Environmental matters

EKN makes an assessment of the risk of negative environmental impact in all transactions that have a clear defined end user.

An environmental review is part of EKN’s business risk assessment and can help to reduce both financial risk and environmental risk. Short-term letter of credit guarantees, working capital credit guarantees and defence material transactions are exempted from the environmental risk assessment.

How is EKN’s assessment made?

  1. When guarantee applications are received, EKN performs a screening to identify transactions with a high risk of negative environmental impact.

  2. Where there is a high risk of negative environmental impact, the application proceeds to an environmental review. The scope of the review is adapted to the size of the transaction, the type of risks that have been identified and EKN’s ability to influence the situation.

  3. EKN uses IFC’s Performance Standards and The World Bank Group Environmental, Health and Safety Guidelines  in assessing what environmental impacts can be considered to be acceptable.

  4. Transactions are classified into categories on the basis of their risk of negative impacts.  Category A involves a risk of significant impact, B involves a risk of some impact and C involves little or no impact. In some cases, EKN includes environmental conditions in the transaction to be guaranteed.

  5. If EKN does not receive the environmental information that is requested, or if the environmental impact is unacceptable and without mitigating actions, the application cannot move forward to a decision making committee.

What should you do as an exporter?

  • Answer the questions in the application on whether the transaction is i) located in an area with a sensitive natural environment etc. and whether ii) you have investigated possible environmental impacts (positive and negative) of the transaction

  • If the exported equipment will be used in a project, ask the buyer if there is an environmental and social impact assessment (ESIA). A project means that the export is going to a new enterprise (commercial, industrial or infrastructure)  being established or to a significant expansion of an existing enterprise that involves an environmental impact.

  • Assist EKN with any questions to the buyer.

Keep in mind

  • It is a good idea to inform the buyer at an early stage that an EKN guarantee may involve questions about managing environmental risks and impacts. The buyer is then prepared for the questions when EKN becomes involved.

  • The more environmental information EKN receives about the buyer, the faster the environmental review.

  • If there are known environmental risks, involve EKN at an early stage so that the environmental issues can be managed in parallel with other guarantee related issues.