DFC works to ensure projects produce positive developmental impacts, apply best practices with respect to environmental and social safeguards, and respect human rights, including worker rights.

Environmental and Social Policy and Procedures

DFC’s Environmental and Social Policy and Procedures (ESPP) is the agency’s guiding policy document on its commitments to environmental and social sustainability in its investment practices. Aligned with the standards and procedures of peer development finance institutions, the ESPP sets out the standards that DFC will apply to DFC-funded projects and investments worldwide. It encompasses both the pre-investment environmental and social policy review as well as ongoing obligations and monitoring post-investment.

The ESPP underwent a full-scale review starting in March 2022 that involved extensive internal and external consultation with a wide range of stakeholders, including the development community, DFC’s client base, DFC’s Board, NGOs, Congress, and other U.S. Government agencies. The updated draft ESPP was made available for public comment for 60 days in early 2023, during which time DFC received over 300 comments. A compilation of the comments received, and DFC’s management responses, can be found here.

DFC management approved the updated ESPP, which was endorsed by the Board, in February 2024 and the updated ESPP will be in effect starting April 1, 2024.

Projects whose applications were submitted prior to April 1, 2024, will be assessed under the previous July 2020 ESPP. All existing, approved projects will continue to be covered by the July 2020 ESPP.

Projects that are likely to have significant adverse environmental or social impacts that are sensitive, diverse, or unprecedented are subject to public disclosure requirements. The environmental and social impact assessments of these projects are disclosed to the public on DFC's website for a comment period of 60 days.

DFC strives to continually improve its environmental and social policy and implementation as well as contribute to the ongoing evolution of best practice in environmental and social risk management.

Development Policy

DFC evaluates every project using its performance measurement tool, Impact Quotient (IQ) to measure, monitor, and evaluate its developmental impact around the world across three main areas: 

  • Growth includes contribution to GDP through improved infrastructure and the generation of local income, fiscal benefits to the local economy, and support for direct and indirect job creation
  • Innovation includes the strengthening of markets, innovation in financial structures and business models that mobilize private capital, and knowledge or technology transfer
  • Inclusion includes benefits to marginalized populations such as women or people living in rural areas, small and medium enterprises, and underdeveloped geographies  


Support provided by DFC must be additional to private sector resources by mobilizing private capital that would otherwise not deploy without such support. For every project that it supports, DFC seeks to ensure  that private-sector support is not available on terms that would make the project economically viable bearing in mind the long-term development goals of the project. DFC considers the following to be important indicators of additionality:

  • DFC’s support supplements and encourages but does not compete with private sector support;
  • DFC’s support alleviates a credit market imperfection;
  • The private market is unable or unwilling to provide support to the project on terms that make it economically viable;
  • DFC’s support is necessary for a project to achieve the appropriate scale required to obtain the returns required by private market participants; and
  • DFC’s support mobilizes private capital that would be unwilling to participate without the Corporation’s support

When assessing and documenting the additionality of a project, DFC also considers the indicators of additionality articulated in the “Multilateral Development Banks’ Harmonized Framework for Additionality in Private Sector Operations.”