Sustainable projects are typically undertaken by companies with a solemn commitment to the mitigation of climate risk, and the protection of people and the planet. At the same time, financial institutions are presented with the opportunity to extend financing and funding for such projects in important sectors that include power, transport, infrastructure, renewable energy, and land use. Sustainable financing also applies to the supply chain of small and medium enterprises engaged in those sectors.

Prudential regulations require that financial institutions draw up and apply frameworks to identify and measure the ESG risks associated with financing large-scale projects or credit portfolios. Senior management within financial institutions must acknowledge the significant influence of extending such financing on the overall ESG performance of their own institution, as well as those of portfolio companies. Banks must not only be conscious of the cost of financing and the return on investment, but also any ESG risk associated with a project or credit portfolio. In addition, financial institutions must recognize the significance of reputational risk associated with the funding of large-scale projects.

In addition to the responsibilities of top management, there are also significant obligations placed on department heads and working level team members to measure and minimize ESG risk and avoid issues such as green and social washing. As such, team members must understand how projects and credit portfolios are properly assessed based on ESG risk. It is also important to comprehend the process of ESG due diligence on projects in order to ascertain risks and develop effective contingency plans as key constituents of project milestones.

• Objectives:
  • To identify and understand ESG risk and control measures when assessing a project financing or credit portfolio.
  • To examine the rubrics of an effective ESG due diligence framework for green and sustainable projects.
  • To assess and estimate the risk exposure of client companies and projects seeking financing and funding, with or without ESG/GHG roadmaps.
  • To understand and apply methods used to mitigate financial risks via effective ESG risk assessment.
  • To develop data intelligence surrounding projects and corporate financing portfolios.