Due Diligence in World Bank Project Financing

Abstract

Abstract This chapter analyses due diligence practices of institutional lenders, such as the World Bank and other multilateral development banks, in the course of international project financing. Such due diligence practices include taking into account country risks, political risks, environmental risks, and social risks. The chapter lays particular focus on the Sustainability Framework of the International Finance Corporation of the World Bank Group which provides the international benchmark practices for the assessment of environmental and social risks. The chapter traces the Framework’s influence on the Equator Principles on Environmental and Social Risk Management adopted by other international private and public financial institutions for international project financing. It argues that due diligence in the area of international project finance may be headed towards possible convergence with international human rights obligations, particularly with environmental and social treaty commitments of States.