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IFC – A Strategic Approach for Social and Environmental Sustainability

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IFC: A Member of the World Bank Group

International Bank for Reconstruction and Development, 1945

International Finance Corporation, 1956

International Development Association, 1960

Multilateral Investment Guarantee Agency, 1988

International Centre for Settlement of Investment

Disputes, 1966

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IFC’s Mission

To promote sustainable private sector investment in developing countries, helping

to reduce poverty and improve people’s lives.

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Mainstreaming Social and Environmental Issues

New Social and Environmental Standards

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IFC’s S&E due diligence framework Exclusion List 8 new Social and Environmental Performance Standards Environmental, Health & Safety and Industry Guidelines – updates soon to

be released― Updated Social and Environmental Review Procedure questionnaires, appraisal,

E&S Review Document, loan agreement, annual monitoring and supervision Best Practice and Guidance Notes

― Creating Business Opportunity through Improved Animal Welfare― Addressing the Social Dimensions of Private Sector Projects― Non Discrimination and Equal Opportunity― Managing Retrenchment― HIV/AIDS in the Workplace― Addressing Child Labour in the Workplace and Supply Chain

New Labor Toolkit for Investment Officers New Biodiversity Guide Updated Disclosure Policy

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New Policy and Performance Standards on Social and Environmental Sustainability

IFC introduced new policy and performance standards on April 30, ,2006

New standards― fill gaps left by earlier policies― outcomes orientation― recognize importance of management systems and

community engagement― becoming an international benchmark (Equator

Principles)

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Equator Principles

Voluntary association of private banks (currently 41) Currently use IFC’s old policies as their principal social

and environment risk management tool. Effective July 1, 2006 the banks will start migrating to the new IFC Policy and Performance Standards on Social and Environmental Sustainability

The banks account for over 85% of global project finance in emerging markets

details available at www.equator-principles.com

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IFC Policy & Performance Standards

Basis of IFC’s leadership & approach to E&S

sustainability― Ensure projects financed by IFC are environmentally

and socially sound ― Provide comprehensive risk and opportunities

framework for IFC and its clients

― Can be used to improve project performance

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IFC’s Policy Framework

Disclosure Policy

Sustainability Policy

Environmental & Social Review Procedure

8 Performance Standards

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

IFC –Institutional

Client –

Project Level

Requirements Implementation

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PS 1: S&E Assessment and Management Systems 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

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8 Performance Standards

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IFC Resources to help clients

Almost 50 social and environmental experts on staff― approximately 25% are working in field offices (4 in Africa)― provide advice and support during appraisal and supervision

Broad range of Technical Assistance and other support for clients― donor funded support through Trust Funds and SME facilities

Social and Environment staff an integral part of IFC team

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Walking the Talk

Highlights of IFC Leadership and Case for Sustainable Finance

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IFC’s value add Global experience in sustainable finance –

mainstreaming S&E issues Provider of technical assistance and incubator

financing to support new sustainable business opportunities

― Sustainable Energy― Biodiversity― Cleaner Technologies― Social Responsibility― Sustainable Finance― Carbon Finance― Gender

S&E site is the most visited part of the IFC website after Careers, in May 2006:

― visits to CES external website = 11,492― total number of document downloads from CES external

website = 8,088

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Responding to climate change challenge

World Bank Group went carbon neutral on World Environment Day, June 5, 2006

― offset GHG emissions from DC headquarters and travel from HQ (field offices next) by investments in renewable energy and energy efficiency projects

― direct and indirect carbon dioxide emissions of approximately 148,000 metric tons = 60 percent from operations and 40 percent from airline travel

First IFC project in Asia – biogas-based power and heat generation in Korat, Thailand

IFC now also guaranteeing carbon finance purchases for European buyers

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IFC supports first FT Sustainable Banking Awards Financial Times launches 1st Sustainable Banking Awards, in

association with IFC― 90 entries from 48 institutions around the world ― HSBC – Sustainable Bank of the Year― Banco ABN Amro Real of Brazil - emerging markets bank of the year― WestLB, the German bank - sustainable bankers of the year― Citigroup, its Mexican arm Banamex and Financiera Compartamos, a

Mexican microfinance provider - sustainable deal of the year for the first peso-denominated investment grade bond issue to finance loans to poor entrepreneurs, mainly women in rural areas

― Credit Suisse - sustainable energy deal of the year - for last year's flotation of Suntech Power Holdings, a Chinese solar energy company, on the New York Stock Exchange

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IFC’s 2005 Sustainability Report

Outlines IFC’s response to global challenges― climate change, poverty, corruption, HIV/AIDS,

participation of women in private sector development, and the preservation of natural resources

Provides more information than ever before about how sustainability is integrated into decision-making throughout IFC's investment cycle

Presents progress in how IFC manages its own social and environmental footprint and is leading by example through its new E&S standards and by promoting the business case for sustainability among its financial sector clients

Adopts the Global Reporting Initiative’s Sustainability Reporting Guidelines

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The case for sustainable finance Protecting the environment and ensuring fair treatment of people and

communities affected by projects is recognized as a fundamental requirement of long-term economic success

Increasing activism coupled with ease of access to global communications has significantly increased the risks presented by poor environmental and social performance

Investors now increasingly demand good environmental and social performance as a condition of investment – growth of SRI funds, Equator Principles, etc

Demonstrated business case for good environment and social performance – positive impacts on costs, market access, risk and reputation