Case Study: Embedding ESG Risk Management
Case Study: Embedding ESG Risk Management
Streamlining Environmental & Social Due Diligence for a Large Asia-Headquartered International Financial Institution
The Challenge: Operationalizing ESG Policy in a Global Financial Institution
For global financial institutions, committing to sustainability frameworks like the Equator Principles is only the first step. The true challenge lies in embedding these principles into the complex, high-stakes environment of project finance and corporate lending. A large, Asia-headquartered international financial institution, despite its commitment to ESG, faced significant internal hurdles in operationalizing its Environmental and Social Risk Management (ESRM) framework. The institution was struggling with bureaucratic silos, inconsistent application of ESG policies across different regions and departments, and a lack of clarity on roles and responsibilities. This resulted in inefficient workflows, resource misallocation, and potential gaps in risk management, creating a need for a clear, streamlined, and effective process to ensure that every relevant transaction underwent rigorous and consistent environmental and social due diligence.
Birch Group's Role: Independent Expertise for Systemic Change
Birch Group was engaged to act as a strategic advisor to untangle these internal complexities and strengthen the institution's ESRM system. Leveraging our unique position as an independent boutique consultancy with deep financial services and Asia-Pacific expertise, we assembled and led a dedicated project team of six specialists over several months. Our mandate was to conduct a comprehensive review of the existing framework and develop a pragmatic, actionable roadmap for improvement. This involved working across multiple departments to map existing workflows, identify pain points, and design a more efficient and robust system for the future.
Engagement Snapshot | Details |
Client | Large Asia-Headquartered International Financial Institution |
Focus Area | Environmental & Social Risk Management (ESRM), Equator Principles Implementation |
Project Duration | Multi-month engagement |
Team | 6-person dedicated project team led by Birch Group |
Core Challenge | Operational silos, inefficient workflows, unclear roles and responsibilities |
The Solution: A Bespoke Framework for Clarity and Capacity
Our approach was not to impose a generic, one-size-fits-all solution, but to co-create a bespoke framework tailored to the institution's specific structure and culture. We developed a comprehensive suite of tools and processes designed to build internal capacity and create lasting systemic change.
Key deliverables included:
Process Flowcharts and Workflow Mapping: We created detailed visual maps of the end-to-end ESRM process, clarifying every step from initial deal screening to final approval. This eliminated ambiguity and created a single source of truth for all teams.
Risk Assessment Frameworks: We developed standardized templates and checklists to ensure that all environmental and social risks were consistently identified, assessed, and mitigated in alignment with the IFC Performance Standards and Equator Principles.
Streamlined Roles and Responsibilities: By clearly defining the roles of the deal teams, risk managers, and sustainability experts, we broke down silos and established clear lines of accountability, ensuring that the right expertise was brought in at the right time.
Customized Training and Capacity Building: We designed and delivered targeted training materials and workshops for different internal teams, building the institutional knowledge and skills necessary to manage ESG risks effectively and independently in the long term.
Impact: From Bureaucracy to Best Practice
The engagement successfully transformed the institution's ESRM process from a source of internal friction into a streamlined and effective best-practice framework. By clarifying responsibilities and providing the right tools, we empowered the institution's small, dedicated sustainability team to deliver on their mandate more efficiently. The new system enhanced the quality and consistency of due diligence, reduced the risk of non-compliance, and ultimately enabled the institution to deploy capital more responsibly.
References & Related Resources
Equator Principles: https://equator-principles.com/
IFC Performance Standards: https://www.ifc.org/en/insights-reports/2012/ifc-performance-standards
Task Force on Climate-related Financial Disclosures (TCFD): https://www.fsb-tcfd.org/
Sustainable Finance Disclosure Regulation (SFDR): https://finance.ec.europa.eu/sustainable-finance
This case study is for informational purposes only. All client details have been anonymized to protect confidentiality.
Birch Group Consulting, LLC.