An environmental and social action plan (ESAP) is the agreed list of actions a project must complete, each with a timeline and an owner, to meet the environmental and social standards its lenders require. It closes the gap between the project's current performance and the applicable standards.

Project finance glossary

ESAP: the environmental and social action plan

Q: What are the IFC Performance Standards?

The IFC Performance Standards are eight standards on environmental and social risk, covering areas such as labour, resource efficiency, community health, land acquisition and biodiversity. Many development finance institutions and Equator Principles banks require projects to meet them.

Q: What are the Equator Principles?

The Equator Principles are a risk management framework adopted by many banks for determining, assessing and managing environmental and social risk in project finance. Projects under them are typically benchmarked against the IFC Performance Standards.

Q: How is ESAP compliance tracked?

Each ESAP action has a deliverable, a deadline and a responsible party. Compliance is tracked by recording, for each action, whether the evidence has been delivered and accepted, and reporting the status to the lenders on the agreed cycle.

An environmental and social action plan, or ESAP, is the agreed list of environmental and social actions a project must complete to meet the standards its lenders require. Each action has a deliverable, a deadline and an owner, and together they close the gap between the project as it stands and the standards that apply to it.

Why a project has an ESAP

When lenders assess a project, they run environmental and social due diligence against the standards they are bound to, such as the IFC Performance Standards or the Equator Principles. That review almost always finds gaps: things the project needs to put in place, improve or evidence before or after financial close. The ESAP is where those gaps become a concrete plan. It is a schedule the borrower commits to and the lenders monitor.

The standards an ESAP is measured against

IFC Performance Standards

Eight standards covering environmental and social risk: labour, resource efficiency, community health and safety, land acquisition and resettlement, biodiversity, indigenous peoples and cultural heritage.

Equator Principles

A risk framework adopted by many banks for assessing and managing environmental and social risk in project finance, generally benchmarked against the IFC standards.

Lender-specific requirements

Development finance institutions and export credit agencies often add their own environmental and social policies on top of the common frameworks.

What an ESAP action looks like

Each line in an ESAP is an obligation. A typical action names the gap, the corrective step, a target date and the responsible party, for example: complete a biodiversity management plan, appoint an environmental and social manager, put a grievance mechanism in place, or deliver a stakeholder engagement report. Some actions fall due before financial close and become conditions precedent. Others run through construction and operations as ongoing commitments and covenants.

How ESAP compliance is tracked

An ESAP only works if its status is honest and current. For each action, the borrower delivers the evidence, the lenders or their environmental and social adviser review it, and the action moves to closed once it is accepted. Progress is reported to the lenders on an agreed cycle. When the plan lives in a document that is emailed back and forth, the status drifts and the reporting becomes a reconstruction exercise. What is needed is a single view of every action, its owner, its deadline and whether its evidence has been accepted.

Where Capital Governance fits

Capital Governance holds the ESAP as part of the same shared obligations register as the conditions precedent, covenants and reporting. Every environmental and social action has an owner, a due date, a clear statement of what closes it, and the evidence trail behind it. The developer, the funders and the environmental and social adviser read the same status, so the ESAP is reported from the record rather than rebuilt for each review. Capital Governance tracks the actions and their evidence. It does not perform the environmental and social assessment itself.

What is an ESAP?

The agreed list of environmental and social actions a project must complete, each with a deliverable, deadline and owner, to meet the standards its lenders require.

What are the IFC Performance Standards?

Eight standards on environmental and social risk covering labour, resource efficiency, community health, land acquisition, biodiversity and more. Widely required by development finance institutions and Equator Principles banks.

What are the Equator Principles?

A risk management framework adopted by many banks for assessing and managing environmental and social risk in project finance, benchmarked against the IFC Performance Standards.

How is ESAP compliance tracked?

Each action has a deliverable, a deadline and a responsible party. Compliance means recording whether the evidence has been delivered and accepted, and reporting the status to lenders on the agreed cycle.