In research carried out by Ecobanking Project on including environmental and social guidelines in financial institutions' operations, it was found that most had no processes, practices, knowledge or tools for evaluating and quantifying the environmental risks and impacts of the projects they were financing. In some cases they were not even aware that the projects financed could harm the environment or that the financial institution had an environmental responsibility. Many of the financial institutions did not know what an environmental risk is or how to evaluate it for improving their financing process and increasing their competitiveness.
The methodology developed in this document is available to the Latin American financial sector to contribute to identifying, evaluating, and managing environmental and social risks, in order to reduce the financial institution's probabilities of assuming the costs occasioned by these risks.
This tool was developed by the Ecobanking Project based on similar mechanisms used by multi-lateral banks, such as the International Financial Corporation (IFC), and leading regional and international banks, adapting them to the requirements of the region's financial institutions (FIs).
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