Alexander W. Indorf, Sr. Environmental Specialist

IFC’s Environmental and Social Sustainability Framework

Workshop on Mitigation of Climate Change and Sustainability, Bogotá, November 19, 2010

International Bank for Reconstruction and Development, 1945

International Finance Corporation, 1956

International Development Association, 1960

Multilateral Investment Guarantee Agency, 1988

IFC is owned by its 176 member countries, which collectively determine policies.

International Centre for Settlement of Investment

Disputes, 1966

IFC: Part of the World Bank Group

IFC’s Products and Services

To assist private enterprise in developing countries, To assist private enterprise in developing countries, IFC:IFC:

Provides loans and equity for viable projectsProvides loans and equity for viable projects Mobilizes capital from other sourcesMobilizes capital from other sources Provides technical assistance and advisory servicesProvides technical assistance and advisory services

IFC Social & Environmental Standards

Building blocks for IFC approach to sustainability―IFC Sustainability Policy ―Performance Standards―Disclosure Policy―EHS Guidelines

Together these provide a framework to:― Manage project risks― Improve performance― Maximize development impact

IFC’s Sustainability Policy Framework

Disclosure Policy

Sustainability Policy

Environmental & Social Review Procedure

8 Guidance Notes Environmental, Health & Safety Guidelines Best Practice Materials

IFC –Institutional

Client –Project level

Requirements Implementation

8 Performance Standards

Overview Performance Standards

PS 1: Social & Environmental Assessment and Management System

PS 2: Labor and Working Conditions PS 3: Pollution Prevention and Abatement PS 4: Community Health, Safety & Security PS 5: Land Acquisition and Involuntary Resettlement PS 6: Biodiversity Conservation and Sustainable Natural

Resource Management PS 7: Indigenous Peoples PS 8: Cultural Heritage

How the Performance Standards are Used Basis of client’s assessment and management

―The client must establish that its future operations will meet the standards

Basis of IFC’s E&S review of the project―IFC assures its board that the project can be expected

to meet the standards―CES Management System tracks project compliance,

performance Basis of IFC’s reporting on development effectiveness

―E&S performance indicators in part based on the standards

Basis of the Equator Principles, others

The Equator Principles in a nutshell

Environmental and social risk management framework for project finance

Based on IFC’s Performance Standards and Environmental, Health and Safety Guidelines

First announced in June 2003 with ten banks - Relaunched as “EP2” in July 2006, referring to the new IFC standards

Over 60 financial institutions globally, including several in emerging markets―http://www.equator-principles.com/index.shtml

Gather annually at Community of Learning event together with ECAs and BFIs

Climate Change within IFC’s Sustainability Framework – 2010

― Policy commitment to low-carbon development and better reporting

― Integrate in environmental and social assessment― Improve efficiency of use of resources― Reduce GHG project emissions through good international

practice― Increase reporting requirements on GHG emissions

100,000 tons CO2 to 20,000 tons

― Ecosystems approach

9

10

- Formally initiated in FY08 as an IFC - Formally initiated in FY08 as an IFC Strategic PriorityStrategic Priority

- FY08-10: developing the analytical - FY08-10: developing the analytical foundation – tools and foundation – tools and methodologiesmethodologies

• est. GHG emissions from investments est. GHG emissions from investments (requirement for all real sector 2/10)(requirement for all real sector 2/10)

• Evaluating climate risks (pilot projects)Evaluating climate risks (pilot projects)• Tracking and reporting clean energy Tracking and reporting clean energy • Shadow price pilotShadow price pilot

- New investment/strategy - New investment/strategy department FY11: Climate Business department FY11: Climate Business Solutions GroupSolutions Group

Climate Change within IFC’s Investment Strategy

Challenges in Implementation

IFC works in emerging and frontier markets Investment climate is often difficult – e.g., poor

regulatory, governance or legal structures to support private sector enterprise

To invest successfully, IFC needs committed sponsors and a comprehensive due-diligence of the risks

To invest sustainably, IFC needs to ensure that development outcomes are maximized

IFC’s Environmental and Social Department

Pollution prevention Cleaner production Socioeconomic/workplace/

labor issues Land acquisition/

resettlement/compensation Indigenous peoples Biodiversity

Community Development & Consultation

Forestry Cultural property Impact assessment E&S management systems Health & Safety

• Over 60 Environmental and Social Specialists globally• Collocated with IFC’s Investment Departments across all industry sectors and regions

Links and Contacts

http://www.ifc.org/sustainability

Alexander W. Indorf, Sr. Environmental Specialist, Regional Team Leader (LAC), CES Department

E-mail: aindorf@ifc.org Phone: +55-11-5185-6885