Projects to be supported by the fund include energy and water efficiency, rooftop commercial and industrial (C&I) solar, waste reutilization and recycling, and cleaner production investments such as waterless dying machines and laser finishing units. Projects are typically sized under US$5 MM. The expected E&S risks and potential impacts of the Project are considered medium. As such, the Project has been categorized as Category FI-2 in accordance with IFC's Sustainability Policy.

The Project will not support coal-related activities or higher-risk business activities that may include a) involuntary resettlement, b) risk of adverse impacts on Indigenous Peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage (d) risk of retrenchment or e) significant Occupational Health and Safety risks. The applicable E&S performance requirements for this Project include the IFC Exclusion List, relevant host country E&S laws and regulations, and the IFC Performance Standards. The key E&S risks and potential impacts derive from the activities of the Fund’s borrowers and their E&S capacity and systems in place to manage these risks, as well as the Fund Manager’s capacity to adequately assess E&S risks, require corrective actions where needed, and monitor their implementation. Typical risks and impacts may include occupational health & safety, supply chain-related risks, labor and working conditions, and waste management, among others.

The Fund Manager has developed an Environmental and Social Management System (ESMS) specific to financing activities in the manufacturing sector. In addition, SIMA has designated staff responsible for managing the ESMS implementation, and staff undertake E&S risk management training. The ESMS review process includes E&S risk screening for excluded activities and E&S categorization, an E&S assessment of the company and supported project(s) against applicable local laws and the IFC Performance Standards, development of an E&S action plan, inclusion of E&S covenants into the legal agreement, and post-disbursement monitoring. For this project, SIMA will be required to enhance its ESMS: (i) to enable it to screen out higher-risk transactions; (ii) to specify criteria for the use of third-party consultants in the E&S assessment and monitoring work; (iii) to develop screening tools to manage occupational health and safety risks related to solar C&I projects, energy and water efficiency; (iv) to develop standard E&S clauses for inclusion in developers’ contracts; (v) develop and implement solar supply chain screening provisions; and (vi) update the external communication mechanism. In addition, the Fund Manager will be required to develop an E&S risk management training plan for staff involved in implementing the Project and provide E&S risk management training. IFC will review the E&S due diligence assessments for the first five investments prior to investment to support the ESMS implementation.