Renormalization of boundary fermions and world-volume potentials on D-branes

We consider a sigma model formulation of open string theory with boundary fermions carrying Chan-Paton charges at the string ends. This formalism is particularly suitable for studying world-volume potentials on D-branes. We perform explicit two-loop computations of the potential T-dual to the non-Abelian Born-Infeld action. We also discuss the world-volume couplings of NS fluxes which are responsible for Myers' dielectric effect