Green Investment Handbook

Transcription

1 Green Investment Handbook How we monitor Green and Responsible Investment monitoring The process described here is to be used for monitoring the Green and Responsible Investment performance and risks of the UK Green Investment Bank s (GIB) portfolio projects, including environmental and social project-related risks initially identified through the due diligence process. Please see the Assess section of the Green Investment Handbook for details on project appraisal and risk consideration in the due diligence stage. Completion of a project risk register Each project requires use of the Environmental and Social Project Risk Register developed during the due diligence stage. The same approach is also used during portfolio management / post-acquisition monitoring to ensure consistency. Post investment: monitor the risks Once the project has passed Final Investment Committee (IC) approval, the signing certificate has been completed, and the project has been handed over to the Portfolio Monitoring Team, the project will be subject to monitoring by the Green team. Specific requirements will depend on the characteristics of the investment, its sector and size of investment. Our core requirements will normally include monitoring of: Those material environmental and social risks identified during the due diligence phase (refer to IC paper content above); Trends in pilot Green Ratings; Actual operational performance and related green impact of the project against green impact performance forecasts made in the initial investment case; and On-going compliance with covenants agreed in the financing documentation (a Green Investment Policy requirement), including requirements to: report on such operating parameters and green impact performance and other material environmental matters in a format agreed with us; comply with all relevant environmental laws, regulations and permits in all material respects; implement and maintain suitable environmental management systems and policies and ensure key project parties have similar arrangements in place; give us prompt notice of any materially adverse environmental (or health and safety) issues arising in connection with the investment and, so far as possible, to implement an action plan to remedy the issue; and comply with other project or sector-specific covenants designed to ensure delivery of anticipated green impacts and to minimise specific adverse environmental impacts.

2 Base risk profile monitoring A Project s Base Risk Profile is the overall level of Green and Responsible Investment (including both environmental and social) risk associated with a project. Each project is allocated into one of three levels: High, Medium or Low. This considers the characteristics and stage of the project (construction or operation), its sector, location and findings from due diligence especially from Equator Principles Review, the External Factors Review and Project Risk Assessment. Determination of Base Risk Profile is informed by this information but is subject to professional opinion. Base Risk Profile sets the indicative level of monitoring and client engagement typical for a project: Base risk profile Examples of key project features High Project with potentially significant adverse environmental or social risks and/or impacts that are diverse, irreversible, or unprecedented e.g. Waste and Biomass, Offshore Wind Projects under construction Medium Project with potentially 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 e.g. Waste and Biomass, Offshore Wind projects in Operation; Energy Efficiency projects under construction Low Project with minimal or no adverse environmental or social risks and/or impacts. e.g. Energy Efficiency projects in operation Monitor No issue(s) reported typical engagement Monthly client reports, (e.g. construction reports) reviewed by Portfolio Management Team. Any issues flagged to Green Team for review six-monthly client engagement: Portfolio Management Team and Green Team Annual face-to-face client meeting/ site visit: Portfolio Management Team and Green Team Quarterly client reports. Reviewed by Portfolio Management Team. Any issues flagged to Green Team for review Annual engagement with client (phone or face to face). Portfolio Management Team and Green Team Annual review of reports Reviewed by Portfolio Management Team. Any issues flagged to Green Team for review Engage with client every three years (phone or face to face). Portfolio Management Team and Green Team Green Investment Handbook How we monitor 2

3 Environmental and social incident reporting Projects must report material environmental and social incidents to GIB in accordance with their legal covenant requirements. Incident reports are then managed within GIB according to the following process: Health, safety or environmental incident on project GIB Director (equity investment) Portfolio Management Green (material ESG event report) Other (e.g. media) forward to is event material?* No no further action Yes Notify the following for reference: Green Team Portfolio management Team Communications Team is event already closed out to GIB s satisfaction? No Request action plan via Portfolio Management Yes Action plan to remediate event Report to board Closed out report Event closed out If event not closed out before board meeting * Materiality. Events should be considered material if they require reporting to statutory regulators (e.g. Health and Safety Executive, Environment Agency, SEPA). Otherwise use reasonable judgement. Green Investment Handbook How we monitor 3

4 Project action watchlist If an issue or event has been reported or is identified but is not being addressed to GIB s satisfaction, the project will be placed on the Action watchlist. This will most commonly occur where a material environmental or social (including health and safety) event has occurred, but full information and/or an action plan has not been provided. A project can go directly into Action watchlist depending on the severity of the nature of the event. Potential actions for projects on the watchlist are provided below: Watchlist: action Known and/or potentially material issue Liaise with Portfolio Management Team (and agent) Formal trigger of adverse material event mechanism Agree bespoke action plan with client to achieve compliance / close issue Site visit by GIB / Technical Advisor to discuss issue and resolve Ongoing calls with client as needed until issue resolved and closed Consider Technical Advisor to monitor progress Inform Portfolio Management Committee as required Liaise with Communications Team as needed Pilot Green Ratings Monitoring of a project s Pilot Green Ratings performance will also be conducted. Green Ratings used at final IC paper will be taken as the first period of the portfolio monitoring. In summary Green Ratings will be reviewed on at least an annual basis, and / or when data is provided which may warrant a change in a specific rating (up or down). Project monitoring and reporting: Green and Responsible Investment Dashboard (GRID) The GRID presents data using the following (see example screen shot provided below): Project Risk Register / Radar, (with previous three reporting period trends) Pilot Green Ratings (with previous three reporting period trends) The project s status includes: Equator Principles category; Base Risk Profile (see above); Details of any environmental or social events reported or known; and Action Watchlist status. The GRID is subject to periodic re-assessment. Green Investment Handbook How we monitor 4

5 Project monitoring and reporting: portfolio green performance dashboard The Green Performance Dashboard presents a snapshot of all projects performance, and is used for monitoring and internal reporting: Pilot Green Ratings Watchlist status Sector Project Financial close Construction or Operations GHG Natural Resources Natural Environment Biodiversity Sustainability Equator Principles Category Env. H&S Comments Engagement and Actions [project 1] [date] O A+ A C C B N/A Operational no reported issues [project 2] [date] C B A B C C N/A One RIDDOR-reported incident took place in January The investigation report has been provided and Health and Safety Executive concluded no further action to be taken. Incident closed out to GIB s satisfaction [project 3] [date] C C B D C C N/A Pre-construction awaiting finalisation of contractor procurement [Sector name] [project 4] [date] C B B B C C B Construction in progress no reported issues [project 5] [date] C A+ A B C A+ B Construction in progress RIDDOR reportable incident: a fork lift operator twisted his ankles while stepping down from the vehicle. Further information requested Copyright UK Green Investment Bank plc Disclaimer: The information in this workbook and any accompanying material ( the Document ) is confidential and commercially sensitive. This Document is provided to each recipient on a confidential basis solely for information purposes only. No reliance can be placed on this Document by any recipient or any other person. This Document and its contents are confidential to the person to whom it is delivered and must not be reproduced or distributed, either in whole or in part, nor its contents disclosed by such persons to any other person without the prior written consent of UK Green Investment Bank plc. Except as required by law, neither UK Green Investment Bank plc nor any of its connected persons accepts any liability or responsibility for the accuracy or completeness of, or makes any representation or warranty, express or implied, with respect to the information contained in this Document or on which this Document is based or any other information or representations supplied to the recipient. UK Green Investment Bank plc will not act and has not acted as your legal, tax, accounting or investment adviser. This Document does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase, any investment and UK Green Investment Bank plc does not arrange investments for/introduce parties as a result of sharing the information set out in this Document. UK Green Investment Bank plc is a public company with limited liability, registered in Scotland with the number SC and is wholly owned by HM Government. Registered Office: Atria One, Level 7, 144 Morrison Street, Edinburgh, EH3 8EX. UK Green Investment Bank plc is wholly owned by HM Government. The company is not authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority. A wholly owned subsidiary, UK Green Investment Bank Financial Services Limited, is authorised and regulated by the Financial Conduct Authority. Use subject to the terms at: Green Investment Handbook How we monitor 5