Development Facility helps financial institutions manage environmental and social risks Development Facility helps financial institutions manage environmental and social risks

As part of the Fund’s mission to promote sustainable business practices, the fund’s Development Facility has helped ten financial institutions in three Latin American countries to implement Environmental and Social Risk Management systems (ESMS) into their lending operations.

A well-designed ESMS can identify and mitigate the potential environmental and social risks of a planned investment. By integrating ESMS into their lending decisions, banks and other financial institutions can comprehensively assess the overall impact of their activities, mitigate risks and strive for a more sustainable performance. The Development Facility began offering ESMS training to staff of the fund’s Latin American partner institutions in 2016; to date, the initiative has trained around 300 employees of ten institutions in El Salvador, Nicaragua and Panama, and most recently at Banco Guayaquil and Banco del Pacífico in Ecuador.

The workshops provide practical guidance on how to design and implement an ESMS that is tailor made to a bank’s own credit and investment operations.  

Karim Ould Chih, Chairman of the Development Facility, stated: “We are proud that our partners are embracing ESMS into their operations. Mitigating environmental and social risk is as important as ensuring positive impact. By increasing awareness among the local financial sector of the importance of ESMS in lending decisions, we are, together, helping generate social and environmental benefits on a systemic level. The Development Facility plans to implement further trainings throughout the region in 2020, and beyond.”

About the Fund

The Fund aims to promote business and consumption practices that contribute to biodiversity conservation, to the sustainable use of natural resources, and to mitigate climate change and adapt to its impacts. By providing financing for business practices that conserve nature and foster biodiversity, the fund seeks investments with both environmental and financial returns. The fund mainly provides loans to qualified financial institutions that on-lend the money to eligible borrowers, which include holders of recognized certifications or those making improvements in line with conservation and biodiversity goals. The fund supports sustainable operations in the sectors of agriculture, fishery (including aquaculture), forestry and tourism.

The Fund was initiated by Germany’s KfW Development Bank and Conservation International with financial support from the German Federal Ministry for Economic Cooperation and Development (BMZ). It has received further donor support from the European Commission The fund’s additional investor base comprises IDB Invest, a member of the Inter-American Development Bank (IDB) Group, the U.K.  government’s Department for Environment, Food and Rural Affairs, Dutch development bank FMO, Austrian development bank OeEB, and institutional investors such as sustainable banking institution ASN Bank, German ethical bank GLS Bank, Calvert Impact Capital, and Raiffeisen Bank International. Finance in Motion, a leading impact investing company, is also an investor.

Operating hand-in-hand with the Fund, the Development Facility provides high-impact technical assistance to financial institutions and final borrowers.

For more information please visit and follow us on Twitter @ecobusinessfund.

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