ESG Gap Analysis Tool
The Hydropower Sustainability ESG Gap Analysis Tool enables hydropower project proponents and investors to identify and address gaps against international good practice.
The ESG Tool is based on the framework of the Hydropower Sustainability Assessment Protocol. It assesses projects against the requirements of the Protocol’s environmental, social and governance topics.
The tool provides an action plan to help project teams address any gaps against good practice. It is divided into 12 sections which are compatible with IFC Environmental and Social Performance Standards and the World Bank’s new Environmental and Social Framework.
The ESG Tool was developed by the International Hydropower Association (IHA) between February 2017 and June 2018 under the mandate of the Hydropower Sustainability Assessment Council, with the support of the Swiss State Secretariat for Economic Affairs (SECO). The tool was launched on 11 July 2018.
Frequently asked questions
Why was the ESG Tool developed?
A key driver in the development of the ESG Tool was the demand for an effective, lower cost alternative to a full Protocol assessment, one which is accessible to projects seeking eligibility for green or climate bond financing.
What does the ESG Tool cover?
The ESG Tool covers topics relating to the environmental, social and governance elements of the Protocol, including the Protocol’s climate change topic, which was launched in July 2018. The 12 sections are as follows:
1. Environmental and Social Assessment and Management
2. Labour and Working Conditions
3. Downstream Flows, Sedimentation, and Water Quality
4. Project-affected Communities and Livelihoods
6. Biodiversity and Invasive Species
7. Indigenous Peoples
8. Cultural Heritage
9. Infrastructure Safety
10. Climate Change Mitigation and Resilience
11. Communications and Consultation
12. Governance and Procurement
How is the ESG Tool structured?
An ESG Tool assessment comprises the following components:
• A summary of the project’s key details
• A simple tick or cross feature to indicate whether requirements have been met
• A summary of any gaps against good practice
• An action plan on how any gaps can be closed and a timeframe detailing when gaps can be closed
• Analysis of any gaps identified
• A detailed report of the criteria for good practice following each topic
• Any additional findings and observations.
When can I use the ESG Tool?
The ESG Tool can be used at any stage of a project’s development, from early planning to operation, and it covers preparation, implementation and operation stages. Each draws on the corresponding stage of the Protocol.
Who does the assessments?
To ensure the highest quality and rigour in the assessment process, all commercial use of the ESG Tool is carried out by accredited assessors. These assessors have significant experience in the hydropower sector or with relevant sustainability issues, and have passed a rigorous accreditation course with specific training on the assessment principles of both the Protocol and the ESG Tool. Previously accredited Protocol assessors have undergone additional training to be able to use the ESG Tool. Details of accredited assessors for the ESG Tool will be published online in due course.
Who governs the ESG Tool?
Both the ESG Tool and the Protocol are governed by a multi-stakeholder body, using a consensus approach in the same spirit in which the Protocol was developed in the late 2000s. This governing body, known as the Protocol Governance Committee, includes representatives of social and community organisations, environmental organisations, governments, commercial and development banks, and the hydropower sector. This approach to governance ensures that all stakeholder voices will be heard in the future shaping of the use of the ESG Tool.
IHA is responsible for administering the ESG Tool, as well as overseeing training and accreditation, liaising on assessments where relevant, and coordinating governance activities.