IFC Performance Standard 1 requires every project to have an environmental and social management system (ESMS) proportionate to its risks. It is the requirement on which the other standards rest, and one of the gaps that comes up most often in due diligence.
The seven elements PS1 requires
- Policy. The project's environmental and social objectives and principles, backed by senior management.
- Identification of risks and impacts. A process to assess them and keep that assessment current.
- Management programs. The plans and procedures that avoid, mitigate and compensate for impacts.
- Organizational capacity and competency. People with defined roles, authority and resources.
- Emergency preparedness and response. Including coordination with communities and authorities.
- Stakeholder engagement. Disclosure, consultation and grievance mechanism.
- Monitoring and review. Indicators, audits and management review.
A system that gets used
A management system is not a folder of procedures. We design it around how the project actually runs: who makes decisions, what contractors do, which commitments come from the environmental license and which from the action plan agreed with lenders.
The result is a right-sized system the team can operate without depending on the consultant.
What our service includes
- Diagnosis of the existing system (ISO 14001, ISO 45001, statutory health and safety system, environmental management plan) against PS1.
- Environmental and social policy, and structure of roles and responsibilities.
- Risk and impact register, and register of legal and financing obligations.
- Management plans and procedures: stakeholder engagement, grievance mechanism, contractor management, labor management, biodiversity, security and emergencies.
- Indicators, monitoring program, internal audit and management review.
- Training for the project team and contractors.
ESMS for financial institutions
Banks, funds and other financial intermediaries that receive funding from development finance institutions must also have a system, known in Latin America as SARAS, to screen, assess and monitor the environmental and social risks of their portfolio.
We design policies, exclusion lists, categorization tools, due diligence procedures and contractual clauses, and we train commercial and risk teams.
Not sure where to start? A gap analysis tells you what you have, what is missing and in what order to build it.