The global political and economic situation remained plagued by uncertainty in 2023. The greatest challenges were still Russia’s war on Ukraine and its consequences, such as high energy and food prices. Many economies were also impacted by diminishing purchasing power as a result of high inflation and monetary policy measures to curb it. These global challenges and the effects of climate change are exacerbating existing social inequalities. Economic activity still lagged behind pre-pandemic levels, particularly in developing and emerging market countries, and regional disparities increased. This makes DEG's contributions and transformation support more important than ever for the economic development of these countries.
Despite these challenges, DEG’s promotional activities for private-sector enterprises in developing countries remained successful in 2023, both financially and in terms of their development impact. The majority of DEG’s customers were again able to contribute to securing and enhancing development impact through their entrepreneurial activities. Despite difficult conditions, DEG slightly exceeded its development impact goals for 2023.
With its commitment, DEG makes an active contribution to the 17 global Sustainable Development Goals (SDGs). While public funding remains largely necessary and essential for development cooperation, the private sector has an increasingly significant role to play in achieving the SDGs. This applies particularly in terms of overcoming the current challenges and in light of dwindling public funds.
Financing private-sector investment not only fosters the further development of innovative approaches, but also helps to drive productivity and sustainable economic growth, create new jobs and promote local development.
Since 2022, DEG has focused its work even more keenly on further enhancing the positive development impact of its customers on society and the environment; reducing greenhouse gas emissions in line with the Paris Agreement’s 1.5 ℃ goal in order to make DEG’s portfolio net-zero in 2040; supporting customers with their transformation in order to strengthen their resilience and achieve greater development impact.
In order to make its investments more sustainable and to promote transformation, DEG combines the financing services it provides with a broad range of advisory and support services, as well as with promoting environmental, social and corporate governance standards.
DEG uses its Development Effectiveness Rating (DERa) to measure how private enterprises contribute to achieving impact 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.
Using the DERa the main contributions to the SDGs are identified by means of direct links with selected indicators. DEG’s customers make a particular contribution to the following sustainability goals, which DEG has prioritised:
No poverty:
85% of customers have shown successful financial development and are helping to fight poverty through higher local incomes.
Decent work and economic growth:
92% of DEG’s customers create additional local income or new, fair jobs.
Industry, innovation and infrastructure:
66% of the companies and project financiers financed by DEG are innovative or are financial institutions that provide targeted support to SME.
Climate action:
19% of DEG’s customers generate renewable energies or use particularly climate- and resource-friendly production methods.