Due Diligence and Risk Management

Due Diligence

"An assessment of a potential investment so that there are no liabilities
beyond those clearly defined in the investment proposal."

Natural Capital Advisors, LLC assists business in incorporating environmental and social considerations into their investment review process. Thus helping:

  • Avoid unexpected costs by identifying issues early
  • Assist negotiations by better valuing investment opportunities
  • Determine cost-effective compliance
  • Guide the compliance processes

Due Diligence in practice

As an example, the Multilateral Investment Fund (MIF)—a special fund administered by the Inter-American Development Bank—operates through a variety of financial instruments including loans, equity investments, and grants. It is MIF policy that all its operations are carried out in an environmentally and socially responsible manner, in accordance with the established policies and procedures, and with each project undergoing review by the Committee for Social and Environmental Impact. As part of the due diligence screening process, the following must be considered for appropriate investments:

  • Compliance with local & national environmental laws, regulations & standards
  • Sustainable use of natural resources
  • Protection of cultural and natural heritage areas & sensitive ecosystems
  • Exposure to natural hazards

For due diligence of social issues, Natural Capital Advisors, LLC assesses risk considering the human rights records, strength of rule of law and accountability, and patterns of past violence in these contexts:

  • Community Tensions
  • Tenure issues
  • History of community grievances, conflicts
  • National and Local Politics
  • Labor
  • Security Arrangements
  • Private security
  • Use of military or police for security
  • Use of Company Assets

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