Responsible Investment: 2013 meeting of German PRI Network at KfW

Frankfurt (ots) -

- Cross-reference: Document with "PRI Unterzeichner Deutschland -
Stand November 2013" is available at
http://www.presseportal.de/dokumente -

- Number of German investors observing sustainability criteria is
growing steadily
- Results of PRI "Fixed Income" working group: importance of ESG
criteria in risk analyses of government and corporate bonds

At the invitation of the PRI initiative and the KfW Group, the
2013 network meeting of German signatories to the Principles for
Responsible Investment (PRI) is taking place today at the
headquarters of the promotional bank in Frankfurt.

The purpose of the 2013 network meeting is for participants to
gain information on the current focal points of PRI activities - an
investor initiative in collaboration with the United Nations that
develops principles for responsible securities management. Managing
director Fiona Reynolds, together with colleagues from London, will
be reporting on the international developments of the PRI Initiative
and expanding on the requirements that PRI signatories have to fulfil
when reporting on their progress in implementing the individual
principles.

The event is also useful for fostering contacts within the German
network: For investors who wish to give their business a sustainable
focus, the PRI network offers a valuable platform for the exchange of
relevant experience, knowledge and methods. This cooperation between
various asset managers, asset owners and service providers
strengthens the initiative and increasingly raises awareness. "The
German PRI network is one of our most active and engaged", explained
Fiona Reynolds. "The signatories are contributing to the development
of a more sustainable financial system by integrating ESG issues
(Environment Social Governance) into their investment processes and
engaging with companies in Germany and internationally to improve
their sustainability disclosure and performance."

The network of German PRI signatories was initiated by KfW in
2011, then comprising 12 members, whose number has since risen to 46.
The business motivations for being a PRI signatory are described by
Heribert Karch, managing director of MetallRente GmbH: "We have a
fiduciary responsibility towards our claimants. This is why the
founding conditions of the framework already refer to a sustainable
capital investment strategy approach. Consequently, signing the PRI
was a logical step that also enables us to strengthen the exchange of
information among investors." Taking a long-term view of investments
is also connected to the ESG criteria, as emphasised by Dr Rainer
Matthes, managing director of Metzler Asset Management GmbH:
"Responsible investing has played a crucial role in our asset
management activities for many years. Becoming a PRI signatory was
the next systematic step in integrating sustainability factors into
our entire investment strategy. For us, sustainability in investments
represents a clear commitment to developing concepts that are
sustainable in the long term."

To support signatories in implementing the individual PRI, they
form international working groups together on selected topics.
Collective know-how is thus elaborated and shared.

The PRI "Fixed Income" working group, whose results are being
presented today, was tasked with examining whether conventional
credit analyses of government and corporate bonds adequately capture
their risk factors, or whether they should be extended with
longer-term factors (ESG criteria). The analysis of the government
bond sector was led by Florian Sommer, Union Investment, while that
of the corporate sector was headed by Dr Solveig Pape-Hamich, KfW.
The promotional bank joined the PRI Initiative in 2006 and has
managed its liquidity portfolio since 2008 sustainably. It is one of
the largest non-government bond issuers in the world and is also a
pure bond investor. "Consequently, it was important for us to get
involved in the PRI "Fixed Income" working group, not only to
contribute our own experience, but also to bring ourselves forward",
explained Dr Frank Czichowski, treasurer of the KfW Group.

The evaluation of the many academic and financial studies can be
summarised as follows:

- There is a correlation between ESG factors and the
creditworthiness of bond issuers as well as the (particularly
long-term) performance of securities. For countries, for
example, it is clear that credit risks increase as the level of
corruption rises. For companies, on the other hand, the
significance of ESG factors depends on size, sector and debt
level.

- What applies to all, however, is that the significance of ESG
factors is steadily growing on account of increasingly scarce
resources, regulatory requirements or demographic developments
for example.

- A weak ESG performance results in higher credit risks, weaker
ratings and therefore higher refinancing costs.

- A growing number of investors advocate rating agencies
incorporating ESG factors into their credit analyses of
fixed-income securities, as this makes it easier to assess
investment risk and therefore better yields can be achieved.

"The PRI were developed in 2006 with a far-sighted approach, and
still offer an outstanding framework for responsible investment.
However, individual investors investing responsibly are not enough to
generate a strong impact. Capital can make great things happen if as
many investors as possible act as required!", explained Czichowski.
The aim now is to continue increasing the quality of implementing the
principles and to support new signatories with their commitments.

Service:
The current list of all German PRI signatories is attached to this
press release as an appendix.

Further information on the PRI as well as on the 2013 network
meeting (video podcasts, speeches, presentations) can be found in our
Special topics at www.kfw.de/PRI_EN.

Contact:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM); Nathalie Drücke,
Tel. +49 (0)69 7431 4400, Fax: +49 (0)69 7431 3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de