56 guidelines and limits for future structuring of the credit portfolio are developed. Specific lending criteria for individual customer segments and countries are defined by credit committees, which consist of representatives of the front office and back office areas. The composition varies depending on the customer group for corporate customers, financial institutions, public authorities and retail. The credit committees make all associated lending decisions within the framework of the lending approval process and the rating- and volume-oriented assignment of responsibility (details on the loan decision process and the Credit Portfolio Management department can be found in the 2016 RBI Annual Report, starting on page 153). The lending decision process is carried out on a case-by-case basis, following standardized principles and guidelines. As such, there is a clear personnel and functional separation between the business activities and all risk management activities. In addition to classic hard facts and numerous qualitative criteria, our internal rating model incorporates an evaluation of the management, which is responsible for adequate handling of environmental and social topics within the company. An evaluation is also performed as to whether an industry is subject to special environmental or social risks, including human rights violations or health risks, and whether a potential borrower follows the existing rules with regard to the environment, human rights and health. The agreed credit terms are also assessed as standard as part of the annual analyses. The rating model is validated on an annual basis with respect to the existing criteria in order to evaluate whether the existing factors are still sufficiently selective. Depending on the statistical significance, a larger adaptation is carried out every three years, if necessary. Group Compliance is responsible for all issues concerning compliance with legal requirements. The described group-wide standards apply to all group units, but these are also supplemented with local, sometimes more stringent, internal guidelines and policies by many of our network banks. They take into account, to varying extents, the social and environmental risk strategies of the respective bank, define sometimes higher minimum criteria or define the exact procedure for compliance with all of the agreed-upon principles. The standards of the International Finance Corporation (IFC) and/or the Multilateral Investment Guarantee Agency (MIGA) apply at seven network banks: Raiffeisen Polbank, Raiffeisen Bank Sh.a. in Albania, Raiffeisen BANK dd Bosna i Hercegovina, Raiffeisen Bank Kosovo J.S.C., Raiffeisen Bank S.A. in Romania, Raiffeisen banka a.d. in Serbia, Priorbank JSC in Belarus and AO Raiffeisenbank in Russia. These network banks all have an Environmental and Social Management System (ESMS) and a corresponding Environmental and Social Policy (E&S Policy). This policy describes the principles of the ecological and social risk management in the bank, defines important roles and responsibilities for managing E&S risks as well as key elements of the E&S risk man agement process. One E&S Officer is nominated by the Managing Board for each bank to be responsible for proper implementation within that bank. All of the employees who are involved in the evaluation of E&S risks receive appropriate training. The credit process ensures that all credit applications in the corporate customer area are reviewed in three steps, in addition to the usual credit and risk criteria. 1. Evaluation of whether the company is engaged in activities on the IFC Exclusion List. 2. Categorization of the environmental and social (E&S) risk level depending on the type, location, noticeability and size of the project as well as the nature and scope of its possible environmental and social impact (low, medium or high). 3. Social and environmental impact assessment (E&S due diligence) for all transactions of high and medium risk: Determination of the environmental and social impacts and risks of a project as well as the determination of whether it meets the laws of the respective country and other policies of the World Bank and IFC. Also included are performance standards regarding work and labor conditions, resource efficiency and the avoidance of environmental pollution, public health and safety, land acquisition and forced relocations, retention of biodiversity and sustainable management of natural resources as well as indigenous peoples and cultural
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