Environmental & Social Due Diligence

Environmental and social due diligence involves the systematic identification, quantification and assessment/evaluation of environmental and social risks associated with a proposed transaction. This process also helps identify the mitigation measures that are necessary to reduce any environmental and social risks that are identified. The extent of the environmental and social due diligence and level of detail is based on the transaction’s environmental and social risk category and will vary by transaction type.

The environmental and social due diligence can involve a simple desktop review or required a site visit with the use of technical experts, if necessary, to understand potential environmental and social risks associated with business activities and review a client’s/investee’s compliance with the financial institution’s environmental and social requirements.  Investors like IFC and World Bank have made ESDD as an essential part of its global economy.

Add-on benefit: Investee becomes E&S compliant too.

For example, environmental issues can include pollution, exposure to extreme weather, carbon management, and use of scarce resources. Social issues can include product safety, human rights, worker safety, customer data protection, and diversity & inclusion 

Our process of Environmental and Social Due Diligence:

• We begin with creation of framework that identifies KPIs and guides decision making

• We make sure all stakeholders agree with E&S policy, strategy and way of execution

• Then we follow some basic steps to perform the analysis

• Desk review by collecting and organizing key documents
• Interview company employees and stakeholders
• Perform on-site analysis of existing facilities and new projects
• Conduct Risk Assessment

• In conclusion, we recommend the solutions to the assessed risk along with best practices.

• A plan on how to address the risks and implement the solutions.

• Formulation of E&S review summary as per the client requirement.

OUTCOME: 

E&S Gap/ E&S Action Plan on which investor and investee company can mutually agree upon, In addition to that, it aids the tracking of pending issues.