For all new financing transactions and funding initiatives, the group-wide exclusion list of KfW Group applies. In order to align new business with the objectives of the Paris Climate Agreement and to systematically strengthen the Group’s transformation contribution, KfW has additionally introduced Paris-compliant sector guidelines for selected emission-intensive sectors. These define minimum sector-specific requirements for the climate compatibility of technologies financed and are derived from the climate scenarios of the International Energy Agency (IEA). In addition, the projects to be financed undergo an environmental and social appraisal.

In order to fulfil the funding purposes of KfW Group and, at the same time, to identify, avoid, minimise, and – where unavoidable – compensate for potential adverse impacts and risks of a project for people and the environment, planned projects worldwide are subject to an Environmental and Social Appraisal. This applies to projects of KfW Development Bank, DEG and KfW IPEX-Bank. Likewise, all projects of the KfW Raw Materials Fund are subject to an Environmental and Social Appraisal. To carry out the Environmental and Social Appraisal, we apply established international standards, including the World Bank’s Environmental and Social Standards (ESS), the Equator Principles or the International Finance Corporation’s Performance Standards (IFC PS), as specified in the relevant sustainability policies (see below).

The Environmental and Social Appraisal begins with a screening for potential environmental and social risks and impacts. The outcome is a classification into an environmental and social risk category, which determines the scope and depth of the Environmental and Social Appraisal conducted internally. For projects with high and significant environmental or social risks, depending on the business area, an additional so-called Environmental and Social Due Diligence (ESDD) may be required, including the involvement of an independent expert.

If the Environmental and Social Appraisal shows that national or relevant international environmental and social standards have not yet been complied with, we define measures to address the identified gaps. The implementation of these measures, their verification and regular reporting are agreed contractually with the relevant partners. Our environmental and social specialists are involved in the screening, the assessment and the implementation as well as the project monitoring in order to evaluate and manage environmental and social risks. Projects that are expected to lead to unacceptable environmental or social burdens that cannot be prevented or mitigated through appropriate measures are excluded from financing.

The KfW business segments “SME Bank & Private Customers” and “Individual Financing & Public-Sector Customers” have established a tiered review process for all newly financed funding projects with regard to environmental and social risks – depending on the investment country and the risk profile of the projects financed. This approach is aligned with internationally common practices.

KfW Capital reviews the fund management and the investment process of the fund against defined ESG criteria. In addition, regular monitoring is carried out. ESG data of the funds and the corresponding portfolio companies are collected on an annual basis.

Detailed information on the procedure for Environmental and Social Appraisals in the different business sectors can be found in the respective Sustainability Guidelines or in the KfW Group’s financial report:

• KfW Development Bank: Appraisal and handling of environmental, social and climate aspects
• Sustainability Guideline of KfW IPEX-Bank
• DEG ESMS Summary
• Sustainability guideline for domestic promotional business(PDF, 490 KB, non-accessible)
• Sustainability Guideline of the KfW Raw Materials Fund(PDF, 168 KB, accessible)
• KfW Capital: Sustainability Policy
• Financial Report 2025(PDF, 4 MB, accessible) including the Consolidated Non-Financial Report in accordance with the ESRS requirements (ESCA from page 78)