E&S due diligence of a major Moroccan bank with operations in 18 African countries

Introduction

As financial institutions expand across borders, their role in promoting sustainable development becomes increasingly important. Environmental and social (E&S) risk management is no longer a peripheral concern but a central pillar of responsible banking, especially for banks operating across diverse regulatory and socio-economic contexts.

A major Moroccan bank, with assets exceeding US$30 billion and operations spanning 18 African countries, recognised the importance of aligning its Environmental and Social (E&S) governance systems with international best practice. Given its rapid growth and ambitious impact finance agenda, including green loans and women-focused lending products, the bank sought an independent, expert review of its E&S management systems and sustainable finance offerings.

To support this strategic review, the bank engaged IBIS (now SLR and hereafter referred to as SLR) to conduct a comprehensive E&S Due Diligence, with a dual focus: (1) assessing the effectiveness of its E&S risk management frameworks across its African operations, and (2) evaluating the credibility and alignment of its impact finance products with global good practice.

Challenge

The bank faced a complex set of challenges driven by its geographic diversity, expanding portfolio of sustainability-linked products, and growing investor expectations regarding responsible finance.

Firstly, the bank needed to ensure that its E&S management system was robust, consistent, and applicable across 18 African jurisdictions, each with unique regulatory environments and varying levels of environmental and social governance. The bank had established basic E&S procedures, but it lacked clarity on how effectively these were embedded across its operations.

Specifically, the bank sought clarity on:

• The strength and consistency of its E&S categorisation and risk screening processes
• The quality and depth of E&S due diligence conducted on transactions
• The use of E&S covenants in legal agreements
• The effectiveness of grievance mechanisms for stakeholders
• The reporting mechanisms used to monitor E&S performance at the client and portfolio levels
• The alignment of its Human Resources and Social Policies with international expectations, particularly with regard to labour rights and gender inclusion

Secondly, the bank was developing and marketing impact finance products, such as:

• Green loans targeting energy efficiency, water management, and waste reduction
• Green bonds
• Targeted financial products for women entrepreneurs

However, there were questions regarding how well these products aligned with recognised impact investing frameworks, such as the Green Bond Principles, and whether the outcomes were being credibly measured and reported.

With its reputation and ESG credentials on the line, the bank needed an independent, in-depth assessment to identify gaps and chart a clear improvement path.

Solution

SLR brought together a multidisciplinary team with expertise in banking operations, sustainable finance, and international E&S standards to conduct a detailed due diligence process. The engagement was structured around two core pillars:

1. Review of E&S Management Systems

SLR undertook a full diagnostic of the bank’s E&S management framework, including:

• Policies and procedures related to E&S risk categorisation
• Integration of E&S factors in transaction screening and approval processes
• Application of E&S due diligence checklists and sector guidelines
• Standardisation and enforcement of E&S covenants in loan agreements
• Operation and accessibility of grievance mechanisms across countries
• Quality and frequency of E&S performance reporting to internal and external stakeholders
• Review of the bank’s Human Resources and Social Policies, particularly in relation to international labour standards and diversity commitments

Interviews were conducted with key departments, including credit risk, compliance, sustainability, and product development teams, to understand the extent of system implementation across the bank’s network.

2. Assessment of Impact Finance Products

SLR carried out a critical review of the design, implementation, and performance tracking of the bank’s impact-oriented financial products. This involved:

• Evaluating the eligibility criteria and environmental benefits of green loans
• Reviewing the alignment of green bonds with globally accepted standards (e.g. ICMA Green Bond Principles)
• Assessing gender-focused lending products for intentionality, impact measurement, and accountability
• Recommending improvements in impact reporting frameworks, including key metrics, frequency, and stakeholder communication

Impact

SLR’s due diligence provided the bank with a clear and actionable roadmap to enhance its E&S management practices and solidify its leadership in sustainable finance within Africa.

Key outcomes included:

• Identification of critical gaps in the application of E&S risk management across jurisdictions, along with practical, prioritised recommendations for alignment with international standards such as the IFC Performance Standards and the Equator Principles
• Strengthening of the bank’s E&S due diligence procedures, including the introduction of standardised tools and training plans for front-line staff
• Enhanced governance structures around impact finance products, including clearer eligibility criteria, improved monitoring systems, and better alignment with global green finance frameworks
• Increased internal awareness and cross-departmental coordination on E&S responsibilities
• Improved ability to demonstrate ESG integrity and impact outcomes to regulators, investors, and stakeholders

Ultimately, the engagement positioned the bank to not only meet rising ESG expectations but also to play a proactive role in financing Africa’s sustainable development. By embedding stronger E&S safeguards and impact metrics across its operations, the bank is now better equipped to manage risk, unlock green finance opportunities, and deliver meaningful outcomes across the continent.