Sustainability, Impact Management and Sustainable Development Goals (SDGs)
Transitioning to a sustainable society is the key challenge of our time. In the coming years and decades, this transformation will require ongoing and extensive investment, innovation and continual further developments. For the global financial system, entrepreneurial action and social responsibility are inseparable in order to accompany this transformation. As a responsible investor and part of KfW Group, KfW Capital is committed to this global task and supports the sustainability objectives of KfW Group and the German Federal Government as well as the 2030 Agenda with its Sustainable Development Goals (SDGs).
KfW Capital regards sustainability as the interplay of multiple factors that contribute to making portfolio enterprises successful on a sustained and long-term basis. KfW Capital is convinced that the identification of major ESG risks and opportunities as well as their management constitute key elements for the enduring success of enterprises. Possible negative effects that result from enterprises and their activities, in particular, must be taken into consideration in the interest of appropriate risk management as they can have a substantial impact on the value of an enterprise and, thus, the investor’s risk-return profile and reputation.
In addition, KfW Capital Exclusion List is applied to all new investments.
Sustainability-related disclosures under Regulation (EU) 2019/2088 (SFDR) can be viewed here.
Impact Management and SDGs
Furthermore, KfW Capital has the ambition to capture the impacts caused associated with portfolio enterprises on the basis of suitable indicators and to report them both internally and externally in order to create more transparency in the market and, in this way, contribute to sustainable development.
Based on its promotional mandate to improve the supply of capital for innovative, technology-oriented start-ups and growth companies, particularly in Germany, the focus of the investments is on SDG 8 “Decent Work and Economic Growth” and on SDG 9 “Industry, Innovation and Infrastructure”. In addition, the companies financed by KfW Capital – through German and European venture capital and venture debt funds – contribute to other SDGs. Due to the high proportion of life science funds in the portfolio, contributions to SDG 3 “Good Health and Well-Being” are also considered.
As no standardized procedure for reporting on financing contributions to the SDGs exists to date, KfW has developed its own group-wide SDG mapping. With this, KfW makes transparent which positive SDG contributions can be expected from the annual new commitments.
KfW Capital’s main SDG contributions in fiscal year 2020 were:
*In total, KfW Capital made investment commitments of EUR 871 million in 2020 (including commitments from the European Investment Fund (EIF) as part of the federal government’s Corona- start-ups-program). The investments may contribute to several SDGs at the same time.
Further information about the SDG-mapping of KfW can be found here.
In future, KfW Capital will also report impact indicators specifically tailored to the three focus SDGs.
Furthermore, KfW Capital is part of the group-wide impact management. It is a key concern for KfW to capture the contribution of its co-financed customers and partner activities to sustainable development even more systematically, make it measurable and present it transparently for the entire group. For this reason, KfW has been introducing a group-wide ‘impact management’ system within the framework of the strategic KfW projects ‘Roadmap Sustainable Finance’ and ‘tranSForm’ since 2020. Further information can be found here.