Environmental and Social Due Diligence (ESDD) for Sustainable Finance

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Case Study

Building Environmental and Social Risk Assessment Capacity for EVF’s Credit Operations

Wiser Environment Vietnam (WEV) partnered with Electricity Finance Joint Stock Company (EVF) to deliver Environmental & Social Due Diligence (ESDD) in line with the IFC Performance Standards for two high-risk projects in Vietnam. Through technical assessments, site inspections and capacity building, the project strengthened environmental and social risk management, supporting sustainable finance and responsible lending practices.

Client: General Finance Joint Stock Company (EVF)

Funding Institution: Dutch Entrepreneurial Development Bank (FMO)

Project: Environmental and Social Due Diligence (ESDD) in accordance with the IFC Performance Standards (IFC PS)

Date: January 2026 to June 2026

As environmental and social (E&S) factors become increasingly important in finance and investment activities, financial institutions are progressively strengthening their risk management capabilities to support sustainable development and align with international good practice.

To enhance the technical capacity of its staff in credit appraisal and credit risk management, Wiser partnered with EVF to undertake Environmental and Social Due Diligence (ESDD) for two high-risk projects in northern Viet Nam. This assignment was carried out at the request of the Dutch Entrepreneurial Development Bank (FMO), under a technical assistance programme designed to strengthen EVF’s environmental and social risk management capabilities.

The project aimed to equip EVF staff with practical knowledge, methodologies and tools to identify, assess and manage environmental and social risks during the review, appraisal and monitoring of credit facilities. The ESDD process was based on applicable Vietnamese legal requirements and the eight Environmental and Social Performance Standards of the International Finance Corporation (IFC PS), a member of the World Bank Group.

Project Objectives and Approach

While the IFC Performance Standards (IFC PS) provide a comprehensive framework for identifying, assessing, managing, monitoring and mitigating environmental and social risks and impacts, translating these principles into day-to-day lending practices can present significant challenges.

Through this project, EVF and FMO sought to:

Conduct Environmental and Social Due Diligence (ESDD) in accordance with the IFC Performance Standards (IFC PS);
Translate international requirements into practical approaches that can be effectively applied within credit appraisal and lending processes;
Strengthen the capacity of credit and risk management professionals to identify, assess and manage environmental and social risks;
Demonstrate how environmental and social considerations can be integrated into credit decision-making and portfolio monitoring.

From January to June 2026, Wiser worked alongside EVF’s technical team to undertake Environmental and Social Due Diligence (ESDD) for two high-risk projects, providing hands-on support to strengthen EVF’s environmental and social risk assessment capabilities through practical application.

The assignment included document and project reviews, desktop assessments, site inspections and stakeholder interviews to identify and evaluate potential environmental and social risks and impacts. The findings were consolidated into comprehensive ESDD reports, including gap analyses against applicable Vietnamese legislation and the IFC Performance Standards, compliance assessments, and recommendations for risk management, mitigation measures and Environmental and Social Action Plans (ESAPs) to enhance each project’s environmental and social performance.

In parallel, as a consulting partner accompanying EVF, Wiser designed and delivered a practical workshop themed “Environmental and Social Risk Assessment in EVF’s Credit Activities”. The programme was attended by EVF’s senior leadership and representatives, Mr. Nguyen Xuan Diep – Deputy Chief Executive Officer, alongside representatives from the International Markets Department – Treasury Division, Credit Division and Risk Management Division.

By combining technical guidance, practical assessment methodologies and real-world case studies, the workshop enabled participants to gain a deeper understanding of how international standards can be effectively applied within credit appraisal and risk management processes.

Training Content

The workshop introduced the key international standards and Vietnamese regulatory requirements commonly applied in environmental and social assessments for financed projects and investment activities, including:

International Standards

IFC Performance Standards on Environmental and Social Sustainability (2012)

Vietnamese Regulatory Framework

Law on Environmental Protection;
Law on Occupational Safety and Hygiene;
Labour Code;
Environmental Impact Assessment (EIA) requirements;
Relevant Government Decrees and National Technical Regulations (QCVNs).

A key component of the workshop was introducing the Environmental and Social Due Diligence (ESDD) process applied in the assessment of projects and borrowers seeking financing. Participants were guided through the principal stages of the ESDD process, including:

1.Information Collection and Assessment Planning

The ESDD process begins with the preparation of a Document and Information Request List (DIRL) to obtain the legal, environmental, social and compliance documentation required for the assessment.

A project-specific assessment plan is then developed, defining the scope, objectives, assessment criteria, project team, implementation schedule and reporting requirements.

2.Desktop Review and Preliminary Assessment

A desktop review is undertaken to evaluate the information collected, identify applicable legal and regulatory requirements, and screen for potential environmental and social risks.

The assessment also considers the project’s location in relation to sensitive receptors, such as residential areas, water resources, protected areas and other environmentally sensitive locations.

3.Site Assessment and Stakeholder Engagement

Site visits are conducted to verify regulatory compliance, evaluate the implementation of environmental and social management measures, and gain a comprehensive understanding of project operations.

Where appropriate, interviews are undertaken with project representatives, workers, contractors and other relevant stakeholders to validate findings and identify potential environmental and social risks and impacts that may not be evident through document review alone.

4.ESDD Reporting and Environmental and Social Action Planning

The assessment findings are documented in an Environmental and Social Due Diligence (ESDD) Report, including an evaluation of compliance, identification of gaps against applicable legal requirements and the IFC Performance Standards, and recommendations for risk mitigation.

Based on the assessment findings, an Environmental and Social Action Plan (ESAP) is developed to address identified gaps, strengthen environmental and social management practices, and support ongoing compliance. ESAP commitments may be incorporated into financing agreements and monitored through periodic reporting and follow-up site visits throughout project implementation.

In addition to the technical content, the workshop incorporated two representative case studies, enabling participants to apply ESDD principles and assessment methodologies to real-world lending scenarios. These practical exercises strengthened participants’ ability to identify environmental and social risks and determine appropriate management and mitigation measures within the credit appraisal process.

Through the project and accompanying workshop, EVF participants:

Developed a stronger understanding of environmental and social risks and their relevance to lending and investment activities;
Gained greater familiarity with the IFC Performance Standards and applicable Vietnamese regulatory requirements;
Learned how to apply internationally recognised Environmental and Social Due Diligence (ESDD) methodologies in practice;
Enhanced their ability to identify, assess and manage environmental and social risks throughout the credit appraisal process;
Strengthened their understanding of how environmental and social considerations can be progressively integrated into EVF’s credit risk management framework.

By strengthening its internal environmental and social due diligence capabilities, EVF is taking important steps towards enhancing its risk management framework, promoting responsible lending practices and aligning its operations with evolving international standards.

Wiser is proud to have partnered with EVF throughout this initiative, supporting the development of practical expertise, robust risk management approaches and sustainable finance practices that contribute to long-term value creation.