Environmental and social impact assessments and sustainability guidelines

The Group-wide KfW Group exclusion list applies to all new financing and promotional projects. KfW has also introduced sector guidelines that are compatible with the Paris Agreement for selected emission-intensive sectors in order to develop new business in line with the temperature target of the Paris Agreement and to systematically boost the Group-wide contribution to transformation. In addition, the projects to be financed are subject to an environmental and social impact assessment (ESIA).

To fulfil KfW Group's promotional mandate and to simultaneously minimise any potential negative effects on or risks to people and the environment, we subject all planned projects in developing countries and emerging economies, as well as all export and project financing, to an environmental and social impact assessment (ESIA). To conduct environmental and social impact assessments, we apply international standards – such as the World Bank’s Environmental and Social Standards (ESS), the Equator Principles or the International Finance Corporation’s Performance Standards (IFC PS).

The environmental and social impact assessment begins with a screening for possible environmental and social risks. The result is a classification into risk categories. High, significant and moderate risks are then subject to an in-depth assessment. If this shows that international environmental and social standards are not yet complied with in some areas, we determine measures to rectify this. We contractually agree on the implementation of the measures, their review and regular reporting with the relevant partners. Specialists for environmentally and socially affordable measures are brought in during both the assessment stage and the implementation processes for projects with particularly high risks for the environment and social factors. Projects that are likely to have an unacceptable environmental or social impact that cannot be prevented or mitigated by suitable measures are not eligible for financing.

The KfW business sectors “SME Bank & Private Clients” and “Customised Finance & Public Clients” have established a graduated assessment procedure for all promotional projects with regard to environmental and social risks, depending on the investment country and risk content of the financed projects. This is based on procedures that are customary at international level.

KfW Capital’s approach includes both a preliminary assessment and subsequent monitoring of environmental and social aspects throughout the investment process as well as impact management.

Detailed information on the procedure for environmental and social impact assessments in the respective business sectors can be found in the respective sustainability guidelines or in the KfW Group’s sustainability report:

• KfW Development Bank: Appraisal and handling of environmental, social and climate aspects
• Sustainability Guideline of KfW IPEX-Bank
• DEG environmental and social sustainability guidelines
• KfW Capital: Sustainability Policy(PDF, 1 MB, non-accessible)
• Sustainability Report of KfW Group