sustainability guidance - screening and categorizing gcf ... · this guidance note 1 see decision...

Sustainability guidance note: screening and categorizing GCF-financed activities

AUGUST2019

ScreeningandcategorizingGCF-financedactivitiesPage1

1. Overview

(1) In2018theBoardofGCFadoptedtheEnvironmentalandSocialPolicy,1whichsetsouttherisk-basedapproachforidentifying,assessing,andmanagingenvironmentalandsocialrisksandimpactsofactivities,2projects,andprogrammessupportedbyGCFresources.TheEnvironmentalandSocialPolicydescribestheenvironmentalandsocialprinciplesandrequirementsthatsupporttheapplicationoftheenvironmentalandsocialsafeguards(ESS)ofGCF.

(2) TheEnvironmentalandSocialPolicyprovidesforarisk-basedapproachtoassessingandmanagingenvironmentalandsocialrisksandimpactsofactivitiesfinancedthroughGCFresources.Thisrisk-basedapproachensuresduediligencebasedontheappropriateleveloflikelyenvironmentalandsocialrisksoftheactivities.Thelevelofenvironmentalandsocialriskwilldetermine:

• Thedepthandextentofenvironmentalandsocialassessmentthatwillneedtobeconducted;

• Themeasuresthatwillbedevelopedandimplementedtoaddress,manageandmonitortherisksandimpacts;

• Theappropriatestakeholderengagement;3and

• Thedisclosureofrelevantenvironmentalandsocialinformation.

(3) Byhavingdifferentiatedduediligence,accreditedentities,andiftheaccreditedentityisactinginanintermediaryfunctiontoensurethattheexecutingentitiesareabletoestablishthelevelofresourcesthatwillneedtobedeployedtoidentify,assess,manageandmonitortheenvironmentalandsocialrisksandimpacts.Forexample,activitiesthataredeemedtohavehighenvironmentalandsocialrisksarerequiredtoundertakeextensiveassessment,managementandmonitoringofrisksandimpacts.Incomparison,lowerriskactivitiesareexpectedtoundertakesimplerandmorenarrowlyfocusedassessments,managementandmonitoringofmeasurestoaddressidentifiedrisksandimpacts.

(4) Asanecessarysteptorisk-basedenvironmentalandsocialduediligence,activitiessupportedbyGCFwillneedtobecategorizedaccordingtothedifferentlevelsofenvironmentalandsocialrisksasdescribedintheEnvironmentalandSocialPolicy.Theenvironmentalandsocialriskcategoryofactivitieswillassistindeterminingthelevelofduediligencethatwillbeconductedfortheactivities.

(5) ThisguidancenoteprovidespracticalinformationfortheSecretariat,accreditedentitiesandexecutingentities,countriesandotherstakeholdersincategorizingtheenvironmentalandsocialrisksofactivitiessupportedbyGCF.Thisdocumentnotesthataccreditedentitiesimplementtheirownenvironmentalandsocialmanagementsystems(ESMS)tomanagetheenvironmentalandsocialrisksandimpactsassociatedwithactivitiesandmeettherequirementsofGCFpoliciesandESS,includingtheconductofduediligenceofactivitiessupportedbyGCF.Assuch,thisguidancenoteclarifiestherequirementsforenvironmentalandsocialriskcategoriesasdescribedintheEnvironmentalandSocialPolicyandprovidesguidanceontheprocessfordetermininghowprojectsandactivitiesarecategorized.Thisguidancenote

1SeedecisionB.19/10,paragraph(b)andannexXtodocumentGCF/B.19/43.2Forthepurposesofthisguidancenote,anactivity,asreferredtointhisdocument,shallhereinafterrefertoprogrammes,projectsandsubprojects

3 FurtherguidanceonmeetingthestakeholderengagementrequirementsofGCF-financedactivitiescanbeaccessedathttps://www.greenclimate.fund/documents/meaningful-stakeholder-engagement


isnotaGCFpolicyanditdoesnotsubstitutefortheneedtoexercisesoundjudgmentinmakingdecisionsrelatedtotheenvironmentalandsocialriskcategoriesofactivities.Rather,thisguidancenoteprovidesthefollowing:

• AnoverviewofGCFEnvironmentalandSocialPolicyrequirements;

• Informationonenvironmentalandsocialriskscreening;

• Theprocessfordeterminingtheenvironmentalandsocialriskcategoriesofactivities;and

• IllustrationsoftheapplicationofthePolicyintheGCF-fundedactivities.

2. EnvironmentalandSocialPolicyrequirements

(6) TheEnvironmentalandSocialPolicylaysdowntheprinciples,responsibilitiesandrequirementsformanagingenvironmentalandsocialrisksandimpactsassociatedwiththeactivitiesthatGCFsupports,includingscreeningandcategorizationofactivities.Inlinewiththepolicy’sguidingprinciples,theESSwillbeappliedinascaled,risk-basedapproachrequiringthatenvironmentalandsocialrequirementsandprocessesarecommensuratewiththelevelofriskassociatedwiththeactivities.

(7) TheresponsibilitiesrelatedtomanagingenvironmentalandsocialrisksthroughoutthelifecycleofGCF-financedactivitiesarealsooutlinedintheEnvironmentalandSocialPolicy.Specifically,GCFisresponsibleforrequiringandensuringthatappropriatescreeningandcategorizationprocessesareconductedwithinanaccreditedentity’srequirements,theGCFESSstandards,andtherequirementsoftheEnvironmentalandSocialPolicy.Accreditedentitieswillberequiredtoensurethatactivitiesareproperlyscreened,assignedappropriateenvironmentalandsocialriskcategories,andthatenvironmentalandsocialrisksandimpactsareproperlyandsufficientlyassessed.

(8) TheEnvironmentalandSocialPolicypresentstheenvironmentalandsocialscreeningofactivitiesasaprocesstodetermineanactivity’senvironmentalandsocialriskcategory.TheenvironmentalandsocialscreeningconsiderationsofactivitiesaredescribedintheEnvironmentalandSocialPolicyandfurtherdiscussedinsection3ofthisnote.

(9) AccordingtotheEnvironmentalandSocialPolicy,theenvironmentalandsocialriskcategoriesofactivitieswillbeproportionaltothenature,scaleandlocationoftheactivities;theirlikelyenvironmentalandsocialrisksandimpacts;andthevulnerabilityofthereceivingenvironmentandcommunities.Inassigningriskcategories,specificattentionwillbepaidtotherisksandimpactsasspecifiedintheESS.Inaddition,theriskcategoriesofactivitieswillconsidertheenvironmentalandsocialrisksandimpactsoftheactivitiesidentifiedandassessedpriortotheapplicationofanymitigationmeasures,withdueconsiderationgiventothemostseriousrisksandimpactsofallactivities,andwillincludeassociatedfacilities.

(10) Incasesofprogrammesorprojectsconsistingofseveralcomponentactivities,theEnvironmentalandSocialPolicyprovidesthatthehighestriskcategoryofthecomponentsubprojectsoractivitieswillbeconsideredastheoverallcategoryoftheprogrammeorproject.Further,theEnvironmentalandSocialPolicystatesthatwheretherearechangesintheactivitiesintermsofdesignandexecutionorotherchangesthatmayaltertheoverallenvironmentalandsocialriskprofileoftheactivities,theaccreditedentitywillundertakeappropriatescreeningandcategorizationtodeterminetheappropriatelevelofduediligencenecessarytomanagetherisksandimpactsfromthechanges.

3. Environmentalandsocialriskscreening


(11) ThescreeningofenvironmentalandsocialrisksofactivitiesisanimportantstepintheoverallenvironmentalandsocialduediligenceofactivitiesproposedforGCFfinancing.Screeningservestoidentifyandassess,attheearlieststagepossible,thelikelyenvironmentalandsocialrisksandimpactsthatcouldbereasonablyanticipatedfromthedesignandexecutionofactivities.Itisalsoatooltoensurethatgender,indigenouspeoplesandotherenvironmentalandsocialsustainabilityissuesareconsideredinthedesignandthroughoutthelifeoftheactivities.Undertakenattheearliestpossibleopportunityduringthepreparationofactivities,screeningassistsGCF,countries,accreditedentities,executingentities,andotherstakeholdersinanticipatingtherisksandimpactsoftheproject,howthesewillbeaddressed,andtherequirementsthatneedtobemetandaddressed.

(12) Thescreeningofenvironmentalandsocialrisksandimpactsofactivitiesinformstherisk-basedapproachtoduediligence.Byidentifyingandanalysingthepotentialrisksandimpactsoftheactivities,theoveralllevelofenvironmentalandsocialriskfromtheactivitiescanbeestablished.Thiscanthenbereflectedastheoverallenvironmentalandsocialriskcategoryoftheactivities.

(13) Activitiesaresubjectedtoascreeningofenvironmentalandsocialrisksandimpacts.Theaccreditedentities,whethertheirroleisofimplementingentityoractinginanintermediaryfunction,areresponsibleforundertakingthescreeningofrisksandimpacts.OtheractivitiesfinancedthroughtheresourcesofGCF,suchasthosesupportedthroughtheReadinessandPreparatorySupportProgrammearenotnormallyscreened,asthetypeandnatureoftheactivitiesarenotlikelytohaveanyphysicalelementsoradverserisksandimpacts;however,iftheGCFconcludesthatanactivitymighthaveaphysicalelementoranadverseriskorimpact,GCFreservestherighttoscreenthatandanyconnectedactivities.InregardtotheProjectPreparationFacility(PPF),anaccreditedentityendorsedbytheNationallyDesignatedAuthoritymayrequestGCFgrantfinanceforenvironmentalandsocialstudies.Inthiscase,evidenceofthescreeningoftheunderlyingactivitieswillberequiredasjustificationforstudiestobeundertakenusingGCFresources.

(14) Screeningisfirstundertakenattheearlystagesofprojectdevelopment.Itisconsideredasastartingpointintheenvironmentalandsocialduediligenceofactivities,typicallyduringthepreparationofconceptnotesorfundingproposals.ScreeningoftheentireGCF-financedactivityasawhole,includingaspectsthatarefundedthroughnon-GCFsources,allowstheaccreditedentityandiftheaccreditedentityisactinginanintermediaryfunctiontorequiretheexecutingentitytotakeintoconsiderationtheidentifiedrisksandimpacts.Screeningcanalsocapturerecommendationsforimprovingtheenvironmentalandsocialperformanceoftheactivitiesinthedesignandinformabouttheduediligenceandexecutionoftheactivities.Asapreliminaryprocessinduediligence,thescreeningofenvironmentalandsocialrisksofactivitiesallowstheentitiesto:

• Identifythepotentialenvironmentalandsocialrisksandimpactsoftheactivities;

• Analysetheidentifiedrisksandimpactstounderstandtheirpotentialsignificance;

• Assignanenvironmentalandsocialriskcategory;and

• Determineapplicablestandards,policiesandplansformeetingrequirements,includingthescopeoffurtherassessments.

(15) Screeningisusuallyundertakenthroughadesktopassessmentoftheconceptnoteorfundingproposal.Screeningwillalsobebasedonthedescriptionsofvariousaspectsoftheproposedactivities,suchasthebiologicalandphysicalenvironment,social,economicandculturalelements,policyandgovernance,capacityandimplementationarrangements.Itisimportanttounderstandthatthescreeningprocessisconductedwhileprojectactivitiesarebeingdesignedandwheninformationrelatedtotheactivitiesmaynotbeavailableingreat


detail.Itwillbedifficultatthisstagetohaveinformationsufficientforacomprehensiveanalysisandjudgmentonthesignificanceofrisksandimpacts.Wheretherearelimitationsintheinformationrelatedtothelikelyenvironmentalandsocialrisksandimpacts,assigningtheappropriatecategoryoftheactivitiesfollowingaprecautionaryapproachwillbenecessarytoassessandaddresstheanticipatedrisksandimpacts.Itistheresponsibilityoftheaccreditedentitiesortorequiretheexecutingentitiestoprovideadequateinformationforaninformedanalysisoftheenvironmentalandsocialrisksandimpacts.Wheregapsinknowledgeabouttheactivitiesareidentified,suchgapsmustbeincludedinthescopeforthedetailedenvironmentalandsocialassessmentsoftheactivities.Asbetterinformationandunderstandingoftherisksandimpactsbecomeknown,thecategoryassignedtotheactivitiesduringscreeningwillneedtobeadjustedtoreflecttheresultsofthedetailedenvironmentalandsocialassessmentsorifanyrisksandimpactsareidentified.

(16) Additionalinformationabouttheactivitiesthatisrequiredduringscreeningataminimumincludesanythingrelatedtothescaleoftheactivities,theirproposedlocations,descriptionsoftheinterventionandtechnologythatwilllikelybeused,andtheinherentrisksoftheactivitiesassociatedwiththesectorandindustry.Relatedliteratureandpreviousenvironmentalandsocialassessments,includingstakeholderconsultationsrelevanttotheproposedactivities,ifavailable,arealsoimportantinunderstandingtheexpectedrisks,impactsandconcernsthatmayaffecttheactivities.

(17) Thepreliminaryanalysisofenvironmentalandsocialriskstakesintoconsiderationthepotentialsignificanceoftherisksandimpactsrelativetoasetofdefinedcriteria.Therearevariousmethodsfordeterminingsignificance,suchasthosebasedontheimpactmagnitude,intensity,sensitivityofreceptors,probabilityofoccurrence,reversibility,duration,definedphysicalandsocialcharacteristicsandsignificance,andspecificthresholds(e.g.,environmentalqualitystandards).Screeningusesvarioustoolstocaptureinformationontherisksandimpactsandthesignificanceanalysis–themostcommontoolbeingachecklistthatprovidesalistofenvironmentalandsocialriskfactorsaswellassignificancecriteria.ExamplesofriskfactorsalignedtoGCFrequirementsareincludedasanannextothisguidancenote.AccreditedentitiescanusetheirownscreeningtoolsthatarepartoftheirESMSormaymodifyordevelopascreeningtoolspecifictotheactivity.Itisimportanttonotethattheanalysisofrisksandimpactsaspartofthescreeningprocessisconsideredaspreliminaryandundertakentoallowforappropriateduediligenceplanningfortheactivities.Whererequired,amorecomprehensiveenvironmentalandsocialassessmentwillbeundertakentofurtheranalysespecificrisksandimpactsassociatedwiththeactivities.

(18) Screeningshouldalsobeundertakenduringtheimplementationoftheactivities,aspartofadaptivemanagement.Thisbecomesanimportantduediligenceprocessasitrevealsrisksandimpactsassociatedwiththechangesinthedesignandimplementationarrangements,policiesandregulations,andhostenvironmentandcommunities.Thesechangesmaybringaboutunanticipatedrisksandimpactsoraltertheoverallenvironmentalandsocialrisklevel.Screening,orupdatingofthepreviousscreening,wouldberequiredtodetermineiftherearechangesintheoverallcategoryoftheactivitiesandthescopeofanyenvironmentalandsocialassessmentoftheunanticipatedorplannedchangestotheactivities.

(19) Belowareimportantconsiderationsinplanningandundertakingscreeningoftheenvironmentalandsocialrisksofactivities:

• ConductthescreeningasearlyasfeasibleandideallyaspartofdevelopingaconceptnoteorfundingproposalfortheentireGCF-financedactivity.Bymakingthescreeninganupstreamprocess,theenvironmentalandsocialrisksaswellasopportunitiesareintegratedintothedesignoftheactivities.Byconductingscreeningintheearlystagesofactivitydesign,thecostforduediligenceisminimizedastheprocessbecomesmorepredictableandtherequirementsareclarifiedfromthestart.Screeningalsosupportstheexaminationand


considerationofalternativesthathavemorebenignenvironmentalandsocialrisksandimpacts.

• Considerrisksandimpactsthatareregardedasdirect,indirect,induced,transboundary,longtermandcumulativeaswellasimpactsfromassociatedfacilitiesandthirdparties.Thesemustbeincludedinscreeninginordertoobtainacomprehensivescanofpotentialrisksandimpactsassociatedwiththeactivities.Itisalsoimportanttoconsiderrequirementsoflawsapplicabletotheactivities,includingnationallawsandrelevantinternationalobligationspolicies,regulationsandstandardsrelatedtomanagingenvironmentalandsocialrisksandimpactsthatwillneedtobemetandcompliedwithinthecourseofthedevelopmentandimplementationoftheactivities.

• Consideropportunitiesforimprovingtheenvironmentalandsocialperformanceoftheactivities.Screeningcanidentifywaystoenhanceenvironmentalandsocialbenefitsthatcanbeharnessedfromtheactivities.Forexample,theremaybetraditionalknowledgesystemsavailablethatcanprovideeffectivemeansforachievinglocaladaptationobjectives.

• Includegenderaspectsandotherimpactsonvulnerablegroups.Womenandvulnerablegroupsmaybeaffecteddifferentlybytheactivities,andscreeningcanshowhowwomen,vulnerablegroups,orindigenouspeoplesmaybedifferentlyimpacted.TheGCFIndigenousPeoplesPolicy(ScopeofApplicationinSectionIV),providesguidanceoncharacteristicsthataidinidentifyingindigenouscommunities.

• Screeningshouldbecontinuouslyupdated.Itisimportanttounderstandthatscreeningisnotaone-offundertakingbutratheronepartofaduediligenceprocessthatiscarriedoutduringimplementationoftheactivities.Theinformationinthescreeningwillneedtobeupdatedbytheaccreditedentity,pursuanttotherequirementsoftheGCFEnvironmentalandSocialPolicy,particularlyininstanceswheretherearechangesinthedesignandscopeofimplementationofactivities.

4. Categorizationofactivities

(20) TheEnvironmentalandSocialPolicyrequiresaccreditedentitiestoassignappropriateenvironmentalandsocialriskcategoriestoactivities.Theenvironmentalandsocialrisksandimpactsofactivitiesvarygreatly.Theyaredeterminedbyfactorssuchasnature,location,scale,magnitude,intensity,durationandreversibilityoftheimpacts,andotherrisksinherenttothesectororindustry.Arisk-basedapproachrequiresthedeterminationoftheextentandscopeofenvironmentalandsocialduediligencethatwillberequiredforeachactivity.Anenvironmentalandsocialriskcategorywillneedtobeassignedtotheactivity.ForGCF,theenvironmentalandsocialriskcategoryofanactivityindicatestheextentof:theduediligencethatneedstobeundertakenbytheaccreditedentityorthroughitsexecutingentity;themitigationmeasures,includingtheresourcesneededtoimplementtheenvironmentalandsocialmanagementplans;andthestakeholderengagementandinformationdisclosure.

(21) GCFrecognizesthatfulfillingitsmandatetopromoteaparadigmshifttowardslow-emissionandclimate-resilientdevelopmentmaynecessitatefinancingactivitiesthatcouldbeinherentlyriskyfromthecontextofenvironmentalandsocialrisksandimpacts.Theriskcategoryoftheactivitiesdoesnot,inanyway,implywhetheranactivityis“good”or“bad”butinsteadindicatesrecognitionofthelikelyrisksandimpacts.Thiswillallowmeasurestobeputinplacetoavoid,minimizeormitigatethem.

(22) GCFrequiresaccreditedentitiestoassignappropriatecategoriestoactivitiesinamannerconsistentwiththeGCFcategorizationapproach,whichdifferentiatesbetweenhigh,moderateandminimaltonoadverseenvironmentaland/orsocialrisksandimpacts.This


categorizationapproachissimilartootherfinancialinstitutions.Theserisklevelsarebasedondefinedcriteriaandfollowacontinuumofrisksandpotentialimpacts.Theassignmentofriskcategoriesreflectsanintegratedviewoftheenvironmentalandsocialaspectsoftheactivitiesandistheresultoftheenvironmentalandsocialriskscreeningoftheactivities.WherethelevelsanddefinitionsofcategoriesoftheaccreditedentitydifferwiththatofGCF,theaccreditedentitywillestablishandconveytoGCFtheequivalenceoftheirlevelsanddefinitionsofcategorieswiththoseofGCF.

(23) GCFwillconfirmthattheenvironmentalandsocialriskcategoryassignedbytheaccreditedentityiswithintheaccreditedentity’sscopeofaccreditation,andisconsistentwiththeaccreditedentity’srequirements,theGCFESSstandards,andtherequirementsoftheEnvironmentalandSocialPolicy.Ifitisinconsistent,GCFwillrequiretheaccreditedentitytoreflecttheappropriatecategory.Onlyactivitieswithriskcategoriesthatarewithintheaccreditedentity’sscopeofaccreditationwillbeconsideredforGCFfinancing.Forexample,entitiesaccreditedtoCategoryBcanproposeactivitieswithenvironmentalandsocialriskcategoryofuptoCategoryBonly.

(24) Theenvironmentalandsocialriskcategoryofactivitiesisinformedbytheresultofthescreening.Wheretheresultrequiresfurtherenvironmentalandsocialassessmentstobeconducted,theriskcategoryassignedduringthescreeningprocessmayneedtobeconfirmedbytheentitiesbasedonthereviewoftheseadditionalassessments.

(25) TheenvironmentalandsocialriskcategoriesofactivitiessupportedbyGCFaredefinedasfollows:

• CategoryA.Activitieswithpotentialsignificantadverseenvironmentaland/orsocialrisksandimpactsthat,individuallyorcumulatively,arediverse,irreversible,orunprecedented;

• CategoryB.Activitieswithpotentiallimitedadverseenvironmentaland/orsocialrisksandimpactsthat,individuallyorcumulatively,arefew,generallysite-specific,largelyreversible,andreadilyaddressedthroughmitigationmeasures;and

• CategoryC.Activitieswithminimalornoadverseenvironmentaland/orsocialrisksand/orimpacts.

(26) CategoryAactivities,oftenreferredtoashigh-riskactivities,includethosewithpotentialsignificantadverseenvironmentalandsocialrisksandimpactsasdeterminedbythescreeningprocess.ActivitiesconsideredascategoryAmayhavesignificantrisksforandimpactsonthephysicalandbiologicalenvironmentaswellasthesocio-economicandculturalenvironment.ExamplesoffeaturesofcategoryAactivitiesinclude:havinglargegeographicscale;involvinglarge-scaleinfrastructure;beinglocatedinvaluableecosystemsandcriticalhabitats;entailingadverseimpactstotherights,resourcesandlandsofindigenouspeoples;andentailingsignificantresettlementofaffectedpeoples.Thesignificantadverseenvironmentalandsocialrisksandimpactsarefurtheranalysedastowhethertheimpactsare:

• Diverse,wheretheremaybevarioustypesofrisksandimpactsassociatedwiththeactivities.Thediversityofrisksandimpactsmayaffectthecapacityoftheentitiestoplanandimplementmeasurestomanagerisksandimpacts,forexample,projectsorprogrammeswithseveraldifferenttypesofcomponentsubprojectsthatmaygeneratevariedrisksandimpacts;

• Unprecedented,wheretheactivitiesandtheidentifiedrisksandimpactsmayhavenotbeenexperiencedinthelocality,andassuchmaybelimitedindesigningandimplementingeffectivemitigationmeasures.Examplesofsuchactivitiesincludeinfrastructurethatwouldrequiremitigationmeasureswithuniquerequirements;


• Irreversible,wheretheactivitiesmayleadtopermanentimpairmentofenvironmentalquality,declineofecosystemservices,andadverseeffectstothecommunities,includingvulnerablegroups.Examplesofsuchactivitiesincludethosethatusenon-renewableresources,reducetheintegrityofnaturalhabitats,andcausefurtherdeclineandreductionofthepopulationofspeciesandecologicalcommunities;and/or

• OtherconsiderationsforcategoryAactivitiesincludethelarge-scalenatureoftheactivities,impactsthatmayextendbeyondtheproject’sfootprint,compleximplementationarrangements,durationofimpacts,manageabilityofrisksandimpacts,andcommunityinvolvementandsupport.

(27) CategoryAactivitiesarerequiredtoundertakeacomprehensiveenvironmentalandsocialassessmentandtodevelopandimplementcorrespondingenvironmentalandsocialmanagementplans;otherplansaddressingspecificrisksandimpacts,suchasthoserelatedtolandacquisitionandinvoluntaryresettlement,indigenouspeoples,andbiodiversity;stakeholderengagement;andactivity-levelgrievanceredressmechanisms.

Box1:ExampleofcategoryAprojectProject:GreenBRTKarachi

TheKarachiRedLinebusrapidtransit(BRT)projectisoneofthesixpriorityprojectsidentifiedundertheKarachiTransportationImprovementPlan.Theprojectentailsa26.6-kilometerlongBRTcorridorwithassociatedfacilitiesdirectlybenefitting1.5millionpeople.Theprojectisexpectedtocontributetogreenhousegasemissionsreductionsandimproveclimateresiliencyoftheurbantransportsystem.

Theprojectwaspreparedusingthesafeguardpolicyoftheaccreditedentity,whichismateriallyequivalenttotheGCFenvironmentalandsocialsafeguardsstandards.TheprojectwasdesignatedascategoryAforEnvironmentduetoitsdiverseimpactsnotingthatwhilethelong-termnegativeenvironmentalimpactsarefewandminor,theshort-termrisksandimpactsoftheconstructioninvolvedwouldbenumerousandsignificant.Thiscategorizationalsoappropriatelyreflectstheproject’ssocialrisksduetopotentialdisplacementofstructuresandlossoflivelihoodsofaffectedpeople.Acomprehensiveenvironmentalimpactassessmentwithanenvironmentalmanagementplanandaresettlementplanwereprepared.Reference:https://www.adb.org/projects/documents/pak-47279-002-eia

(28) CategoryBactivities,ormoderateriskactivities,includethosewithrisksandimpactsthatarelessadversethancategoryAactivitiesintermsofmagnitudeandlikelihoodofoccurrence.Risksandimpactsareconsideredlimited,andthemagnitudeisexpectedtobelowtomoderate.Therisksandimpactsarefewinnumber,containedwithinthefootprintoftheactivities,largelyreversible,andreadilymitigatedthroughgenerallyacceptedmitigationmeasuresandgoodinternationalindustrypractices.

(29) IndeterminingcategoryBactivities,itisimportanttoconsiderthespatialextentofrisksandimpactsaswellaswhetherthedurationofimpactsistemporaryorpermanentandwhethertheentitiesandproponentsofactivitieshaveexperienceindesigningandimplementingmeasurestomitigateidentifiedrisksandimpacts.

Box2:ExampleofcategoryBprojectProject:EnhancingclimateresilienceofIndia’scoastalcommunities

ThefocusofthisprojectisonenhancingtheclimateresilienceofthecoastalcommunitiesinIndiathroughanecosystem-based,community-centredapproachtoadaptation.Thekeycomponentsoftheprojectinclude(i)enhancingtheresilienceofcoastalandmarineecosystemsandtheirservices;(ii)climate-adaptivelivelihoodsforvulnerablecoastalcommunities;and(iii)strengtheninggovernance,institutionalframeworks,andknowledgemanagementforclimate-resilientmanagementofcoastalareas.

Theaccreditedentityscreenedtheprojectagainstitssocialandenvironmentalstandardsprocedureanddeemeditashavingmoderateenvironmentalandsocialrisk,equivalenttocategoryBoftheGCF


EnvironmentalandSocialPolicy.Overall,theprojectactivitiesarelikelytohavesomeshort-term,small-scaleenvironmentalimpactsduringimplementationthatcanbereadilymitigatedfollowingtheduediligenceandmitigationapproachespresentedintheenvironmentalandsocialmanagementframework(ESMF),whichwaspreparedbytheaccreditedentityinlinewiththerequirementsundertheaccreditedentity’sprocedureandtheGCFenvironmentalandsocialsafeguardsforcategoryBprojects.Theprojectwillultimatelyhaveconsiderable,long-termenvironmentalandsocialbenefitsasitseekstostrengthentheresilienceofthevulnerableecosystemsandcommunitiesinthestatesofAndhraPradesh,MaharashtraandOdisha,including24targetlandscapesin12coastaldistricts.TheprojectESMFidentifiespotentialrisksandoffersavoidanceand/ormitigationmeasuresandprocessestoreduceimpactsfromthevariousactivities.Reference:https://www.adaptation-undp.org/projects/enhancing-climate-resilience-india’s-coastal-communities

(30) CategoryCactivities,orlow-riskactivities,includethosethathaveminimaltonoadverseenvironmentalandsocialrisksandimpacts.CategoryCactivitiesaretypicallythosethathavenophysicalelementsordefinedfootprints.However,incertaincontexts,activitiesthathavephysicalelementsorafootprintmayalsobeconsideredaslowrisk,particularlywheretheactivitiesaresmall-scale,undertakenwithinanalreadybuiltenvironment,donotinvolvephysicalandeconomicdisplacementofpeopleorhaveminimalornoadverseimpactsonindigenouspeoples.SomeexamplesofcategoryCactivitiesinclude:

• Capacitydevelopment,planningsupport,institutionaldevelopmentandstrengthening,advisoryservices,communicationandoutreach,andearlywarningandothermonitoringsystems;and

• Small-scalefacilities,smallholderproductionandcommunity-basedconservation,rehabilitationandmaintenanceofexistingsmall-scaleinfrastructurewithinanalreadybuilt-upareaandwithnoadditionalfootprint.

Box3:ExampleofcategoryCprojectProject:EnhancedclimateresilienceofruralcommunitiesincentralandnorthBeninthroughtheimplementationofecosystem-basedadaptation(EbA)inforestandagriculturallandscapes

Theprojectaimstobuffercommunitiesagainsttheeffectsofclimatechangebyadoptingagriculturallivelihoodsandinvestinginlandstewardship.Theprojectwillimplementecosystem-basedadaptationandclimate-resilientagricultureinterventionsinforestareasandtheadjacentagriculturallandscapes.Theactivitiesareprimarilyfocusedoncapacitydevelopment,institutionalstrengthening,andecosystemrestorationaimedatimprovingthebiodiversityandecosystemservicesinforestareasandadjacentagriculturallands.Theaccreditedentityhasscreenedtheprojectaslikelytohaveminimalenvironmentalandsocialrisksandimpacts.Thescreeningconsideredpotentialrisksandimpactsrelatedtoworksontherestorationofdegradedlands,andinimplementingclimate-resilientagriculturalproductivityimprovements.Thepotentialriskswereratedbytheaccreditedentityashavingalowprobabilityofoccurrenceandlowseverity.

Theaccreditedentityincludedaspartoftheproposaltheproject’sSocialandEconomicActionPlan.Theactionplandescribesthemeasuresthatwillbeundertakentoavoid,reduceandmitigatetheidentifiedlow-levelenvironmentalandsocialrisksandimpacts.Theprojectisdesignedtoempowerthelocalcommunities,includingethnicgroupsusingforestlands,tousetheseresourcessustainably.Abenefits-sharingsystemwillbedevelopedasaresultoftheland-useplanning,whichwillalsodesignandstrengthenpermitsalesystemstoregulatethecollectionofforestresources,includingwoodandnon-timberforestproductsandsmallgame.Traditionalleadersandlocalauthoritieswillbeengagedbytheprojecttomobilizecommunitygroupsaroundtheproject.

(31) Categorizationalsoappliestoinvestmentsthroughfinancialintermediation.Thescreeningandcategorizationwillconsidertherisksassociatedwiththeintendedenduse.Categoriesofactivitiesinvolvinginvestmentsthroughfinancialintermediationfunctionsordeliverymechanismsinvolvingfinancialintermediationaredividedintothefollowingthreelevelsofrisk:


• Highlevelofintermediation,orI1,whenanintermediary’sexistingorproposedportfolioincludes,orisexpectedtoinclude,financialexposuretocategoryAactivities;

• Mediumlevelofintermediation,orI2,whenanintermediary’sexistingorproposedportfolioincludes,orisexpectedtoinclude,financialexposuretocategoryBactivities;and

• Lowlevelofintermediation,I3,whenanintermediary’sexistingorproposedportfolioincludesfinancialexposuretocategoryCactivities.

(32) Itisimportanttonotethatinassigningtheoverallenvironmentalandsocialriskcategoryofactivitiesthroughfinancialintermediation,thehighestriskcategoryofpotentialsubprojectswillbeadopted.

Box4:ExampleofcategoryI2,medium-levelintermediationProject:EmbeddedGenerationInvestmentProgramme(EGIP)

TheprogrammeaimstoassistinprovidingcommercialviabilitytoembeddedgenerationprojectsinSouthAfrica.Thisprogrammewillsupporttheimplementationofrenewableenergyprojectsmainlyfromsolarphotovoltaicandwindenergy.TheaccreditedentityconsiderstheoverallenvironmentalandsocialriskcategoryoftheprogrammeasmediumlevelintermediationorI2.Theaccreditedentityanticipatesthattheprojectswilllikelyhavemoderateenvironmentalandsocialrisksandimpacts,equivalenttocategoryBoftheGCFEnvironmentalandSocialPolicy.Giventhescaleoftheprojects,theaccreditedentityconsidersthelikelyenvironmentalandsocialrisksandimpactstobereadilyidentified,assessedandmitigatedthroughtheadoptionofsoundenvironmentalandsocialpractices.ProjectsthatwillbeconsideredundertheprogrammewillbelimitedtocategoryBandC.

Asthespecificprojectsandtheirlocationshaveyettobeselected,theaccreditedentityprovidedanenvironmentalandsocialmanagementframework(ESMF)describingtheenvironmentalandsocialduediligenceprocessthatwillgoverntheprogramme.Clientswillberequiredtodevelopenvironmentalandsocialimpactsassessments,environmentalandsocialmanagementplansandotherpertinentmanagementplansfortheprojects.TheESMFincorporatesaframeworkforindigenouspeoplesplanningthatdescribestheengagementstrategyandguidelinesforindigenouspeoplesplanning;thefree,priorandinformedconsentprocess;andthepreparationofanindigenouspeoplesplanshouldanyoftheprojectsinvolveindigenouspeoplesorbelocatedinindigenouslands.TheESMFalsoincorporatesaresettlementframeworkthatguidestheprojectsinaddressingrisksandimpactsresultingfrompotentiallandacquisition,involuntaryresettlement,andlossoflivelihoods.Reference:https://www.dbsa.org/EN/About-Us/Publications/Documents/DBSA%20Embedded%20Generation%20Investment%20Programme%20ESMF.pdf

5. Screeningandcategorizingactivitiesinvolvingindigenouspeoples.

(33) Thescreeningandcategorizationtakeintoaccountallpotentialenvironmentalandsocialrisksandimpactsassociatedwiththeactivities.Itisimportanttounderstandthatthescreeningofenvironmentalandsocialrisksiscontextualized,recognizingthevariousfactorssuchasthoserelatedtolocation,communitiesandtypesofinterventionthatcontributetotheanalysisofthelevelofrisksandimpactsoftheactivities.Theanalysisoftheriskfactorsassociatedwiththeactivitieswillneedtoincludehowthedifferentsocialgroups,includingindigenouspeoplesandothervulnerableandmarginalizedpopulations,aredifferentlyaffected̶eitherpositivelyornegatively̶bytheimpactsoftheproject.Itshouldberecognizedthatthereareduediligencerequirementsspecifictoindigenouspeoples,women,andothervulnerableandmarginalizedgroupsthatwouldneedtobetakenintoconsiderationinthescreeningandfurtherassessments.

(34) ThescreeningandcategorizationofactivitieswillneedtoestablishtheapplicabilityoftheGCFIndigenousPeoplesPolicybydeterminingwhetherthereareindigenouspeopleswho


maybepotentiallyaffectedbytheactivities,4notingthatthemerepresenceofindigenouspeoplesandothervulnerableormarginalizedgroupsshouldnotautomaticallysignalhighermagnitudesofrisk.Thescreeningandcategorizationofactivitieswhereindigenouspeoplesmaybepresentwillneedtorecognizethatindigenouspeoplesmaybeaffecteddifferentlybytheactivitiesduetotheirvulnerabilities,asmaybeaffectedbytheireconomic,socialandlegalstatus;institutions,customs,cultureandlanguage;dependenceontheirlandsandnaturalresources;andtheirrelationshipwiththedominantgroupsandmainstreameconomy.

(35) Thescreeningandcategorizationwillneedtotakeintoaccounttherisksandimpactsoftheactivitiesontheindigenouspeoples,includingtheirrightstoterritories,resourcesandlivelihoods.Examplesoftheriskfactorsthatmaybeconsideredduringscreeningandcategorizationincluderisksrelatedtothephysicaldisplacementofindigenouspeoplesfromtheirancestrallandsandterritories;restrictionsthatresultinlossoftheirtraditionallivelihoodsystemsincludingaccesstotheterritoriesanditsresources;degradationoflandsandtheenvironmentandthedepletionofresources;exacerbationofcommunityconflicts;andimpactstotheculturalheritageandotherphysicalresourcesandsitesthatareconsideredculturallyimportanttotheindigenouspeoples.5

(36) Incategorizingactivities,itisimportanttounderstandtheadverseimpactsofactivitiesontheindigenouspeoples.Forexample,activitiesthatseektoestablishprotectedareasorareassetasideforenhancingecosystemservicesmayoverlapwiththeindigenouspeoplesterritoriesoraffectthelandtenurerightsofindigenouspeoples.Theseconservation-basedactivitiesmayalsonegativelyimpacttraditionallivelihoodsofindigenouspeoples,leadingtothedegradationoftheircultureandknowledgesystems.Activitiesmayalsorestricttheaccessofindigenouspeoplestotheirlands,naturalresourcesandculturalandreligioussites.Activitiesmaybeconsideredtohavemoderate-tohigh-riskiftheseentailriskfactorssuchasthosecitedinparagraph35.Activitiesmaybeconsideredlow-riskiftheactivitiesareplannedinconsultationwithindigenouspeoplesandexpectedtoprovidebenefitssuchascapacitydevelopment,institutionalstrengthening,awarenessbuilding,outreachandothersmall-scaleinterventionsandthatdonotresultinadverseimpactssuchasonlandtenurerights,accesstoresourcesandculturalheritageandotherriskfactors.Itisalsocrucialtoconsiderthatwhilesomelow-riskactivitiesmayhavenophysicalelementsordefinedfootprints,theseactivitiesmayhaveinadvertentadverseeffectsontherightsofindigenouspeoplesincludinglandsandnaturalresourcessubjecttotraditionalownershiporcustomaryuse.Theenvironmentalandsocialriskcategoryofactivitieswillneedtotakeintoaccounttheseenvironmentalandsocialrisksandimpactsontheindigenouspeoples.

(37) Ifthescreeningidentifiesindigenouspeoples,furtheranalysisshouldbeundertakentocollectbaselinedataonthosecommunities,coveringkeyaspectsthatmaybeaffectedbytheactivityandthepotentialimpactsandbenefitsoftheactivitytoindigenouspeoples.Thebreadth,depth,andtypeofassessmentshouldbeproportionaltothenatureandscaleoftheproposedactivity’spotentialimpactsontheindigenouspeoplesandthevulnerabilityoftheindigenouspeoples.

Box4:ExampleofactivityinvolvingindigenouspeoplesProject:Poverty,reforestation,energyandclimatechangeTheprojectaimstoincreaseresilienceandenhancethelivelihoodsofvulnerablehouseholdsandreduceforestcoverlossinenvironmentallysensitiveareasofEasternParaguay.Theaccreditedentityclassified

4Paragraphs14,15,16,and17oftheGCFIndigenousPeoplesPolicysetsouttheapplicabilityofthepolicy.AdditionalguidanceisalsoprovidedintheIndigenousPeoplesPolicyOperationalGuidelines.5AdditionalguidanceonpotentialenvironmentalandsocialrisksandimpactscanbefoundontheGCFIndigenousPeoplesPolicy,theIndigenousPeoplesPolicyOperationalGuidelinesandtheIFCGuidanceNoteonPerformanceStandard7.


theprojectashavingpotentiallymoderateenvironmentalandsocialrisksandimpactsbasedonriskscreeningandenvironmentalandsocialanalysis.Theprojectrecognizesthepresenceofindigenouscommunitiesintheeightdepartmentswheretheprojectwillbeimplemented.Anindigenouspeoplesplanningframework(IPPF)wasdevelopedbytheaccreditedentitydescribingtheprocessesofdevelopingspecificindigenouspeoplesplan,thepotentialimpactsoftheprojects,andthemitigationmeasurestakingintoconsiderationtheindigenoussystemofdecision-making,participationmechanisms,meaningfulconsultationandgrievanceredress.AconsultationplanisintegratedintotheIPPFandelaboratesfurthertheprocessforobtaining,maintainingandoperationalizingthefree,priorandinformedconsent.Furtherassessmentsoftheimpactsofsubprojectssuchasontheindigenouspeopleswillbeundertaken,andevidenceofthefree,priorandinformedconsentshallbeprovidedbytheaccreditedentity.

Theprojectrecognizestheimportanceofsecurerightsinsustainingthebenefitsoftheproject.Withintheprojectarea,themajorityofhouseholdshaveaccesstolandandlandrights.Throughthetechnicalassistance,theprojectwillsupporttheresolution,acknowledgment,andrecognitionofthecommunitiesandindigenouspeopleslegitimaterightstotheirland.Duediligenceonlandtenuresituations,includingassessmentofpotentialconflictsoverrightstolands,willbeundertakenaspartofthetechnicalassistanceandriskmanagementactivitiesoftheproject.Reference:http://www.fao.org/environmental-social-standards/disclosure-portal/en/?page=2&ipp=10&no_cache=1&tx_dynalist_pi1[par]=YToxOntzOjE6IkwiO3M6MToiMCI7fQ==


Annex1

ExamplesofriskfactorsalignedtotheenvironmentalandsocialsafeguardsandpoliciesofGCFThelistbelowprovidessomeexamplesofenvironmentalandsocialriskfactorsthatcanbeusedindevelopingascreeningchecklist.TheriskfactorsareorganizedaccordingtotheinterimESSofGCFandconsidertherequirementsoftheinterimESS,EnvironmentalandSocialPolicy,GenderPolicy,andtheIndigenousPeoplesPolicyoftheGCF.AssessmentandmanagementofenvironmentalandsocialrisksandimpactsWilltheactivitiesinvolvetransboundaryimpactsonair,waterorothernaturalresources?Aretheactivitieslikelytocontributetocumulativeimpacts?

Willtheactivitiesinvolveassociatedfacilitiesandthird-partyimpacts?

Aretheactivitieslikelytoinducepotentialsocialconflicts?

Dotheaccreditedentities,executingentitiesandimplementingagencies(grantees,sub-borrowersandproponents)havethecapacitytoimplementtheenvironmentalandsocialmanagementplans/actionplans?LabourandworkingconditionsAretheactivitieslikelytoaffectworkingconditions,particularlyintermsofemployment,compliancewithlabourandotherlawspertainingtonon-discrimination,equalopportunity,childlabour,andforcedlabourofdirect,contractedandthird-partyworkers?Willtheactivitiesposeoccupationalhealthandsafetyriskstoworkers,includingsupplychainworkers?ResourceefficiencyandpollutionpreventionWilltheactivitiesgenerateemissions;dischargepollutionintowaterandland;generateactivity-relatedgreenhousegasemissions;usehazardousmaterials;generatenoiseandvibration;and/orgeneratewasteincludinghazardouswaste?Aretheactivitieslikelytoutilizenaturalresources,includingwaterandenergy?Willtherebeaneedtodevelopandimplementmeasurestoreducepollutionandpromotesustainableuseofresources?Communityhealth,safetyandsecurityWilltheactivitiespotentiallygeneraterisksandimpactsonthehealthandsafetyoftheaffectedcommunities,includingimpactsonecosystemservicesaffectingthelocalcommunityhealthandsafety?Willtheactivitiesincreasetheriskofsexualexploitation,abuseandharassment?

Willtherebeaneedforanemergencypreparednessandresponseplanthatalsooutlineshowtheaffectedcommunitieswillbeassistedinemergencies?Willtherebepotentialrisksposedbythesecurityarrangementsandpotentialconflictsattheprojectsitebetweentheworkersandtheaffectedcommunity?LandacquisitionandinvoluntaryresettlementAretheactivitieslikelyinvolvetheacquisitionoflands,landrightsorland-userightsthroughexpropriationorothercompulsoryproceduresinaccordancewiththelegalsystemofthecountry?Aretheactivitieslikelytoalterexistinglanduseandrestrictaccesstonaturalresourcesresultinginlossoflivelihoodsandothereconomicactivities?BiodiversityconservationandsustainablemanagementoflivingnaturalresourcesIstheprojectorprogrammelikelytobelocatedonmodified,naturaland/orcriticalhabitatsorinprotectedorinternationallyrecognizedecologicalareas?


Istheprojectorprogrammelikelytointroduceinvasivealienspeciesoffloraandfauna,affectingthebiodiversityofthearea?Istheprojectorprogrammelikelytohavepotentialimpactsonbiodiversity(especiallycriticallyendangeredand/orendangeredspecies,endemicorrestricted-rangespecies,andgloballysignificantmigratoryorcongregatoryspecies)andecosystemservices,includingproductionoflivingnaturalresources?IndigenouspeoplesAretheactivitieslikelytohaveimpactsonindigenouspeoplesandcommunities,suchasimpactsonlandsandnaturalresources,landtenureandonculturalresources?Aretheactivitieslikelytoleadtophysicaldisplacementofindigenouspeoplesand/orrestricttheaccessofindigenouspeoplestolandsandresourcesresultinginlossoflivelihood?Willtheactivitiesprovideequitableopportunitiestoindigenouspeoplesandothervulnerablegroupsduringstakeholderconsultationandindecision-makingduringthepreparation,implementation,monitoringandevaluationoftheactivities?Willtheactivitiesneedtoobtainfree,priorandinformedconsent(FPIC)?Ifso,hastheprojectobtainedFPIC?CulturalheritageWilltheprojectorprogrammebelocatedonareasthatareconsideredtohavearchaeological(prehistoric),paleontological,historical,cultural,artisticandreligiousvaluesorcontainfeaturesconsideredascriticalculturalheritage?