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ESIA: contributing to environmental protection and social development

Published: 29.03.2021

All the projects KfW IPEX-Bank plans to finance are routinely subjected to an environmental and social impact assessment (ESIA) before contracts are signed. An ESIA comprises a screening element and the actual assessment.

In the first step, the screening, the bank categorises the project according to potential environmental and social impacts and risks. The categorisation into A, B and C projects follows the international standards of the World Bank/IFC (International Finance Corporation) and is subject to an internal verification by a non-market unit.

In the next step, KfW IPEX-Bank requires comprehensive environmental and social impact studies for category A projects. For category B projects, the scope, focus and depth of assessment are defined according to specific characteristics of the project or investment. Environmental and social experts are involved in both the assessment and realisation of any project involving particularly high environmental and social risks.

Category C projects generally have no or only minimal impacts and adverse effects. Examples include supplies of capital goods, such as mechanical and electrical engineering products, whose use is not normally associated with any significant adverse environmental impacts. Projects in this category do not require any further review.

Measures are defined within an environmental and social management plan – a key outcome of the assessment – and must be implemented by the project partner or financed enterprise to protect the environment and people and thus to avoid undesirable effects, reduce them to an acceptable level or compensate for them.

The ESIA is described in more detail in our Sustainability Guideline, which can be found here.