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Development of CFC’s Social and Environmental Management System

This project concerns the development of CFC’s Social and Environmental Management System (SEMS). Such management systems are designed to enable a financial service provider to identify social and environmental risks associated with a particular transaction and take this into account when deciding whether or not to provide financing as well as identify opportunities to improve social and environmental performance.

The CFC has always considered the Environmental, Social and Governance (ESG) risks when assessing a project. This analysis is included in the entire process of evaluating a new proposal, from the initial screening of the applications received to the ongoing monitoring of an active project. However, recognizing the great importance and complexity of this topic, the CFC decided to take a step further, aligning its procedures to the current best practices from the impact investment industry, by developing its own SEMS.

To develop its SEMS, the CFC is partnering with the Social Finance Programme of the International Labour Organization (ILO). Since 2012, the ILO has gained experience on development and implementation of SEMS through collaborations with impact investors and development finance institutions, being a great partner for the CFC to build a robust and effective SEMS.

Current status

The project started in 2019, with the ILO conducting an analysis to assess the existing policies and procedures regarding management of ESG risks of the CFC. Based on the findings from this analysis, the ILO team together with CFC staff, developed new and upgrade existent documents, templates and tools for the Fund. Also, mentoring activities were provided to capacitate CFC’s staff on current best practices on ESG risks assessment.

Project overview CFC-2018-13-0003FT
Project type: Fast Track Organization: International Labour Organisation (ILO)
Commodity: Cross Commodity CFC Financing: USD 105,540
Country: Netherlands Cofinanciers:  
Form of finance: Grant Target Impact indicators: NA
SDGs Impacted