Project environmental appraisal and monitoring

Appraisal

Before financing is approved, every project is appraised for its social and environmental impact and is classified according to type, location, sensitivity and scale.

Initially, project sponsor provide information through questionnaires, which call for a detailed account of:

• Project site(s)
• Staffing structure
• Health and safety, and human resource policy and management practices
• Environmental management and certification
• Existing environmental studies and audits

The project classification determines the scope of studies required to identify environmental risk, liabilities and opportunities associated with the project. These, along with current compliance status and future risk of non-compliance, determine what mitigation and/or enhancements will need to be built into the project.

If a risk or liability is identified during due diligence more detailed investigations are undertaken. The project sponsor is then required to document measures and budgets to remedy the issues and achieve compliance with the EBRD’s requirements within a specified timeframe. The commitments are formalized into an Environmental and Social Action Plan, which is becomes part of the legal agreement between the EBRD and the project sponsor. Sponsors are required to report annually on implementation of corrective actions. During due diligence the Sponsor or the Bank may consult with trade unions, employer organizations, NGOs and the public.

Monitoring

The EBRD monitors all its active investments for compliance with the standards agreed at project signing and with the Environmental and Social Policy. High-risk projects are monitored more often than those with a lower risk. Monitoring stops when a loan is repaid, when the Bank divests its equity, or if the project is cancelled.

Monitoring mechanisms include:

• Review by the Portfolio Review Committee (normally twice a year).
• Review of annual environmental reports (annual).
• Independent audits of projects in environmentally sensitive sectors (periodical).
• Project visits by environmental specialists (periodical).

Sponsors are required to report annually on the implementation of any agreed corrective actions.