Managing E&S Risks
- Media Manager
- Jul 10, 2022
- 1 min read
International Finance Corporation & First for Sustainability
A financial institution can manage its exposure to environmental and social (E&S) risks by developing an Environmental and Social Management System (ESMS). This helps a financial institution to decrease its exposure to overall risk.
By developing procedures, E&S assessment tools and internal capacity to identify and manage environmental and social risks as part of the risk appraisal process for financial transactions a Environmental and Social Management System or ESMS a financial institution can manage its exposure to overall risk.
An ESMS consists of several components, including a financial institution's E&S policy, procedures and designated staff with responsibility for implementation. It should be designed to manage the level of environmental and social risk that the financial institution is exposed to through its portfolio.
