KfW Group - New energy-efficient homes

The rapidly expanding and evolving market of green and social bonds presents excellent opportunities to finance new projects and business that enable positive impact. In the UK Triodos Investment Management consider these as part of the portfolio for the Triodos Sterling Impact Bond Fund.

These bonds are an important vehicle for companies to raise money for projects with specific environmental and social benefits. In turn, by issuing the bonds, the balance sheet of the issuer becomes more sustainable.

The German state-owned bank KfW Group is by far the largest issuer of green bonds, not only in Germany, but globally. It has actively participated in the green bond market since 2014 and added energy efficiency to its green bond loan programme in 2019. The portfolio is endorsed by the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMU).

KfW contribute to the Triodos Investment Management sustainable transition themes of Sustainable Mobility & Infrastructure (energy efficient buildings) and Renewable Resources (renewable energy generation) because the proceeds from its bond issue are used to finance projects aimed at improving the energy efficiency of buildings.

Low-carbon economy

KfW Group  aim to catalyse Europe’s transition towards a low-carbon economy. Thirty-five percent of all its business is allocated to projects that support renewable energies (wind, solar, biomass, hydrogen), improve energy efficiency, safeguard biodiversity and prevent and/or reduce environmental pollution. It also explicitly excludes projects related to fossil fuels and nuclear power. KfW also support the Germany’s real economy, with 40% of its new loans provided specifically to SMEs.

Why it’s a good fit for the Triodos Impact Investment Funds

Under Triodos Investment Management’s ‘Sustainable mobility and infrastructure’ and Renewable Resources (renewable energy generation) themes KfW Group was selected because of its commitments to financing sustainable construction and energy efficiency through the proceeds of its bond issue.

KfW allocate up to 80% of the bond proceeds to help finance the construction of new energy efficient residential buildings to reduce the need for heating and cooling. In addition, in the long-term homes and offices that are designed to be energy neutral, and then built, operated, and maintained using environmentally responsible and resource-efficient processes will optimise their positive environmental, social and economic impacts.

• The new energy efficient residential building are built under strict criteria to enhance efficiency levels which better the country’s current energy savings requirements for new buildings by at least 25%.
• The remaining 20% of its proceeds are used to fund new renewable energy plants for electricity generation, combined electricity and heat generation and measures to integrate renewable energy into the energy system. Energy sources include solar panels, on- and offshore wind, hydropower, and biomass.

KfW Group contributes to the following UN Sustainable Development Goals (SDGs):

Sustainable Mobility and Infrastructure

Mobility and infrastructure cover a broad range of facilities, structures, systems and services that support the day-today operations of human society. The infrastructure sectors of transport, energy and water, telecommunication, waste and sanitation are among the most important elements. Sustainable infrastructure is designed, constructed and operated to optimise the environmental, social and economic impact.