Does KfW Bank violate human rights?

The KfW (Kreditanstalt für Wiederaufbau) is a German development bank. It was founded in 1948 with the mission of supporting the German economy in its reconstruction after the defeat in World War II. Its initial capital came largely from the Marshall Plan, the US aid program for the reconstruction of European countries.

Since 1961, KfW has been responsible for the Federal Republic of Germany's financial cooperation with developing countries . The bank, one of the largest and most influential development banks in the world, is a public-law institution and operates with a balance sheet total of more than half a trillion euros.

The federally owned bank finances projects around the world , from roads in Africa to water systems in Asia. But what happens when projects backed by the lender displace an entire village, pollute a river, or silence dissent? A new report on KfW Bank's human rights record shows that these aren't just hypotheses, but real risks that aren't being adequately addressed. KfW is supported with billions in public funds, so its failures are more than venial sins; they are ultimately paid for by the German taxpayer.

What is KfW accused of?

The Coalition for Human Rights in Development (CHRD), an alliance of more than 100 civil society organizations, has raised concerns in a report about the impacts of KfW's overseas projects on vulnerable communities.

The CHRD, which also includes Urgewald, a Germany-based watchdog organization that monitors the social and environmental impacts of global finance, has now targeted the development bank's slogan ( KfW - Bank aus Verantwortung ), accusing the lender of "irresponsible banking" and causing "hidden harm."

Development banks like KfW emphasize how they shape the future in emerging markets. However, the report claims that infrastructure projects financed by the lender have led to the forced relocation of indigenous communities in Indonesia, Mexico , and elsewhere. These projects are taking place without adequate involvement of local people or compensation.

The projects are also blamed for environmental damage. The study authors highlight projects in Eastern and Southern Europe that may contribute to air and water pollution while providing little transparency or accountability.

Marc Fodor, campaign coordinator for the CHRD, believes that environmental and social issues are "merely an accessory" to business deals for KfW. In an interview with DW, he said that many projects supported by KfW are launched without prior, informed consent from the local population, thus violating international standards for indigenous rights and participatory development.

Furthermore, KfW's own investigation into severe repression in Indonesia, where indigenous peoples were reportedly arrested and abused, concluded only that free, prior, and informed consent was "not respected." "It wasn't just that people weren't consulted. It was much more serious," Fodor said.

Lack of cultural sensitivity

As another example, the report cites a project in Kenya . Maasai communities were relocated in connection with geothermal and infrastructure projects in the Kedong Ranch area, about 93 kilometers northwest of Nairobi. This land has long been disputed because Maasai groups claim it as their ancestral land.

According to Fodor, the Maasai were housed in "culturally inappropriate" new dwellings that did not reflect their traditions and led to isolation and the collapse of the community.

Another example is Indonesia . Members of the Pocoleok community, who opposed the expansion of a geothermal power plant financed by KfW, were intimidated and abused when they raised concerns about ecological and cultural damage.

In addition to citing controversial KfW projects, the report also criticized the complaints process as "slow, opaque, and inaccessible to many affected parties." The lender failed to "prevent and remediate retaliation against individuals who raise concerns about the impacts of its projects."

In a complaint in Uganda , KfW initially denied its involvement until a community member presented a document bearing the bank's logo. The report does not accuse KfW of intentional misconduct, but points out that the bank's due diligence and oversight were inadequate. Fodor told DW that he himself "couldn't understand the guidelines—even though they're my daily bread."

What does the CHRD demand?

KfW must address structural changes, such as establishing an independent accountability mechanism with clear human rights guarantees. Furthermore, measures to prevent reprisals are lacking. Public access to project documents and comprehensive consultation with affected communities must be guaranteed before financing is approved.

Many other development banks have already taken steps in this direction: The World Bank and the Asian Development Bank publish detailed environmental and social assessments online. The European Investment Bank (EIB)—the EU's international development finance institution—has a central complaints office that is partially independent.

"Responsible handling is a matter of course"

In response to the report, KfW issued a statement. It states that respect for human rights and the responsible management of environmental and social risks are "self-evident" for all KfW business areas. "There are sustainability guidelines for all financing activities of KfW and its subsidiaries." These require "environmental and social impact assessments for all financed projects," the statement continues.

KfW emphasizes its adherence to internationally recognized standards to avoid financing projects that harm people or the environment. Furthermore, indigenous communities are involved in the process in cases of serious potential harm. "If risks are deemed unacceptable, financing will be refused," the statement concludes.

In response to a DW inquiry, KfW referred to specific projects mentioned in the report and wrote to us that NGO complaints about the biomass project in Serbia had been investigated and the allegations had been "proven to be completely unfounded." The bank stated that the NGOs subsequently apologized and removed the allegations from their websites.

Regarding a KfW-supported project in Ulumbu, Indonesia, the bank stated that it had "suspended financing of the planned infrastructure measures" and asked its local partner to fully investigate the project's impact on local communities.

This article was adapted from English.