Environmental stewardship

Through the SDGs, the international community aims to substantially advance global environmental, climate and resource protection. These issues are also of key importance for DEG and its customers. Since 2022, DEG has been focusing its work even more purposefully on reducing greenhouse gas emissions in line with the Paris Agreement’s 1.5 ℃ goal and neutralising emissions attributable to DEG in order to make DEG’s portfolio climate-neutral by 2040. More than ever, the companies it finances are being required to operate in a manner that is as sustainable and efficient as possible. Large parts of the global private sector rely on natural resources either as part of their core business or in their supply chains. This makes an entrepreneurial commitment to, and innovative solutions for, global environmental and climate protection and resource efficiency a crucial aspect of sustainable development.

All manufacturing companies and infrastructure projects in DEG’s portfolio commit to 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 management systems (ESMS), and for them to also manage potential environmental and social risks adequately with their customers. This helps to mitigate risks, identify investment opportunities and enhance reputation. By complying with international environmental standards and initiatives for more sustainable business activities, DEG’s customers bring their businesses into line with SDG 12 (Responsible Production).

Renewable energy in the DEG portfolio

Energy utilities that are co-financed directly by DEG and indirectly via funds make a contribution to SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). Each year, around 35.2 TWh of electricity are produced from renewable energy sources, currently supplying more than 33.4 million people. Solar and wind energy as well as hydroelectric power account for around 55% of electricity from renewable sources. This lowers carbon dioxide (CO2) emissions, the main greenhouse gas, by more than 24 million tonnes per year, for example by significantly reducing emissions using more sustainable technologies and alternative energy sources.

DEG also advises its customers across industries and regions on developing and implementing environmental and social management systems and supports them to obtain certification in accordance with international standards. DEG provided a total of EUR 609 million in 2021 for investments that promote climate and environmental protection.

Sustainability in the electrical and electronic sector

Name: Walton Hi-Tech Industries PLC.
Invested volume (in EUR): 30m
Country: Bangladesh
DERa category: Environmental stewardship
% achieved of category: 64

Walton manufactures environmentally friendly and energy-efficient electrical and electronic products, including washing machines, refrigerators, elevators and household appliances, and is a leader in the local market in Bangladesh. DEG and Walton have been cooperating since 2015. Besides the provision of long-term finance, DEG has supported the sustainable growth of the company by various Business Support Solutions, among others on corporate governance, working capital, environmental and social management, and data security. The company has been following an emissions reduction pathway to reduce its greenhouse gases, including energy efficiency measures and the planned installation of a 30 MW solar plant.

Climate risk assessment for loans in the agricultural sector

Name: Banco de Machala, S.A.
Invested volume (in EUR): 14m
Country: Ecuador
DERa category: Environmental stewardship
% achieved of category: 32

Banco de Machala is an Ecuadorian commercial bank with a strong focus on the agricultural sector. Not only severely affected by the COVID-19 pandemic in recent years, climate change is also having an impact on the region, with increased risks from more frequent extreme weather events expected in the coming decades. Therefore, the financing will be flanked by a “climate risk assessment” as part of a pilot project that aims to increase transparency on climate risks in the client portfolio and help the bank and its clients identify actions to increase their resilience.