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Germany’s KfW to match 2014 green bond issuance with ‘at least’ €2.7bn next year

KfW’s Capital Markets Head says bank is intent on combatting climate change.

German development bank KfW, which has issued €2.7bn worth of green bonds this year alone – the most of any institution to date – is targeting at least the same volume for next year. Speaking at a conference at the Frankfurt School of Finance and Management yesterday (November 12), KfW Capital Markets Head, Horst Seissinger, said that while the actual volume would depend on the availability of projects to finance, “it certainly won’t be under the volume for this year.” Last July, the KfW issued its inaugural triple ‘A’- rated green bond with a volume of €1.5bn. Then in October, it issued a US dollar-denominated green bond with a volume of $1.5bn (€1.2bn) In both cases, a majority of subscribers to KfW’s debt were responsible investors. With the proceeds from the issues, the KfW is financing environment and climate protection projects around Europe. The bonds are assured by CICERO (Centre for International Climate and Research – Oslo). The Center for Solar Energy and Hydrogen Research (ZSW), meanwhile, is measuring the impact of KfW’s loans.
Asked by Responsible Investor how large the green bond market could be five years from now, Seissinger said he felt that that was not the relevant question. “I’m less concerned with the question of whether the market will be worth $200bn or whatever,” he said. “For me the question is whether climate change can be stopped and whether the KfW, by refinancing itself through green bonds, can make a huge contribution in this effort.”The Climate Bonds Initiative, an NGO that promotes green bonds, believes the market could be worth $100bn by the end of 2015, and $300bn by 2018. Like the KfW it says such rapid growth depends on the availability of projects to be financed. Even before its push into the green bond market, the KfW was the world’s biggest “green” financier. Last year, for example, more than one-third of the €72.5bn in financing the bank provided went to projects related to climate- and environmental protection. Beyond renewables, these were for energy efficiency and the green renovation of old buildings.
In related news, ABP, the €300bn pension fund for Dutch civil servants, said that in the first three quarter of this year, it had allocated €230m to green bonds. The investments were made by APG, ABP’s in-house investment manager. “With these green investments, we contribute to a large number of sustainable projects around the world,” said ABP, citing as examples wind parks in Nicaragua and India as well as measures to deal with rising water levels in the Netherlands.
Link to previous RI KfW green bond story