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Guidance Note 6 V2Biodiversity Conservation and Sustainable Management of Living

Natural Resources

Guidance Note 6 corresponds to Performance Standard 6. Please also refer to PerformanceStandards 15 and 78 as well as their corresponding Guidance Notes for additionalinformation. Bibliographical information on all referenced materials appearing in the text of thisGuidance Note can be found in the References section at the end.

Introduction

1. Performance Standard 6 recognizes that protecting and conserving biodiversity,maintaining ecosystem services, and sustainably managing living natural resources arefundamental to sustainable development. This Performance Standard has been guided bythe Convention on Biological Diversity, which defines biodiversity as the variability amongliving organisms from all sources including, inter alia, terrestrial, marine and other aquaticecosystems and the ecological complexes of which they are a part; this includes diversitywithin species, between species, and of ecosystems.

2. Ecosystem services are the benefits that people, including businesses, derive fromecosystems. Ecosystem services are organized into four types of services: (i) provisioningservices, which are the products people obtain from ecosystems; (ii) regulating services,which are the benefits people obtain from the regulation of ecosystem processes; (iii)cultural services, which are the nonmaterial benefits people obtain from ecosystems; and(iv) supporting services, which are the natural processes that maintain the other services.

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3. IFC recognizes that the human-valued services provided by ecosystems are oftenunderpinned by biodiversity, and that impacts on biodiversity can often adversely impact onthe delivery of ecosystem services. This Performance Standard addresses how clients canmitigate impacts on and sustainably manage biodiversity and ecosystem servicesthroughout the projects lifecycle.

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Examples are as follows: (i) provisioning services may include food, freshwater, shelter, timber; (ii) regulatingservices may include surface water purification, carbon storage and sequestration, climate regulation, protectionfrom natural hazards; (iii) cultural services may include natural areas that are sacred sites and areas ofimportance for recreation and aesthetic enjoyment; and (iv) supporting services may include soil formation,

nutrient cycling, primary production.

G1. IFC recognizes that the protection and conservation of species in their own right and theecosystems in which they persist is a responsibility that the private sector is expected to upholdas part of being a good steward of the environments in which they operate. IFC also recognizesthat biodiversity protection and conservation is an essential element in its mission to achievepoverty reduction through sustainable development. As emphasized by the Biodiversity forDevelopment Program of the Convention on Biological Diversity (CBD), biodiversity loss canresult in critical reductions in the goods and services provided by the earths ecosystems, all ofwhich contribute to economic prosperity and human development. This is especially relevant indeveloping countries where natural-resource based livelihoods are most prevalent.

G2. The definition of ecosystem services provided in paragraph 2 of Performance Standard 6is from the Millennium Ecosystem Assessment. All four categories of ecosystem services(provisioning, regulating, cultural and supporting services) are recognized in this PerformanceStandard. The Economics of Ecosystems and Biodiversity (TEEB) initiative, a long-term studythat draws on expertise from around the world to evaluate the costs of the loss of biodiversityand the associated decline in ecosystem services worldwide, defines ecosystem services asthe direct and indirect contributions of ecosystems to human well being. TEEB also makesreferences to the concept of natural capital in that, from an economic point of view, the flows ofecosystem services can be seen as the dividend that society receives from natural capital, and


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that maintaining stocks of natural capital allow the sustained provision of future flows ofecosystem services, and thereby help to ensure enduring human well-being.

G3. Performance Standard 6 recognizes that sustainable development cannot be achieved ifeither biodiversity or ecosystem services are lost or degraded by development efforts..

Whilerecognizing that these two concepts are inextricably linked, Performance Standard 6 providesseparate client requirements for biodiversity and ecosystem services. This, in part, is becausebiodiversity management involves expertise and scientific knowledge mainly from thecommunity of practice of ecologists and conservation biologists, while the implementation ofassessment, mitigation and management programs for ecosystem services often require theexpertise of social specialists and other specialists (for example, water resources specialistsand geologists) and direct engagement with Affected Communities. With respect to theprovisions relevant to ecosystem services, there is also a considerable amount of overlap withclient requirements contained in other Performance Standards (notably Performance Standard4, 5, 7 and 8).

G4. Biodiversity and ecosystem services are especially relevant to sectors that developliving natural resources as commodities, such as agriculture, fisheries and livestock.Sustainable management practices for many such sectors have been codified in internationally-recognized standards. For this reason, additional client requirements are provided forcompanies involved in the primary production of living natural resources as commodities.

G5. General client requirements for the assessment of biodiversity and ecosystem servicesare defined in paragraphs 6 through 8 of Performance Standard 6 (under sub-header General).Client requirements for biodiversity are defined in paragraphs 9 through 23 (under sub-headerProtection and Conservation of Biodiversity), and include provisions for legally protected andrecognized areas and for invasive species management. Client requirements for ecosystem

services are defined in paragraphs 24 through 25 and contain links to other PerformanceStandards (notably Performance Standard 4, 5, 7 and 8). Client requirements for companiesinvolved in the primary production of living natural resources and their supply chains are definedin paragraphs 26 through 31.

Objectives

To protect and conserve biodiversity To maintain the benefits arising from ecosystem services To promote the sustainable management of living natural resources through the

adoption of practices that integrate conservation needs and development priorities

Scope of Application

4. The applicability of this Performance Standard is established during the social andenvironmental risks and impacts identification process, while the implementation of theactions necessary to meet the requirements of this Performance Standard is managedthrough the clients social and environmental management system. These requirements areoutlined in Performance Standard 1.

5. Based on the risks and impacts identification process, the requirements of thisPerformance Standard are applied to projects (i) located in modified, natural, and criticalhabitats; (ii) that potentially impact on or are dependent on ecosystem services over which


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the client has direct management control or significant influence;2

or (iii) that include theproduction of living natural resources (e.g., agriculture, animal husbandry, fisheries,forestry)._______________________________________________

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This considers the nature and scale of their commercial relationships, and in consideration of the extent of directmanagement control and/or influence the client has over these areas

G6. The application of Performance Standard 6 is established during the social andenvironmental risks and impacts identification process. General client requirements for thisprocess are provided in paragraphs 6 through 11 of Performance Standard 1, andaccompanying guidance is provided in paragraphs 17 through 31 in Guidance Note 1. The risksand impacts identification process should include scoping of potential issues relating tobiodiversity and ecosystem services. Scoping may take the form of an initial desktop analysisand literature review, including a review of regional studies and assessments, the use of globalor regional screening tools such as the Integrated Biodiversity Assessment Tool (IBAT) and fieldreconnaissance. Scoping for ecosystem services would also take place through consultationwith Affected Communities as part of the Stakeholder Engagement process outlined inparagraphs 24 through 30 in Performance Standard 1 and its accompanying guidance (seeparagraphs G100 through G110 in Guidance Note 1).

G7. The risks and identification process will vary depending on the nature and scale of theproject. At a minimum, the client should screen and assess the risks and potential impacts onbiodiversity and ecosystem services in the project area of influence taking into account thefollowing: (i) the location and scale of project activities, including those of associated facilities;(ii) its supply chains (as required in paragraphs 31 of Performance Standard 6); (iii) theprojects proximity to areas of known biodiversity value or areas known to provide ecosystemservices; and (iv) the types of technology that will be used (e.g., underground mining versusopen pits, directional drilling and multi-well pads versus high-density single well pads, air cooledcondensers versus wet cooling towers, etc.). Performance Standard 6 will not be applicable

where no known risks to biodiversity and ecosystem services, including risks related to potentialknowledge gaps, are identified through this screening. Further guidance on the risks andimpacts process is described in paragraphs G10 through G24 of this Guidance Note in theevent where Performance Standard 6 is applicable.

G8. With respect to ecosystem services, Performance Standard 6 will in most cases applywhen the (main) direct beneficiaries of such services are the Affected Communities, as definedin paragraph 1 of Performance Standard 1, as the client will likely have direct managementcontrol or significant influence over such resources in the majority of the cases. PerformanceStandard 6 would not apply in instances where a client, through its project, does not have directmanagement control or significant influence over such services. These include regulatingecosystem services, such as carbon storage or climate regulation, where the benefits of such

services are received on a global scale. Impacts on this scale are covered as part of the risksand impacts identification process in Performance Standard 1 and some additional guidance isprovided in paragraphs G35 through G38 of its accompanying Guidance Note. Clientrequirements for Greenhouse Gas emissions are described in paragraphs 7 and 8 ofPerformance Standard 3 and in paragraphs G17 through G27 of its accompanying GuidanceNote.

G9. Regarding living natural resources, Performance Standard 6 will apply for all projectsinvolved in the primary production of such resources.


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Requirements

General

6. The risks and impacts identification process should consider direct and indirectproject-related impacts on biodiversity and ecosystem services and identify any significantresidual impacts. This process will consider relevant threats to biodiversity and ecosystemservices, especially focusing on habitat loss, degradation and fragmentation, invasive alienspecies, overexploitation, hydrological changes, nutrient loading, and pollution. It will alsotake into account the differing values attached to biodiversity and ecosystem services byAffected Communities. For biodiversity, where appropriate, this process will also take intoaccount values by other stakeholders. Where paragraphs 1320 are applicable, clientsshould consider project-related impacts across the potentially affected landscape

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orseascape.

7. Given the complexity in predicting project impacts on biodiversity and ecosystemservices over the long term, the client should implement mitigation and monitoring

measures through adaptive management. When avoidance of impacts is not possible,measures to minimize impacts and restore biodiversity and ecosystem services should bedefined. For the protection and conservation of biodiversity, the mitigation hierarchyincludes biodiversity offsets.

8. Where paragraphs 1320 are applicable, the client will retain competent experts toassist in conducting the risks and impacts identification process. Where paragraphs 1619are applicable, the client should retain competent experts with appropriate regionalexperience to assist in the development of a mitigation strategy that complies with thisPerformance Standard and to verify the implementation of those measures.______________________________3

Includes freshwater aquatic systems that occur within the landscape.

G10. Paragraphs 6 through 8 refer to the completeness of the risks and impacts identificationprocess once it has been determined that Performance Standard 6 applies to a particularproject. The risks and impacts identification process will often take the form of an environmentaland social impact assessment (ESIA). The scope of the assessment will depend on the natureand scale of the project and sensitivities in terms of biodiversity attributes and ecosystemservices. With respect to biodiversity, clients should refer to the good practice guidelines andreference documents on biodiversity assessment and management provided in paragraph G26.With respect to ecosystem services, clients should refer to paragraphs G123 through G137,which provides references for the assessment of ecosystem services and describes theecosystem services review process.

G11. As part of the ESIA, a baseline should be developed on the relevant biodiversityattributes and ecosystem services. The baseline should be recent and data should be acquiredfor the actual site of the projects facilities, including related and associated facilities, and the

projects area of influence. The baseline is some combination literature review, consultation withexperts and Affected Communities, and field surveys. The extensiveness of the baseline willvary depending on the nature and scale of the project. For sites with potentially significantimpacts on biodiversity and ecosystem services, the baseline should include field surveys overmultiple seasons and conducted by qualified external experts.

G12. The planning of baseline surveys should be informed by a literature review and initialdesktop analysis. The extent of the literature review will depend on the sensitivity of thebiodiversity attributes associated with the projects area of influence and the ecosystem services


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that may be impacted. Literature reviews could comprise a number of sources such as peer-reviewed journals, regional assessments, national or regional planning documents (e.g.,national biodiversity strategy and action plan [NBSAP] and local biodiversity action plans[LBAPs]), existing assessments and studies in the project site and its area of influence, web-based data such as information provided in the International Union for the Conservation ofNature (IUCN) Red List of Threatened Species, landscape prioritization schemes includingsystematic conservation assessments and plans, masters or doctoral theses, among others.

G13. Depending on the nature and scale of the project, existing spatial data and landscapemapping may form part of the literature review and initial desktop analysis. This is especiallyimportant for project sites in natural and critical habitats. This includes land classification andland use maps, satellite imagery or aerial photographs, vegetation type and ecosystem maps,topographical and hydrological mapping such as watersheds and interfluvial zones. Numerousregional ecosystem mapping efforts have been completed or are currently underway byacademic and governmental institutions, intergovernmental organizations, and non-

governmental organizations (NGOs) (e.g., UNEP-WCMC [e.g., Ocean Data Viewer

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], FAOForest Assessments, The Nature Conservancy, NatureServe [Terrestrial Ecosystems Map forSouth America], Global Forest Watch, Conservation International, the GEO GEOSS Africaecosystem mapping project etc.). This information can directly inform the ESIA and any relatedassessments of landscape integrity, resource development and management analyses,ecosystem services valuations, reporting and prediction of environmental trends.

G14. The ESIA should take into account the differing values attached to biodiversity andecosystem services by Affected Communities. For ecosystem services, this process will formpart of the ecosystem service review and is described in paragraph G130. Regardingbiodiversity, the client should establish the differing values attached to particular biodiversityattributes by relevant local, national and international stakeholder groups as relevant.Biodiversity will be viewed differently depending on the stakeholders and will vary from region to

region. Stakeholder groups to consult include Affected Communities, governmental officials,academic and research institutions, recognized specialists for the biodiversity attributes ofconcern, and national and international conservation NGOs as appropriate. Together, theliterature review, stakeholder consultation and baseline surveys should establish a core set ofbiodiversity values, which would form the basis of impact analysis and the definition ofmitigation and management measures. The same is true for ecosystem services, although theecosystems services review will largely inform that process.

G15. For some projects, biodiversity values and ecosystem services associated with a sitemight be numerous, and clients would benefit from the prioritization of such features.Biodiversity and ecosystem services can be prioritized along two axes: (i) based upon thenumber of spatial options left where conversation can occur (i.e., spatial limitation or thefeatures irreplaceability); and, (ii) based on the time available for conservation to occur before

the feature is lost (i.e., temporal limitation as caused by threats to the feature in question.These concepts can be applied to both biodiversity and ecosystem services. For example, asacred lake may hold particularly unique significance for local communities, one patch of forestmay provide a type of fiber or medicinal plant found nowhere else, a low ridge in the land mayprovide singular flood control, a species may be endemic to a single site or an ecosystem maybe singular in the landscape. These are all spatially limited biodiversity values/ecosystem

1UNEP-WCMCs mapping tools for protected areas are provided in paragraph G111 and additional resources are provided in the

References section.


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services, in that they are relatively irreplaceable in the landscape. The concept of threat orvulnerability is equally applicable: the probability of a species being lost in a defined time asmeasured by lists of threatened species such as that of IUCN, the speed of loss of anecosystem service such as pollination or flood regulation, and the continuing erosion of anindigenous peoples culturally valued site due to in-migration are all examples of time limitationsor threats. The relative importance with respect to conserving the feature as part of projectoperations could therefore be determined by its status in terms of these two axes: itsirreplaceability in the landscape/seascape and its vulnerability in remaining there.

G16. Paragraph 6 provides a list of the particular threats to biodiversity and ecosystemservices that the client should consider as part of the ESIA. The client should provide anaccurate description of threats, including regional level threats that are relevant to the projectsite and its area of influence. The client should describe if threats are pre-existing and/or theextent to which the project might exacerbate them, and the threats analysis should be used toinform the impact assessment. For example, if illegal bushmeat hunting, or timber extraction is

on-going, would project-induced access further this situation?

G17. The impact assessment should spell out project-related direct, indirect and residualimpacts on populations, species and ecosystems and the ecosystem services identified in theliterature review and baseline studies. Direct impacts might include habitat loss and disturbance(noise, light, land or shipping traffic), emissions and effluents, alterations of surface hydrologyand land forms, edge effects and forest gaps, loss of provisioning ecosystem services or accessto such services, degradation of regulating, cultural and supporting ecosystem services, etc.Indirect impacts might include the accidental introduction and spread of invasive species,project induced access by third parties, in-migration and associated impacts on resource use.Mitigation and management measures should then be defined to address all impacts identifiedas adverse to sensitive biodiversity or ecosystem services. Residual impacts are significantproject-related impacts that might remain after on-site mitigation measures (avoidance,

management controls, abatement, restoration, etc.) have been implemented. In critical habitats,any significant residual impacts must be mitigated using biodiversity offsets. Regardingcumulative impacts, the client is responsible for considering such impacts in line with paragraph7 of Performance Standard 1 and as described in its accompanying Guidance Note.Cumulative impact analysis is especially relevant for projects located in or near critical habitat

G18. Clients are expected to fully exercise the mitigation hierarchy, which is defined in theObjectives section of Performance Standard 1. Firstly, assessment of project infrastructure andthe existing landscape can inform the identification, screening and design of alternatives as aform of avoidance. Alternatives may include variations in the layout of the project facilities,alternative engineering and manufacturing processes and construction practices, the selectionof different sites or routing of linear facilities, and selection of alternative suppliers throughscreening to identify those with appropriate environmental/social risk management systems.

Secondly, once the preferred alternatives have been chosen, minimization of impacts may bepossible through modifications to drainage systems, methods of road construction (for exampleto reduce dust and noise), the pattern of vegetation clearance, selection of different pollutionabatement treatments, and the layout of infrastructure. Thirdly, where disturbance to biodiversityand ecosystem services has occurred, remediation may be possible in the form of rehabilitationand restoration. This may include vegetation rehabilitation (erosion control and facilitated naturalregeneration of ecosystems); restoration of the original habitat type (where appropriatetechniques are known or can be developed); and restoration of major ecosystem services, suchas facilitated watercourse flow with dewatering water in the case of mining operations.


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Mitigations should be designed or reviewed by appropriate biological and engineeringspecialists to ensure that mitigation has been optimized in accordance with the hierarchy. Forimpacts on biodiversity, the mitigation hierarchy includes the use of biodiversity offsets. Offsetsare not a client requirement for mitigation of potential impacts on ecosystem services.Paragraphs G30 through G33 provides guidance on biodiversity offsets.

G19. As stated in paragraph 6 of Performance Standard 6, in natural and critical habitatsclients should consider project-related impacts across the potentially affected landscape orseascape. The term landscape/seascape does not necessarily correspond to any one pre-defined unit of geographical space. It is a broadly defined term that might correspond to anecoregion, a biome, or any other ecologically significant unit of space on a regional level (i.e.,not site-specific). In some cases the landscape/seascape unit might be defined in terms of anadministrative or territorial boundary or a particular zoned area within international waters. Ineither case, the intention of the requirement is that clients identify project-related impacts,especially those on habitat connectivity and/or on downstream catchment areas, outside the

boundaries of the project site. Landscape / seascape analysis is a fundamental step indetermining ecologically-appropriate mitigation options that align with broader conservationefforts in the region. Such analyses support decision-making as to whether impacts should beavoided or are appropriate for offsets, and support the selection and design of a mitigationstrategy, including offset mitigation, that contributes to regional-level conservation goals ratherthan on site-level impacts only. Landscape /seascape analysis does not necessarily imply in-field data collection outside the project site. Desktop assessment, including mapping exercisesand consultation with regional experts, would help the client understand their project site in thecontext of the greater landscape/seascape. This type of analysis is especially important in theprevention of the degradation and fragmentation of natural habitat, especially from cumulativeimpacts.

G20. Large-scale and complex projects that involve significant impacts across multiple

biodiversity values and ecosystem services would benefit from applying an ecosystemsapproach to understanding the environment in which the project is located. As described by theConvention on Biological Diversity (CBD), the Ecosystem Approach is a strategy for theintegrated management of land, water and living resources that promotes conservation andsustainable use in an equitable way. The CBD defines 'ecosystem' as a dynamic complex ofplant, animal and micro-organism communities and their non-living environment interacting as afunctional unit. This definition does not specify any particular spatial unit or scale. Instead, theCBD advises that scale of analysis and action should be determined by the problem beingaddressed. This approach is similar to the IFCs approach to defining habitats (see paragraphG27).

G21. The ecosystem approach focuses on the relationship between components andprocesses in an ecosystem. It acknowledges that the many components of biodiversity control

the stores and flows of energy, water and nutrients within ecosystems, which provide resistanceto major perturbations. Knowledge of ecosystem structure and function would contribute to anunderstanding of ecosystem resilience and the effects to biodiversity loss and habitatfragmentation. The ecosystem approach acknowledges that functional biodiversity inecosystems provides many goods and services of economic and social importance (i.e.,ecosystem services). This approach has the potential to add considerably more depth to thestandard ESIA, which often analyzes impacts in isolation from one another and prescribesmitigation measures in the same manner. IFC encourages its clients to consider implementingintegrated and innovative approaches to assessing the socio-ecological environment,


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especially for large-scale and complex projects with significant unique, multiple and/or diverseenvironmental impacts.

G22. An essential element in the ecosystems approach, and a client requirement defined inparagraph 7 of Performance Standard 6, is the adoption of adaptive management practices.The premise of adaptive management is that ecosystem management must involve a learningprocess, which helps to adapt methodologies and practices to the ways in which these systemsare being managed and monitored. For the private sector, adaptive management is a conceptthat should be rooted in the clients environmental and social management system (ESMS). Asis often the case in determining the risks and impacts on biodiversity and ecosystem services,data gaps exist even after a sometimes lengthy data collection period or due to changingconditions. The clients mitigation strategy is designed based on what is known at the time ofcompletion of the ESIA or additional studies. While the clients mitigation strategy should bedesigned to the best of the clients abilities, flexibility should also be built in the clients ESMS sothat the clients mitigation and management approach can be adapted based on new findings.

New findings may arise from the clients monitoring program or from independent sources. Ineither way, the client has the responsibility to update their approach to continually improve uponthe existing management of biodiversity, ecosystem services and living natural resources.

G23. Clients are responsible for identifying qualified experts able to identify biodiversity valuesand ecosystem services and propose appropriate mitigation options. The range of qualifiedexperts is large, and the necessary skill-sets for the job at hand will vary. For example,ecologists with regionally specific experience, biologists with expertise in a specific taxon, andevolutionary or landscape biologists might be suitable for the identification of certain biodiversityvalues. Biodiversity management specialists who are familiar with the industries (e.g., for theextractive industries versus forestry and other agribusiness and aquaculture specialists) willhowever bring a different skill-set in terms of identifying mitigation options in line with currentgood international practices in the sector. A single project might need to work with various

specialists to adequately characterize its environment and a mitigation strategy. Ecosystemservices assessment may require any number of specialists, depending on the service inquestion (e.g., soil and erosion control specialists, geologists and hydrologists, agronomists,rangeland ecologists, specialists in the economic valuation of natural resources, resettlementand social specialists with expertise in natural resource-based livelihood, etc). In either case,the client will be expected to demonstrate the competency of the selected specialists involved inbiodiversity and ecosystem services assessments.

G24. For projects located in critical habitat or legally protected/recognized areas, clients mustensure that qualified external experts with regional experience are involved in the biodiversityand/or critical habitat assessment. If habitat is critical due to the presence of CriticallyEndangered and Endangered species, recognized species-specialists, including individualsfrom IUCN Species Survival Commission (SSC) Specialist Groups, where applicable, must be

involved. In areas of critical habitat, clients should consider establishing a mechanism topromote the external review of the projects risks and impacts identification process andproposed mitigation strategy. This is especially relevant where uncertainty is high, wherepotential impacts are complex and/or controversial and/or where no precedent exists forproposed mitigations (such as some types of offsets). Such a mechanism would also promotethe sharing of good international practice between projects and improve transparency indecision-making.


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Protection and Conservation of Biodiversity

9. Habitat is defined as a terrestrial, freshwater, or marine geographical unit or an airway

passage that supports assemblages of living organisms and their interactions with the non-

living environment. For the purposes of implementation of this Performance Standard,

habitats are divided into modified, natural, and critical. Critical habitats may be a subset of

both modified and natural habitats that deserve particular attention.

General

10. For the protection and conservation of biodiversity, the mitigation hierarchy includes

biodiversity offsets.4

A biodiversity offset should be designed and implemented to achieve

measurable conservation outcomes that can reasonably be expected to result in no net loss

and preferably a net gain of biodiversity; a net gain is required in critical habitats. The

design of a biodiversity offset must adhere to the like-for-like or better principle5

______________________________

and must

be carried out in alignment with best available information and current practices. When a

client is considering the development of an offset as part of the mitigation strategy,competent experts with knowledge in offset design and implementation should be involved.

4Biodiversity offsets are measurable conservation outcomes resulting from actions designed to compensate for

significant adverse biodiversity impacts arising from project development and persisting after appropriateavoidance, minimization and restoration measures have been taken.5

The principle of like-for-like or better indicates that biodiversity offsets must be designed to conserve thesame biodiversity values that are being impacted by the project (an in-kind offset). In certain situations,however, the biodiversity to be impacted by the project may be neither a national nor a local priority, and theremay be other areas of biodiversity that are a higher priority for conservation and sustainable use and underimminent threat or need of protection or effective management. In these situations, it may be appropriate toconsider an out-of-kind offset that involves trading up (i.e., where the offset targets biodiversity of higherpriority than that affected by the project).

G25. In developing requirements for biodiversity, IFC is guided by and supports the

implementation of applicable international law and conventions including: The Convention on Biological Diversity, 1992 (CBD)

The Convention on the Conservation of Migratory Species of Wild Animals, 1979(Bonn Convention).

The Convention on International Trade in Endangered Species of Wild Flora andFauna, 1975 (CITES)

The Convention on Wetlands of International Importance Especially as WaterfowlHabitat, 1991 (Ramsar Convention).

The World Heritage Convention, 1972

G26. A summary of good practice guidelines on integrating biodiversity into impact

assessment and on biodiversity management is provided below. Others are provided in theReferences section at the end of this document. Clients should make use of such referencedocuments when biodiversity is a key focus of the projects environmental assessment andmanagement. The literature on this topic is vast and these references are indicative only.Extensive regional and sector-specific2

2For sector specific biodiversity issues see IFCs Guide to Biodiversity for the Private Sector

guidance and case studies are widely available.

http://www.ifc.org/ifcext/sustainability.nsf/Content/BiodiversityGuide_Sectors Lessons from experience and case studies are alsoprovided via this website.
http://www.ifc.org/ifcext/sustainability.nsf/Content/BiodiversityGuide_Sectorshttp://www.ifc.org/ifcext/sustainability.nsf/Content/BiodiversityGuide_Sectorshttp://www.ifc.org/ifcext/sustainability.nsf/Content/BiodiversityGuide_Sectors


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Academic journals dedicated to environmental impact assessment are another rich source ofinformation. The resources below were selected because their collective content covers a broadrange of conceptual and practical approaches for the integration of biodiversity-related issuesinto the impact assessment process. Select resources include the following:

International Association for Impact Assessment (IAIA), Principles on Biodiversity inImpact Assessment, IAIA Special Publication Series No. 3 (2005).

IAIA guidance, best practices and manuals produced as part of IAIAs CapacityBuilding for Biodiversity in Impact Assessment Project (2005-2009).

Convention on Biological Diversity, Decision VIII/28 Impact Assessment: VoluntaryGuidelines on Biodiversity-Inclusive Impact Assessment (2006).

Secretariat of the Convention on Biological Diversity, Netherlands Commission forEnvironmental Assessment, Biodiversity in Impact Assessment, BackgroundDocument to CBD Decision VIII/28: Voluntary Guidelines on Biodiversity-InclusiveImpact Assessment, CBD Technical Series NO. 26 (2006).

Addis Ababa Principles and Guidelines for the Sustainable Use of Biodiversity CBDGuidelines published by the Secretariat of the Convention on Biological Diversity(2004)

Various products of The Energy and Biodiversity Initiative (2003 & 2004), including:

- Integrating Biodiversity into Environmental Management Systems

- Integrating Biodiversity into Environmental and Social Impact AssessmentProcesses

- Framework for Integrating Biodiversity into the Site Selection Process

- Biodiversity Indicators for Monitoring Impacts and Conservation Actions

- Good Practice in the Prevention and Mitigation of Primary and SecondaryBiodiversity Impacts.

A Guide to Biodiversity for the Private Sector: Why Biodiversity Matters and Why itCreates Business Value (online tool), International Finance Corporation;

http://www.ifc.org/biodiversityguide

The World Bank, Biodiversity and Environmental Assessment Toolkit (2000).

Institute of Ecology and Environmental Management Guidelines for EcologicalImpact Assessment (2006).

Business and Biodiversity Offsets Programme (BBOP), The Relationship BetweenBiodiversity Offsets and Impact Assessment: A BBOP Resource Paper (2009).

Conservation Internationals online Rapid Assessment Program (RAP) Tool Kit,including the guide, To RAP or not to RAP.

R. Slootweg, A. Rajvanshi, V. Manthur and A. Kolhoff, Biodiversity in EnvironmentalAssessment: Enhancing Ecosystem Services for Human Well-Being, CambridgeUniversity Press (2009).

J. Treweek, Ecological Impact Assessment, Blackwell Science Ltd (1999).

Convention on the Conservation of Migratory Species of Wild Animals, Resolution7.2 Impact Assessment and Migratory Species(2002).

Ramsar Convention Secretariat,Ramsar Handbooks for the Wise Use of Wetlands,Volume 13. Impact Assessment (2007).


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Ramsar Convention on Wetlands, Resolution X.17 Environmental ImpactAssessment and Strategic Environmental Assessment: Updated Scientific andTechnical Guidance (2008).

Biodiversity Management Tools and Methods from the online Information Hub of theBusiness and Biodiversity Campaign, including the Corporate BiodiversityManagement Handbook: A Guide for Practical Implementation (June 2010).

Earthwatch Institute (Europe), International Union for the Conservation of Nature andWorld Business Council on Sustainable Development, Business and Biodiversity: AHandbook for Corporate Action and A Companion Volume to Business andBiodiversity: A Handbook for Corporate Action (2002).

G27. Paragraph 9 of Performance Standard 6 purposely provides a broad definition ofhabitats as geographical units (includes marine and freshwater aquatic areas as well as airwaypassages), which is clearly a departure from a classic ecological definition of habitat (i.e., theplace or type of site where an organism or population naturally occurs). Modified, natural andcritical habitat refers to the biodiversity value of the area as determined by species, ecosystemsand ecological processes. IFC did not opt to substitute habitat with ecosystems in the 2011revision of Performance Standard 6 for three principal reasons: (i) project areas may span morethan one ecosystem and the current definition of habitat allows for this; (ii) the ecosystemlanguage does not lend itself well to communicating with clients non-specialist staff andconsultants (e.g., project operators); (iii) since the inception of the Performance Standards in2006, projects have been discussed in the vernacular as being in or out of modified, natural orcritical habitat, which has effectively included other biodiversity values in addition to species.Users of Performance Standard 6 have familiarized themselves with this term, and it wasdecided that it was practical not to modify this terminology after 5 years of operational use withan extensive range of projects adopting it.

G28. In practice, natural and modified habitats exist on a continuum that ranges from largelyuntouched, pristine natural habitats to intensively managed modified habitats. In reality, projectsites will often be located amongst a mosaic of habitats with varying levels of anthropogenicdisturbance. Clients are responsible for delineating the project site as best as possible in termsof modified and natural habitat. This determination is made based on the level of human-induced disturbance (e.g., presence of invasive species, level of pollution, extent of habitatfragmentation, viability of existing naturally-occurring species assemblages, resemblance ofexisting ecosystem functionality and structure to historical conditions, degree of other types ofhabitat degradation etc.) and the biodiversity values of the site (e.g., threatened species andecosystems, culturally important biodiversity features, ecological processes necessary formaintaining nearby critical habitats). When delineating modified and natural habitats clientsshould not focus on the project site in isolation. The level of anthropogenic impact should bedetermined with respect to the greater landscape/seascape in which the project is located. In

other words, is the project site (or parts of it) located in a disturbed area amidst an otherwiseintact landscape? Is the project site (or parts of it) an island of natural habitat within a heavilydisturbed or managed landscape? Is the project site located nearby areas of high biodiversityvalue (e.g., wildlife refuges, corridors or protected areas)? Or, is the project site located in amosaic of modified and natural habitats that contain various degrees of biodiversity values ofimportance to conservation? The client should be prepared to define their project site in theseterms as part of the risks and impact identification process.


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G29. As described in paragraphs G14 and G15, the client is responsible for establishing thebiodiversity values associated with the project site. Both natural and modified habitats maycontain high biodiversity values, thereby qualifying as critical habitat (see paragraph 16 ofPerformance Standard 6 for relevant high biodiversity values). Performance Standard 6 doesnot limit its definition of critical habitat to critical natural habitat. An area may just as well becritical modified habitat. The extent of human-induced modification of the habitat is thereforenot necessarily an indicator of its biodiversity value or the presence of critical habitat.

G30. Biodiversity offsets are an important part of mitigation in natural and critical habitats. Abiodiversity offset serves as a risk management tool for developers whose projects will have animpact on biodiversity. It involves an agreed set of conservation actions, which sets out howquantified biodiversity losses caused by the development project will be balanced by equivalentbiodiversity gains. The actions for achieving biodiversity gains must be designed to deliver long-term on the ground conservation outcomes (as opposed to mere training or capacity building),usually at one or several offset sites located in the vicinity of the project site but generally not

within its boundaries. The outcomes need to demonstrate no net loss in biodiversity (or a netgain in critical habitats) relative to the project impacts and must be over and above existingconservation interventions.

G31. Actions to deliver no net loss/net gain conservation outcomes for a specific developmentproject will include one or several of the three following interventions: 1) positive conservationmanagement interventions, such as the restoration, enhancement, or arrested degradation ofbiodiversity components at suitable offset sites; 2) where this has been demonstrated asfeasible, the creation or reconstruction of an ecologically equivalent ecosystem and associatedbiodiversity values; 3) averted risk interventions which result in on-the-ground protection ofbiodiversity in an area demonstrated to be under threat of imminent or projected loss of thatbiodiversity (due to factors other than the development project in question). In addition, sinceno net loss embraces socioeconomic and cultural uses of biodiversity, many biodiversity

offsets also include: 4) the provision of compensation packages for Affected Communitiesimpacted by the development project and offset.

G32. Key biodiversity offset design steps and elements include: 1) Ensuring that thedevelopment project meets all applicable laws, regulations and policies pertaining to biodiversityoffsets; 2) Establishing an effective process for Affected Communities to participate in designingand implementing the biodiversity offset; 3) Describing the projects scope and predictedimpacts on biodiversity, applying and documenting the steps in mitigation hierarchy to limitthose impacts, and using defensible metrics to calculate the residual impacts that need to beoffset; 4) Within the context of the relevant landscape/seascape, identifying suitableopportunities (potential offset sites, activities and mechanisms) for achieving like-for-like orbetter biodiversity gains to balance the losses due to the development; 5) Quantifying (usingthe same metrics as those used in the loss calculations) the required biodiversity gains to

achieve a no net loss or net gain outcome (including adequate compensation to AffectedCommunities), and selecting the preferred locations and activities to provide these gains; and 6)Setting out the final biodiversity loss / gain account, and the specific offset activities andlocations in a biodiversity offset management plan to guide implementation. A good biodiversityoffset design will meet the principles as established by the Business and Biodiversity OffsetProgram (BBOP).

G33. Important elements for the successful implementation of a biodiversity offset, and forsecuring long term conservation outcomes, include: clarifying the roles and responsibilities of all


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stakeholders; setting up the legal arrangements to secure the biodiversity offset site/s;developing a comprehensive biodiversity offset management plan; establishing appropriatefinancial mechanisms, such as a conservation trust fund or non-fund options, to ensuresufficient and sustainable financial flows to implement the offset, continuing after the developerhas ceased to operate and as long as the impact endures; and setting up a system formonitoring, evaluation and adaptive management for the implementation of the conservationoutcomes required for the offset.

G34. Depending on the nature and scale of the project, clients should consider identifyingadditional opportunities to enhance habitat and protect and conserve biodiversity as part of theiroperations. While net positive gains are a requirement in critical habitat (see paragraph 17 ofPerformance Standard 6), clients should also endeavor to implement additional measures,beyond the scope of compliance, in modified and natural habitats. For example, the restorationof relevant biodiversity values or other habitat enhancement measures, such as the removal ofinvasive species, in modified habitat. An example in natural habitats might be the development

of strategic frameworks with other companies and/or with the government through the design ofjoint mitigation measures. Clients might also opt to catalyze funding from third-party financiersfor appropriate and integrated land use planning exercises by relevant government structures orpartner in research programs with local universities. Such initiatives would need to be identifiedwith the assistance of qualified specialists. Clients developing projects in all habitats areencouraged to demonstrate their intentions and willingness to be good stewards of theenvironments in which they live through these and other innovative approaches.

G35. Certain sectors, most notably agriculture and forestry, refer to High Conservation Value(HCV) areas when determining the conservation value of a land area. The HCV ResourceNetwork, an internationally-recognized group that includes environmental and social NGOs,international development agencies, timber and forest product certifiers, suppliers and buyers,and forest managers, provides information and support on the evolving usage of HCV to ensure

a consistent approach. The Network recognizes six types of HCV types, which are based onboth biodiversity and ecosystem services. Because intrinsic biodiversity values of an area andhuman value (or anthropogenic value) in terms of ecosystem services are treated separately inPerformance Standard 6 (see paragraph G3 for further explanation), HCV areas do not directlycorrespond with IFCs definitions for modified, natural and critical habitat. For conveniencehowever, each HCV type is spelt out below along with guidance on its potentially correspondingIFC designation:

The Relation between High Conservation Value Types and Performance Standard 6

HCV Type Performance Standards

HCV 1: Areas containing globally, regionally or

nationally significant concentrations of biodiversityvalues

Critical habitat in most cases. See paragraphs

G54 through G109 for further guidance.

HCV 1.1: Protected areas

HCV 1.2: Rare, threatened or endangeredspecies

HCV 1.3: Endemic species

HCV 1.4: Seasonal concentrations of species

HCV 2: Globally, regionally or nationally significantlarge landscape-level areas where viable

Natural habitat, and may be critical habitat ifareas contain high biodiversity values as


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HCV Type Performance Standards

populations of most if not all naturally occurring

species exist in natural patterns of distribution andabundance.

identified in paragraph 16 of Performance

Standard 6.

HCV 3: Areas that are in or contain rarethreatened or endangered ecosystems

Critical habitat

HCV 4: Areas that provide basic ecosystem

services in critical situations Priority ecosystem services as defined byparagraph 24 of Performance Standard 6. See

paragraphs G123 through G137 for furtherguidance.

HCV 4.1: Areas critical to water catchments

HCV 4.2: Areas critical to erosion control

HCV 4.3: Areas providing critical barriers todestructive fire

HCV 5: Areas fundamental to meeting basic

needs of local communities

Priority ecosystem services as defined byparagraph 24 of Performance Standard 6. Client

requirements defined in Performance Standard 5

are also applicable. See paragraphs G123through G137 for further guidance.

HCV 6: Aras critical to local communitiestraditional cultural identify (areas of cultural,ecological, economic or religious significance

identified in cooperation with such localcommunities.

Priority ecosystem services as defined byparagraph 24 of Performance Standard 6. Clientrequirements defined in Performance Standard 8

are also applicable. See paragraphs G120through G134 for further guidance.

G36. Good practice guidance documents for High Conservation Value assessments areprovided in the Reference section at the end of this Guidance Note.

11. Modified habitats are areas that may contain a large proportion of plant and/or animalspecies of non-native origin, and/or where human activity has substantially modified an

areas primary ecological functions and species compositions.

Modified Habitat

6Modified habitats may

include areas managed for agriculture, forest plantations, reclaimed7

coastal zones, and

reclaimed wetlands.

12. This Performance Standard will apply in areas of modified habitat that include

biodiversity of significance to conservation as identified as part of the risks and impacts

identification process described in Performance Standard 1. In these cases, the client

should minimize impacts on such biodiversity and implement mitigation measures as

appropriate._____________________6This excludes habitat that has been converted in ant icipation of the project.7

Reclamation is the process of creating new land from sea or other aquatic areas for productive use.

G37. Definitions for what constitutes a modified or a degraded area vary dramatically.Given the range of habitats in which IFC invests, there is no prescriptive set of metrics fordetermining if an area is to be considered modified or not. The client should determine the levelto which human-derived activities (excluding traditional uses by indigenous peoples) havemodified the ecological structure and functions of the habitat and its naturally-occurringbiodiversity. IFC recognizes that the term naturally-occurring is in itself nebulous, as someecosystems, such as savanna landscapes that have evolved through the use of human-induced


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fires, calls into question what could be considered natural or not. Again, no formula exists todetermine a priori if a habitats disturbance regime and species assemblages could beconsidered naturally-occurring. Decision-making of this type will vary from place to place andshould be informed by competent specialists.

G38. The presence of modified habitat will trigger Performance Standard 6 only whenbiodiversity of significance to conservation is identified as part of the risks and impactsidentification process (paragraph 12 of Performance Standard 6). The reason for adding thiscaveat is two-fold. Firstly, Performance Standard 6 is designed to protect and conservebiodiversity (amongst the other objectives listed). As almost any area could be consideredmodified, without this specification the Performance Standard would have the potential to beconsidered applicable for almost any project financed by IFC regardless of the biodiversity valueof that area. The caveat in paragraph 12, therefore, prevents the Performance Standard frombeing unnecessarily defined as applicable during the due diligence process and thereforefocuses its intention. Another option was to have the Performance Standard applicable for all

projects in modified habitats except projects in brownfield, industrial and urban sites (i.e.,exclusion zones for the applicability of the Performance Standard). However, excluding suchareas would prevent the Performance Standard from being defined as applicable in instanceswhere remnant biodiversity values were present at such sites (for example peregrine falconsresiding in urban areas or remnant riparian areas in brownfield sites). The existing languageavoids such exclusion zones and does focus the clients responsibilities on biodiversityprotection and conservation.

G39. Overall however, IFC clients should endeavor to maximize the locations of projectsfacilities and infrastructure on modified habitat rather than on natural habitat, and demonstratethis effort through the alternative analysis conducted during the risks and impacts identificationprocess. The 2011 version of Performance Standard 6 was revised to make this clearer (e.g.,paragraph 12 and the first bullet of paragraph 14). As part of the risks and impacts identification

process, the client is responsible for determining if there are biodiversity attributes associatedwith the modified habitat that might be of significance to conservation. Of significance toconservation is a general term meaning to capture biodiversity attributes that might haveintrinsic value as determined by scientific consensus (e.g., riparian areas, umbrella species) orcultural value (fauna or flora species of significance to local communities). Some modifiedhabitats might contain high biodiversity values that trigger a critical habitat designation, such asancient hedges in European agricultural landscapes or tembawang rubber plantations inKalimantan. In either case, biodiversity values shall be assigned based on scientific merit orvalues as attributed by relevant stakeholders such as local communities, government authoritiesand NGOs.

G40. In managed landscapes such as agricultural and forestry areas, clients will beresponsible for conducting a High Conservation Value assessment, which would identify

biodiversity values in addition to importance ecosystem services. This requirement is defined inparagraph 30 of Performance Standard 6.

G41. Paragraph 12 requires that clients minimize impact to identified biodiversity values andimplement mitigation measures as appropriate. Mitigation measures vary considerably and thestringency of the mitigation will depend on the biodiversity value in question. Mitigationmeasures might take the form of fencing or other physical controls, erosion and sedimentcontrol measures, effluents treatment, light and noise reduction, habitat restoration. Mitigationshould aim to maintain relevant biodiversity values in question.


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G42. Footnote 6 calls in the question of for how much time does habitat degradation have tooccur before it is considered a modified habitat? In other words, if the area was substantiallymodified only in the last year, would IFC consider it a modified habitat? Habitat will beconsidered modified if it has existed in such condition for an extended period and is nototherwise likely to be returned to natural conditions. Habitat will not be considered modified ifthe clients own activities for the project proposed for IFC financing, caused a natural habitat tobe in such a state. A natural area only recently impacted by unsustainable landuse practices bythird-parties would also not result in a modified habitat designation. Natural disturbances suchas forest fire or tornado affecting a natural habitat also do not comprise acceptable conditionsfor the modified habitat designation. Also relevant to the Sustainable Management of LivingNatural Resources section of Performance Standard 6, IFC will respect cut-off dates for theconversion of natural habitat as established by internationally-recognized voluntary standards,such as the Forest Stewardship Council (FSC) and the Round Table for Sustainable Palm Oil(RSPO).

13. Natural habitats are areas composed of viable assemblages of plant and/or animal

species of largely native origin, and/or where human activity has not essentially modified an

areas primary ecological functions and species compositions.

Natural Habitat

14. The client will not significantly convert or degrade8

natural habitats, unless the

following canbe demonstrated:

No other viable alternatives within the region exist for development of the project on

modified habitat;

Stakeholder consultation has established the views of stakeholders, including Affected

Communities, with respect to the extent of conversion and degradation

Adequate conservation measures will be implemented within the project site, which

may include the identification and protection of set-asides

9

10

Any conversion or degradation is mitigated according to the mitigation hierarchy.

; and

15. In the areas of natural habitat, mitigation measures will be designed to achieve no net

loss of biodiversity where feasible, and may include a combination of actions, such as:

Habitat restoration during operations and post-operation restoration of habitats

Implementation of biodiversity offsets

Investment in a relevant and credible offset banking scheme

Measures to minimize habitat fragmentation, such as biological corridors

_____________________8

Significant conversion or degradation is (i) the elimination or severe diminution of the integrity of a habitatcaused by a major, long-term change in land or water use; or (ii) a modification that substantially minimizes thehabitats ability to maintain viable populations of its native species.9

Conducted as part of the stakeholder engagement and consultation process, as described in PerformanceStandard 1.10

Set-asides are land areas within the project site, or areas over which the client has management control, thatare excluded from development and are targeted for the implementation of conservation enhancementmeasures. Set-asides will likely contain biodiversity attributes and/or provide ecosystem services of significanceat the local, national and/or regional level. Set-asides should consist of areas of High Conservation Value (HCV)as identified using internationally recognized guidelines.

G43. As described in paragraph G37 in the section on modified habitats, there are noprescribed set of metrics available to identify what constitutes a natural habitat. The


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determination of natural habitat will be made using credible scientific analysis and best availableinformation. An assessment and comparison of current and historic conditions should beconducted, and local knowledge and experience should be utilized. Natural habitats are not tobe interpreted as untouched or pristine habitats. It is assumed that the majority of habitatsdesignated as natural will indeed have undergone some degree of historic or recentanthropogenic impact. The question is the degree of impact. If the habitat still largely containsthe principal characteristic and key elements of its native ecosystem(s), such as complexity,structure and diversity, than it should be considered a natural habitat regardless of the presenceof some invasive species, secondary forest or other human-induced alteration.

G44. Significant conversion or degradation of natural habitat will not take place unless theclient is able to demonstrate that no viable alternatives exist for that project on modified habitat(within the region). The first bullet point in paragraph 14 is especially relevant to agribusinessprojects where it might be feasible in some cases to site the project on heavily modified anddegraded lands rather than on areas that have recently been deforested areas or on other forms

of natural habitat (e.g., tropical savanna). In these cases, a well-developed locations alternativeanalysis should be conducted to explore potential viable options for development on modifiedhabitat. The term viable includes, but is not limited to, technically and financially feasiblealternatives. This analysis will in most cases be in addition to the alternative analysis includedas part of the risks and impacts identification process.

G45. If a project has the potential to result in significant conversion or degradation of naturalhabitats, relevant stakeholder groups must be engaged as part of a rigorous, fair and balancedmulti-stakeholder dialogue (see the second bullet in paragraph 14). Client requirements forstakeholder engagement are described in paragraphs 24 through 30 of Performance Standard 1and related guidance in can be found in paragraphs 100 through 110 of Guidance Note 1.Stakeholders should specifically be engaged with respect to the (i) the extent of conversion anddegradation; (ii) the alternatives analyses; (iii) biodiversity values associated with the natural

habitat; (iv) options for mitigation, including set-asides and biodiversity offsets; (v) identificationof additional opportunities for biodiversity conservation (see paragraph G34). Clients must keepa record of such stakeholder engagement and consultation activities and demonstrate howviewpoints have been reviewed and integrated into the project design. Stakeholders shouldinclude a diverse set of opinions, including scientific and technical experts, members of thenational and international conservation NGO community in addition to affected communities.

G46. The third bullet in paragraph 14 describes the client requirements to conserve theremaining biodiversity values within the project area, which could take the form of set-asides,amongst other measures. Set-asides are land areas, usually within the project site or in otheradjacent areas over which the client has management control, that are excluded fromdevelopment and targeted for the implementation of conservation enhancement measures(footnote 10). Set-asides are a common form of mitigation in the agribusiness and forestry

sectors. The terminology is less familiar to mining and oil & gas operators or other industrial(e.g., cement manufacturing and construction material extraction) sectors and to housing andinfrastructure development sectors. Set-asides may also be areas of High Conservation Value(HCV) areas (see paragraph G35 for a description of HCV areas). The set-aside terminologyhas been incorporated in the 2011 version of Performance Standard 6 to be more consistentwith some forms of governmental legislation and with the many mature and evolvinginternational voluntary standards, such as the Forest Stewardship Council (FSC) and theRoundtable for Sustainable Palm Oil (RSPO). Although other industrial / infrastructuredevelopment sectors do not typically subscribe to the set-aside terminology, their practice is


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essentially the same in that areas of higher biodiversity value within the project site orconcession area are avoided and set aside for conservation purposes.

G47. Set-asides and biodiversity offsets are related, but different concepts. Biodiversity offsetsare usually more robust than set-asides as they should be designed to compensate forsignificant residual impacts, and must demonstrate no net loss, and preferably net positive gainsof biodiversity. Set-asides are the equivalent to avoidance measures along the mitigationhierarchy and are sometimes prescribed by the government to be a certain percentage (e.g., 20percent) of the land area to be converted. In order to design a biodiversity offset however,practitioners would need to carry out an assessment to determine that the loss of biodiversityon-site is compensated for with the gains in biodiversity at the offset site. See paragraph 10 inPerformance Standard 6 and related guidance on offsets as provided in paragraphs G30through G33.

G48. General guidance on the mitigation hierarchy, as mentioned in the fourth bullet of

paragraph 14 of Performance Standard 6, is provided in paragraph G18. With respect to on-sitemitigation, the types of possible measures are numerous and are often best identified byenvironmental engineers, erosion control and reinstatement specialists in addition to biodiversitymanagement specialists. Overall, clients should seek to minimize habitat degradation byadhering to a footprint minimization principle. Habitat degradation is one of the most significantpotential direct threats to biodiversity associated with projects involving significant landdevelopment, including mining, plantations or certain energy and industrial projects (e.g., oil andgas developments, construction material extraction, for example in cement manufacturing).Habitat alteration and degradation may occur during different stages of projects: while oil andgas projects may have the greatest potential for temporary or permanent alteration of terrestrialand aquatic habitats occurring during construction, mining and quarrying projects will have thegreatest potential to alter such habitats during the operational activities. Additionally, explorationactivities in both the mining and oil and gas sectors often require the development of access

routes, transportation corridors, seismic tracks, temporary facilities (such as storage materialstorage yards, workshops, airstrips and helipads, equipment staging areas), constructionmaterial extraction sites (including borrow pits and quarries), and temporary camps to houseworkers which may all result in varying degrees of land-clearing and population in-migration.The client should adopt the principle of footprint minimization throughout the project lifecycle,and develop and implement appropriate ecological restoration strategies, including physicalreinstatement (or restoration) and revegetation (or biorestoration) planning and methods, at theearliest possible stage in the project planning. The basic principles should include: (i) protectionof topsoil and restoration of vegetation cover as quickly as possible after construction ordisturbance; (ii) reestablishment of original habitat retuning the project footprints to theirpreconstruction / pre-disturbance conditions; (iii) minimization measures including managementcontrols and workforce education; and, (iv) where native species (especially protected species)cannot be retained in situ, consideration of conservation techniques such as translocation /

relocation. On-site mitigation measures should be included in a Biodiversity Management orEcological Management Plan (see Annex A for guidance).

G49. As described in paragraph 15 of Performance Standard 6, in all areas of natural habitat,regardless of the prospects of significant conversion and degradation, the client should designmitigation measures to achieve no net loss of biodiversity, as feasible, through the applicationof various on-site and offset mitigation measures. A variety of methods exist to calculate loss ofidentified biodiversity values and to quantify residual losses. Such methods would then need tobe paired with an assessment to determine if losses could be compensated by gains made


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through mitigation measures, including offset mitigation. Appropriate methods and metrics willvary from site to site, and the client will need to retain competent specialists to demonstrate thatno net loss could be achieved.

G50. The implementation of biodiversity offsets is one important means by which the clientmay obtain no net loss of biodiversity. Guidance on biodiversity offsets is provided inparagraphs G30 through G33. In some cases, it might be more effective for the client to investin existing offset or conservation banking schemes. IFC would expect the client to demonstratethe credibility and long-term viability of such initiatives.

G51. Especially relevant, but not limited to, the extractive industries, clients should establish areclamation funding mechanism for projects located in natural habitats and characterized bypotentially significant impacts due to their footprint, the footprint of their associated facilities, andrelated land conversion. The costs associated with reclamation and/or with post-decommissioning activities should be included in business feasibility analyses during the

planning and design stages. Minimum considerations should include the availability of allnecessary funds, by appropriate financial instruments, to cover the cost of reclamation andproject closure at any stage in the project's lifetime, including provision for early, or temporaryreclamation or closure. Reclamation funding mechanisms are well-established in the miningindustry and are described in Section 1.4 of the IFC EHS Guidelines on Mining. A similarmechanism should be established for biodiversity offsets as discussed in paragraph G33.

G52. The fourth bullet of paragraph 15 of Performance Standard 6 places emphasis on theclients consideration of mitigation measures aimed to reduce habitat fragmentation. Habitatfragmentation is one of the most pervasive impacts to biodiversity in natural habitats and oftenleads to long-term habitat degradation due to edge effects, increased third-party access intopreviously undisturbed areas, and sometimes genetic isolation of fauna and flora populations.When a project is located in an expansive intact wilderness, the client should seek to define

mitigation measures to limit fragmentation such as the design of wildlife corridors or othermeasures to help ensure connectivity between habitats or existing meta-populations. Measuresto reduce habitat fragmentation tie together with the client requirement in paragraph 6 ofPerformance Standard 6 on the landscape/seascape level analysis (see paragraph G19). Suchan analysis would also likely inform the client on potential measures that would help reduce thefragmentation of landscapes. Indirect impacts associated with induced third-party access can beespecially detrimental to biodiversity and are related to the topic of habitat fragmentation.Clients developing linear infrastructures and/or access roads should, as a matter of priority,develop strict means to control third-party use of such areas. Mitigation measures should befully discussed with both project construction and operations managers to ensure a coordinatedand long-term approach. The government should be made fully aware of project commitmentsas they may be interested in maintaining project access routes for public use after theconstruction phase and/or project decommissioning. Mitigation measures should be developed

and implemented through an Induced Access Management Plan.

G53. Biodiversity and ecological related mitigation measures should be captured in the clientsEnvironmental and Social Management System (ESMS). Where biodiversity offsets are part ofthe mitigation strategy or where other measures have not been fully incorporated into theclients ESMS, a Biodiversity Action Plan should be developed. See Annex A for furtherguidance.


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16. Critical habitats are areas with high biodiversity value, including (i) habitat of significant

importance to Critically Endangered and/or Endangered

Critical Habitat

11

_____________________________

species; (ii) habitat of significant

importance to endemic and/or restricted-range species; (iii) habitat of significant importance

to globally significant concentrations of migratory species and/or congregatory species; (iv)

regionally significant and/or highly threatened or unique ecosystems; and/or (v) areas which

are associated with key evolutionary processes.

11

As listed on the International Union for the Conservation of Nature (IUCN) Red List of Threatened Species.The determination of critical habitat based on other listings is as follows: (i) If the species is listed nationally /regionally as critically endangered or endangered, in countries that have adhered to IUCN guidance, the criticalhabitat determination will be made on a project by project basis in consultation with recognized experts; and (ii)In instances where nationally or regionally listed species categorizations do not correspond well to those of theIUCN (e.g., some countries more generally list species as protected or restricted), an assessment will beconducted to determine the rationale and purpose of the listing. In this case, the critical habitat determinationwill be based on such an assessment.

Critical Habitat Definition

G54. The critical habitat definition presented in paragraph 16 of Performance Standard 6 is inline with criteria captured from a wide range of definitions of priority habitat for biodiversityconservation in use by the conservation community and contained in governmental legislationand regulations on nature conservation. Critical habitats are areas of high biodiversity value thatinclude at least one or more of the five values specified in paragraph 16 of PerformanceStandard 6. For ease of reference, these values are referred to as critical habitat criteria for theremainder of this document. Each criterion is described in detail in paragraphs G70 throughG96. Critical habitat criteria are as follows and should form the basis of any critical habitatassessment:

Criterion 1: Critically Endangered (CR) and/or Endangered (EN) species Criterion 2: Endemic and/or restricted-range species Criterion 3: Migratory and/or congregatory species Criterion 4: Regionally significant and/or highly threatened or unique ecosystems Criterion 5: Key evolutionary processes

G55. The determination of critical habitat however is not necessarily limited to these criteria.Other aspects might also support a critical habitat designation, and the appropriateness of thisdecision would be evaluated on a case-by-case basis. Examples are as follows:

Areas required for the reintroduction of CR and EN species and refuge sites forhighly threatened species (habitat used during periods of stress [e.g. flood, droughtor fire]) (an important aspect to Criterion 1).

Areas of primary / old-growth / pristine forests or other landscapes (an importantaspect of Criterion 4).

Ecosystems that are of high importance to species for climate adaptation purposes(an important aspect of Criterion 5).

Landscape and ecological processes (e.g., water catchments, areas critical toerosion control, disturbance regimes [e.g., fire, flood]) required for maintaining criticalhabitat (Regionally unique and/or highly threatened ecosystems).


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Habitat necessary for the survival of keystone species.3

Areas of high scientific value such as those containing concentrations of species new

and/or little known to science.

G56. In general, internationally and/or nationally recognized areas of high biodiversity valuewill likely qualify as critical habitat; examples include the following:

Areas that meet the criteria of the IUCNs Protected Area Management CategoriesIa, Ib and II, although areas that meet criteria for Management Categories III-VI mayalso qualify depending on the biodiversity values inherent to those sites.

UNESCO Natural World Heritage Sites that are recognized for their GlobalOutstanding Value.

The majority of Key Biodiversity Areas (KBAs) 4

Areas identified by the client as High Conservation Value (HCV) using internationallyrecognized standards, where criteria used to designate such areas is consistent withthe biodiversity values listed paragraph 16 of Performance Standard 6.

, which encompass inter alia RamsarSites, Important Bird Areas (IBA), Important Plant Areas [IPA] and Alliance for ZeroExtinction Sites [AZE].

G57. The designation of critical habitat and the determination of what a client may or may notdo in critical habitat is not a black and white issue. There are gradients of critical habitat or acontinuum of degrees of biodiversity value associated with critical habitats based on therelative vulnerability (degree of threat) and irreplaceablity (rarity or uniqueness) of the site. Thisgradient or continuum of criticality is true for all criteria as listed in paragraph 16. Even within asingle site designated as critical habitat there might be habitats or habitat features of higher orlower biodiversity value.

Gradients of Critical Habitats

G58. In order to facilitate internal decision-making, IFC has assigned numerical thresholds tothe first three critical habitat criteria (i.e., Critically Endangered/Endangered species; endemic/restricted-range species; migratory/congregatory species). The thresholds presented in thisguidance note are based on globally standardized numerical thresholds published by theInternational Union for Conservation of Nature (IUCN) as Best Practice Protected AreaGuidelines.5

For this section, citations are kept in the body of the text for ease of reference.

G59. The thresholds form the basis of a tiered approach, in that numerical thresholds areused to assign Criteria 1 through 3 to a Tier 1 or a Tier 2 critical habitat designation. Asummary of the tiers with respect to the thresholds for each criterion is provided in the tablebelow. Paragraphs G70 through G96 discuss each criterion with respect to the tiers in more

detail. It should be emphasized that both the thresholds and associated tiers are indicative andserve as a guideline for decision-making only. There is no universally accepted or automatic

3Defined here as a species that has a disproportionate effect on its environment relative to its biomass and whose removal initiates

significant changes in ecosystem structure and loss of biodiversity.4 Key Biodiversity Areas are nationally mapped sites of global significance for biodiversity conservation that have been selectedusing globally standard criteria and thresholds based on the framework of vulnerability and irreplaceability widely used in systematicconservation planning. See Langhammer, P. F. et al, 2007 in the references section of this document.5

See Langhammer, P.F. et al. 2007. Identification and Gap Analysis of Key Biodiversity Areas: Targets for ComprehensiveProtected Area Systems. Best Practice Protected Area Guideline Series No. 15. IUCN, Gland, Switzerland.


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formula for making determinations on critical habitat. The involvement of qualified experts andproject-specific assessments is of upmost importance, especially when data are limited as willoften be the case.

G60. Both a Tier 1 or a Tier 2 habitat would qualify as critical but the likelihood of projectinvestment in a Tier 1 habitat is generally considered to be substantially lower than in a Tier 2habitat. Note that this Guidance Note does not outline the particularities of when an investmentis or is not a suitable one for IFC in terms of the presence of critical habitat. IFCs decision toinvest in a development in or near a Tier 1 or Tier 2 critical habitat, or in a habitat withparticularly high biodiversity values that trigger Criteria 4 and 5, is determined by the clientsability to comply with paragraphs 17 through 19 of Performance Standard 6. Given thesensitivity of Tier 1 habitats however, if a development is located in a Tier 1 habitat, or a habitatof comparative importance for Criteria 4 and 5, it is considered unlikely that the client will beable to comply with paragraphs 17 through 19.

G61. Regarding Criteria 4 and 5, internationally agreed numerical thresholds have not beensufficiently developed. While thresholds may be appropriate, especially for regionally significantand/or threatened or unique ecosystems (Criterion 4), international consensus on a singlestandard are currently lacking. There are however, efforts underway to develop such methods,e.g., recent IUCN Ecosystems work presented in Rodriguez et al. 2007. Until these are morefirmly established and readily accessible to a wide-range of practitioners, best availablescientific information and expert opinion would be used to guide the decision-making withrespect to the relative criticality of a habitat triggered by these criteria. It is emphasizedhowever that in the critical habitat determination process, all criteria are equally weighed interms of potential compliance with paragraphs 17 through 19 of Performance Standard 6. Thereis no one criterion that is more important than another for making critical habitat designationsor for determining compliance with Performance Standard 6. Tiered (Criteria 1 through 3) andnon-tiered (Criteria 4 and 5) criteria are equally important in this regard.

Determination of Critical Habitat

G62. Considering the breadth of ecosystems (e.g., forests, grasslands, deserts, freshwaterand marine habitats), the various forms of critical habitat (e.g., habitats required for the survivalof threatened and migratory species, areas containing unique evolutionary processes) and therange of species (e.g., benthos, plants, insects, birds, reptiles/amphibians, wide-rangingmegafauna) covered under Performance Standard 6, specific methods for the assessment ofbiodiversity will inherently be project and site-specific. Guidance Note 6 therefore does notprovide methodologies for conducting biodiversity assessments. Instead, three broad levelsteps are provided below to direct the client in designing the overall scope of a critical habitatassessment.

G63. It should be clear that relatively broad landscape and seascape units might qualify ascritical habitat. The scale of the critical habitat assessment therefore depends on thebiodiversity attributes particular to the habitat in question and the ecological processes requiredtomaintain them. A critical habitat assessment therefore must not solely focus on the projectsite. While it often may not be feasible to conduct an actual field survey beyond the boundariesof the project site, the client should be prepared to conduct desktop assessments and/or consultwith experts and other relevant stakeholders to obtain an understanding of the relativeimportance or uniqueness of the site with respect to the regional and even the global scale.


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Natural Resources

This analysis would form part of the landscape/seascape level analysis as referred to inparagraph 6 of Performance Standard 6 and in paragraph G19.

G64. For Criteria 1 through 3, the project should determine a sensible boundary (ecological orpolitical) which defines the area of habitat to be considered for the Critical Habitat Assessment.This is

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