Commercial International Bank (CIB) (First Year Implementation)

Adoption Date: 05 Apr 2021
Region of Headquarters: Middle East & Africa
Current EPFI Reporting Year/Period: 5 Apr 2021 – 31 Dec 2021
Institutional Reporting: Link to Report - Link to Additional Report

 

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Implementation of the Equator Principles

Introduction & summary

CIB has adopted the equator principles in April 2021 in order to ensure that the Projects we finance and advise on are developed in a manner that is socially responsible and reflects sound environmental management practices.

CIB commit to implementing the Equator Principles through our internal environmental and social policies, procedures and standards for financing Projects

This report is the first year of Equator Principles adoption for the Commercial International Bank.

In alignment with the SDGs, Paris Climate Agreement, and CIB’s Sustainability Policy and long-term sustainability goals, CIB has put in place an Environmental and Social (E&S) Risk Management System, with the following broad objectives:

  • Manage Environmental and Social (E&S) risks in the overall project/facility cycle,
  • Set an example for social and environmental potent practice,
  • Strive to conserve natural resources, protect the environment and put into consideration the standards of living for those affected by its operations,
  • Inspire and encourage sustainable practices among all stakeholders, including partners and co-investors to improve project development, implementation, monitoring and project conclusion

CIB Environmental and Social Risk Management System has its standards of procedures which apply the following standards in the E&S assessment process: IFC Performance Standards, EBRD Performance Requirements and The Equator Principles

THE 10 EQUATOR PRINCIPLES

  • Principle 1: Review and Categorization
  • Principle 2: Environmental and Social Assessment
  • Principle 3: Applicable Environmental and Social Standards
  • Principle 4: Environmental and Social Management System and Equator Principles Action Plan
  • Principle 5: Stakeholder Engagement
  • Principle 6: Grievance Mechanism
  • Principle 7: Independent Review
  • Principle 8: Covenants
  • Principle 9: Independent Monitoring and Reporting
  • Principle 10: Reporting and Transparency

E&S Risk Categorization

  • As part of the review of environmental and social risks and impacts of a proposed finance, the bank uses the IFC/EBRD process of environmental and social categorization to reflect the magnitude of risks and impacts in addition to the categorizations list by Egyptian Ministry of Environment. These categories are:
    • Category A: Business activities with potential significant adverse environmental or social risks and/or impacts that are diverse, irreversible, or unprecedented.
    • Category B: Business activities with potential limited adverse environmental or social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures.
    • Category C: Business activities with minimal or no adverse environmental or social risks and/or impacts
  • CIB has established a checklist / Environmental and Social (E&S) Concurrence to identify the potential E&S risks. The checklist is mainly composed of the eight (8) E&S aspects/ IFC Performance Standards:
  • Performance Standard 1: Assessment and Management of Social and Environmental Risks and Impacts
  • Performance Standard 2: Labor and Working Conditions
  • Performance Standard 3: Resource Efficiency and Pollution Prevention
  • Performance Standard 4: Community Health, Safety, and Security
  • Performance Standard 5: Land Acquisition and Involuntary Resettlement
  • Performance Standard 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
  • Performance Standard 7: Indigenous Peoples
  • Performance Standard 8: Cultural Heritage

Implementation Process & procedure of Equator Principles & Scope of Application

  • The Equator Principles have been implemented within Commercial International Bank on project finance activities and project-related corporate loans, project finance advisory services, Bridge Loans, Project-Related Refinance
  • The process main implementation steps are performed in three phases
    • Phase 1: Project Appraisal and Screening (Screening phase)
    • Phase 2: Due Diligence (Pre-financing phase)
    • Phase 3: Monitoring (Post-financing phase)
Project Appraisal and Screening
(Screening phase)
Due Diligence
(Pre-financing phase)
Monitoring
(Post-financing phase)
  • Collect Relevant E&S information and documents
  • Screening against the exclusion list
  • Conduct project categorization
  • Conduct E&S risk assessment and due diligence
  • Complete E&S concurrence checklist and draft correction action plan
  • Secure approvals from relevant lending authorities
  • Drafting, signature and submission of E&S irrevocable undertakings
  • Annual review and monitor of E&S risks
  • Discussion and approval
  • Mitigation approval
  • Annual reporting

Mandates & Roles

1-      For Project appraisal & screening:

The categorization of the project to be financed is performed by the Global Customer Relations (GCR) officer for new clients & Corporate Banking Group (CBG) officer for existing clients, & concurred by E&S team by using the checklist, essentially filtering the project by factors including but not limited to size, activity type, irreversibility of effects on local environment and population in order to assign a risk status to loan applications.

2-     The E&S Due Diligence & Corrective Action Plan:

The E&S due diligence (ESDD) is an integral part of the credit appraisal process, as environmental and social risk may translate into credit risk. Since environmental and social risk can have material financial implications, the Bank conducts environmental due diligence early in the transaction appraisal process. This is particularly important for high risk transactions where more detailed investigations are needed. E&S team is responsible for providing the due diligence for the projects and review compliance against the Equator Principles.

3-     Control and Monitoring of the E&S performance/Action plan

A close monitoring is performed by the GCR/CBG Officer as part of their regular monitoring activities (involving frequent visits and face to face meetings with the client several times per year), and complemented by an annual review performed by the Environmental & Social Risk Management (ESRM) officer.

Training Program

  • Training Programs: Sustainable finance team have prepared an in house training program which has been conducted to different departments during 2021(Corporate, Risk, GCR and Business Banking) mainly focused on Environmental and Social Risk Management System (IFC performance standards, the equator principles, Concurrence sheet, EIA study and national standards/Egyptian Regulation and Laws).
  • Across all bank functions trainings has been delivered by our national and international consultant mainly include a comprehensive explanation for the following topics:
    • Sustainable Finance
    • The Business Case of Sustainable Finance
    • The Equator Principles
    • Sustainable Finance Principles- CIB Environmental & Social Risk Management (ESRM) System
    • ESG and Climate Change Risk Management (TCFD)
    • Green Finance: Product Development
    • Ecological Footprint