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The procedures and tools for conducting environmental and social due diligence for microfinance are described in a financial institution’s Environmental and Social Management System.

The focus of the environmental and social due diligence will be on screening transactions rather than detailed assessments. The procedures should include the following step as part of a desktop review and a site visit, if necessary:

If a potential client is significantly involved in an excluded activity, the operation should be discontinued.

In addition, many microfinance institutions see the promotion of good environmental and social practices as part of their role in the community and can therefore recommend to their clients the implementation of good practices in areas such as health and safety, working conditions, resource conservation and efficiency, and pollution prevention.

Resources:

FMO: Environmental and Social Risk Management Tools for Microfinance Institutions


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