Processes for monitoring clients' implementation of and compliance with environmental and social requirements included in agreements or transactions

Processes for monitoring clients' implementation of and compliance with environmental and social requirements included in agreements or transactions

• Reference Number: FS3
• Related Status: Reported
• GRI Status: Core GRI Indicator

EIB procedures are based on the presumption that promoters are fully responsible for implementing projects financed by the Bank, including all environmental and social aspects, such as studies, the EIA process, implementation of mitigation and/or compensation measures and monitoring the success/effectiveness of these measures after implementation. The Bank takes a proactive stance in determining the conditions attached to its financing and ensuring that these conditions are met. At the appraisal stage, the Bank must therefore determine, and recommend to the Management Committee, who submits proposals to the Board of Directors, the level of checking on environmental and social matters that should be undertaken by the Bank and how this should be controlled.
There are, in general, three stages at which these checks are made and these are covered by three different types of control by the Bank:

1. Conditions for signature - meaning these environmental and social matters must be addressed to the satisfaction of the Bank prior to signature of the Finance Contract between the Bank and the borrower. Non-compliance with this condition would block signature of the Finance Contract;
2. Conditions for disbursement - meaning these environmental and social matters must be addressed to the satisfaction of the Bank prior to any money being disbursed by the Bank on either the whole project or a part of the project. Non-compliance with this condition would block disbursement of the Bank’s loan; and,
3. Particular Undertakings - meaning these environmental and social matters must be addressed to the satisfaction of the Bank during the implementation and sometimes operation of the project. Non-compliance with these conditions would be an important consideration should the promoter wish to receive further funding from the Bank on a subsequent project, but could also in an extreme case result in the Bank recalling its funds from a project.

Proposed conditions for environmental and social matters for each project must be related to the roles and responsibility of the parties signing the document. The Bank discusses these during appraisal, with the client and other parties, to ensure there is sufficient appreciation and shared understanding both of the EIB standards and expectations as well as of where the responsibilities lie.
Specific Finance Contract conditions, in addition to the general conditions, will then be composed to target: a) legislative compliance, such as EIA completion, or Habitats Directive assessments; subsequently, b) project completion requirements, including all mitigation and compensation measures; and, finally c) reporting required by the Bank as part of its monitoring of environmental and social matters.

The EIB monitors the implementation of mitigation measures of the riskier projects on a regular basis.

A new Results Measurement Framework has just been introduced for projects outside the EU to be approved starting in 2012. Outcome indicators will be identified for all operations, and followed throughout the project cycle. An important feature of this process is the extension of the monitoring period after the Project Completion Report, for a period of 3 years, which is felt to be more adequate for reporting on the outcomes of a project.