Promoting sustainable development

Promoting sustainable development

After two years dominated by the ongoing COVID-19 pandemic, related economic turmoil and persistent pressure on global supply chains, conditions in many developing and emerging countries remained challenging in the 2022 financial year. Russia’s war of aggression against Ukraine and its effects, such as rising food and energy prices, are putting a strain on many economies around the world.

Despite these challenges, DEG’s investments continued to be successful also in 2022, both financially and in terms of their development impact. Most DEG customers were able to further contribute to maintaining and improving the effectiveness of development policy with their entrepreneurial investments. The impacts achieved exceeded expectations – which initially were lower due to the pandemic. The effects of Russia’s war on Ukraine, however, are not expected to affect the developmental performance of DEG’s customers until next year.

Both in its support of existing and new customers, DEG once again focused on contributing to the achievement of the “2030 Agenda for Sustainable Development” and the 17 global Sustainable Development Goals (SDGs) in 2022. Implementing these goals requires various players to take an active role. While substantial public funding remains necessary and essential for development cooperation, the private sector has an equally significant role to play in promoting the achievement of the SDGs. This applies, in particular, to overcoming current challenges and the looming scarcity of public funds.

Through their financial success and responsible operations, the companies financed by DEG are promoting sustainable development in line with the 2030 Agenda. Financing private-sector investment not only fosters the further development of innovative approaches, but also helps to drive productivity and sustainable economic growth.

In order to make its customers’ investments more sustainable, DEG combines the financing services it provides with a broad range of advisory and support services, as well as promoting environmental, social and corporate governance standards.

The principle of sustainable development guides everything that DEG does: it is embedded in DEG’s business strategy and applies to dealings with customers and partners and to the way we run our own business. Since 2022, in line with its impact and climate strategy, DEG has focused its financing and advisory services even more strongly on sustainable business practices which make a measurable contribution to the UN Sustainable Development Goals and help to achieve the Paris climate targets.

DEG uses its Development Effectiveness Rating (DERa) to measure how private companies contribute to achieving impact and climate goals and to identify how these impacts can be increased. Quantitative and qualitative indicators to measure the development impact of each customer are collected annually and assessed across the five dimensions for development effectiveness of private-sector investments: decent jobs, local income, market and sector development, environmental stewardship, and community benefits.

The DERa records the main contributions to the SDGs by means of direct links with selected indicators. DEG’s customers make a particular contribution to the following sustainability goals, which DEG has defined as its main focus:

No poverty: 83% of customers have shown successful financial development and are helping to fight poverty through higher local incomes.

Decent work and economic growth: 93% of DEG’s customers create additional local income or new, fair jobs.

Industry, innovation and infrastructure: 64% of the companies and project financiers financed by DEG are innovative or are financial institutions that provide targeted support to SMEs.

Climate action: 20% of DEG’s customers generate renewable energies or use particularly resource-friendly production methods.