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KfW Bankengruppe

PRI reporting framework 2018

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (A) Implementation: Screening

(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
Corporate (financial)
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

04.2. Describe your approach to screening for internally managed active fixed income

Green Bond portfolio: The portfolio is screened on the exclusion of nuclear energy projects in accordance with the promotional mandate. Before purchasing a Green Bond, the ESG specialists assess the green bond framework of the issuer. One of the assessment criteria is that the use of proceeds of the green bonds are not used to finance nuclear energy projects.

Liquidity portfolio: In addition to the ESG criteria, exclusion criteria are also integrated into KfW's investment approach for the non-governmental issuers of the liquidity portfolio. The criteria have been applied since 2011 and are deemed adequate for the time being. Screening of the exclusion criteria is performed by our research provider Sustainalytics.

For more details on the exclusion criteria for the liquidity portfolio, please see FI 04.3 and FI 05.2.

04.3. Additional information. [Optional]

Application of the exclusion criteria in the liquidity portfolio: If the issuers are financial services providers, the exclusion criteria are applied indirectly (for example, in the case of banks, to their relevant equity participations). Exclusion criteria are not considered for bonds of sovereign issuers.

Indirect application of exclusion criteria to:

  • Shares held by financial institutions of at least 10% in an enterprise which generates at least 5% of its annual turnover on the basis of one or more of the products covered by the exclusion criteria, or
  • which exhibits a controversy factor of 4 or 5 as determined by our research partner Sustainalytics. A rating of 4 or higher on a scale of 1-5 means that controversies or serious violations have been repeatedly identified in an enterprise.
  • The amount of the equity participations must account for at least 0.5% of a bank’s total assets.

FI 05. Negative screening - overview and rationale

05.1. Indicate why you conduct negative screening.



Corporate (financial)

Corporate (fin)



05.2. Describe your approach to ESG-based negative screening of issuers from your investable universe.

Applying exclusion criteria ensures that, as a matter of principle, no fund provided by KfW through the purchase of bonds for the KfW liquidity portfolio can flow into projects which, from our perspective, are likely to have unacceptable negative environmental and social impacts.

More information on KfW's website:

Please see FI 04.2 and FI 04.3

05.3. Additional information. [Optional]

The exclusion criteria for financial services providers are based on the "IFC Exclusion List":

  • Production or activities involving harmful or exploitative forms of forced labour or child labour as defined in the ILO core labor standards.
  • Production or activities involving harmful or exploitative forms of forced labour or chlid labour as defined in the ILO core labour standards.
  • Production, use of or trade in pharmaceuticals, pesticides/herbicides, chemicals, ozone depleting substances and other hazardous substances that are subject to international bans.
  • Trade in animals or animal products that are subject to the provisions of CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora).
  • Production of cosmetics etc. involving testing on animals.
  • Commercial logging operations for use in primary tropical moist forests.
  • Production of wood or wood products other than from sustainably managed forests (enterprises with less than 50% FSC-certified production are excluded, FSC - Forest Stewardship Council).
  • Production or trade in controversial weapons or important components for the production of controversial weapons (anti-personnel mines, biological and chemical weapons, cluster bombs, radioactive ammunition, nuclear weapons).
  • Production or trade in tobacco.
  • Drift net fishing in the marine environment using nets in excess of 2.5 kilometres in length.
  • Controversial forms of gambling: operation of casinos, production of devices or other equipment for casinos or betting offices or companies that generate turnover via online betting. (So-called "short odds" are defined as "controversial forms of gambling").
  • Any business activity involving pornography.
  • Production or distribution of racist, anti-democratic and/or neo-Nazi media.

FI 06. Examples of ESG factors in screening process

06.1. Provide examples of how ESG factors are included in your screening criteria.

Type of fixed income

ESG factors


Description of how ESG factors are used as the screening criteria

Exclusion criteria are indirectly applied to banks and financial institutions. The screening is applied to the relevant equity participations in activities included in our exclusion list (see FI 04.3 and FI 05.3). Currently, one financial institution is excluded from the investment universe of the liquidity portfolio due its significant stake in an arms producing company.

Type of fixed income

ESG factors


Description of how ESG factors are used as the screening criteria

Before purchasing a Green Bond, a screening is done to make sure that the bond's proceeds are not applied to finance nuclear energy projects.

06.2. Additional information.

FI 07. Screening - ensuring criteria are met

07.1. Indicate which systems your organisation has to ensure that fund screening criteria are not breached in fixed income investments.

Type of screening
Negative/exclusionary screening?

other description

          Screening performed by an external Research Provider and updated monthly for the liquidity portfolio

07.2. Additional information. [Optional]

Green Bond portfolio: screening of nuclear is part of the internal analysis made before investment.

Liquidity portfolio: In case an issuer does not meet one of the screening criteria, the non-eligibility of the issuer is reflected in the IT system and indicated automatically in the limits' overview used by the investment staff.