{"id":409,"date":"2021-04-22T15:51:34","date_gmt":"2021-04-28T10:54:01","guid":{"rendered":"https:\/\/norfund.wpenginepowered.com\/annualreport-2020\/?page_id=409"},"modified":"2023-06-06T08:35:16","modified_gmt":"2023-06-06T06:35:16","slug":"e-and-s","status":"publish","type":"page","link":"https:\/\/reports.norfund.no\/annualreport-2022\/this-is-norfund\/responsible-investor\/e-and-s\/","title":{"rendered":"Environmental and social risk management"},"content":{"rendered":"\n

Appropriate Environmental & Social (E&S) measures reduce risk to workers, the environment and local communities and provide business benefits which increase our impact. The management of environmental and social risks is therefore an integral part of Norfund\u2019s investment process. <\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Our sustainability commitments<\/strong> <\/h3>\n\n\n\n

Norfund\u2019s Environmental, Social and Governance Policy (ESG Policy) is approved by the Board of Directors. The policy sets direction for Norfund\u2019s E&S work and presents our sustainability commitments and the main standards we use in our work. The policy also describes how we work to identify, assess and manage the environmental and social risks associated with the operations of our clients, and provides an overview of the cross-cutting issues that guide our work. <\/a><\/p>\n\n\n\n

IFC PERFORMANCE STANDARDS <\/h3>
\n

The IFC Performance Standards for Environmental and Social Sustainability<\/a> and the World Bank Group Environmental, Health and Safety Guidelines<\/a> are the main standards for operationalising Norfund\u2019s sustainability commitments. These standards are globally recognised benchmarks for environmental and social risk management in the private sector. The standards are used by development finance institutions, commercial banks and other similar institutions.<\/p>\n\n\n\n

The eight Performance Standards define clients\u2019 responsibilities for managing their environmental and social risks. The following aspects are included:<\/p>\n\n\n\n

1: Assessment and Management of Environmental and Social Risks and Impacts<\/p>\n\n\n\n

2: Labour and Working Conditions<\/p>\n\n\n\n

3: Resource Efficiency and Pollution Prevention<\/p>\n\n\n\n

4: Community Health, Safety and Security<\/p>\n\n\n\n

5: Land Acquisition and Involuntary Resettlement<\/p>\n\n\n\n

6: Biodiversity Conservation and Sustainable Management of Living Natural Resources<\/p>\n\n\n\n

7: Indigenous Peoples<\/p>\n\n\n\n

8: Cultural Heritage<\/p>\n<\/div><\/div>\n\n\n\n

Clear roles and responsibilities<\/h3>\n\n\n\n

Our Environmental and Social Management System (ESMS) describes roles and responsibilities relating to E&S risk management, including governance, oversight, and E&S day-to-day working practices.  Investment staff take part in a training programme which includes modules on our ESMS, the IFC PS and how to identify environmental, health and safety issues on site-visits.<\/p>\n\n\n\n

Integrated part of investment process<\/h3>\n\n\n\n

E&S risk management is an integrated part of our investment process and specific actions are required for each step of the project cycle: initial screening, due diligence, legal agreements and monitoring. <\/p>\n\n\n\n

Understanding the risk profile of our portfolio companies<\/h4>\n\n\n\n

In the initial screening phase, Norfund evaluates the project against the EDFI Exclusion lists and performs a high-level assessment of key E&S risks. An inherent risk category is assigned which will determine the depth of due diligence and the degree of E&S expert involvement. Our approach is aligned with EDFI\u2019s E&S Standards and was revised in 2022 to include new tools and training modules.<\/p>\n\n\n\n

Assessing E&S risks and impacts<\/h4>\n\n\n\n

If the project is approved by our investment committee, the E&S due diligence commences. This includes a comprehensive assessment of E&S risks and performance based on document reviews, site visits and interviews with key stakeholders. Gauging the potential client\u2019s capacity and commitment to E&S risk management is an important aspect of this process. Shortcomings and value add opportunities identified in due diligence are described in an Environmental and Social Action Plan (ESAP) which forms part of the investment agreement.<\/p>\n\n\n\n

Monitoring compliance and supporting capacity building<\/h4>\n\n\n\n

Norfund is a responsible owner and monitors portfolio companies\u2019 compliance with our E&S requirements. Investees are required to report at least annually to Norfund on their E&S risk management performance. In 2022, we revised our approach for assessing the E&S performance of the projects in our portfolio and created a new E&S monitoring system. This helps us better understand the E&S risk and performance of the portfolio and analyse changes over time.  Our business support facility is an important tool for building E&S capacity and is often used to strengthen portfolio companies\u2019 ESMS and provide training.<\/p>\n","protected":false},"excerpt":{"rendered":"

Appropriate Environmental & Social (E&S) measures reduce risk to workers, the environment and local communities and provide business benefits which increase our impact. The management of environmental and social risks is therefore an integral part of Norfund\u2019s investment process.  Our sustainability commitments  Norfund\u2019s Environmental, Social and Governance Policy (ESG Policy) is approved by the Board […]<\/p>\n","protected":false},"author":19,"featured_media":7791,"parent":30,"menu_order":1,"comment_status":"closed","ping_status":"closed","template":"","meta":{"norfund_header_layout":"","norfund_header_layout_image_id":0,"norfund_header_layout_image_focal_point_x":0,"norfund_header_layout_image_focal_point_y":0,"norfund_header_layout_suptitle":"","norfund_header_layout_subtitle":"","norfund_header_layout_title":"Environmental and social risk management","teft_cards_image_id":7791,"teft_cards_image_focal_point_x":0.5,"teft_cards_image_focal_point_y":0.5,"teft_cards_title":"Environmental and social risk management","teft_cards_excerpt":""},"acf":[],"yoast_head":"\nEnvironmental and social risk management | Annual Report 2022<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/reports.norfund.no\/annualreport-2022\/this-is-norfund\/responsible-investor\/e-and-s\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Environmental and social risk management | Annual Report 2022\" \/>\n<meta property=\"og:description\" content=\"Appropriate Environmental & Social (E&S) measures reduce risk to workers, the environment and local communities and provide business benefits which increase our impact. 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