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Note: This interim report from the consultation workshop summarizes key points and suggestions made by the participants. It does not contain detailed responses from IFC. The issues are under review and discussion, and IFC is preparing a summary of responses to key issues related to these and other topics during the second half of September 2010. These

will be posted to the www.ifc.org/policyreview website.

IFC wishes to thank all the participants in this consultation as well as others who have contributed to the consultation process on IFC’s revised Sustainability Framework. While we have tried to be as comprehensive and accurate as possible in capturing participants’ views

and observations, there may be errors or omissions in the summary. We welcome corrections.

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

Consultations’ report: New Delhi, India, June 25, 2010

Location of Consultation: New Delhi, India Date: June 25, 2010 Participants: See annex. Consultation Process: The consultation included: (i) brief introduction of all participants and the expectations of the process, (ii) overview of the Performance Standards, (iii) plenary on the key proposed changes and cross-cutting themes, (iv) breakout group discussion #1 and report back to plenary on key issues, (iv) Disclosure Policy overview, together with CAO representative, (v) breakout group discussion #2 to drill down on topics, (vi) management responses and next steps, and (vii) closing comments.

Key Themes, Recommendations, and Questions Raised Climate Change/Ecosystem Services • IFC should review its lending policy on climate change and energy efficiency. IFC should

take a leading role in incentivizing development of renewable energy at the policy and technology levels.

• IFC should allow for gradual improvement on GHG emissions depending on the context of where the company operates and should provide a standard approach to local benchmarking on GHGs.

• Climate change should be factored into project design, at the project scoping phase. • Projects in sensitive ecosystems should not be funded by IFC. • IFC should participate more heavily in biodiversity monitoring. Consider incorporating

biodiversity registers in each project. If one cannot assign a value to natural resources, it’s difficult to measure the project’s impact on those resources.

• Most high-profile studies on biodiversity focus on economic impacts – increase in employment, etc. Ecosystem services have not been but should be assessed. There are ways to quantify the value of natural resources, including forest costs.

• Some 30% of the poor in India are dependent on natural resources. IFC should consider the economic impact of natural capital depletion and should consider expanding the livelihood assessment to include all natural resources in the area.

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• IFC’s client companies can play a role in helping the community build resilience to climate change. How does IFC help clients address adaptation issues?

• Companies with financial resources may have the capacity to pay for the rights to access natural resources – those companies that can afford to may continue to impact the environment.

• IFC should focus more on the issue of waste management. • Some definitions in IFC’s Sustainability Framework conflict with IUCN, WWF definitions on

guidelines for eco-projects. • There is a need to understand supply chain risks at the beginning of the project. Typically

the issue is averted through outsourcing and passing on the responsibility. • IFC should clarify how many links / levels into the supply chain should be reviewed. • Water is a low cost but least valued resource. How is IFC addressing this? Financial Intermediaries (FIs) • What is IFC’s role and responsibility for money that is on-lent to clients of financial

intermediaries (FIs)? • FIs are identifying the risk of their subprojects – there is a need for external monitoring of

how FIs classify those risks. • IFC should have FI-specific DOTS indicators. Engagement/Disclosure/Consultation • Consent versus consultation. If IFC goes with a consent-based approach, external

stakeholders should be involved in determining the definition of consent. • Consider ADB/EBRD’s approach to consent. • What is the appropriate percentage of community members that need to be consulted to

reach consent? Consent is difficult to operationalize. For instance, it’s difficult to determine whether stakeholders are engaged in the process, and the make-up of the community/community membership may change over the life of the project.

• Local communities need to be better informed about projects throughout the project cycle. Local communities should get monthly project implementation updates. The updates should be in a language and format that can be easily understood by local communities.

• It’s important for IFC to keep current on how the project is being implemented and how the community is engaged throughout the life of the project.

• IFC should increase emphasis on stakeholder involvement, i.e. help in monitoring high-risk projects.

• Much reporting is required before a project starts; however, there is little to no technical assistance on reporting provided by IFC. Also, there needs to be increased focus on reporting and disclosure throughout the investment process.

• External stakeholders are not aware of how disclosure is done. • DOTS information should be shared during the project lifecycle – not just after the project. • The Sustainability Framework should be translated into Hindi. • Suggest a shift to 120 days on disclosure. • Consider differences in the sustainability of IFC clients versus sustainability of stakeholders,

including local communities. Institutional arrangements between communities and clients are important can help with capacity building and to empower local communities.

• Is the term CAO “ombudsman” considered gender insensitive?

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• There is more clarity in the revised Performance Standards – some jargon was removed. • Consider disclosing loan agreements where land issues are involved.

Human Rights/Labor • Social impact assessments should address human rights. There should not be separate

human rights impact assessments. • There may be resistance from certain sectors to do human rights assessments. Even best

intentioned companies may be concerned about how far the assessment will go. • IFC should consider whether it should do business in sectors that engage in child labor. • What is the definition of child (age) when it comes to child labor? • How should clients address the need of migrant workers to care for their children during

work hours? • Legislation is helpful but challenges exist in working conditions of migrant labor in factories. • Divergent thinking on boundaries for employers on issues of abuse that come to their

attention, such as domestic violence. Guidance is needed on how far client companies should go to address these issues.

• IFC should offer Technical Assistance to sectors most vulnerable to labor/supply chain issues.

Sustainability Framework Review and Update General/Process

• Attendees were notified of this consultation only 10 days prior to the event. More advance notice is needed to adequately prepare.

• There should be additional regional consultations on the Sustainability Framework Review and Update.

• IFC should consider a Performance Standard on compliance that applies to all projects. • Has there been experience where IFC clients lose competitive advantage from complying

with the Performance Standards?

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ANNEX: Participants – New Delhi Amit Vatsyayan Private Sector Adviser-South Asia, Oxfam GB Ashok Emani Senior Vice President, IDFC / IIF Bhavna Prasad Head of Business and Industry, WWF-India Debi Goenka Executive Trustee, Conservation Action Trust Dr K.S.M.Rao Director, Ramky Enviro Engineers Ltd. K C Malhotra Training Programme Developer, Uttar Pradesh Forest Departement and Tripura Forest Departement Khadga Bahadur Bisht Project Manager, Himal Power Limited Mainak Hazra Director, SENES Consultants India Pvt. Ltd. Mangesh Dakhore Head - Environmental & Social Risk Management, SENES Consultants Mangesh Pathak Principal, Ambit Pragma Ventured Pvt Ltd MAYANK CHOUDHARY Associate Director, Macquarie Capital Advisers (India) Pvt. Ltd. Md. Eleash Mridha Director, Pran Group Menaka Guruswamy Attorney, Supreme Court of India N. Sateesh Babu Vice president-Environment, IL&FS Environment Group Neena Singh Partner, ERM India Pvt Ltd Pearl Tiwari Vice President (CSR), Ambuja Cements Limited R.R. Nair Executive Director, Lanco Anpara Power Limited Raman Mehta Functional Manager, Policy, ActionAid India Ramananda Wangkheirakpam Coordinator, Forum for Indigenous Perspectives and Action Ramesh Chand Swarankar Resettlement & Social Development Officer, Asian Development Bank Ronak Shah Development Professional, Seva Mandir S.R. HUSSAIN Senior Manager - Group CSR & Corporate EHS, Amalgamated Bean Coffee Trading Co. Ltd Sadananda Poojary Company Secretary, Amalgamated Bean Coffee Trading Co. Ltd Sanjay Prasad Gairola AGM (EHS&S), Allain Duhangan Hydroelectric Project

Shivesh Sinha

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ANNEX: Participants – New Delhi Development Director - Asia; Chairmam LUMPL, Lafarge Asia Sdn Bhd

SUNAYNA KALRA Dy. General Manager, HOLTEC CONSULTING PVT. LTD. Surya Man Shakya Sr. Manager, Environment, SN/Power Holding Singapore Pte. Ltd. Joe Athialy Coordinator for South Asia, Bank Information Center Himanshu Thakkar Coordinator, South Asia Network on Dams, Rivers and People