Review and Update of IFC Policy and Performance Standards on Social and Environmental Sustainability

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Review and Update of IFC Policy and Performance
Standards on Social and Environmental
Sustainability and Disclosure Policy
Background and Overview October 5, 2009 Istanbul
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IFC Sustainability Framework
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Convergence of Standards

• Equator Principles Financial Institutions (68)
• OECD Export Credit Agencies (34)
• European Development Financial Institutions (16)
• MIGA and IDA
• EBRD
• Others

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Sustainability Policy Highlights

• SE sustainability improves development outcomes
• Clearly defined roles and responsibilities of IFC
  and clients
• IFC reviews clients assessment against the
  Performance Standards
• Establishes risk-based approach to reduce,
  mitigate or compensate impacts
• Categorization (A, B, C, FI) not a determinant
  of process
• Contains provision for IFC to determine Broad
  Community Support

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Performance Standards

• PS1 SE Assessment and Management Systems
• PS2 Labor and Working Conditions
• PS3 Pollution Prevention and Abatement
• PS4 Community Health, Safety Security
• PS5 Land Acquisition and Involuntary
  Resettlement
• PS6 Biodiversity Conservation and Sustainable
  Natural
• Resource Management
• PS7 Indigenous Peoples
• PS8 Cultural Heritage

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Performance Standard Highlights

• Management system driven
• Principles based, not rules based
• PSs and GNs refer to relevant international
  agreements
• Key Human rights relevant to private sector
  operations are embedded in the standards
• Includes an elevated form of consultation Free
  Prior Informed Consultation
• Comprehensive set of social standards for the
  private sector
• Elevated the topic of pollution emissions to
  policy level

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Disclosure Policy Highlights

• Reaffirms and reflects IFCs commitment to
  transparency and good governance
• Presumption in favor of disclosure
• Sets forth a framework to provide accurate and
  timely information to clients, partners and
  stakeholders regarding IFCs activities
• Sets conditions to protect sensitive information
• Established procedures to appeal to
  non-disclosure of information

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Stages of the IFC Project Cycle and Relevant
Points of Disclosure

• Appraisal

• Disbursement

• Supervision

• Evaluation

• Approval

• Early Review

CLIENT Preliminary Community Engagement
IFC Public Notification SPI/ESRS Disclosure
CLIENT On-going Community Engagement /
Documentation Updates
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Summary of Three-Years of PS and DP Implementation

• The policy framework is sound and the approach is
  strengthening projects
• PS are adaptable to different economic scenarios
• Cost is manageable both for IFC and its clients
• Catalyzed the convergence of ES standards for
  project finance worldwide
• Improved transparency, but need to focus on
  communication with project-impacted communities
• An update to reflect implementation experience
  and changes in the market is needed

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Three years of experience in PS implementation
Which Performance Standard is Triggered?

• A TOTAL OF 287 AB PROJECTS BOARD APPROVED APRIL
  30, 2006APRIL 30, 2009

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Why are we updating the Policies?

• Three years of IFC experience has identified
  areas to be strengthened
• Users have requested additional clarity in some
  places
• The context of application has rapidly evolved in
  certain areas
• Views of stakeholders on issues has evolved

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Preliminary Key Issues and Challenges

• Policy and process issues
• Evolving nature of IFCs business
• Timing of IFC entry
• Categorization
• Broad Community Support/Community Engagement
• Disclosure throughout the project life-cycle
• Environmental issues
• Climate Change
• Supply chain management and biodiversity
• Biodiversity Conservation

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Preliminary Key Issues and Challenges (cont.)

• Social issues
• Further strengthening of human rights
• Indigenous People involvement
• Compensation for land and livelihood loss
• Labor issues
• Supply chain labor
• Increased retrenchment management
• Provision for workers accommodation
• Further include non-employee workers

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Review and Update Process Principles

• A collaborative and transparent process
• Engage stakeholders in a variety of ways
• Adopt to ever changing global ES needs
• Obtain feedback from directly-affected communities

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Indicative Timeline

• SeptemberNovember 2009 Phase I 60-day
  consultation period on key issues and challenges.
• November/December2009 Issue summary of the
  consultation outcomes from Phase I.
• March 2010 Review of findings from CAOs
  Advisory Note on IFCs Policy and Performance
  Standards Portfolio Review.
• March 2010 Review of findings of IEGs report on
  Evaluation of the World Bank Groups Experience
  with Safeguard and Sustainability Policy
  (19992008).
• May 2010 Presentation of version 1 of the
  revised PPS to CODE for review and authorization
  to initiate consultation on proposed language.
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• MayJuly 2010 First formal (60-day) consultation
  period open to all stakeholders to comment on
  Version 1 draft text changes.
• AugustSeptember 2010 Preparation of a revised
  draft V2 reflecting stakeholders comments.
• October 2010 Submit V2 of the revised final
  text changes to CODE for information.
• October 2010 Second formal (30-day) consultation
  period open to all stakeholders to comment on the
  draft final text changes.
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• December 2010 Presentation of the complete final
  draft text to the Board.
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• January 2011 Revised PPS becomes effective.

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Phase I Input Needed

• Performance Standards Clarity of Language Are
  the requirements clear? IFC is looking for
  advice on how to reduce ambiguity and ensure the
  requirements are clear.
• Implementation Effectiveness What doesnt work?
  IFC is seeking advice on ways to improve the PPS
  and DP implementation.
• Gaps in Current Coverage What else should be
  covered? IFC is looking to identify missing or
  new areas that should be covered by the policies
  and accompanying guidance on how to implement new
  requirements on the ground.
• Disclosure Policy
• Additional Requirements What can IFC do to
  better ensure disclosure throughout the project
  life-cycle?
• Clarity in Scope Are all disclosure
  requirements appropriate for all projects?

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How to Participate and Provide Feedback

• Website www.ifc.org/policyreview
• E-mail policyreview_at_ifc.org
• Mail PPS Update Mail Stop F3P-301 or
• Disclosure Policy Update Mail Stop 10K-100
• International Finance Corporation
• 2121 Pennsylvania Avenue NW
• Washington DC 20433, USA
• Open and by invitation meetings in DC and regions
  (schedule available on the website)

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