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Environmental and social sustainability

As early as in 2000, we were one of first German banks to establish demanding guidelines requiring all projects we finance to be environmentally and socially sustainable. We will not finance projects that result in unacceptable environmental damage or cause unreasonable social impacts.

Loan applications are categorised according to environmental and social aspects

All loan applications are assigned to one of three categories based on the environmental and social aspects of the projects to be financed: "A", "B" and "C". Categories A and B represent projects that could have considerable environmental and social impacts, such as raw materials projects and thermal power plants. As these impacts are often technically manageable, projects in these categories are vetted closely with the collaboration of KfW technical experts. Subject to this detailed review, KfW IPEX-Bank finances projects only if they comply with its own Sustainability Guideline - which is in turn based on the World Bank Group's demanding and internationally accepted environmental and social standards, in particular the IFC Performance Standards, EHS Guidelines and Safeguard Policies, and also includes the Equator Principles - if necessary with additional requirements.

The "safeguard policies" of the World Bank serve as our yardstick for the avoidance or alleviation of negative social impacts. Besides, we have adapted all of our regulations governing business operations several times to take account of current trends in international discussions on "Corporate Social Responsibility". As a bank, we want to lead by example in protecting indigenous populations and cultural heritage, eradicating child and forced labour and preventing people from being involuntarily resettled.

Our sustainability guideline is also intended to:

  • encourage suppliers, project sponsors, borrowers and other involved parties to consider environmental and social aspects at an early stage when planning the project and its financing,
  • foster a better understanding in the host country of the significance of environmental and social risks, through studies required by us, and of the advantages of adopting timely protective measures and raising public awareness, and cause these aspects to be given more weight in development planning,
  • encourage buyers/project sponsors to implement meaningful and economically viable improvements based on the discussion of the results of environmental and social impact assessment procedures, other assessments and environmental and social sustainability requirements,
  • contribute to the international discussions directed at giving more importance to ecological and social aspects in decisions taken by finance institutions and applying uniform standards wherever possible.