bonds in net proceeds used
register for each
several currencies for disbursements
and sizes calendar year,
of eligible green
first-in -> first-out
projects
On a monthly basis, amounts matching requests for disbursements under KfW’s programmes “Renewable
Energies – Standard” and „Energy-efficient Construction“ are allocated to an internal register starting with
the beginning of the calendar year.
Upon issuance of “Green Bonds – Made by KfW”, an amount equal to the net proceeds in euros of such
transactions is allocated to this internal register in their order of issuance.
For any “Green Bonds – Made by KfW”, KfW expects full allocation by end of the year of issuance.
“Green Bonds – Made by KfW” can be increased (tapped). In terms of management of proceeds and
reporting a tap is treated like a new issuance.
The volume-weighted average maturity of the cumulated green bonds issued in one year may not exceed
the average duration of the cumulated loan commitments for eligible green projects of the preceding year.
Green Bonds - Made by KfW / June 2020 22How does KfW report on allocation and impact of Green Bonds?
Reporting
KfW aims to create transparency and trust in the effectiveness of its “Green Bonds – Made by KfW” with a
regular reporting. Two separate reports provide information about the allocation and impact.
Allocation Report Impact Report
Annual report until full allocation of the net proceeds. One-off report once the relevant loan programmes have been
Shows allocated and unallocated proceeds, if applicable. evaluated for an entire calendar year.
Shows breakdown by eligible category and country of Shows the estimated social and environmental ex-ante
the cumulated requests for disbursement of one year. impact in accordance with the Harmonized Framework for
Impact Reporting.
This non-dynamic portfolio is linked to the cumulated net
proceeds of all green bonds issued in the same calendar Core indicators for Renewable Energy:
year, therefore, all fully allocated “Green Bonds – Made by GHG emissions reduced/avoided, renewable energy
KfW” issued in one calendar year show the same breakdown generation, capacity of renewable energy added
by category/country. Core indicators for Energy Efficiency:
Prepared on a portfolio basis and shows aggregated data. GHG emissions reduced/avoided, energy savings
Prepared on a portfolio basis and shows aggregated data for
each calendar year as well as the key underlying methodology
and assumptions to the estimations.
The non-dynamic portfolio is linked to the cumulated net
proceeds of all green bonds issued in the same calendar year,
therefore, all “Green Bonds – Made by KfW” issued in one
calendar year show the same impact per unit financed.
Green Bonds - Made by KfW / June 2020 23Estimated impact of “Green Bonds – Made by KfW”
Ex-ante data based on external programme evaluation and on KfW’s financing share
Renewable Energy Cumulated impact 2014-2018
KfW loan programme "Renew able Energies – Standard" (no. 270)
of all KfW Green Bonds22
Impact data per €1m KfW loan amount1 2014 2015 2016 2017 2018
Expected reduction of GHG emissions
Not yet Not yet
Annual GHG emissions reduced (in tons of CO2e) 880 859 794 available available
Annual renewable electricity generation (in MWhel)
Renewable energy capacity added (in MWel)
1,218
0.61
1,273
0.64
1,185
0.61
Not yet
available
Not yet
available
Not yet
available
Not yet
available
12.0m
tons of CO2e p.a.
Number of jobs created/preserved (in person years) 17 17 16
Not yet
available
Not yet
available
equivalent to GHGs
from more than 6.1m passenger
cars 3
Not yet Not yet
Annual savings in energy imports (in EUR) 46.5K 46.8K 44.3K available available
Not yet Not yet
Annual savings in external costs (in EUR) 89.7K 86.4K 80.7K available available Expected renewable electricity generated
Energy Efficiency
KfW loan programme "Energy-efficient Construction" (no. 153)
17.5mMWhel p.a.
Impact data per €1m KfW loan amount1 2014 2015 2016 2017 2018
equivalent to
powering almost 5.5m German
housholds 4
Not yet
Annual GHG emissions reduced (in tons of CO2e) 3.8 4.4 4.6 4.6 available
Annual final energy savings (in MWh) 12.5 11.9 10.9 9.6 Not yet Renewable energy capacity added
available
Number of jobs created/preserved
1 Figueres
(in person years) 12 11 11 11 Not yet
available
are based on numbers evaluated by external research institutions (ZSW or IWU) and own calculations. Data for projects outside Germany are not available. Assumption:
Projects outside Germany deliver the same impact as projects located in Germany. The share of projects outside Germany in total project costs of Programme no. 270 between
8,910MWel
2014 and 2018 varied from 20% to 50%. Actual and future impacts might be different. equivalent to the nuclear
2 Issuance volume €14.5bn. Preliminary as the impact of the not yet evaluated years 2017 and 2018 is estimated based on prior year‘s results. Therefore subject to adjustments.
3 Based on data from the German Federal Ministry of Environment: and the German Federal Motor Transport Authority: 139gCO e/km; 14,015km/year.
4 Based on an average power consumption of a German household of 3,207kWh per year.
2
power of more than 6 power plants5
5 Based on an average power of 1.4 GW per nuclear power plant.
Green Bonds - Made by KfW / June 2020 24Independent expert opinions are essential for KfW
External review
Second Party Opinion Verification Green Bond Rating
Independent Second Party Opinion for The positive environmental impact The first two “Green Bonds – Made
KfW’s Green Bond Framework issued of KfW's individual loan programmes by KfW” (EUR1.5bn 0.375%
by CICERO saying: underlying its “Green Bonds – Made 2014/2019 and USD1.5bn 1.750%
KfW Framework 2019 by KfW” is evaluated by one or more 2014/2019) were rated by oekom
(Renewable Energy & Energy Efficiency) independent institutions. research AG (today: ISS ESG)
In line with Green Bond Principles The KfW loan programme saying:
Shades of Green: medium green “Renewable Energies – Standard” Good (b+), which represents the
has been and will be evaluated at highest rating at that time
Governance: excellent least until 2018 by the independent As all KfW Green Bonds issued
KfW Framework 2014 research institution ZSW (Center for between 2014 and 2018 refer to the
(Renewable Energy) Solar Energy and Hydrogen same framework, the assessment
In line with Green Bond Principles Research / Germany). applies as well to all other „Green
Shades of Green: dark green The KfW loan programme “Energy- Bonds – Made by KfW“ issued under
efficent Construction” has been the KfW Framework 2014.
CICERO (Center for Int‘l Climate and
evaluated until 2017 by the
Environmental Research Oslo/Norway)
independent research institution IWU
is an experienced, non-profit research
(Institute for Housing and
centre recognized as „best external
Environment / Germany).
assessment provider“.1
1Environmental Finance Bond Awards 2019
Green Bonds - Made by KfW / June 2020 25Green Bonds issuances Overview, experiences and reporting of all KfW green bonds issued Green Bonds - Made by KfW / June 2020 26
Green Bonds – Made by KfW
Highlights of KfW’s footprint in the green bond market
Currency split of all
KfW Green Bonds issued
by December 31, 2019
High Quality Liquidity Credibility HKD
NOK
4% AUD
Aligned with GBP & Harmoni- Large sizes in benchmark Top ESG ratings and a strong
zed Framework for Reporting, maturities make KfW green focus on green finance make 7%
SEK
SPO from CICERO, external bonds among the most liquid KfW one of the most credible 9%
impact evaluation. green bonds in the market. issuers of green bonds. GBP
#1 in Germany Contribution to SDGs Green Indices
29%
€22.9bn of „Green Bonds –
Made by KfW“ since 2014
7: Affordable & Clean Energy,
11: Sustainable Cities & Com-
Eligible for many green
indices like “The BofA Merrill USD
make KfW one of the largest munities, 13: Climate Action. Lynch GB Index”, “Barclays
issuers globally and by far the MSCI GB Index”, “S&P GB
largest issuer in Germany. Index”, “Solactive GB Index”.
Green Bond Investor Vocal Advocate Global Engagement
EUR
As member (since 2015) of Engaging in and suppoting of 49%
Since 2015 runs a dedicated
green bond investment the Exec. Committee of the int‘l and national initiatives to
portfolio of €2bn (target) Green Bond Principles, KfW promote sustainability in
mandated by the Federal is highly committed to foster capital markets (e.g. PRI,
Ministry of Environment. green bond market standards. TCFD, EU TechExpert-Group).
Green Bonds - Made by KfW / June 2020 27Investors in Green Bonds – Made by KfW
KfW set three goals with regard to its investor base
New Investors Dedicated Green Investors Mainstream Investors
KfW Green Bonds shall attract new KfW Green Bonds shall comply with KfW Green Bonds shall raise aware-
investors. strong requirements of dedicated ness of mainstream investors for
green investors. sustainability and green finance.
100 new investors 40% SRI Almost every
since 2014, primarily asset mana- In 2019, SRI bought 40% of KfW discussion with investors, even with
gers, which did never invest before Green Bonds → SRI/dedicated central banks and treasuries, at
in KfW bonds in primary markets. green investors preferred. least touches on green bonds.
Investor Characteristics of our experience of Green Bonds – Made by KfW
Share of asset managers (incl. 3% Predominantly From discussions with investors
insurances/pension funds) in KfW 18% European and feedback from lead managers:
Green Bonds much higher than in investors dedicated green investors and SRI
Investors
conventional KfW bonds 11% by region tend to be more
35% 68%
buy-and-hold
18% Europe Americas
Allocation of EUR/USD bonds 2014-2019 Asia Australia
Green Bonds - Made by KfW / June 2020 28Green Bonds – Made by KfW
Overview on issuances and reporting
EUR in
billions
9
Volume of KfW Green Bonds
8.1
8 EUR
issued by May 31, 2020:
EUR 23bn USD
7
AUD
6 GBP
5 SEK
4 3.7 3.7 HKD
NOK
2.7 2.8
3 PLN
2 1.6 HUF
1 0.4
0
2014 2015 2016 2017 2018 2019 2020ytd
2 Green Bonds 5 Green Bonds 4 Green Bonds 7 Green Bonds 3 Green Bonds & 9 Green Bonds & 6 Green Bonds
Details issued issued issued issued 1 promissory note 1 promissory ytd
loan issued note loan issued
Allocation Available in
Reporting Q1 2021
Impact Available in 2022 once impact is
Available in Q2 2020
Reporting externally evaluated
EUR equivalent; based on ECB reference rate on the pricing date;
Reports available under: https://www.kfw.de/KfW-Konzern/Investor-Relations/KfW-Green-Bonds/KfW-Green-Bonds-Reporting/index-2.html
Green Bonds - Made by KfW / Mai 2020 29A comparison of green and conventional KfW Bonds
Green Bonds – Made by KfW Conventional KfW Bonds
Issuer
Guarantor The Federal Republic of Germany
Rating (1) Moody‘s: Aaa Scope Ratings: AAA Standard & Poor‘s: AAA
Risk weight 0% according to CRR/Basel III
General business, however, amount General business
Use of
equal to net proceeds for climate friend-
Proceeds
ly projects accord. to KfW Framework
Reporting Allocation report & Impact report None
Target Institutional investors, especially green Institutional investors
investors or socially responsible investors (SRI)
Currency Flexible, primarily EUR, USD, GBP, AUD, SEK, JPY. Up to 20 currencies possible.
Determined by underlying green assets, Flexible, primarily 2 to 15 year
Term
primarily 5 to 10 years
Repayment Bullet
(1) A rating is not a recommendation to buy, sell or hold securities. Ratings are subject to revision or withdrawal at any ti me by the assigning rating organization. Each rating should be evaluated
independently of any other rating.
Green Bonds - Made by KfW / June 2020 30KfW at debt capital markets KfW as an issuer of bonds and notes Green Bonds - Made by KfW / June 2020 31
Key financial figures of KfW Group (IFRS)
Solid business performance
2018 2019 1Q 2020
Business activities (in EUR bn) – for the period
Promotional business volume 75.5 77.3 19.8
Income statement key figures (in EUR mn) – for the period
Operating result before valuation & promotional activities 1,387 1,677 392
Consolidated profit 1,636 1,367 -592
Consolidated profit before IFRS effects from hedging 1,311 1,447 -517
Balance sheet (in EUR bn) – at the end of the period
Total assets 485.8 506.0 524.7
Equity 30.3 31.4 31.2
Volume of business 590.7 610.7 632.7
Key regulatory figures (in %) – at the end of the period
Tier 1 capital ratio 20.1% 21.3% 24.0%
Total capital ratio 20.1% 21.3% 24.1%
Green Bonds - Made by KfW / June 2020 32Highlights in 2019 & 1Q2020
In 2019, KfW achieved EUR 77.3bn in its promotional activities (+2% yoy). While int’l business increased again
KfW Group quite significantly, this was offset by a slight decrease in domestic business. EUR 19.8bn (+17% yoy) in Q1
marked a successful start in 2020, a year dominated by KfW’s role in delivering COVID-19-related liquidity aid.
Domestic In 2019, 5% decrease to EUR 43.4bn due to excellent financing conditions for SMEs; however, increasing
Business demand for housing (e.g. grant-based government-sponsored Baukindergeld). EUR 13.6bn (+25% yoy) in
1Q2020 due to high demand in energy-efficient construction/refurbishment, housing and venture capital.
KfW Special On behalf of the government and part of a comprehensive package of measures, KfW is responsible for various
Programme 2020 loan facilities providing liquidity aid for COVID-19 affected companies in Germany. After one week, EUR 0.5bn
(COVID-19 aid) already committed in Q1. As events develop, a significant increase is expected in the KfW Special Programme.
International In 2019, 25% increase in export & project finance to record level EUR 22.1bn; further growth in Q1 (+18% yoy),
Business decrease expected as the year progresses. Promotion of developing countries & emerging economies remained
unchanged in 2019, significant role in implementing government’s Emergency COVID-19 Support Programme.
Financial In 2019, KfW invested approx. EUR 1.1bn in securitization transactions to promote SMEs and EUR 0.3bn in
Markets green bonds (2020e: EUR 0.4bn) to support climate change mitigation and environmental protection. While
securitization transactions ended in 1Q2020, green bond investments rose to EUR 77m (+ EUR 53m yoy).
Consolidated profit of EUR 1.4bn in 2019 characterised by rise of operating result combined with decline in the
Results valuation result, exceeded well KfW’s target (EUR 0.8bn). In 1Q2020, result of EUR -0.6bn marked by extreme
burdens of approx. EUR 1bn related to COVID-19 pandemic, operating result before valuation up 10% yoy.
Green Bonds - Made by KfW / June 2020 33Business performance
77.3 bn EUR 506 bn EUR 1.4 bn EUR
Total promotional business Total assets at end-2019 Consolidated profit 2019
volume 2019
• About 55% domestic and 45% international • Germany’s 3rd largest credit institution in Much better than 2019 target, due to a year-on-
business. terms of total assets. year increase in the operating result combined
• In 2018/19 shift towards int’l business. with a decline in the valuation result.
81.0 77.3
76.5 75.5 525
507 472,4 486 506
2.0
1.6
in bn EUR
1.4 1.4
in bn EUR
in bn EUR
19.8
1Q
2016 2017 2018 2019 2020
-0.6
2016 2017 2018 2019 1Q 2020 2016 2017 2018 2019 1Q 2020 Strategic target (before IFRS effects)
Capital Ratio (Tier 1)
24.0
22.3 20.6 21.3 • BaFin approval as advanced IRBA institution
20.1
20 since 6/2017.
preliminary IRBA The increase of the Tier 1 capital ratio of KfW as
15 of December 31, 2019, is largely attributable to
IRBA approval
CRSA
10 IRBA approved
the increase in regulatory capital and to
16.5 changes in the measurement of counterparty
16.1 BaFin minimum requirement
5 default risk.
0
2016 2017 2018 2019 1Q 2020
Green Bonds - Made by KfW / June 2020 34Impact of the ongoing COVID-19 pandemic
Focus on supporting the German economy on behalf of the German government
KfW Special Programme 2020 Refinancing of KfW Special Programme 2020
Loan facilities for liquidity aid for companies of all Federal Ministry of Finance is authorized to
sizes, self-employed and freelance professionals in refinance KfW Special Programme 2020 up to
Germany affected by COVID-19. €100bn through new government-owned Economic
Precondition: no financial difficulties at end of 2019. Stabilisation Fund (WSF).
Promotional terms are significantly modified in order Limited to year-end 2021, but no obligation for KfW.
to facilitate the approval and extension by involved Close coordination with Ministry of Finance,
on-lending banks, e.g.: German DMO (Finance Agency) and WSF.
Mid-sized enterprises Large enterprises
loan < €0.8m
100% instant 80% max €1bn Impact on KfW’s Q1 Results
KfW risk no risk KfW risk loan amount
assessment
In 1Q2020, significant crisis-related negative effects
of approx. €1bn, primarily from
the valuation of the investment portfolio, primarily
Direct lending to large corps in consortium possible. in developing countries & emerging economies;
Up to 100,000 loans, more than €50bn expected. risk provisions for COVID-19 severely affected
Germany, pursuant to a separate guarantee countries and hard-hit sectors of E&P business.
declaration, bears the financial risks KfW incurs. Consolidated Q1 loss: - €592m
Green Bonds - Made by KfW / June 2020 35Explicit and direct guarantee from the Federal Republic of Germany
Basis of KfW’s funding
Guarantee established in 1998
Defined by law
Direct, explicit and unconditional
§1a of the Law concerning KfW:
The Federal Republic guarantees all obligations of KfW
in respect of loans extended to and debt securities issued by
KfW, fixed forward transactions or options entered into by
KfW and other credits extended to KfW as well as
credits extended to third parties inasmuch as they are expressly
guaranteed by KfW.
Green Bonds - Made by KfW / June 2020 36Wide selection of products addressing investor needs
KfW Benchmark Programmes Green Bonds – Made by KfW
Large and highly liquid bonds, Liquid green bonds, diversified
highly diversified investor base SRI investor base
Regular offerings and taps Focus: € and $
Size: 3–5bn (6bn incl. taps, euro only) Regular offerings and taps
3, 5, 7 and 10y Private placements possible
Format: EMTN, Global Format: EMTN, Global, Kangaroo, US-MTN
€$ € $ ₤ A$ NOK SEK HK$...
€35.3 bn
May 31’20
Additional Public Bonds Tailor-made Placements
Large and liquid bonds, Customized products for
diversified investor base investor needs
Tenors from 1 to 30y Flexible in currency, structure
Liquid curves and strategic and maturity
approach in ₤ and A$ Uridashi transactions
Regular offerings and taps Format: EMTN, US-MTN, NSV, SSD
Format: EMTN, Global, Kangaroo, Kauri
€ $ ₤ A$ NZ$ C$ SEK NOK € $ ¥ HK$ Mex$ CN¥ ZAR …
Green Bonds - Made by KfW / June 2020 37Strong presence in debt capital markets
Funding volume (EUR in billions) Capitalization (as of December 31, 2019)
90,00
78.2 80.6
6%
80,00 76.1
72.8 3.3
4.2 5%
2.1
70,00 4.3
15,8 17,0 22,4 9%
60,00 16,0
3.7 1.6
50,00 2.8 8.1 Total
40,00 €493bn
30,00 6.6
55.4 55.4
49.8 EUR
45.9
20,00 35.3bn
issued as per 80%
26.7 May 31, 2020
10,00
0,00
2016 2017 2018 2019 2020
KfW Benchmark Programmes Green Bonds – Made by KfW Capital Markets Money Markets
Additional Public Bonds Tailor-made Placements Other Liabilities Equity
(primarily collateral from derivative transactions)
Green Bonds - Made by KfW / June 2020 38KfW’s funding by currencies and instruments
Benchmark bonds are key – core currencies euro and US dollar
Instruments Currencies
(in %) (in %)
80 70 14
70 60 12
60 10
50
50
40 8
40
30 6
30
20 4
20
10 10 2
0 0 0
Benchmark Green Additional Tailor-made EUR USD GBP AUD JPY Others
Programmes Bonds Public Bonds Placements
2016 (EUR 72.8bn) 2017 (EUR 78.2bn) 2018 (EUR 76.1bn) 2019 (EUR 80.6bn)
Highlights in 2019
10 benchmark bonds (plus 4 taps) issued in EUR (2x 5y, 3y, 10y, 7y) and USD (2y, 2x 3y, 2x 5y) accounting for EUR 45.9bn raised.
10 “Green Bonds – Made by KfW” issuances in EUR, SEK, AUD, GBP, HKD, NOK, and USD with an equivalent of EUR 8.1bn. The SEK
7bn issuance in 3s and USD 2bn in 10s mark the largest green bonds of their kind at the time.
Ongoing strong demand for large and liquid benchmark bonds: 57% of total funding volume in 2019.
The challenging market environment led to yield all-time lows and a particularly flexible funding strategy.
EUR remains by far #1 funding currency (approx. EUR 42bn, 52% of total funding). Lower (~21bn in EUR equivalent) but stable (vs. 2018)
share of USD funding as EUR funding levels are very competitive vs USD (after hedging into EUR). Strong investor demand for S terling
pushes the share of GBP as funding currency #3.
Green Bonds - Made by KfW / June 2020 39KfW in the capital markets in 2020
Strong presence in the capital markets with funding target of
EUR 75 billion.
KfW’s outstanding access to the capital markets, including in
USD, facilitates the issue of liquid global bonds.
KfW relies on its proven strategy of diversification and therefore
continues to offer a wide selection of products addressing
investors’ needs.
EUR & USD remain key currencies in 2020 (2019: 78%).
The KfW Benchmark Programs remain the most important
funding source.
GBP, AUD and Scandinavian currencies are important for
KfW’s funding mix.
Strong commitment to green bonds, target: ~ EUR 8 billion.
Green Bonds - Made by KfW / June 2020 40Green Bond portfolio of KfW KfW as an investor in green bonds Green Bonds - Made by KfW / June 2020 41
KfW is also an active investor in Green Bonds
Goals and eligible categories of KfW’s Green Bond Portfolio
Motivation & Goals Eligible Categories
KfW’s long-term goal is an active contribution to Renewable energy fund
the global reduction of environmental pollution Energy efficiency projects
and climate change, through alternative funding
of sustainable projects via the capital market. Environmental friendly transportation
Waste industry
The portfolio is backed by the Federal Ministry (Waste-) water-management
for the Environment, Nature Conservation, Biodiversity measures
Building and Nuclear Safety (BMU).
Other refinancings with a positive impact on
climate and environmental protection
KfW actively supports the green bond market
with the development of qualitative standards
and an engagement process with market
participants.
Since April 2015, Target volume
€2bn
KfW has been actively
investing in Green Bonds
on a global scale.
Green Bonds - Made by KfW / June 2020 42KfW has strict criteria on its green bond investments
Minimum criteria & key portfolio figures of KfW’s Green Bond Portfolio
Minimum Criteria Key Portfolio Figures
Management of proceeds KfW will invest in various fixed income securities
Transparent process of Sovereigns and regions
funds allocated and a
competent project selection. Supranationals, agencies and other state-owned or partially state-
owned institutions
Financials
Project description Covered bonds and „Pfandbriefe“
A clear description of the ABS (senior tranches only)
projects refinanced
(including goals and
projected impact).
An investment-grade rating is mandatory.
Reporting
A frequent public reporting
as well as an independent
second party opinion. Currencies: primarily EUR, but various other currencies possible.
Green Bonds - Made by KfW / June 2020 43Photo credits / references
Title slide: full-page image: gettyImages, plainpicture / Piotr Krzeslak, Cultura
Disclaimer, slide 14:
Slide 5, Picture 1: KfW Photo Archive / Rüdiger Nehmzow
Slide 5, Picture 2: KfW Photo Archive / Angelika Kohlmeier The use by KfW of any MSCI ESG Research LLC Data,
Slide 5, Picture 3: KfW Photo Archive / - and the use of MSCI logos, trademarks, service marks or
Slide 5, Picture 4: DEG / Andreas Huppertz
index names herin, do not constitute a sponsorship,
Slide 7, Picture 1: KfW-Photo Archive / photothek.net
Slide 7, Picture 2: KfW-Photo Archive / Jürgen Lösel endorsement or promotion of KfW by MSCI or any of its
Slide 7, Picture 3: KfW-Photo Archive / Frank Blümler
Slide 7, Picture 4: KfW Photo Archive / photothek.net
affiliates. MSCI services and data are the property of
Slide 7, Picture 5: KfW Bankengruppe / Jens Steingässer MSCI or its information providers. MSCI and MSCI
Slide 7, Picture 6: KfW-Photo Archive / Charlie Faw ell
research names and logos are trademarks or service
Slide 9: KfW Photo Archive / Jens Steingässer
marks of MSCI or its affiliates
Slide 11, Picture 1: thinkstock / Top Photo Corporation
Slide 11, Picture 2: Fótolia / Olivier Le Moal
Slide 11, Picture 3: KfW-Photo Archive / Thomas Klew ar
Slide 11, Picture 4: KfW-Bildarchiv / photothek.net
Slide 12: KfW-Photo Archive / Thomas Futh
Slide 16: : gettyImages, plainpicture / Piotr Krzeslak, Cultura
Slide 20, Picture 1: NOTUS energy / FRICKE Film
Slide 20, Picture 2: HP-T Höglmeier Polymer-Tech GmbH & Co. KG / Werner
Röthlingshöfer
Slide 20, Picture 3: KfW-Photo Archive / Claus Morgenstern
Slide 20, Picture 4: KfW-Photo Archive / Claus Morgenstern
Slide 37: Deutscher Bundestag / Lichtblick / Achim Melde
Slide 38: Freunde des Hauses / gettyImages
Slide 41: full-page image: gettyImages, plainpicture / Piotr Krzeslak, Cultura
Slide 43: KfW-Photo Archive / Charlie Faw ell
Green Bonds - Made by KfW / June 2020 44Contacts
Treasurer of KfW: Ext. KfW Bankengruppe
Tim Armbruster - 5599 Palmengartenstrasse 5–9
60325 Frankfurt am Main
Treasury:
Markus Schmidtchen - 4783 Phone +49 69 7431 - Ext.
Fax +49 69 7431 - 3986
Capital Markets:
Petra Wehlert - 4650 investor.relations@kfw.de
Otto Weyhausen-Brinkmann - 4652
Alexander Liebethal - 4656 Bloomberg: KfW
Investor Relations: www.kfw.de/investor-relations
Jürgen Köstner - 3536
Dorota Reiter - 8537
Serviceline - 2222
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