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

Due to the short-term nature of these types of transactions, a financial institution has only limited leverage for managing environmental and social risks. The focus of the environmental and social due diligence will be on screening transactions rather than detailed assessments. The procedures should include the following steps as part of a desktop review:

  • Screen client’s activities against a list of excluded activities adopted by the financial institution.
  • Check local and international records, where available, to identify if the company is listed as having pending issues such as fines, revoked licenses or lawsuits.

The financial institution should document the outcome of the screening, which will be considered during the decision-making process before proceeding with a transaction.


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