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This enables a financial institution to track the environmental and social performance of each transaction and to assess the financial institution’ s overall exposure to risk. As part of a financial institution’s existing recordkeeping process, the following documentation and records should be kept for each transaction:

  • Preliminary Environmental and Social Screening Form. At an early stage of a proposed transaction, Loan Officers/Relationship Managers identify potential environmental and social issues and history of significant environmental and social incidents and accidents associated with a client’s/investee’s activities. Based on these initial findings, a environmental and social risk category may be assigned and the need for additional environmental and social information is identified.
  • Environmental and Social Due Diligence Form. During the environmental and social due diligence process, the financial institution should record any environmental and social issues associated with the proposed transaction. This form should include the key environmental and social risks identified during the desk top review and site visit, including any non-compliance with applicable environmental and social regulations and international standards.
  • Summary/Recommendations on Environmental and Social Findings Form. Typically, financial institution staff prepares a summary of findings on environmental and social issues which should be used in the decision-making process to approve or reject a transaction. This form should also include recommendations for a corrective action plan, if necessary, and any other environmental and social conditions to be incorporated by the Legal Department into the legal agreement with the client/investee if the transaction is approved.
  • Environmental and Social Monitoring Form. Record all findings from reviewing the client’s/investee’s environmental and social performance, based on a desktop review or a site visit. Depending on the complexity of the environmental and social issues associated with a transaction, a financial institution may require a client/investee to submit a environmental and social monitoring report on an annual basis. In cases of non-compliance, this form should be used by the financial institution to record the action to be undertaken by the client/investee and timeframe for doing so.

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