News from 2021-07-27 / DEG

“Impact and transparent action are our focus”

DEG recently published its Development Report. DEG division head Hubertus Graf von Plettenberg describes the development impact achieved despite the pandemic and explains how and why DEG continues to develop its instruments.

As Head of Strategy and Corporate Development, you are also responsible for DEG’s annual Development Report. What are the key findings of the portfolio analysis that underlies the latest edition of the report?

DEG has developed an analysis system based on the Sustainable Development Goals (SDG), the DERa, which has been used since 2017 to examine the development impact of all the companies we co-finance. The DERa was developed in consultation with outside experts and is now used by several European development financiers. We can use it to perform a comprehensive analysis, prepare a transparent report on the findings and make them available to others. This gives our customers, ourselves and anyone interested in our work important information about what has been achieved and where there is room for improvement.

The latest report shows, among other things, that at least by the time of the evaluation, the developmental impact achieved through the companies we co-financed was very significant, despite Covid: last year, for example, the companies employed around 2.3 million people and generated local income of 120 billion euros, representing yet another increase compared to the previous year. So private companies are an important factor for development in our partner countries.

However, we do expect some setbacks under the influence of the global Corona pandemic. After all, in this year of 2021 the pandemic still isn’t over, and in many developing countries – especially in Latin America and Africa – the health and economic impacts have been devastating. We are very concerned about this and are supporting our customers with specific advisory services and programmes in order to alleviate these effects as far as possible. These range from liquidity support and health management advice to financing for companies active in the healthcare sector. But it is also important to recognise that in our partner countries in the global South the private sector is playing an important role in tackling the global pandemic.

The Development Report is part of a range of information that DEG publishes on a regular basis. It is guided by the Sustainable Development Goals (SDGs). What is DEG doing to help achieve them?

Besides various annual reports, we provide comprehensive information, for example on the DEG website and via social media. We have further expanded this offering in recent years so as to reach as many interested parties as possible. We are also in regular – including personal – contact with various stakeholders in order to understand how they view DEG and to discuss any comments and questions they might have.

We are committed, in various ways, to supporting our companies and helping to ensure that effective progress is made in line with the SDGs in developing countries – often in demanding circumstances and with difficult framework conditions. This applies in particular to environmental and social management in compliance with international standards. We therefore aim to provide targeted advice and support to companies, for example on energy efficiency and water consumption, ESG monitoring systems or community management. We are also involved in sector initiatives to help disseminate international standards in our partner countries. Impact and transparent action are our focus.

Against this backdrop, we have also further systematised the delivery of information on the projects we co-finance: since 2015, DEG has published investment-related information on every co-financed project. Most of the finance we provide is from our own resources, that is to say, not taxpayers’ money. Once the financing has been approved, information about the project is made available on the DEG website in a regularly updated database for five years. It includes information about the customer, the purpose of the project, the financing volume, and the environmental and social category. Publication requires the customer’s consent in each case. As a credit institution, we are obliged to obtain the customer’s express consent.

We made a conscious decision to do this in order to provide the most comprehensive and transparent information possible about our work and our customers. In 2020 we took this a step further: for land-related projects – larger agricultural projects involving primary land use of more than 5,000 hectares, larger renewable energy projects and mining projects – we require customers, after committing to the financing, to publish a summary of the agreed environmental and social action plan on their website, so that this information is also available to the public.