Helping a global financial institution assess and manage environmental and social risks when providing client finance

Financial Institution ESG Due Diligence and Risk Reviews

Our Sustainability Advisory Services team has an ongoing partnership with a global financial institution to assess projects under consideration for financing. Our evaluations focus on project alignment with the Equator Principles (EP). This risk management framework is used by financial institutions to assess and manage environmental and social risks when financing projects. To streamline our evaluations, we developed an EP applicability standard for use by line of business representatives as well as checklists to expedite compliance review.

We also conduct enhanced due diligence on the environmental, social, and governance (ESG) performance and policies of the bank’s clients that are under consideration for non-project finance. We examine company climate risk, climate performance, and commitment to reducing emissions. The reviews also include analysis of environmental, health, and safety performance and compliance, engagement with Indigenous peoples, labor relations, deforestation avoidance, water and air quality protection, and corruption governance.

Additionally, we carry out red flag reviews to capture legal and regulatory exposure, negative media, reputation risk, and social license to operate. Companies seeking financing are compared to industry peers, leaders, and laggards, with our team providing recommendations for performance improvement and ongoing monitoring. We also actively monitor and provide updates to our client on emerging issues and economic, market, and technological developments, examining their potential impact on near-term environmental and social risk.

Our client applies the knowledge gained from these evaluations to inform and actively improve their portfolio’s ESG performance.