We assist our FI clients to develop a categorization system based on the level of E&S risk of their transactions to guide them on the scope of the ESDD. A typical system includes three E&S risk categories, designated as high (category A), medium (category B) and low risk (category C).
Categorization: Assiging category A, B or C to mainstream or FI-1, FI-2 or FI-3 to FI investment projects.
Category A: Projects with potential significant adverse social or environmental impacts that are diverse, irreversible, or unprecedented.
Category B: Projects with potential limited adverse social or environmental impacts that are a few in number, site-specific, largely reversible, and readily addresses through mitigation measures.
Category C: Projects with minimal or no adverse social or environmental impacts.
We strongly advise our clients to use automatic categorization tools like the EASI tool that has been developed at KfW/DEG. The advantage of such a tool is that it can be handled by non-experts and yet produces with a relatively high degree of certainty and objectivity a result that is in line with international categorization practices and IFC Performance Standards.
If you want us to suggest provisional E&S categories with the help of such a tool, please provide us with the necessary input data:
- Detailed description of (industrial) sector
- Type of project (Modernisation, site expansion, green field, no change)
- Project size as compared to similar projects in the country (large, medium, small)
- Project site (unused nature, agricultural land, residential land, industrial area, unknown)
- Biodiversity issues (no critical habitat in the vicinity, project adjacent to critical habitat, project inside critical habitat)
- Project impacts on surrounding communities (e.g. heavy traffic, indigenous people present, migrant workers), if any
- Critical issues identified in the supply chain if the project (e.g. smallholder, wood from natural forests, mining)
- Presence of risk groups (e.g. young workers, migrant workers, etc.)
- Magnitude of resettlement involved (number of economically or physically displaced persons)
- Number of jobs
While this service is free of costs, Innovativkonzept does not take any reliabilities for the result. Hence, the suggested categories should only serve to “plausify” your own categorisation results.
Please do not hesitate to contact us should you desire to have additional information on our categorisation tools.