Environmental and Social Risk Management System

To develop and implement an Environmental and Social Risk Management System together with our financial institution clients is one of our key services / products. Our experiences with more than 40 FI clients worldwide allow us to compare results achieved, to build upon already existing tools, checklists, ideas (no re-inventing the wheel) and to offer very competitive prices.

We can set up an Environmental and Social Risk Management System in your Financial Institution / Investment Fund with the help of the following activities:

  • Top management motivation
  • Reviewing current portfolio with regard to E&S risks
  • Suggesting E&S procedures / tools / policies
  • Integration of E&S procedures into credit procedures
  • Coaching of E&S officers – including field visits
  • Providing training on latest E&S management practices including IFC Performance Standards
  • Monitoring success of E&S management system based on performance indicators
  • Integration of corporate governance, environmental and social issues into one single management process

Very often we offer this product in the framework of a technical assistance project financed by a Development Financing Institution (e.g. IFC, KfW, DEG, FMO, CDC, AFD, Proparco).

The purpose of a technical assistance project is…

To set up an Environmental and Social Management System (ESMS) in order to systematically assess and manage E&S risks, including:

  • E&S policy
  • E&S procedures (guideline, checklist, responsibilities…)
  • E&S basic know how (training)
  • E&S responsibilities (E&S officer, buy-in)

A typical technical assistance project offered by us includes:

  • Phase 1: Assessment and action plan
  • Phase 2: Development of procedures / tools as per action plan
  • Phase 3: (Regional) training, start of trial testing, assistance for 2 projects
  • Phase 4: Evaluation of pilot phase
  • Phase 5: Fine tuning, final evaluation

What are we doing in …

… Phase 1 ?

  • Understanding the credit process and setup
  • Understand shortcomings of existing E&S management system
  • Reviewing the portfolio (E&S risks)
  • Development of an ESMS structure
  • Preparation of a detailed action plan on how to proceed
  • Feedback by Top-Management
  • Getting “buy-in” from key people (change agents)

… Phase 2 ?

  • Developing the documents identified in the Action Plan as necessary to develop an ESMS and E&S risk management capacity
  • E&S Policy
  • E&S Procedures
  • Supporting tools such as checklists and guidelines reflecting the company’s investment focus

… Phase 3 ?

  • Providing training in the application of the company’s E&S Procedures
  • A pilot to test the ability of staff to implement the ESMS on pipeline deals
  • A site visit to one pipeline investment to provide relevant E&S Due Diligence input and to demonstrate best practice E&S Review

… Phase 4 ?

  • Evaluation of the pilot efforts

… Phase 5 ?

  • On-going support to the company
  • Final evaluation of the effectiveness of its ESMS