A gap analysis compares your project, requirement by requirement, with the standards your lenders will apply. Done in time, it turns due diligence into a predictable process instead of a source of surprises a few weeks before financial close.
Why do it before approaching lenders
The most expensive gaps are not the ones that need another document. They are the ones that need time:
- Biodiversity. Supplementing the baseline for a critical habitat assessment may require surveys in more than one season.
- Land. Documenting how land was acquired and restoring the livelihoods of occupants without title is hard to do retroactively.
- Communities and Indigenous Peoples. An inadequate engagement process cannot be fixed with a signed record of a meeting: the relationship has to be built.
- Contractors. Environmental, social and labor requirements need to be in the construction contract before it is signed.
Identifying them during development means they can be built into the project schedule and budget.
Common gaps between the environmental license and IFC standards
In Colombia and much of Latin America, a project with its environmental license in good standing typically shows gaps in these areas:
- An environmental and social management system that covers contractors and goes beyond the environmental management plan (PS1).
- A stakeholder engagement plan and grievance mechanism that operate throughout the life of the project (PS1).
- Labor policies, a workers' grievance mechanism and accommodation standards (PS2).
- Climate change risk assessment and greenhouse gas quantification (PS3 and EP4).
- Management of security personnel and labor influx (PS4).
- Economic displacement and livelihood restoration, including occupants without formal title (PS5).
- Critical habitat assessment and demonstration of no net loss or net gain (PS6).
- Free, prior and informed consent where applicable, beyond statutory prior consultation (PS7).
- Cumulative impact and human rights assessments.
We explain this in detail in Colombian environmental license vs. IFC Performance Standards.
How we do it
- Defining the applicable framework. We identify which standards apply given the expected lenders: IFC Performance Standards, Equator Principles, World Bank Group Environmental, Health and Safety Guidelines, or specific development bank policies.
- Document review and interviews. We review studies, permits, plans and contracts, and speak with the people responsible for each area.
- Gap matrix. For each requirement we state whether the project complies, partially complies or does not comply, with the supporting evidence.
- Prioritization. We separate what conditions the financing from what can be resolved during construction or operation.
- Closure roadmap. Actions, owners, deadlines and recommended sequence, aligned with the project schedule.
Deliverables
- Gap matrix by Performance Standard and by Equator Principle.
- Analysis report with prioritized findings.
- Gap closure roadmap.
- Presentation of results to project management.
Is the project already in construction or operation? A gap analysis is also useful for refinancings, asset sales and alignment audits against international standards.
What comes next
With the gaps identified, we can help you close them: design the environmental and social management system, prepare the missing studies and plans, and get the team ready for the lenders' due diligence.