csr APPrAisAl And monitoring guidelinesIFU/IØ (the Funds) are committed to supporting the project com-panies in their work with CSR, and the purpose of these guidelinesis to describe the appraisal and monitoring process, to clarify theresponsibilities of the Funds, the Danish partner and the projectpartner and to introduce the tools available.The following figure outlines who is responsible for which tasks,To ensure that the operational standards of a project company areset and implemented in accordance with the CSR policy, the Fundshave established a CSR toolkit with specific operational proceduresand guidelines to be applied during the appraisal stage and duringand which tools are available to the project company in the differentstages of the appraisal and monitoring process. Available tools anddocuments can be downloaded from the website www.ifu.dk.the monitoring at the operational stage. The toolkit also includes abrochure that explains the principles of the CSR policy, interprets thepolicy and describes the procedures for sector-specific and parti-cularly sensitive issues, e.g. hiv/aids, corruption and animal welfare.

Project APPrAisAlThe Funds’ CSR assessment of the projects includes – in particular – two key components:• • an identification and assessment of the CSR risks and impacts (the likelihood of harm)of the project andan evaluation of the commitment and capacity of the investment partners to manageexpected risks and impacts and work towards an international level of performancein accordance with Danish or EU rules and regulations or standards set by the WorldBank/IFC, ILO or OECD.The Funds will decide which level of documentation will be required to assess the CSR risksand impacts. It will depend on the specific sector, technology, size of production, location,local rules and regulations, climatic and cultural conditions, etc.When partnering with experienced Danish companies with proven and well-documentedCSR policies and experience, the Funds may accept that the project will be appraised andmonitored on the basis of the Danish partner’s policies and standards.

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The project company and/or the Danish partner must identify the host country’s rules andregulations regarding CSR-related issues relevant to the project company, as well as theenforcement and control systems.The project company and/or the Danish partner must assess the actual, project-specific con-ditions regarding CSR issues taking into account the location of the project. Significant CSRissues must be assessed using relevant international standards as a baseline.Available tools:• • Human Rights Quick Check (HRCA).Environmental Quick Check, including a climate check.

Best judgement declArAtion

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The Danish partner must issue a Best Judgement Declaration on their best assessment ofall significant deviations between international standards and host country rules and regula-tions in relation to all relevant CSR issues. The Best Judgement Declaration must be basedon the assessment made by the project company and/or the Danish partner.Available tool: Best Judgement Declaration Guidelines.

the csr Action PlAn

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The Danish partner and the project company must describe and quantify significant CSRissues and deviations from international standards in a well-defined CSR Action Plan speci-fying the required action and the agreed time frame for eliminating the deviations.Available tool: CSR Action Plan Guidelines.The project company must continuously monitor the issues identified in the CSR Action Planto ensure sufficient control and must prepare an annual update of the Quick Check used inappraisal.The responsibility for compliance with the Action Plan rests with the Board of Directors andthe Management of the project company. The Board of Directors must prepare an annualreview of the company’s situation in respect of continued compliance with the CSR policy. Ifrequired, i.e. if new issues are identified, the Board must revise and update the list of issuesand decide on a revised CSR Action Plan for further improvements.

the csr stAtus rePort

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The project company must prepare an annual CSR Status Report for discussion and ap-proval by its Board of Directors at the board meeting at which the budget for the next finan-cial year is presented for approval.The CSR Status Report must describe:• CSR activities, events and results during the year, including e.g. incidents of corruptionand facility payments, environmental and work accidents and contributions to climatechange mitigations.• • • • • Progress on the CSR Action Plan.Compliance with rules and regulations.CSR competences and management.CSR-related communication and training and external communication to interested parties.Monitoring of key CSR issues.

Available tool: CSR Status Report Guidelines for project company.The annual CSR Status Report will serve as a tool for monitoring all CSR issues relevant tothe project company. It is the responsibility of the Board of Directors to ensure the transpar-ency and accountability of the CSR Status Report and a follow-up procedure, i.e. if new is-sues are identified.The first CSR Status Report must be received by the Board of Directors no later than 15months from the first disbursement date. Thereafter, a report must be received annually.