What are the steps that financial institutions will follow?
As per previous practice, EPFIs will continue to use common terminology in categorising projects into high, medium and low environmental and social risk, based on the IFC’s categorisation process. They will apply this to projects globally and to all industry sectors. This will be helpful in developing consistent approaches to dealing with high and medium risk projects. Second, EPFIs will require their borrowers to demonstrate in their Social and Environmental Assessments, and in their Action Plans, the extent to which they have met the applicable World Bank and IFC sector-specific EHS Guidelines and IFC Performance Standards, or to justify deviations to them. This will give EPFIs much better information on which to make judgments. Third, EPFIs will insert into the loan documentation for high and medium risk projects covenants for borrowers to comply with the Action Plan. Where a borrower is not in compliance with its social and environmental covenants, EPFIs will work with the borrower
