Sustainability policy and strategy

Due diligence is a process that involves mapping potential risks and preventing and reducing potential negative impacts related to business activities. For Eksfin, this means assessing the risks and impacts associated with offers of loans and guarantees.

Responsible business conduct is to ensure compliance with international standards and laws including environmental protection, human rights, labour relations and financial accountability, as part of the company’s own business conduct, as well as throughout their value chain.

A sustainable company balances economic gain with managing its social and environmental footprint in order to ensure long-term value creation. The aim is to meet the needs of the present without compromising the ability of future generations to meet their needs.

”Do no harm” means that environmental and social risks and impacts are identified, assessed and reduced in a systematic manner in order to meet with international recognised standards and practices, as well as in compliance with local regulation.

ESG stands for “Environmental, Social and Governance”.  Due diligence of a transaction is often referred to as an ESG assessment or analysis. Governance refers to assessments of anti-corruption, risk of sanctions and money-laundering. The “G” of ESG is covered by other policies and guidelines in Eksfin.

This term refers to the financing of business activities that is good for the climate and/or other environmental aspects.  

No net loss is defined as the point at which project-related biodiversity impacts are mitigated to have an overall zero net loss of biodiversity over the life-time of the project. This can be through various mitigation measures at an appropriate geographic scale (e.g., local, landscape-level, national, regional) such as avoiding sensitive areas, avoiding fragmentation of habitats and creating corridors, as well as on-site restoration and offsets.

Net Positive Impact (NPI) on biodiversity is a target for a project outcome in which the impacts on biodiversity caused by the project are outweighed by the actions taken to avoid and reduce such impacts, rehabilitate affected species/landscapes and offset any residual impacts.

This term refers to the UN’s global Sustainable Development Goals, or SDGs. There are 17 objectives that cover environmental, social, and societal aspects to achieve a better and more sustainable future for all.

Eksfin expects companies to support and align with internationally recognised human rights as outlined  in the UN Guiding Principles on Business and Human Rights (UNGP), both in their own operations and through the supply chain.

Eksfin will not offer guarantees or loans where a project has serious and/or systematic breaches of internationally recognised human rights, and where there is no agreement on a corrective action plan to implement necessary changes to improve the situation(s).

Eksfin encourages companies to identify and assess possible risks and develop mitigation measures to reduce greenhouse gas emissions, as well as developing adaptation measures (where relevant) for their own operations and where relevant in their supply chain. Furthermore, Eksfin encourages companies in carbon-intensive sectors to publicly report on climate-related information.

Projects that are expected to to have considerable greenhouse gas emissions will be subject to added due diligence, and will be subject to additional requirements and follow-up prior to a final offer of financing.

Eksfin will not support projects related to the establishment of new coal-fired power plants or that relate to the expansion or life extension of existing coal-fired power plants, nor thermal coal extraction.

Eksfin expects companies to assess their impact on the ocean from their own operations, as well as the associated supply chain. Companies engaged in fisheries are expected to monitor and have traceability systems of the catches to minimise the risk of overfishing as well as possible illegal or unregulated fishing in their value chains.

Eksfin will seek to support projects that promote or contribute to healthy oceans, as well as people and societies that live off the ocean or by the coast. Eksfin evaluates potential ocean related impacts (where relevant) and seeks to ensure that customers develop relevant mitigation measures to reduce potential negative impact.

Eksfin will actively participate in (inter)national initiatives related to the sustainable use of ocean resources and sustainable oceans.

Eksfin expects companies to assess potential negative impact on biodiversity, from their own operations and due to activities in their supply chain. In cases where there is a significant risk or impact to biodiversity, Eksfin aims to align with the principle “No Net Loss”. For critical biodiversity areas, Eksfin aims to align with the principle “Net Positive Impact” (cf. IFC Performance Standard 6).

Eksfin encourages companies with a significant impact to biodiversity to publicly report on impacts and mitigation measures.

Exporters and customers have an independent responsibility to carry out satisfactory due diligence of their business operations, their project developments and relevant parties in their value chain. The assessments are expected to be in line with current laws, the OECD Guidelines for Multinational Enterprises (OECD MNE), and the UN Guiding Principles on Business and Human Rights (UNGP).

In addition, Eksfin assesses the environmental and social risks of new projects and transactions based on information received from potential customers and relevant parties. This due diligence is risk based. Eksfin will rely on other Norwegian government agencies for mitigating environmental and social risks and impacts of activities in Norway, and avoid any overlap with their responsibilities. 

Eksfin offers support and advice to customers, exporters, and project developers as part of evaluating the transaction and, together with relevant parties, plays an active role in identifying measures to avoid or reduce the negative impacts associated with a particular transaction.

Eksfin has a clear requirement for compliance with applicable laws and regulations.  Eksfin will not offer guarantees or loans where relevant parties in the transaction have serious and/or systematic breaches of applicable laws and regulations, and where there is no agreement on a corrective action plan to implement necessary changes within a reasonable time frame.

For a more detailed description of Eksfin’s approach to environmental and social due diligence, please see environmental and social due diligence. 

Eksfin will evaluate  how the consequences of sustainability risks associated with a transaction could affect the credit risk. Sustainability risks must also be assessed in relation to loss provisions and asset depreciations (both overall premises and individual company evaluations), as well as in the annual review of commitments. For ownership interests as a result of breaches and recovery cases, sustainability must be safeguarded (cf. the report to the government on the state’s direct ownership of companies – sustainable value creation (2019-2020)).  

Transactions involving ships and other mobile units will be evaluated for environmental and social risks and impacts. The assessment will include labour and human rights during construction, operation, and disposal of the unit.

Mobile units that are going to a specific location, or where its use is associated with specific risks, will be assessed in line with Eksfin’s guidelines for environmental and social due diligence.