memorandum of understanding (MoU) has been signed between the FMO – Dutch entrepreneurial development bank , NMB Bank Ltd., and the Hydropower Sustainability Alliance (HSA). The agreement aims to integrate the Hydropower Sustainability Standard into the environmental, social, and governance (ESG) due diligence process for banking in Nepal.

The objectives of the MoU include:

- Promoting independent environmental and social due diligence through the use of HYDROSELECT. Improving community engagement, consultation, and transparency in the planning and development of hydropower projects.

- Supporting local capacity-building initiatives focused on ESG best practices.

- Recognizing Nepal’s significant potential for hydropower development, the MoU aims to guide investments toward sustainable and climate-friendly projects.

The Hydropower Sustainability Standard provides a rigorous assessment framework that ensures responsible hydropower development. It has a focus on community benefits and environmental protection. It covers 12 key ESG topics and offers guidelines at two performance levels. These levels are good practice (basic requirements) and best practice (advanced standards).

Hydroselect helps facilitate early-stage decision-making in hydropower project development. It addresses a common issue where projects begin without current data on energy, water, or land. This can lead to costly mistakes or even project abandonment. Hydroselect allows developers to assess and rank potential projects based on their benefits and sustainability, helping to avoid investment in problematic sites.

By identifying potential risks early, the tool enables more informed and sustainable decisions, saving time and resources. Hydroselect also encourages feedback from a broad range of stakeholders, including developers, NGOs, government bodies, and civil society, to refine its assessment structure and focus areas.

Source: WP