German state-owned bank KfW has become the first to have issued a total of more than 50 billion euro in green bonds on the Luxembourg Green Exchange, known as LGX, the Luxembourg Stock Exchange said. This achievement was marked by a LuxSE bell ceremony on Monday.
KfW issued its first green bond 8 years ago and has since issued about 100 green bonds, raising some 50 billion euro for green projects. Its significant green funding programme makes KfW one of the 10 largest sustainable bond issuers in the world.
“We commend KfW’s contribution to the development of industry standards for sustainable finance, and its focus on impact reporting. If we are to curb climate change, green finance must remain a priority,” said Julie Becker, chief executive at LuxSE, which established the Luxembourg Green Exchange as a platform for sustainable securities.
ICMA Green Bond Principles
KfW’s green bond programme was launched in 2014 and finances projects in renewable energy, energy efficiency and clean transportation. Its investment approach is aligned with the Green Bond Principles as defined in 2021 by the International Capital Markets Association.
KfW’s green bonds are the most liquid green bonds on the LGX. Liquidity increased after KfW moved the issuance size for green bonds to the 3-to-5-billion-euro range, which was “a major step to bring this market out of niche”, LuxSE and KfW said in a statement.
“Green bonds play an essential role in promoting sustainability on the capital market,” said Petra Wehlert, head of capital market at KfW. “We are happy to provide investors with a product that offers investment opportunities in green projects and thus help to channel capital into areas that contribute to the sustainable transformation.”
37 green bonds listed
Since 2014, KfW has issued green bonds in 14 different currencies, offering a range of maturities. While some of KfW’s initial green bonds have already matured, 37 of them are currently listed and tradable on LuxSE, raising the equivalent of 44 billion euro for green projects.
Initially, funds equal to the net proceeds from KfW’s green bonds were exclusively linked to renewable energy projects across Germany. During the last years, KfW updated its green bond framework twice and extended it by two further project categories: energy-efficient construction and clean transportation. The latest update was made at the beginning of 2022.
KfW, owned by Germany’s federal and state governments, was established in 1948 and has been given a legal mandate to finance and promote sustainable development. KfW has listed its bonds on LuxSE since 1990. The firms said their cooperation has strengthened over the past few years “through their joint focus on accelerating the sustainable finance agenda and contributing to environmental and climate goals”.