DEG (Germany)
- Score:
- 32.8
- Position:
- 16 / 22 (Non-sovereign)
Overview
German Investment and Development Company (DEG), is a subsidiary of the German Investment Corporation (KFW). It was established in 1962. DEG finances long-term investments of private companies in developing and emerging market countries. DEG is one of the world’s largest private-sector development financiers, investing in nearly 80 countries. It joined the Association of bilateral European Development Finance Institutions (EDFI) in 1992.
Analysis
DEG ranked 16th out of 22 non-sovereign DFIs, with a score of 32.8 out of 100. While this reflects an improvement from its 2023 score of 27.7, its overall ranking dropped from 11th place. DEG earns points for data accessibility through its bulk download file of investment data. However, it continues to fail on IATI publication as it has yet to publish to the IATI Standard. Since 2023, DEG has made some modest improvements, mostly in the Core Information component. Despite these steps, DEG still failed to score on the majority of project-level indicators across the Impact Management, ESG and Accountability to Communities and Financial Information components.
In the Core Information component, DEG came 10th with a score of 11.58 out of 20, maintaining the same position as in 2023. It scored on all but one of the 17 indicators, missing only on activity status. Notable improvements included new disclosures on domicile, investment instrument and funding source. DEG also gained points for format of publication on some indicators due to having a bulk download available. It did not, however, publish to the IATI Standard so did not score for that format where it was applicable.
DEG ranked joint 18th in the Impact Management component with a score of 6.75 out of 25. Although this matches its 2023 score, its position has declined from joint 12th, reflecting stagnation relative to other DFIs. No progress was observed within this component. DEG received all its points in this component from organisation-level indicators, including impact measurement approach and evaluations, but not for sector/country strategies or impact attribution. It did not score for any project-level impact indicators including impact metrics and results.
For the ESG and Accountability to Communities component, DEG ranked joint 10th with a score of 11.5 out of 30. The only improvement from 2023 in this component was new disclosure of the IAM on its project pages. Other than that, DEG continued to fail on all project-level indicators including summary of E&S risks, E&S documentation and assurance of community disclosure. On the organisational level, DEG scored 100 per cent for its E&S community disclosure policy and 50 per cent for its E&S global disclosure policy. DEG scored points for its independent accountability mechanism (IAM), but did not score for a community disclosure policy on this.
DEG ranked joint third lowest in the Financial Information component, scoring just 1.75 out of 15. It earned points solely for the disclosure of financial reports/statements and showed some improvement through the disclosure of repeat investments. However, it did not score on any other indicators within this component, including the new climate finance indicators.
DEG’s performance in the Financial Intermediary (FI) Sub-Investments component remained unchanged from 2023 with a score of 1.25 out of 15, which was joint third lowest. As in 2023, it earned points solely for the FI (bank) use of funds indicator at the project level and did not score on any organisation-level indicators.
Recommendations
- DEG should review its disclosure policy according to current best practice.
- DEG should become an IATI publisher and disclose all investments to the IATI Standard.
- It should disclose further Core Information data including unique identifiers, activity status, sub-sector, disbursement, date of activity disclosure, approval date and last update date. It should consistently disclose sub-national location and total investment cost.
- It should disclose its approach to determining impact attribution and sector/country strategies.
- DEG should disclose project-level Impact Management indicators, including additionality statement, activity indicators/metrics and results.
- It should develop an early disclosure policy covering, at a minimum, high risk projects and disclose investments in line with the policy.
- DEG should disclose project-level ESG and Accountability to Communities indicators, including summary of E&S risks and E&S documentation.
- DEG should create a policy guiding disclosure of the presence of the IAM at community level.
- It should provide assurance of community disclosure for investments when disclosure is required, as well as a beneficial ownership statement and identification of the main shareholders of the client company.
- DEG should publish a clear climate finance methodology and disclose whether each investment qualifies as climate finance, including the rationale and a breakdown by mitigation and adaptation.
- For Financial Information indicators it should disclose for currency of investment, concessionality, mobilisation and instrument-specific details (share of equity and loan tenor) and consistently disclose for co-financing.
- DEG should create a policy for the disclosure of FI sub-investments in line with Publish What You Fund’s DFI Transparency Tool.