Integration of climate change into country level work

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Paris alignmentReasoning
Not applicableKfW does provide some direct strategic support for client countries and is bound by bilateral agreements between Germany and partner countries.

Please note: This section is only referring to KfW Development Bank. The branch is the only one which provides country-level strategic support and technical assistance. The other branches finance only on a project by project basis. E3G recommends that KfW IPEX and DEG support client countries in developing Paris aligned sectoral strategies where appropriate.

Explanation

KfW Development Bank’s way of working is guided by the  country strategies developed by the Federal Ministry for Economic Cooperation and Development (BMZ). The development cooperation by KfW Development Bank is referred to as financial cooperation (FC). The German government negotiates a joint approach for development with the partner country in question, listing priority areas for investment. The promoted projects and programmes are proposed during these bilateral government negotiations and the German Federal Government decides about the maximum amount of financial funds to be committed.

Subsequently, an intergovernmental agreement is concluded on this matter. KfW checks whether the proposed projects can be implemented by the bank, under consideration of financial and development feasibility. Working together with the partner, specialised consulting firms draw up a feasibility study, which provides answers to  the project’s key questions – economic efficiency, developmental impacts and possible risks. Within this feasibility studies, social, cultural and ecological aspects are taken into account.

The BMZ’s 2030 Agenda is building on several core areas:

  1. Peacebuilding
  2. Food security
  3. Training and sustainable growth
  4. Climate and energy
  5. Environment and natural resources
  6. Health sector

For climate and energy, BMZ has set out three areas of intervention, that KfW is meant to be focusing on:

  1. Climate change mitigation and adaptation
  2. Renewable energy and energy efficiency
  3. Sustainable urban development

KfW Development Bank does provide some policy-based lending. Most notably, the Bank has constructed a programme with Colombia, focusing on the SDG’s in the environmental space, including climate change.

KfW should explore whether, within its mandate, the Bank could expand its concrete strategic support for deep decarbonisation and climate resilience, in coordination with the German development agency GIZ.

Last Update: November 2022