Promoting sustainable supply chains

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The Supply Chain Act passed in June 2021 obliges German companies to comply with minimum ecological and social standards along their entire value chain. This increases the pressure on exporting suppliers. However, small and medium-sized suppliers often have difficulty meeting these requirements. In some cases, occupational health and safety, environmental friendliness and social justice are lacking. KfW is responding to these challenges with the ESG First Fund, launched in cooperation with Aavishkaar Capital. The fund, which was launched in early 2022 with a starting capital of USD 250 million, of which an initial EUR 54 million was provided by KfW, invests in manufacturing companies in partner countries that are integrated into German and European supply chains. The focus is particularly on Southeast Asia (India, Vietnam, Bangladesh, Cambodia, Indonesia) and sub-Saharan Africa (Kenya, South Africa and Nigeria), with a focus on agricultural products, textiles, shoes, machine and car parts and furniture. The fund evaluates working conditions in partner companies and initiates changes to improve minimum social and environmental standards, with gender equality playing a special role.