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

Background and OverviewOctober 5, 2009

Istanbul

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

• S&E sustainability improves development outcomes

• Clearly defined roles and responsibilities of IFC and clients

• IFC reviews client’s 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: S&E 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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• 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

Performance Standard Highlights

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Disclosure Policy Highlights

• Reaffirms and reflects IFC’s 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 IFC’s 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

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• Appraisal • Disbursement • Supervision • Evaluation• Approval

IFC:

Public Notification

SPI/ESRS Disclosure

CLIENT:

On-going Community Engagement /

Documentation Updates

• Early Review

CLIENT:

Preliminary

Community

Engagement

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 E&S 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 A&B PROJECTS BOARD APPROVED APRIL 30, 2006—APRIL 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 IFC’s 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 E&S needs

•Obtain feedback from directly-affected communities

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Indicative Timeline

• September–November 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 CAO’s Advisory Note on IFC’s Policy and Performance Standards Portfolio Review.

• March 2010: Review of findings of IEG’s report on Evaluation of the World Bank Group’s Experience with Safeguard and Sustainability Policy (1999–2008).

• May 2010: Presentation of version 1 of the revised PPS to CODE for review and authorization to initiate consultation on proposed language.

 

• May–July 2010: First formal (60-day) consultation period open to all stakeholders to comment on Version 1 draft text changes.

• August–September 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.

 

• December 2010: Presentation of the complete final draft text to the Board.

 

• January 2011: Revised PPS becomes effective.

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Phase I: Input Needed

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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 doesn’t 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?

How to Participate and Provide Feedback

• Website : www.ifc.org/policyreview

• E-mail: policyreview@ifc.org

• Mail: PPS Update Mail Stop F3P-301 orDisclosure 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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