ESG / Environmental & Social Due Diligence Services

SLP Environmental specialises in the provision of Environmental, Social and Governance (ESG) and Environmental and Social Due Diligence (ESDD) services and has a proven track record performing ESG / ESDD on behalf of both financier and project sponsor/borrowers throughout South East Asia. An overview of some of our key ESG / ESDD assessment and management services is provided below.

Financiers environmental and social due diligence is typically performed in order to identify the potential environmental and social (E&S) risks and liabilities associated with a particular transaction or investment. This is achieved by assessing the compliance status of the Target Project/Company under assessment with respect to applicable national legal requirements and international good practice standards and guidelines pertaining to E&S performance. SLP’s clients include international financial institutions (IFIs) including the International Finance Corporation (IFC), the Asian Development Bank (ADB), IFI Financial Intermediaries (FI) as well as various Equator Principles Financial Institutions (EPFI’s), Multi-national Investment Funds and Private Equity Companies etc.

Project sponsor/borrower ESDD is typically conducted by a project developer seeking financing or investment who wants to ensure that their E&S performance is aligned with lenders/investors environmental and social safeguards (ESS) requirements, and that the necessary E&S policies and management programs are in place to satisfy financiers project conditions.

Environmental and social due diligence is typically performed in order to identify the potential environmental and social (E&S) risks and liabilities associated with a particular transaction. This is achieved by assessing the compliance status of the Target Project/Company under assessment with respect to applicable national legal requirements and international good practice standards and guidelines pertaining to E&S performance.

The primary objective of ESDD is to determine the Targets E&S performance relative to the applicable requirements of a defined ‘Reference Framework (RF)’ for each assignment. The RF varies on a project by project basis, but typically includes national legal requirements pertaining to E&S performance (i.e., environmental, community and occupational health and safety, labour and working conditions, land acquisition and involuntary resettlement, indigenous peoples, cultural heritage and biodiversity etc.) supplemented with other international good practice performance benchmarks such as the:

IFC Performance Standards 1 – 8;
WBG Environmental, Health, and Safety General and Sector Specific Guidelines;
ADB Safeguard Requirements 1 – 4;
ILO Conventions and Core Labour Standards;
The Equator Principles IV;
JICA Guidelines for Environmental and Social Considerations; and
EDCF Environmental and Social Safeguards Policy.

In addition, and depending on the specific project and business industry sector, clients may also require additional assessments added to the RF of an ESDD study, such as Human Rights, Child Safeguarding, Food Safety and Hygiene, Gender=Based Violence/Harassment and Security Force Risks etc.

In summary, the scope of works of a conventional ESDD assignment typically comprises of:

A review of relevant information provided by the Target;
An E&S Compliance Audit of the Targets project/s, activities or assets;
An Environmental and Social Management System (ESMS) Audit;
Compliance Review, Gap Analysis and Risk Assessment;
Project Risk Categorisation; and
Preparation of Environmental and Social Action Plan (ESAP) or Corrective Actions Plan (CAP).

…achieved by assessing the compliance status of the Target Project/Company under assessment with respect to applicable national legal requirements and international good practice standards and guidelines pertaining to E&S performance…

The ESAP/CAP is developed to align with the project/borrowers/Targets performance with ESS requirements and, where applicable, high risk findings are conventionally required to be addressed prior to financial close (FC).

The ESDD may identify that the Target does not have an Environmental and Social Management System (ESMS), or that the Targets ESMS requires further development. SLP has comprehensive experience in preparing, and or enhancing, a borrowers ESMS such that it is aligned with lenders/investors requirements. SLP can also provide high level ESMS training to familiarise the Targets senior management with the objectives, principles, benefits, structure and workings of the new or enhanced ESMS, and to ensure that key staff responsible for its ongoing development, implementation and monitoring are aware of their roles and responsibilities.

Furthermore, SLP also provides post financial close Environmental and Social Performance Monitoring (E&S PM) and auditing services on behalf of project financiers/sponsors, including comprehensive E&S audits of construction sites and operational facilities to determine whether the borrower is complying with the requirements of the ESAP, ESMS, ESIA/ESMP and applicable E&S management programs etc. Our experience includes long term E&S performance monitoring and auditing assignments for Category A projects in the agribusiness, cement, infrastructure, mining, power and oil and gas sectors.

SLP Environmental has a proven track record in performing environmental and social due diligence (ESDD) and ESMS assignments for a variety of business and industry sectors across the ASEAN region (Cambodia, Laos, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam) and professional references can be provided on request.