Kreditanstalt fuer Wiederaufbau

"Bank aus Verantwortung" (Responsible banking), supporting the transformation of the economy and society with the aim of improving economic, social and environmental living conditions around the world.
Total assets:
EUR 546 billion (December 2020)
Frankfurt am Main, Germany
Top five shareholders:
Germany (Federal Government 80%; Federal States 20%)
Summary of Paris alignment assessment:
KfW's Paris alignment assessment is mixed. The Bank has set out an overarching Paris alignment concept for the emission-intensive sectors. However, while the Bank is a transformational leader in the area of energy efficiency, it is significantly lagging in areas such as the comprehensive exclusion of fossil fuels, greenhouse gas accounting and setting an internal carbon price. KfW is currently undergoing an internal reform process as part of its sustainable finance implementation project tranSform which will see the Bank align with the Paris agreement and report regularly on its progress. However, an analysis of KfW's sustainable finance concept suggests that the Bank has been applying a relatively low ambition definition of Paris alignment, which is currently not aligned with a 1.5°C pathway. It should be noted that the subsidiaries of KfW differ in their ambition, with KfW Development Bank being the most progressive.

This page is part of the E3G Public Bank Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

Metric Summary
Promotion of green finance Paris aligned – KfW has been a key driver of mainstreaming green bonds in Germany. KfW Development Bank has been developing innovative instruments to promote sustainable businesses and finance in developing countries. KfW engagement to foster systemic change toward a sustainable financial system could be further expanded.
Fossil to non-fossil energy finance ratio and scaling up climate finance

Some progress – For every $1 KfW Development Bank provided to fossil fuels, $4 went to renewables. For KfW IPEX, for every $1 in fossil fuels, $2.93 went into renewables. No data is available for domestic lending and DEG. KfW has publicly stated that it may invest up to 1/3 of its energy investment into fossil gas until 2030.

Nature based solutions

Some progress – KfW does not yet systematically integrate nature-based solutions and biodiversity protection in all its operations. However, there are some promising approaches in both the domestic branch and KfW Development Bank.

Climate risk, resilience, and adaptation

Some progress – KfW is in the process of assessing climate risks (both physical and transitional) more systematically. There are questions around the scenarios used as well as how wholistic the approach will be.

Overarching climate strategy

Some progress – KfW’s strategic framework to strengthen climate ambition falls short of what to expect from a transformational bank, as envisioned under German Climate Law. Most notably, net-zero emission ambition are not aligned with the government’s net-zero target for 2045.

Integration of climate mitigation and resilience in key sectoral strategies

Some progress – KfW releases partial information on sector specific strategies. The assessed documents for sectoral guidelines suggest that KfW Group is not applying ambitious targets for sectoral transformation.

Institutional leadership Paris aligned – By definition of its sheer size, KfW is a highly influential market shaper and innovator in sustainable finance. KfW is represented and participating in most national and international initiatives for sustainable finance.
Energy access and fuel poverty

Paris aligned – KfW is covered under the energy access target set by the German government. KfW has been reporting against this target for the period 2014 – 2018. KfW sets out the form of access its supports and is a member of the “Sustainable Energy for all Initiative”.

Energy efficiency strategy, standards and investment Paris aligned – Overall, the Bank’s approach to energy efficiency can be considered Paris aligned. KfW’s support for energy efficiency in buildings and SMEs in Germany has been a transformational success.
Fossil fuel exclusion policies Some progress – KfW has excluded coal from its investment and limits investment in upstream oil & gas in some of its operations. KfW has publicly stated that it may invest up to 1/3 of its energy investment into fossil gas until 2030. 
Greenhouse gas accounting and reduction

Unaligned – KfW does not currently apply a systematic greenhouse gas accounting of its portfolio. This assessment will be adjusted once a system is in place.

Shadow carbon pricing

Unaligned – The Bank does not apply an internal carbon price.

Country level work Not applicable – KfW does provide some direct strategic support for client countries and is bound by bilateral agreements between Germany and partner countries.
Technical assistance for implementing Paris goals

Some progress – KfW Development Bank and DEG provide technical assistance, amongst other in reference to project scoping and conceptualisation. Alignment with the Paris agreement plays a role on a case-by-case basis.

Transparency of climate finance data

Some progress – KfW provides little overall data on its climate-related lending. KfW Development Bank is transparent and provides project level data, as well as overall data on its lending. It is recommended that all branches adopt the transparency practice of KfW Development Bank. KfW IPEX does not disclose any project-related data.

Top recommendations:

  • KfW Group needs to become more transparent to allow for more detailed and precise assessment and scrutiny by civil society and its shareholders. While the Bank has published its sector guidelines, strategic documents for sectors and branches of the Bank are not published.
  • Current commitments, in particular in the energy sector, suggest that the Bank has been applying the Sustainable Development and the Beyond 2°C scenario of the International Energy Agency. This is no longer in line with the German governments climate policy goal to be on a 1.5°C pathway. KfW Group needs to show how its current sector guidelines and strategic approaches would shift by applying the most ambitious net-zero scenario by the IEA.KfW has confirmed to E3G that new sector guidelines will be derived from a 1.5°C scenario. E3G will adjust the assessment accordingly, once these come available.
  • KfW Group should apply the Development Bank’s approach toward investing and reporting to the entire organisation. This includes defining investment priorities and disclosing project impact data, taking into account the configurations of the individual branches.
  • KfW Group is a technical leader in sustainable finance and is a member of the major development finance initiatives. In order for KfW to play an active role and use its institutional weight, KfW’s shareholders should give the Bank the mandate to actively contribute and shape the debate on transformational development banks. 

Last updated: January 2022.

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