Lender standards, closed out on the ground rather than on paper
Development finance conditions are not met by a document. They are met by a site that can show a grievance log, a resettlement file, a contractor induction record and a monitoring report that all say the same thing. We write the documents, and we are on site for the work behind them.
What environmental and social due diligence is
Environmental and social due diligence, or ESDD, is a structured review of an asset, a company or a portfolio against a defined set of environmental and social standards. It produces a finding: what complies, what does not, what it takes to close the difference, and what residual risk the financier is being asked to accept. Its forward-looking twin is the environmental and social impact assessment, which predicts the effects of a project before it is built. A deal often needs both.
ESDD is commissioned by a lender before a credit decision, by a sponsor before going to market so that surprises are found by its own adviser, or by an operating company when a facility is refinanced, expanded or sold. The trigger differs; the standards do not.
Due diligence is only the opening move. Almost every review ends with an environmental and social action plan, and the plan, not the report, is what ends up in the loan agreement. From there the work is implementation: the management system that runs the plan, engagement with the communities affected, and monitoring evidence for the life of the loan.
The four standard sets we work to
Projects using development finance land on one or more of four standard sets. They differ in structure but converge on the same demands: assess, avoid, mitigate, engage, monitor, disclose.
IFC Performance Standards
Eight Performance Standards, in force since 2012, covering risk management, labour, resource efficiency, community health and safety, land acquisition and resettlement, biodiversity, Indigenous Peoples and cultural heritage. They are the most widely referenced set, because other lenders and the Equator Principles adopt them by reference. IFC and MIGA are updating their Sustainability Frameworks for the first time since 2012: the dialogue phase is expected to conclude in October 2026 and public consultation on a first draft to open between October and December 2026. Until then, the 2012 set applies.
EBRD Environmental and Social Requirements
Ten requirements, part of the EBRD Environmental and Social Policy adopted in October 2024 and in force since 1 January 2025. That policy renamed them: what the market still calls the Performance Requirements (PR1 to PR10) are now the Environmental and Social Requirements (ESR1 to ESR10), and documents written before 2025 use the old name. The ground largely maps onto the IFC standards, but the numbering does not, and stakeholder engagement and information disclosure carry a requirement of their own. A borrower moving between the two should expect a mapping exercise, not a copy.
AIIB Environmental and Social Framework
An Environmental and Social Policy supported by three standards, on assessment and management, on land acquisition and involuntary resettlement, and on Indigenous Peoples, plus a list of activities the bank will not finance. Last updated June 2024.
Equator Principles
EP4, in effect for adopting financial institutions since 1 October 2020, applies to project finance and related products. Principle 1 requires each project to be reviewed and categorised by environmental and social risk, and EP4 made the IFC Performance Standards the primary underlying standards in low and middle income countries. So a commercial bank may be asking for a development bank's evidence, under another name.
Our approach: from screening to monitoring
- Screening and categorisation What the project is, where it sits, what it touches and which standards apply. This sets the depth of everything that follows, and getting it wrong either way is expensive.
- Due diligence and gap analysis Site visits, document review, worker and community interviews, and a gap list written against the applicable standards, not general good practice.
- Impact assessment and specialist studies For a project still being planned, an impact assessment, with biodiversity, resettlement, livelihood or cultural heritage studies underneath it as the findings require.
- Action plan Each gap converted into an action with an owner, a deadline and a completion test. A plan that cannot be closed out gets renegotiated later, in worse conditions.
- Management system and plans An environmental and social management system, the plans that sit within it, and the capacity to keep both running once the consultants leave.
- Stakeholder engagement and disclosure A stakeholder engagement plan, a grievance mechanism people can use, and disclosure that reaches the communities affected, not only the lender file.
- Monitoring and reporting Periodic monitoring reports, corrective action tracking and support through lender reviews.
The test we apply to our own work: could an independent reviewer arrive unannounced, speak to a contractor and a neighbour, and find the picture the report describes.
What we deliver
- Due diligence and gap analysis against lender standards.
- Environmental and social impact assessment and specialist studies.
- Action plans, management systems and management plans.
- Resettlement and livelihood restoration planning.
- Stakeholder engagement plans and grievance mechanisms.
- Biodiversity work, climate action plans and nature-based projects.
- Supply chain management and operational audits.
- Human rights and labour policy, procedures and training.
- Rural development, cooperatives and ecotourism programmes.
- Corporate capacity building and sustainability culture.
- Monitoring reports and lender review support.
Suppliers and smaller operators
A growing share of requests comes not from project finance but from exporters and mid-sized manufacturers whose European customers now ask for policies, management plans and evidence as a condition of the next order. We have done this for more than a hundred smaller companies in five years, and the pattern holds: a short, genuine document set the company can operate, plus a roadmap for what comes next, beats a system copied from a multinational.
Why this work is decided on the ground
Two things make this different from a desk review, and both argue for consultants who are physically there. The first is evidence. Lender standards are met in the field, in the language the workforce and the neighbouring village actually speak. Interviews run through a flying visit and an interpreter produce a thinner record, and that thinness shows up later, in a monitoring mission. So our consultants go to the site themselves, for as long as the evidence takes.
The second is an overlap nobody is covering. The same site can be expanding capacity on a development bank loan while supplying a European customer that needs value chain data for its own reporting. Advisers tend to know one of those worlds. The evidence base is largely shared, so we build it once and use it for both, which is why our sustainability reporting work and this service sit in the same team. If the reporting side is the pressing one, our CSRD and ESRS guide sets out who is in scope and from when.
Our consultants have more than twenty years of experience in heavy industry and manufacturing, from mining and cement to retail and textiles, and in five years we have worked with over forty corporate brands on more than ninety projects. At the Muratdere mining project in Bilecik we ran a programme reaching from a biodiversity action plan through to community development.
Frequently asked questions
What do IFC, EBRD and AIIB actually require from a borrower?
Evidence that environmental and social risk is identified, managed and monitored for the life of the project, not documented once. In practice: a due diligence or impact assessment against their standards, an action plan closing every gap it finds, a management system that runs the plan, a stakeholder engagement plan with a working grievance mechanism, and periodic monitoring reports. Where land, livelihoods, biodiversity or cultural heritage are affected, specific plans sit underneath.
Our project already has a national EIA. Is that enough for a lender?
Usually not on its own. A national environmental impact assessment is a permitting document and rarely covers everything lender standards ask for, particularly labour and working conditions, involuntary resettlement and livelihood restoration, Indigenous Peoples and stakeholder engagement. The normal route is a gap analysis plus supplementary studies, not starting again.
Who is the Lenders Independent Environmental and Social Consultant?
A consultant appointed by the lenders rather than the sponsor, to review the project on their behalf and monitor performance after financial close. The sponsor keeps its own advisers, and the two roles are not interchangeable on one transaction, so establish which side a consultancy is on before you appoint anyone.
We supply an EU customer and we also have a lender. Are these two separate exercises?
They overlap more than most advisers admit. The workforce, health and safety, community and supply chain evidence a lender expects is largely what an EU customer needs for its value chain reporting. Collected once, in one structure, it answers both. Collected twice, it costs twice and the versions disagree.