Businesses that implement sustainable practices and manage environmental and social risks responsibly are more likely to succeed.
Companies with clean, efficient operations and strong relationships with stakeholders, including local communities, are positioned to reduce operational costs, avoid fines or penalties, boost their reputation, maintain a social license to operate and increase their market share. Similarly, lenders with such companies in their portfolios are more likely to manage environmental and social risks more effectively, prevent credit risks, have a strong bottom line and attract funding on the international market.
Throughout the life of every project, we focus on the most relevant environmental and social aspects and systematically address risks.
We work with our clients to implement measures to mitigate and adapt to the effects of climate change, as well as identify and manage the risks of natural disasters. We also promote practices and strategies to adequately identify and assess the environmental and social impacts and manage them through a systematic approach, with sufficient resources, to reduce waste and pollution, protect and conserve biodiversity, and sustainably use natural resources. When we invest in a project, we also require our clients to put in place certain practices to uphold human rights and promote strong social values. These practices include, but are not limited to:
- Robust public consultation, communication and outreach to affected communities.
- Adequate labor relations, including mechanisms to redress worker grievances.
- Good working conditions and high standards for occupational health and safety.
- Gender equality and diversity.
- Participation and inclusion of indigenous peoples and other vulnerable groups, and prevention of adverse impacts on them.
- Preservation of cultural heritage.
Whether we are making a direct investment, investing indirectly through financial intermediaries such as banks or providing technical assistance, we conduct due diligence reviews to understand the potential environmental and social risks and impacts involved. We evaluate the client’s ability to comply with our Environmental and Social Sustainability Policy and with the host country’s institutional regulatory framework. The level of evaluation and oversight varies, depending on the potential risks and impacts of each project.
For a direct investment, for example, we would do an appraisal that includes reviewing available information, records and documentation related to risks and impacts; conduct a site visit and interviews with client staff and relevant stakeholders; evaluate the project’s environmental and social plans or, if it is already in an operational phase, its performance; identify any gaps or areas of non-compliance with IDB Invest’s Sustainability Policy and with local standards, guidelines and regulations; and develop an Environmental and Social Action Plan to close any gaps. Once IDB Invest and the client agree on such a plan, it becomes part of the legal agreements between them.
We also have procedures in place that apply to indirect investments made through financial intermediaries and to technical assistance activities. We monitor the environmental and social performance of all our investments as part of our portfolio management program.
Sustainability Week goes digital!
IDB Invest Sustainability Platform will develop demand-driven and user-centric knowledge and tools aimed to promote, amplify, and accelerate the application of sustainability solutions across markets. It will expand IDB Invest Sustainability Week to a 365-day user experience with access to sustainability solutions, tools, and knowledge with a keen focus on partnerships and collaboration, localized actions, and innovation by convening doers to share best practices that drive development impact.
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22 Nov 2022