Evaluating the Environmental, Social and Governance (ESG) Risk Assessment Method in Supporting Decisions for Loan Approval by Financial Institutions

Financial institutions ensure borrowers’ ability to repay the loan before lending them for the pursuing projects. The ESSAFIN Logic 1.0 software tool is available for evaluating loan proposals based on the Environment, Social, and Governance (ESG) criteria. The tool has a potential for improvement to account for the lack of critical practical application and evidence-based literature support. This research aims to validate the indicators of ESG criteria and improve the existing risk assessment method for evaluating projects to assist decision-making in loan approval for financial institutions. The existing ESSAFIN Logic tool 1.0 will be improved to incorporate uncertainty
using the available literature and expert opinions on the types of indicators, and weights of criteria and indicators. The generated risk score will be compared with the risk level estimated using the existing method. Based on this, an improved risk assessment method will be proposed.

Faculty Supervisor:

Rehan Sadiq;Kasun Hewage

Student:

Partner:

ESSAFIN Logic Ltd.

Discipline:

Engineering

Sector:

Professional, scientific and technical services

University:

The University of British Columbia - Okanagan

Program: