Entrepreneurs play an important, active role in society. As part of its environmental and social standards, DEG expects its customers to implement sound community, health and safety management for neighbouring communities. Active interaction with local communities is a win-win situation for all involved: companies encourage local social acceptance and support for their activities, while communities benefit from an increase in amenities and opportunities that would not otherwise exist. The aim is to avoid or appropriately mitigate potential negative impacts on local residents’ health and safety. DEG requires its customers to put in place a community management system that is commensurate with the level of risk and includes a complaint mechanism.
Over 80% of the manufacturing companies and infrastructure projects in DEG’s portfolio have implemented community, health and safety management in line with DEG’s environmental and social standards.
Economic and/or physical resettlements were unavoidable in 33 out of a total of 225 companies and infrastructure projects financed. This results in points being deducted under the new net impact approach. In such cases, DEG and the customer contractually agree resettlement plans that are in line with international standards and monitored by DEG.
In addition, almost 83% of DEG’s portfolio companies engage in community development activities. On average, each company provided the equivalent of around EUR 930,000 to support local communities in the last reporting year.
Of the portfolio customers contributing to community development, 38% pursue an advanced or best-practice community strategy geared towards sustainable and effective outcomes. These strategies are clearly linked to the business model and contain clear goals. Examples include training and health programmes for local communities, hiring initiatives to promote local employment, and local procurement programmes that are geared towards supporting local economic development and aligned with the company objectives.
If required, DEG advises its customers on how they can improve their community engagement. It runs programmes to support companies with building a comprehensive stakeholder management system or with developing local community projects that promote sustainable structures on the ground, for example through the transfer of expertise or the development of small, local industries.
It is important to communities that local residents can approach a company directly when they have concerns. This enables any potential problems to be brought to the attention of the company so that it can take remedial action. A structured complaints management system serves not only as a means of customer communication to improve services and customer loyalty, but is also an important tool for internal and external stakeholders and demonstrates an institution’s commitment to transparency and ethical business practices. Establishing a complaints mechanism is a requirement of the international environmental and social standards which DEG has undertaken to uphold.
83% of DEG’s portfolio companies have set up a complaints management mechanism.
Investments in energy- and water-efficient housing
Name: Vinte
Invested volume (in USD): around 20 million
Country: Mexico
DERa category: Community benefits
DEG has reinforced its long-standing partnership with Vinte Viviendas Integrales, S.A.B. de C.V. (Vinte): As the anchor investor in Vinte 24X SDG, it has subscribed for MXN 400 million (around USD 20 million) of the latest sustainable development bond issued by the Mexican developer. The SDG bond amounting to a total of MXN 500 million was certified in accordance with the SDG Impact Standards for Bond Issuers set by the United Nations Development Programme (UNDP). It will finance specific environmentally friendly and socially oriented construction projects in Mexico.
The funds will be allocated to the construction and certification of over 1,200 energy- and water-efficient homes complying with IFC EDGE or EcoCasa standards. IFC EDGE, a certification system developed by the World Bank Group, promotes energy-efficient construction and the reduction of CO₂ emissions in the construction industry.
The initiative is to create around 3,300 direct and indirect jobs across the entire value chain. Compliance with sustainability and environmental standards will be verified by external experts.
DEG supports installation of a photovoltaic system in West Ukraine
Name: A. Reiter GmbH
Invested volume (in EUR): around 500,000
Country: Ukraine
DERa category: Community benefits
With the people of Ukraine still struggling with the challenges of day-to-day life, economic prospects can make their living conditions more bearable. Against this background, DEG through its subsidiary DEG Impulse, co-finances the installation of a photovoltaic system at the Ukrainian site of German SME A. Reiter GmbH. The system is designed to generate 600,000 kWh of green electricity each year to secure the site’s manufacturing operations, with a third of the solar energy produced to be fed into the Ukrainian power grid. A. Reiter will invest around EUR 494,000 of its own funds into the project, which will be matched by DEG using resources from the develoPPP programme run by the German Federal Ministry for Economic Cooperation and Development (BMZ).
A. Reiter GmbH, headquartered in the administrative district of Augsburg, is a family-run SME that treats and produces wood fuels. Its subsidiary STAF Dovhe LCC has been operating in the village of Dovhe in West Ukraine since 2018, where, with 50 members of staff, they are a major employer. It produces and exports firewood and wood briquettes from sustainably managed forests in West Ukraine.
