You've probably never heard of KfW. It's a national development bank — the world's largest — backed by the German state and established to funds projects around the world, ranging from roads in Africa to water systems in Asia.

But what happens when projects backed by the lender displace a village, pollute a river, or silence dissent?

A new report on KfW Bank’s human rights record says these aren't just hypotheticals; they're real risks and they're not being handled well enough.

Known by the slogan "Responsible Banking," KfW is backed by billions in public money. So those failures aren’t seen as just tragic; they're paid for by German taxpayers.

What is KfW Accused Of?

Compiled by the Coalition for Human Rights in Development — a grouping of civil society organizations — the report raises concerns about how KfW's overseas projects are affecting vulnerable communities.

The coalition, which includes Urgewald, a German-based watchdog group known to track the social and environmental impacts of global finance, took aim at KfW's slogan, accusing the lender of "irresponsible banking" and causing "hidden harms."

Development banks like KfW try to highlight how they are shaping futures in emerging economies. But the report alleges that infrastructure projects funded by the lender led to forced relocations of Indigenous communities in Indonesia and Mexico. Plans to back a graphite project in Tanzania were criticized for taking place without adequate engagement with locals or compensation. 

Marc Fodor, campaign coordinator at the Coalition for Human Rights in Development, thinks for KfW, social issues are "just an add-on" to business deals.

Speaking with DW, Fodor said the report reveals that many projects backed by KfW were launched without prior informed consent from local populations, violating international standards on Indigenous rights and participatory development.

Locals who complained faced reprisals

Fodor also noted that KfW's own investigation into serious reprisals in Indonesia, where Indigenous people were reportedly arrested and beaten, concluded only that "free, prior and informed consent had not been respected."

"It wasn’t just that people weren’t consulted. It was much more serious than that," he said.

Apart from naming controversial KfW projects, the report criticized the lender's complaints procedure as lacking "provisions to ensure independence," adding that the lender was failing to "prevent, address and remedy reprisals against those raising concerns" around the impacts of its projects.

The report doesn’t accuse KfW of deliberate wrongdoing, but it does suggest that the bank’s due diligence and oversight are falling short and are often unclear.

"It's a maze… I was unable to understand what the policies are — even though that’s my bread and butter," Fodor told DW.

KfW has disputed some of the claims in a response to DW below.

What is the coalition urging KfW to do?

To move forward, the rights groups say KfW must go beyond procedural reforms and embrace structural change. That means establishing an independent accountability mechanism across all its international operations with clear human rights safeguards.

Additionally, they are calling for proactive policies to prevent reprisals, public access to project documents and meaningful consultation with affected communities before any financing is approved.

Many other development banks have already taken steps in this direction. The World Bank and the Asian Development Bank, for example, publishes detailed environmental and social assessments online.

The European Investment Bank (EIB) — the EU's international development finance lender — has a centralized complaints office with partial independence.

Compared to these institutions, KfW relies on partner policies and scattered grievance systems, the report criticized, which leave gaps that can allow harm to go unchecked.

What does KfW have to say?

In response to the report, KfW issued a statement defending its practices. It says that for all three international business areas of the KfW, respect for human rights and responsible management of environmental and social risks are "a matter of course."

"All financing by KfW and its subsidiaries is subject to sustainability guidelines. These require procedures and standards for environmental and social impact assessments for all financed projects," the statement added.

KfW also emphasizes that it employs more than 50 specialists and applies internationally recognized standards such as those of the World Bank, IFC and the Equator Principles — global guidelines banks use to avoid funding projects that harm people or the environment.

Furthermore, in cases of serious potential harm to Indigenous communities, those communities are included in the process. "If risks are deemed unacceptable, financing is refused," the statement concluded.

KfW later emailed DW with its response to criticism of a project it backed in Ulumbu, Indonesia. The development lender said it has "suspended financing for the planned infrastructure measures" and asked its local partner to fully implement the recommendations in an audit on the project's impact on local communities.

Edited by: Uwe Hessler

Editor's note: This story was first published on September 10, 2025, and was updated a few hours later with a response from KfW to allegations about a specific project in the report.