Environmental stewardship

The international community’s intention is to appreciably advance global protection of the environment, climate and natural resources via the SDGs. These topics are also of key importance for DEG and its customers.

To achieve its climate target of reducing greenhouse gas emissions in line with the Paris Agreement’s 1.5 ℃ goal in order to make DEG’s portfolio net-zero in 2040, DEG will make no new high-emissions investments without agreeing on a transformation pathway that is compatible with the Paris objective. DEG will invest even more in climate-friendly business models, provide targeted advice to its customers on their transformation and climate change adaptation pathways, and step up investment in forestry and carbon sink projects certified to internationally recognised standards.

In the carbon reporting of financial institutions promoted by DEG, Scope 3–15 emissions are particularly relevant. These comprise the emissions of companies financed by these institutions and represent indirect greenhouse gas emissions arising from the activities of the companies financed. Modelling using the Joint Impact Model (JIM) shows a total footprint of 173 million t CO₂e per annum for financial institutions promoted by DEG.

DEG’s direct customers in manufacturing and infrastructure have a total footprint of 34 million t CO₂e per annum (Scope 1 and 2 emissions).

Through their lending and investment decisions, banks are able to target financing towards investments that promote environmentally friendly technologies and sustainable practices. By offering green bonds or sustainable funds, for example, they can positively influence their customers’ climate targets and increase awareness of environmental responsibility.

Industrial companies, meanwhile, often have a more direct influence on climate impacts, as their production processes and supply chains can produce significant greenhouse gas emissions. These businesses therefore have a responsibility to optimise their production methods in order to reduce energy consumption and increase the use of renewable energy.

For industrial companies in particular, climate impact is closely linked to the commercial success of their business activities. Measures aimed at a positive climate impact are not just a reaction to increasing regulatory requirements and societal expectations, but also bring long-term commercial benefits such as efficiency gains and the mitigation of climate risks. Responsibility for climate action is therefore integral to companies’ strategic direction. There is good climate governance at

47% of companies and infrastructure customers, and

34% of funds.

Entrepreneurial commitment and innovative solutions for global environmental protection, climate action and resource efficiency are critical to sustainable and long-term economic development. Large parts of the global private sector rely on natural and limited resources either as part of their core business or in their supply chains. More than ever, it requires them to be managed as sustainably and efficiently as possible.

All manufacturing companies and protagonists in infrastructure projects in DEG’s portfolio commit to complying with or introducing international environmental and social standards. During due diligence, the current status is recorded and, where necessary, an action plan is drawn up. DEG expects banks and funds to implement their own environmental and social risk management systems and to appropriately manage potential environmental and social risks for their customers. This enables risks to be mitigated and investment opportunities to be identified, and also enhances their reputations. By promoting compliance with international environmental and social standards and initia­tives for more sustainable business activities, DEG is contributing to SDG 12 (Responsible production).

78% of DEG direct customers already comply with international environmental standards.

DEG’s customers can impact regional biodiversity through their business activities. For the first time, the DERa now records whether critical or natural habitats are affected or in the vicinity and whether the impact is well managed. It also recognises positive impacts of DEG customers on bio­diversity, including through co-benefits programmes and nature-based solutions.

DEG also advises its customers across industries and regions on developing and implementing environmental and social risk management systems, on collecting emissions data and identifying reduction potential, and on developing their own climate action strategies. It also helps them to obtain certification in line with international standards. Around 50% of the BSS measures at DEG Impulse, which specialises in advising on sustainable transformation, contribute to these areas.

25.2 TWh of electricity from renewable energies: technologies applied

The energy utilities and power stations that are financed directly by DEG make their own contribution to SDG 7 (Affordable and clean energy) and SDG 13 (Climate action). They produce around 25.2 TWh of electricity from renewable energy sources each year, currently supplying over 46 million people. This reduces emissions of carbon dioxide (CO₂), the main greenhouse gas, by more than 13 million tonnes CO₂ per year. Solar, wind, hydroelectric and geothermal energy account for around 59% of electricity from renewable sources.

In addition, companies that DEG invests in indirectly via funds produce 8.9 TWh of renewable energy with a focus on biomass and reduce emissions by a further 6 million tonnes of CO₂ per year.

The five DERa dimensions

Promoting decent jobs

Increasing local income

Strengthening market
and sector development

Environmental stewardship

Securing community benefits