Environmental and Social Policy and Procedural Guidelines for

E

NVIRONMENT AND

S

OCIAL

P

OLICY AND

P

ROCEDURAL

G

UIDELINES

FOR

P

ROJECTS IN

IDA C

OUNTRIES

F

INANCED

J

OINTLY BY

B

ANK AND

IFC

June 19, 2012

(based upon 2012 Final IFC Sustainability Framework)

Table of Contents

Overview ......................................................................................................................................... 3

Part One (A): Guidance on Policy Issues by Scenario ................................................................... 5

Part One: Comparison and Guidance on Policy Issues by Topic ................................................... 7

Part Two: Guidance on Procedural Differences ........................................................................... 53

F IGURES

1 IDA/IBRD Project Cycle ...................................................................................................................... 55

2 IFC Investment Cycle ........................................................................................................................... 56

2

Overview

IFC’s Sustainability Framework, which includes the Policy and Performance Standards on

Environmental and Social Sustainability, and the Access to Information Policy, effective January 1, 2012, and the World Bank Operational Policies relating to environment and social safeguards are generally equivalent in scope, but sometimes realized in slightly different ways in practice. The differences are mostly in form and process, and do not represent major differences in policy content. The Sustainability

Framework and the Operational Policies were approved for application in all eligible member countries.

In recent years, senior management has agreed an institutional priority to increase collaboration between the Bank and IFC in IDA countries. Joint Bank-IFC project teams in IDA countries have faced a number of systemic issues that have made project preparation harder and more time consuming than if prepared independent of the other institution. Staff have cited the application of two different environment and social systems (standards and processing requirements) as one of the excessive transaction costs of joint projects, which has added time and complexity to project preparation. Often, the private sponsor and the government have also been confused by the two different World Bank Group requirements in a jointly-financed project.

O BJECTIVE

These Policy and Procedural Guidelines were first developed in 2008 and issued in January 2009 to explain to staff how the policies and procedures of the World Bank Group environment and social systems apply jointly in IDA countries, and aimed to identify possible efficiency gains. Part One clarifies the key differences between Bank and IFC policies, and provides guidance on how the two systems' policy requirements should be applied together. Part Two outlines how the two systems' procedural requirements relate to each other throughout the project cycle, and how they should be applied most efficiently. In 2011, IFC’s Board approved an update of the IFC Sustainability Framework, which went into effect on January 1, 2012. Therefore, this update of the Policy and Procedural Guidelines has been prepared.

1

S COPE

These Guidelines focus on the major issues which are different in policy or practice between the Bank and IFC. They are not comprehensive of all Bank and IFC respective policy requirements. The Guidelines are intended to help joint teams to apply the two systems together more efficiently. The Guidelines do not replace or alter the approved World Bank Safeguard Policies and IFC’s Sustainability

Framework; they only clarify how the two systems should be applied together.

I MPLEMENTATION

These Guidelines highlight the need for consensus and joint decision-making by the Bank and IFC teams. If joint teams and their respective managers are unable to resolve a major conflict, the OPCS Vice

President and the IFC Advisory Vice President should agree on a solution in consultation with the respective General Counsels. As a normal part of the work undertaken by OPCOR and CES, staff decisions will be recorded, so they can be used as a growing body of common law and for ongoing

1 Prior to issuing the previous version of these Guidelines in January 2009, MIGA had adopted identical

Performance Standards as the IFC, and therefore those previous Guidelines also applied to projects jointly financed by the Bank and guaranteed by MIGA. At the time of this update, MIGA had not yet decided whether to seek Board approval to adopt the revised IFC Performance Standards as MIGA’s Performance Standards. Should MIGA do so in the future, these updated Guidelines would also apply to projects jointly financed by the Bank and insured by

MIGA.

3

learning. Project teams are also encouraged to record any decisions taken in the Project Appraisal

Document (Bank) and PDS document (IFC), to ensure transparency on the decisions taken.

The Guidelines were originally produced under the auspices of the IDA-IFC Secretariat in 2008, and have been updated by a Bank-IFC Working Group.

For any questions, please contact William Bulmer (IFC) or Stephen Lintner (OPCOR).

4

Part One (A): Guidance on Policy Issues by Scenario

This section (Part One) provides an overview of key Bank and IFC policy differences, and offers guidance to staff of joint teams on how key elements of the two systems' policy requirements should be applied together. Part Two provides an overview of procedural differences, which are substantive. It should be noted that most of the policy differences and the more substantive procedural differences are driven by key differences in the respective institution’s project cycle and clients. Bank and IFC have two different project models in order to best serve their different clients:

 IFC Project Cycle: Within the IFC business model there are actions to be taken by IFC (i.e., IFC appraisal, etc., which is the project cycle carried out by IFC staff) and actions taken by the private sector client (i.e., to get a project designed, built, and operational). In IFC's case, the two timelines often are very different, i.e., IFC typically comes in at an advanced stage in the client's project cycle. By the time IFC becomes involved and begins its internal project cycle, the client/investor typically has moved well along in its project cycle, i.e., the client: (1) has done all the marketing and feasibility studies, much of the design work, various risk assessments, etc., in order to understand the costs; (2) has made a determination that there is a good business opportunity, having considered costs and benefits; (3) has identified a project site location; (4) often has received some sort of governmental approval such as the award of a concession, license, or permits; and (5) is now looking for project financing. In fact, an important share of IFC's business entails proposed investment in projects that are well past the early design and planning phase, that are already built and operating. In effect, IFC typically has more information on project site, design and other specifics at an early stage of its project cycle compared to IBRD at its comparable point of its project cycle.



IBRD/IDA Project Cycle: In contrast, IBRD/IDA and its public sector client typically have significant overlap in timing of their project cycles. IBRD/IDA typically works closely with its client from the very earliest concept stage, working with the government client to assess the need, to define the IBRD/IDA's role, to assess feasibility, to design, and to assess impacts and risks.

These project cycle differences are reflected in Figures 1–3 in Part 2 of these guidelines.

The following section assumes three scenarios, and provides guidance on how to address real or apparent differences between the Bank Operational Policies on Safeguards and IFC Performance Standards and

Policies:



Scenario #1 : the linked IFC and Bank projects are processed contemporaneously

 Scenario #2 : the Bank project leads and the linked IFC project follows



Scenario #3 : the IFC project leads and the linked Bank project follows

Regardless of the investment scenario, the joint team should be guided by the following good practice principles to avoid duplication of efforts, expedite project processing time, and take advantage of the synergies of the World Bank Group institutions.



Anticipate potential policy implementation differences . The Bank and IFC environmental and social policies are aligned, but institutional and procedural differences between the two institutions create potential confusion and project delays. When one institution is involved in a project, team members should always ask if it is likely that the other institution might participate in the future. If the answer is positive, the team should anticipate the policy implementation differences that can become an issue. One example of such differences is the implementation of the Bank's and the

IFC's disclosure of environmental and social information (see the relevant section of the accompanying matrix).

5



Anticipate policy requirements with long lead-times and prepare ahead . Some policy requirements will need time to be fulfilled by borrowers/clients. Examples include the requirement for a regional/strategic impact assessment and the requirement for a cumulative impacts assessment (see the relevant sections of accompanying matrix). These are complex documents that could add months to project processing time if not planned at the outset and executed alongside other assessments or studies. Whenever possible, the regional impact assessments for IDA-IFC priority countries and sectors should be prepared prior to projects; such foresight will significantly reduce the time needed for regional and sectoral impact assessments in connection with specific projects.

 Share project information and consult . To avoid delays and duplication of effort under any of the three scenarios, all relevant environment and social project information should be shared within a joint project team. Sensitive information (such as business or financial plans) that it is not necessary to share should be redacted from documents before sharing. When necessary, confidential information should be shared with a confidentiality agreement; if copies are distributed, they should be numbered and marked “Confidential” on each page. If in doubt, teams should seek advice from their respective legal counsel.

 When potential conflict surfaces, seek advice from managers and experts . The joint team should not let a potential conflict turn into a real conflict. They should consult Bank and IFC environmental managers and policy advisors, and the WBG Conflict of Interest Office, for guidance.

The accompanying matrix in Part One provides further detail, including a side-by-side comparison of the related text in Bank and IFC safeguard policies, along with the same guidance to staff of joint teams on how the two systems’ policy requirements should be applied together.

6

Part One (B): Comparison and Guidance on Policy Issues by Topic

This matrix provides a side-by-side comparison of the related text in Bank safeguard policies and IFC Sustainability Framework (policies and Performance

Standards), along with guidance to staff of joint teams on how the two systems’ requirements should be applied together.

A.

I NTERNAL P RACTICES

Project

Screening and

Categorization

Text from World Bank OP

The Bank undertakes environmental screening of each proposed project to determine the appropriate extent and type of EA.

(a) Category A : A proposed project is classified as

Category A if it is likely to have significant adverse environmental impacts that are sensitive, diverse, or unprecedented. These impacts may affect an area broader than the sites or facilities subject to physical works.

(b) Category B : A proposed project is classified as

Category B if its potential adverse environmental impacts on human populations or environmentally important areas-including wetlands, forests, grasslands, and other natural habitats-are less adverse than those of Category A projects. These impacts are site-specific; few if any of them are irreversible; and in most cases mitigatory measures can be designed more readily than for

Category A projects.

(c) Category C : A proposed project is classified as

Category C if it is likely to have minimal or no adverse environmental impacts.

(d) Category FI : A proposed project is classified as Category FI if it involves investment of Bank funds, through a financial intermediary, in subprojects that may result in adverse environmental impacts.

Text from IFC Policies and Performance

Standards

As part of its review of a business activities

’ expected social and/or environmental impacts,

IFC uses a system of social and environmental categorization to: (i) reflect the magnitude of risks and impacts understood as a result of the client’s

Social and Environmental Assessment; and (ii) specify IFC’s institutional requirements to disclose to the public project-specific information prior to presenting projects to its Board of Directors for approval in accordance with paragraph 34 of the

IFC Access to Information Policy. These categories are:

Category A: Business activities with potential significant adverse environmental or social risks and/or impacts that are diverse, irreversible, or unprecedented

Category B : Business activities with potential limited adverse environmental or social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures

Category C: Business activities with minimal or no adverse social or environmental risks and/or impacts

Category FI: Business activities involving investments in FIs or through delivery mechanisms involving financial intermediation.

This category is further divided into:

FI-1: when an FI’s existing or proposed portfolio includes, or is expected to include, substantial

Comparison & Guidance

Comparison: The categorization definitions are similar between the Bank and IFC, but IFC has further refined Category FI into three subcategories. Reflecting the different clients of the two institutions as summarized in the introduction to these guidelines, the two institutions implement categorization in a different manner. In the Bank business model, categorization provides a road map for Bank and the client to begin to assess together the impacts and to disclose the assessment of those impacts and proposed risk mitigants. In contrast, IFC's

Sustainability Policy and Performance Standards require clients to assess risks and impacts and identify risk mitigants, which IFC then reviews once it becomes involved in order to determine categorization. The Category then defines the minimum IFC institutional disclosure period.

Guidance: All jointly-financed projects should have the same categorization. For Bank and IFC staff, the categorization should be based on the most serious potential adverse environmental and social risks and impacts of the project and not be influenced by any mitigation measures proposed by or discussed with the government or the private sponsor as part of the EIA or

Environmental and Social Action Plan.

The problem potentially arises in Scenario #2, when a

Bank project leads and the linked IFC project follows; or in Scenario #3, when an IFC project leads and the linked Bank project follows. If the

EIA:

Responsibility for Drafting



Standards financial exposure to business activities with potential significant adverse environmental or social risks or impacts that are diverse, irreversible, or unprecedented.

FI2: when an FI’s existing or proposed portfolio is comprised of, business activities that have potential limited adverse environmental or social risks or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures; or includes a very limited number of business activities with potential significant adverse environmental or social risks and impacts that are diverse, irreversible, or unprecedented.

FI-

3: when an FI’s existing or proposed portfolio includes financial exposure to business activities that predominantly have minimal or no adverse environmental or social impacts.

The borrower is responsible for carrying out the

EA. For Category A projects the borrower retains independent EA experts not affiliated with the project to carry out the EA. [Footnote 7 states:

However, the borrower ensures that when individuals or entities are engaged to carry out EA activities, any conflict of interest is avoided. For example, when an independent EA is required, it is not carried out by the consultants hired to prepare the engineering design.] (OP 4.01)

The Assessment (the process of identification of risks and impacts) will be an adequate, accurate, and objective evaluation and presentation prepared by competent professionals. For projects with potentially significant adverse impacts or where technically complex issues are involved, clients may be required to involve external experts to assist in the risks and impacts identification process. (IFC PS 1 paragraph 19).

The hierarchy of expertise goes from competent professional (defined in PS1 paragraph 18) and increases to external expert.

Competent professionals and external experts are required in the circumstances referenced in PS 1 paragraphs 19 & 22; PS4 paragraph 6; PS5 paragraph 14 & 15; PS6 paragraph 8 and FN 14;

PS7 paragraph 7. Guidance Note 1, paragraph74 gives further detail:

Comparison & Guidance team from either institution has a reasonable expectation that the other will also be financing the project, they should seek input when determining categorization. If an IFC project proceeds with a Category B designation, and the identical project is later proposed for Bank financing with a Category A designation, the Bank team should review the content of the social and environmental assessment already carried out by the project to determine whether the scope of the assessment is satisfactory. If this is not the case, the joint team should, to the extent possible, propose specific measures for the project to meet

Bank requirements, rather than require the project to carry out an entirely new Environmental Impact

Assessment.

With respect to Category FI, the Bank does not distinguish among Safeguards requirements as does IFC between IFC’s FI-1 and FI-2. In the case of IFC’s Category FI-3, the Bank likely would designate such an investment as Category C.

Comparison: The Bank requires the EIA for

Category A projects to be carried out by an entity independent of the borrower, while for projects with potentially significant adverse impacts or where technically complex issues are involved,

IFC may require its clients to involve external experts. In addition, IFC requires the client to retain external experts to verify monitoring information for Category A (PS1 paragraph 22).

Guidance: Joint teams should normally assist the borrower to develop the TOR together. For

Category A joint projects, the EIA should be carried out by an external consultant not connected with the project. For non-Category A projects, both institutions should be flexible as to whether the EIA is carried out by an external consultant or another qualified and experienced person; in a joint project, this decision should be

Disclosure

Requirements



Standards Comparison & Guidance taken jointly.

The Project Information Document (PID) is prepared when the first formal review of the proposed operation is held by Bank management, and is made publicly available. As project preparation evolves, the PID is updated. The updated PIDs are also publicly available. (Policy on Disclosure of Information paragraph 15)

The Integrated Safeguards Data Sheet (ISDS) is

Clients can use in-house staff and/or external consultants (referred to in the Performance

Standards and Guidance Notes as “competent professionals”) or external experts (referred to in the Performance Standards and Guidance Notes as “external experts”) to carry out the risks and impacts identification process, provided that the applicable requirements of the Performance

Standards are met. The competent professional(s) conducting the risks and impacts identification process must be in a position to do so adequately, accurately and objectively, as well as have the requisite competency and experience. For projects with issues that may pose significant adverse impacts and risks, clients should (and may be required to) retain qualified external experts to assist in the conduct of all or part of the environmental and social assessment.

To be considered qualified, these external experts should be required to have substantive and extensive experience in similar projects. They should be involved or engaged early in the project’s development phase and, as necessary, in the various stages of design, construction, and commissioning of the project. In addition, the services of qualified external experts are typically required in certain defined circumstances, on issues concerning resettlement (as provided in

Performance Standard 5), biodiversity (as provided in Performance Standard 6), Indigenous

Peoples (as provided in Performance Standard 7) and cultural heritage (as provided in Performance

Standard 8).

Pre-Board Requirements:

A Summary of Investment Information (SII) is made publicly available once the relevant IFC department has determined that there is reasonable certainty that an investment will be forwarded to IFC’s board of Directors for consideration. (IFC AIP paragraph 30)

Comparison: After Project Concept Review (the first formal review of the proposed operation held by Bank management), the Bank’s PID and ISDS are made publicly available. The equivalent early- project document for IFC (PDS-ER) is not publicly disclosed and there is no equivalent early stage

ISDS for IFC.

Text from World Bank OP prepared when the first formal review of the proposed operation is held by Bank management and is made publicly available. As project preparation evolves, the ISDS is updated. It is revised before formal project appraisal; if changes to the project that are relevant to the ISDS are made after appraisal, a final revision of the ISDS is prepared. The updated ISDSs are also publicly available.

(Policy on Disclosure of Information paragraph 30)

The EA report is publicly available (a) after the borrower has made the draft EA report available at a public place accessible to project-affected groups and local NGOs in accordance with

OP/BP 4.01, Environmental Assessment, and (b) after such EA report has been officially received by the Bank, but before the Bank begins formal appraisal of the project. (Policy on Disclosure of

Information paragraph 31)

For Category FI projects, the Bank discloses the

FI’s Environmental and Social Management

Framework (ESMF), which is a flexible instrument in terms of format, but is required to describe the mechanisms and responsibilities for environmental screening and environmental assessment of subprojects by the FI.


Standards

The SII and the Environmental and Social Review

Summary (ESRS) is released no later than sixty days, in the case of Category A projects, and thirty days, in the case of Category B projects, prior to consideration of the proposed investment for approval by IFC’s Board of Directors. (IFC AIP paragraph 34). For Category C and FI-1, FI-2 and

FI-3 projects, only an SII is released 30 days prior to Board consideration.

For Category A projects, IFC will endeavor to provide access to the draft ESIA prepared by the client even before IFC has competed, or in some cases even started, the review of its investment

(IFC AIP paragraph 36).

Along with the ESRS, IFC will make available electronic copies of, and where available, web links to, any relevant environmental and social impact assessment documents. (IFC AIP paragraph 31 (vi)).

Post-Board Requirements:

Throughout the life of the investment, IFC will update the SII, as necessary, to ensure the continued accuracy of the information (AIP, paragraph 40) and will also update the

Environmental and Social Action Plan with the status of client implementation, will make public

ESIAs that may have been received post-Board, and third-party monitoring reports that were required by IFC (AIP, paragraph 41). IFC will also disclose results for standard indicators tracked in its Development Outcome Tracking System

(DOTS), as agreed with the client, other than those indicators containing confidential information. This information will be updated in the SII as it becomes available.

Clients of all IFC-financed extractive industry


Prior to Appraisal (which typically occurs four months prior to Board), the Bank discloses all borrowers’ safeguard documentation (except for guarantees). For guarantees, the Bank disclosure policy requires a minimum of 60 days disclosure of environmental assessments for Category A projects prior to Board, and 30 days disclosure for

Category B projects (BP 4.01, paragraph 17).

IFC discloses the SII and the ESRS at the same time: no later than 60 days prior to Board for Cat

A and no later than 30 days prior to Board for Cat

B projects. For Category C and FI-1, FI-2 and FI-3 projects, only an SII is released 30 days prior to

Board consideration.

Throughout the life of the investment, IFC will update the SII, as necessary, to ensure the continued accuracy of the information (AIP, paragraph 40) and will also update the

Environmental and Social Action Plan with the status of client implementation, will make public

ESIAs that may have been received post-Board, and third-party monitoring reports that were required by IFC (AIP, paragraph 41). IFC will also disclose results for standard indicators tracked in its Development Outcome Tracking System

(DOTs), as agreed with the client, other than those indicators containing confidential information. This information will be updated in the SII as it becomes available.

Guidance: Joint teams should be mindful of the difference in disclosure requirements, focus on it early, and agree together how best to handle it, while ensuring policy compliance. Typically, this is best handled through detailed pre-planning and coordination. The joint teams should be mindful of a scenario in which the Bank is ahead of IFC and nearing appraisal.

(The Bank’s appraisal must be preceded by Bank disclosure of E&S documents, while IFC disclosure of E&S information always

EA Advisory

Panel


For Category A projects that are highly risky or contentious or that involve serious and multidimensional environmental concerns, the borrower should normally also engage an advisory panel of independent, internationally recognized environmental specialists to advise on all aspects of the project relevant to the EA.

7 The role of the advisory panel depends on the degree to which project preparation has progressed, and on the extent and quality of any EA work completed, at the time the Bank begins to consider the project. (OP 4.01 paragraph 4).

The Panel advises the borrower specifically on


Standards projects publicly disclose their material project payments from those projects to the host government(s) (such as royalties, taxes, and profit sharing). (Policy on Social and Environmental

Sustainability paragraph 49). IFC will encourage governments and corporations to make extractive industry contracts public, and by January 1, 2014 will require that extractive industry projects make principal contracts with governments that sets out the key terms and conditions under which the resource is exploited, and any significant amendments to the contract, public (Policy on

Social and Environmental Sustainability paragraph 50). A summary may be submitted in lieu of the contract but will include key information described in the Policy on Social and

Environmental Sustainability paragraph 51.

When IFC invests in projects involving the final delivery of essential services, such as the retail distribution of water, electricity, piped gas, and telecommunications, to the general public under monopoly conditions, IFC encourages the public disclosure of information relating to household tariffs and tariff adjustments, service standards, investment obligations, and the form and extent of any ongoing government support. (IFC AIP paragraph 53)

For Category A projects with significant impacts that are diverse, irreversible, or unprecedented, the client will retain qualified and experienced external experts to verify its monitoring information. (PS 1 paragraph 22)

In addition, external experts are required in certain defined circumstances, regardless of categorization, on issues concerning potentially significant impacts (PS1 paragraph 19 & 22), community safety from infrastructure failure (PS4 paragraph 6), for some resettlement action plan implementations (PS5 paragraph 15), biodiversity

(PS6 paragraph 8 and FN14), and Indigenous

Comparison & Guidance follows IFC appraisal. As noted in Part Two, however, teams should be aware that the two institutions have very different definitions of

“appraisal.”) This could lead to a clash in institutional disclosure requirements that makes it very difficult for the two institutions to simultaneously disclose identical project information. While this should be a rare occurrence, the joint team should be aware of the possibility, and time their disclosure activities accordingly.

When the Bank is ahead and financing projects in the extractive and utility sectors, it should encourage governments to disclose material payments from the project to the host government , unless the government is already an

EITI participant.

Comparison: The Bank requires an independent panel of experts for a small number of Category A projects that are highly risky, contentious, or very complex. IFC requires external experts based on project-specific issues and also considers the contribution of other project experts, such as the

Lenders’ Independent E&S Specialists.

Guidance: In Scenario #1, joint teams should take a joint decision on whether a panel is required, taking into account all EA work that has already been undertaken and mindful of Bank policy. Teams can access standard templates regarding panel composition and procedures. In

Dam Safety

Panel

Text from World Bank OP the following: (a) the terms of reference for the

EA; (b) key issues and methods for preparing the

EA; (c) recommendations and findings of the EA;

(d) implementation of the EA’s findings; (e) development of environmental management capacity (OP 4.01, footnote 8).

For Category B projects, an EA Advisory Panel is not required.

The Bank’s OP 4.37—Safety of Dams—applies to all dams, distinguishing between small dams

(normally less than 15 meters in height) and large dams (normally over 15 meters or more in height, but can include dams of between 10 – 15 meters if they present special design complexities or dams under 10 meters if they are expected to become large dams during operations). OP 4.37 applies to new dams, dams under construction and existing dams. It includes the following requirement (paragraph 4, 5):

For large dams the Bank requires:

(a) reviews by an independent panel of experts of the investigation, design, and construction of the dam and the start of operations;

(b) preparation and implementation of detailed plans: a plan for construction supervision and quality assurance, a plan for instrumentation, an operation and maintenance plan, and an emergency preparedness plan within the specific timeframes set out in BP 4.37, Annex

A;

(c) prequalification of bidders during procurement and bid tendering; and

(d) periodic safety inspections of the dam after completion.

This also covers tailings dams and ash ponds.

The independent review panel consists of three or more experts, appointed by the borrower and acceptable to the Bank, with expertise in the various technical fields relevant to the dam safety


Standards

Peoples (PS7 paragraph 7).

With IFC implementation of the Performance

Standards, dam safety is part of PS 4

—

Community Health, Safety and Security. PS 4 includes the following text (in paragraph 6):

When structural elements or components, such as dams, tailings dams, or ash ponds, are situated in high-risk locations, and their failure or malfunction may threaten the safety of communities, the client will engage one or more external experts with relevant and recognized experience in similar projects, separate from those responsible for the design and construction, to conduct a review as early as possible in project development and throughout the stages of project design, construction, and commissioning.

Guidance Note 4, Paragraph 7 goes on to say:

The need for certification and approval of structural elements to meet the requirements of

Performance Standard 4 will entail consideration of engineering safety competencies including geotechnical, structural, electrical, mechanical, and fire specialties. Clients will be expected to base this determination, which in some cases will be in addition to or beyond local regulatory requirements, on the potential risk of adverse consequences posed by the nature and use of these structural elements and the natural conditions of the area (i.e., potential for hurricanes, earthquakes, flooding, etc.). Additional guidance is provided in the General and Industry

Sector EHS Guidelines.


Scenario #3, if IFC has not established a panel and the Bank determines that its policy requirements can be met only by the late creation of an independent panel, the client government and the Bank project should normally finance the costs of the panel.

Comparison: The Bank requires the borrower to appoint an independent panel (3-5 members) of dam safety experts acceptable to the Bank for large dams. IFC takes a risk-based approach: where risks are high, it will require one or more external experts not connected to the project. IFC will also consider the contribution of other project experts, such as the Lenders’ Independent

Engineer, in determining need for a panel.

Guidance: In all three scenarios, the project team should be aware of this Bank policy requirement; the Bank’s Lead Dam Safety Specialist in OPCQC should screen the project information for the joint team as early as possible to determine whether a panel is required. The composition of any panel should be a joint decision, sufficient to cover the specialized issues involved, and taking into account all existing arrangements for independent input into the project.

Text from World Bank OP aspects of the particular dam. The primary purpose of the panel is to review and advise the borrower on matters relative to dam safety and other critical aspects of the dam, its appurtenant structures, the catchment area, the area surrounding the reservoir, and downstream areas.

However, the borrower normally extends the panel's composition and terms of reference beyond dam safety to cover such areas as project formulation; technical design; construction procedures; and associated works such as power facilities, river diversion during construction, shiplifts, and fish ladders.

(footnote) The number, professional breadth, technical expertise, and experience of panel members are appropriate to the size, complexity, and hazard potential of the dam under consideration. For high-hazard dams, in particular, the panel experts should be internationally known experts in their field.

The companion document, BP 4.37, describing the Bank’s procedures, says:

5. If an independent panel of experts (the Panel) is required, the TT advises borrower staff, as necessary, on the preparation of TOR. The TT reviews and clears the TOR and the Panel members proposed by the borrower. Once the

Panel is in place, TT staff normally attend Panel meetings as observers.

6. The TT reviews all reports relating to dam safety prepared by the borrower, the Panel, the independent specialists who assess an existing dam or a dam under construction, and the professionals hired by the borrower to design, construct, fill, and start up the dam.

8. The appraisal team reviews all project information relevant to dam safety, including cost estimates; construction schedules; procurement


Standards

GN4, Paragraph 9, states that high risk structural elements are also commonly encountered in larger projects and include those that could threaten human life in the event of failure, such as dams located upstream of communities. In these cases, a risk assessment, in addition to the local engineering certification requirements, should be performed by competent experts and external experts. Representative types of dams which may require risk assessments and/or review by external experts include hydroelectric power dams; mine tailings dams; dams for ash ponds; fluid overburden and spoils dams; water and other liquid storage dams; and dams for wastewater and storm water management. For examples of risk-based criteria that can be used to evaluate dams see GN4, Annex A.

Annex A

—Examples of Risk-Based Criteria for

Assessment of Dams

In the case of dams and impoundments, external experts should base their evaluation of safety on specific risk criteria. External experts should initially refer to national regulations and methodologies. Should such regulations not be available in the country, existing, well-developed methodologies promulgated by authorities in countries with mature dam safety programs should be referred to and adapted as necessary to local conditions. In broad terms, risk assessment criteria may include the following aspects:



Design flood



Design earthquake (maximum credible event)



Properties of construction process and properties of construction materials



Design philosophy



Foundation conditions



Height of dam and volume of materials contained



Quality control during construction


International

Waterways

Text from World Bank OP procedures; technical assistance arrangements; environmental assessments; and the plans for construction supervision and quality assurance, instrumentation, operation and maintenance, and emergency preparedness. The team also reviews the project proposal, technical aspects, inspection reports, Panel reports, and all other borrower action plans relating to dam safety. If a Panel has been required, the team verifies that the borrower has taken the Panel’s recommendations into consideration and, if necessary, assists the borrower in identifying sources for dam safety training or technical assistance.

4. The Bank ensures that the international aspects of a project on an international waterway are dealt with at the earliest possible opportunity.

If such a project is proposed, the Bank requires the beneficiary state, if it has not already done so, to formally to notify the other riparians of the proposed project and its Project Details (see BP

7.50 paragraph 3). If the prospective borrower indicates to the Bank that it does not wish to give notification, normally the Bank itself does so. If the borrower also objects to the Bank's doing so, the

Bank discontinues processing of the project. The executive directors concerned are informed of these developments and any further steps taken.

5. The Bank ascertains whether the riparians have entered into agreements or arrangements or have established any institutional framework for the international waterway concerned. In the latter case, the Bank ascertains the scope of the institution's activities and functions and the status of its involvement in the proposed project, bearing in mind the possible need for notifying the institution.

6. Following notification, if the other riparians raise objections to the proposed project, the Bank, in appropriate cases, may appoint one or more independent experts to examine the issues in


Standards



Management capacity of the client/operator



Provisions for financial responsibility and closure



Financial resources for operation and maintenance, including closure when applicable



Population at risk downstream of the dam



Economic value of assets at risk in case of dam failure

Risks and impacts will also be analyzed from the early developmental stages through the entire life cycle (design, construction, commissioning, operation, decommissioning, closure or, where applicable, post-closure) PS1, paragraph 4.The risks and impacts identification process will also consider the transboundary effects, such as pollution of air, or use or pollution of international waterways, as well as global impacts, such as the emission of greenhouse gasses. (PS 1 paragraph

7).

IFC Environmental and Social Review Procedure requires IFC to notify the Board of Directors of affected international waterway countries.

GN1, Paragraph 36, Transboundary impacts are impacts that extend to multiple countries, beyond the host country of the project, but are not global in nature. Examples include air pollution extending to multiple countries, use or pollution of international waterways, and transboundary epidemic disease transmission. If the risks and impacts identification process determines that (i) the project entails activities that may cause adverse effects through air pollution or abstraction of water from or pollution of international waterways; (ii) the affected countries and the host country have entered into any agreements or


Comparison: Both the Bank and IFC have a policy requirement of notification, although IFC in practice typically only notifies downstream affected countries, based on potential adverse effects to riparians.

The Bank requires the beneficiary state to notify both upstream and downstream riparians directly or undertakes notification on their behalf whether or not there are likely to be adverse impacts. IFC assumes the responsibility for notification on its projects, and does so through the respective

Executive Directors.

Guidance: In Scenario #1, when projects are designed together, or in Scenario #2, when the

Bank project leads, the Bank, guided by LEGEN, should lead in assisting the participating government entity in notifying both the upstream and downstream riparians. In Scenario #3, where

IFC leads, if the IFC team envisages a follow-on

Bank project, IFC should inform the Bank so the

Bank can coordinate the notification process consistent with its policy.

Regional and

Strategic

Assessments

Text from World Bank OP accordance with BP 7.50 paragraphs 8-12.

Should the Bank decide to proceed with the project despite the objections of the other riparians, the Bank informs them of its decision.

(OP/BP 7.50 paragraph 4-6)

OP 4.01

: When the project is likely to have sectoral or regional impacts, sectoral or regional

EA is required.

OP 4.01 Annex A Definitions:

Regional EA : An instrument that: examines environmental issues and impacts associated with a particular strategy, policy, plan, or program, or with a series of projects for a particular region

(e.g., an urban area, a watershed, or a coastal zone); evaluates and compares the impacts against those of alternative options; assesses legal and institutional aspects relevant to the issues and impacts; and recommends broad measures to strengthen environmental management in the region. Regional EA pays particular attention to potential cumulative impacts of multiple activities.

Sectoral EA : An instrument that: examines environmental issues and impacts associated with a particular strategy, policy, plan, or program, or with a series of projects for a specific sector (e.g., power, transport, or agriculture); evaluates and compares the impacts against those of alternative options; assesses legal and institutional aspects relevant to the issues and impacts; and recommends broad measures to strengthen environmental management in the sector.

Sectoral EA pays particular attention to potential cumulative impacts of multiple activities.


Standards arrangements or have established any institutional framework regarding the potentially affected airshed, waterway, subsurface water, or other resources; or (iii) there are unresolved differences between the affected countries and host country regarding the potentially affected resource, and the likelihood of a resolution is not imminent, the client should determine the need to meet any obligations to relevant government authorities.

Where the project involves specifically identified physical elements, aspects and facilities that are likely to generate environmental and social impacts, the identification of risks and impacts will take into account the findings and conclusions of related and applicable plans, studies, or assessments prepared by relevant government authorities or other parties that are directly related to the project and its area of influence. These include master economic development plans, country or regional plans, feasibility studies, alternatives analyses, and cumulative, regional, sectoral, or strategic environmental assessments where relevant. The risks and impacts identification will take account of the outcome of the engagement process with Affected

Communities as appropriate. (PS1 paragraph 11).

[PS1, Footnote 17 states The client can take these into account by focusing on the project’s incremental contribution to selected impacts generally recognized as important on the basis of scientific concern or concerns from the Affected

Communities within the area addressed by these larger scope regional studies or cumulative assessments.]

IFC does not require a strategic/regional/sectoral impact assessment.

GN 54 states: Performance Standard 1 requires that, where the project involves specifically


Comparison: The Bank requires the use of strategic/regional/sectoral impact assessment on a selective basis; IFC rarely would require this of private sector clients. The Bank makes explicit reference to assessment of cumulative impacts only in Annex A of OP 4.01, in the definition of

Sectoral EA and Regional EA instruments. (see also subsequent discussion on cumulative impacts in this matrix, p. 22)

Guidance: In Scenarios #1 and #2, the Bank should take the lead on the assessment, which should not be made the responsibility of the private sector client to finance (unless it is in their own interest). IFC Investment Officers need to be fully aware of this Bank requirement and take into account its likely consequences for the project schedule as early as possible.

The issue surfaces only in Scenario #3, when IFC leads with a project and the linked Bank project follows. In this scenario, it is preferable for the

Bank to have undertaken this requirement upstream of any Bank or IFC project, through a joint prioritization process that identifies likely zones for future projects. If this has not happened, the IFC team should notify their Bank colleagues as soon as they have a reasonable expectation that Bank will later also be financing the project.

As soon as the Bank colleagues are informed, the

Bank team should review the content of the social

Regional and

Strategic

Assessments

(cont.)



Standards identified physical elements, aspects and facilities that are likely to generate impacts, the identification of risks and impacts should take into account the findings and conclusions of related and applicable plans, studies, or assessments prepared by relevant government authorities that are directly related to the project and its area of influence. These include master economic development plans, regional plans, feasibility studies, alternatives analyses, and cumulative environmental assessments where relevant. In exceptional circumstances, however, regional, sectoral, or strategic environmental and social assessment may be required in addition to the

ESIA. These assessments, however, are typically carried out by the public sector.

GN 1, Paragraph 37 includes the following:

Government concessions and/or business developments often concentrate around available natural resources (e.g., watersheds with hydroelectric potential, wind resources, coastal port zones, oil reserves, mining resources, forests), potentially leading to multiple projects in the same geographical area. Multiple environmental and social impacts from existing projects, combined with the potential incremental impacts resulting from proposed and/or anticipated future projects may result in significant cumulative impacts that would not be expected in the case of a standalone project or business activity.

GN1 Paragraph 38. As outlined in paragraph 8 of

Performance Standard 1, where the project involves specifically identified physical elements, aspects and facilities that are likely to generate impacts, the risks and impacts identification process should include an assessment of the combined effects of the multiple components associated with the project (e.g., quarries, roads, associated facilities) in the context of the

Comparison & Guidance and environmental assessment already carried out by the project to determine whether the scope of the assessment is satisfactory. If this is not the case, the joint team should, to the extent possible, propose specific measures for the project to meet

IDA requirements, rather than require the project to carry out an entirely new Assessment.



Standards project’s area of influence. The determination of the project’s area of influence should take into consideration the findings and results of any related cumulative, regional, sectoral, or strategic environmental assessments that may have been undertaken by a government authority. In situations where multiple projects occur in, or are planned for, the same geographic area, as described above, it may also be appropriate for the client to conduct a Cumulative Impact

Assessment (CIA) as part of the risks and impacts identification process. In certain instances, however, it may not be practical or appropriate for the CIA to be performed by the client or individual project developers: for example (i) impacts from multiple existing and future third party projects or developments over a large area that may cross jurisdictional boundaries (e.g., watershed, airshed, forest), (ii) effects that may have occurred or will occur over a longer period of time,

(iii) impacts on specific ecosystem components or characteristics that will increase significance and/or irreversibility when evaluated in the context of a series of existing or future third party projects or developments, and not just in the context of effects associated with the project under review.

In those situations, where cumulative impacts are likely to occur from activities by third parties in the region and the impacts from the client’s own operations are expected to be a relatively small amount of the cumulative total, a regional or sectoral assessment may be more appropriate than a CIA. For further guidance on such assessments see paragraphgraph GN54 below.

GN1, Paragraph 39 Cumulative impacts are those that result from the incremental impact of the project when added to other existing, planned and reasonably predictable future projects and developments. Examples of cumulative impacts include effects on ambient conditions such as incremental contribution of pollutant emissions in an airshed, increase in pollutant concentrations in a water body, in soil or sediments or




Standards bioaccumulation, reduction of water flow in a watershed due to multiple withdrawals, increases in sediment loads to a watershed or increased erosion, interference with migratory routes or wildlife movement, increased pressure on the carrying capacity or the survival of indicator species in a given ecosystem, wildlife population reduction due to increased hunting, road kills and forestry operation, depletion of a forest as a result of multiple logging concessions, secondary or induced social impacts, such as in-migration, or more traffic congestion and accidents along community roadways due to increases in transport activity in a project area of influence.

GN1, Paragraph 40. Even though cumulative impacts may not necessarily be different in quality from impacts analyzed in an ESIA focused on the specific area and timeframe related to the project’s direct footprint and execution timetable, a CIA enlarges the scale and timeframe of the assessment. At a practical level, the critical element of such an assessment is to determine how large an area around the project should be assessed, what an appropriate period of time is, and how to practically assess the complex interactions among different projects occurring at different times. Because a CIA transcends a single project development, the resulting potential management or mitigation measures typically require participation from a larger and more diverse number of stakeholders in order to be coordinated and implemented. Furthermore, the active participation of government authorities is typically required to assess the incremental contribution of each project to the cumulative impacts, monitor and enforce the implementation of the mitigation measures corresponding to each project, identify the additional mitigation measures required, and coordinate, ensure and document their implementation. In all other ways a CIA is fundamentally similar to an ESIA and, therefore often relies on established ESIA practices, including scoping, analysis of effects, evaluation




Standards of significance, identification of mitigation measures, and follow-up.GN4

GN1, Paragraph 41. Paragraph 8 of Performance

Standard 1 requires that, where the project to be financed involves specifically identified physical elements, aspects and facilities that are likely to generate impacts, the risks and impacts identification process by the client identifies and assesses cumulative impacts from further planned development of the project and other project-related developments, any existing project or condition whose impacts may be exacerbated by the project, and other developments of the same type that are realistically defined at the time of the risks and impacts identification process. Impacts from unplanned but predictable developments caused by the project that may occur later or at a different location should also be identified and assessed.

The assessment should be commensurate with the incremental contribution, source, extent, and severity of the cumulative impacts anticipated, and be limited to only those impacts generally recognized as important on the basis of scientific concerns and/or concerns from Affected

Communities. Potential impacts that would occur without the project or independently of the project should not be considered. The geographic and temporal boundaries of the assessment should depend on the screening and identification of potential cumulative impacts that correspond to the criteria indicated above. The assessment should determine if the project is incrementally responsible for adversely affecting an ecosystem component or specific characteristic beyond an acceptable predetermined threshold (carrying capacity) by the relevant government entity, in consultation with other relevant stakeholders.

Therefore, although the total cumulative impacts due to multiple projects are typically identified in government sponsored assessments, the client should ensure that its assessment determines the degree to which the project under review is




Standards contributing to the cumulative effects.

GN1, Paragraph 42. The client’s baseline study should identify any relevant condition associated with existing projects that could be exacerbated by the project to be financed and could lead to cumulative impacts. In terms of anticipated future projects, priority should be given to assessing cumulative impacts stemming from the project being considered for financing, such as further planned developments associated with the project and other future developments of the same type in the project's area of influence that are realistically defined at the time of the assessment

(this may include any combination of developments which are either proposed, licensed or for which permits exist).

GN1, Paragraph 43. Where appropriate, the client should use commercially reasonable efforts to engage relevant government authorities, other developers, Affected Communities, and, where appropriate, other relevant stakeholders, in the assessment, design, and implementation of coordinated mitigation measure to manage the potential cumulative impacts resulting from multiple projects in the same project’s area of influence.


B.

S COPE OF E NVIRONMENTAL AND S OCIAL A SSESSMENT

Integration of

Social and

Environmental

Assessments

The Bank OP 4.01 requires an Environment

Assessment that addresses physical, biological, health and safety, socio-economic, and cultural heritage impacts; it also makes use in some cases of Social Assessment.

EA takes into account the natural environment

(air, water, and land); human health and safety; social aspects (involuntary resettlement, indigenous peoples, and physical cultural

Performance Standard 1 is titled “Assessment and Management of Environmental and Social

Risks and Impacts ”.

Comparison: IFC policy and Performance

Standards explicitly integrates Environmental and

Social Assessment and uses the term “social” as equivalent to “environment” throughout the

Performance Standards; the Bank OPs mandate that physical, biological, health and safety, socioeconomic, and physical –cultural resources aspects be examined in an Environmental

Assessment, and that the EA considers natural and social aspects in an integrated way.

No Action

Alternative

Text from World Bank OP resources); and transboundary and global environmental aspects. EA considers natural and social aspects in an integrated way. (OP 4.01

Paragraph 3)

Analysis of alternatives . Systematically compares: feasible alternatives to the proposed project site, technology, design, and operation

—including the

"without project" situation

—in terms of their potential environmental impacts; the feasibility of mitigating these impacts; their capital and recurrent costs; their suitability under local conditions; and their institutional, training, and monitoring requirements. For each of the alternatives, quantifies the environmental impacts to the extent possible, and attaches economic values where feasible. States the basis for selecting the particular project design proposed and justifies recommended emission levels and approaches to pollution prevention and abatement. (OP 4.01 Annex B: Content of

Environmental Assessment Report for Cat A

Project)

Mitigation Hierarchy

EA for a Category A project examines the project's potential negative and positive environmental impacts, compares them with those of feasible alternatives (including the "without project" situation), and recommends any measures needed to prevent, minimize, mitigate, or compensate for adverse impacts and improve environmental performance.

EA for a Category B project examines the project's potential negative and positive environmental impacts and recommends any measures needed to prevent, minimize, mitigate, or compensate for adverse impacts and improve


Standards

Projects with potential significant adverse impacts that are diverse, irreversible, or unprecedented will have a comprehensive environmental and social risks and impacts identification process.

This process will include an examination of technically and financially feasible alternatives, and documentation of the rationale for selecting the particular course of action proposed (PS 1 paragraph 14).

Mitigation Hierarchy

IFC Sustainability Policy, para 6, states that central to the PS requirements is the application of a mitigation hierarchy to anticipate and avoid adverse impacts on workers, communities, and the environment, or where avoidance is not possible, to minimize, and where residual impacts remain, compensate/offset for the risks and impacts, as appropriate.

PS1, paragraph 14 states: The mitigation hierarchy to address identified risks and impacts will favor the avoidance of impacts over minimization, and, where residual impacts remain,


Guidance: Joint teams should ensure that there is no material difference in implementation or coverage for the Bank and IFC.

Comparison:

The Bank requires a “without project” analysis; IFC does not.

Guidance: In scenarios #1 and #2, when projects are processed in parallel or when the Bank leads, there is no issue, since the “without action” alternative will be included as a Bank policy requirement. The issue surfaces only in scenario

#3, when IFC leads with a project and the linked

Bank project follows; in this scenario, IFC

Investment Officers need to be aware of the Bank requirement to conduct an alternatives analysis that includes the “without project” scenario. They should determine during business development/early review if the requirement has already been met in the project’s ESIA Report or by another means. If necessary, the Bank team that follows IFC’s team will have to require its borrower to carry out a “without project” analysis, limited in scope.

Cumulative

Impacts

Text from World Bank OP environmental performance.

Annex C states: The EMP identifies feasible and cost-effective measures that may reduce potentially significant adverse environmental impacts to acceptable levels. The plan includes compensatory measures if mitigation measures are not feasible, cost-effective, or sufficient. Specifically, the EMP

(a) identifies and summarizes all anticipated significant adverse environmental impacts

(including those involving indigenous people or involuntary resettlement);

(b) describes--with technical details--each mitigation measure, including the type of impact to which it relates and the conditions under which it is required (e.g., continuously or in the event of contingencies), together with designs, equipment descriptions, and operating procedures, as appropriate;

(c) estimates any potential environmental impacts of these measures; and

(d) provides linkage with any other mitigation plans (e.g., for involuntary resettlement, indigenous peoples, or cultural property) required for the project.

The Bank’s OP 4.01 does not require consideration of cumulative impacts, except in

Annex A in the context of defining Regional EA and Sectoral EA. OP 4.01 requires that both a

Regional EA and Sectoral EA pays particular attention to potential cumulative impacts of multiple activities.

In Annex B, under the Content of an

Environmental Assessment Report for a Category


Standards compensation/offset, wherever technically and financially feasible.

PS 1, paragraph 15 statesa: 15. Where the identified risks and impacts cannot be avoided, the client will identify mitigation and performance measures and establish corresponding actions to ensure the project will operate in compliance with applicable laws and regulations, and meet the requirements of Performance Standards 1 through 8.

Technical feasibility is based on whether the proposed measures and actions can be implemented with commercially available skills, equipment, and materials, taking into consideration prevailing local factors such as climate, geography, demography, infrastructure, security, governance, capacity, and operational reliability (PS1, FN 20).

Financial feasibility is based on commercial considerations, including relative magnitude of the incremental cost of adopting such measures and actions compared to the project’s investment, operating, and maintenance costs, and on whether this incremental cost could make the project nonviable to the client (PS1, FN21).

PS1, paragraph 8 states that cumulative impacts that result from the incremental impact, on areas or resources used or directly impacted by the project, from other existing, planned or reasonably defined developments at the time the risks and impacts identification process is conducted will be examined.

PS1, Footnote 16 defines cumulative impacts as being limited to those impacts generally recognized as important on the basis of scientific concerns and/or concerns from Affected


Comparison: IFC policy puts boundaries on the cumulative impact analysis, both in time and space, and focuses the analysis on project-related activities; the Bank is less explicit, so the scope of the cumulative impact analysis required by the

Bank is potentially broader. The Bank requires cumulative impacts to be assessed, especially in the broader context of Regional or Sectoral EAs, which are more appropriately prepared by government authorities.


A Project, the Bank defines the baseline data for the study as follows: d) Baseline data . Assesses the dimensions of the study area and describes relevant physical, biological, and socioeconomic conditions, including any changes anticipated before the project commences. Also takes into account current and proposed development activities within the project area but not directly connected to the project. Data should be relevant to decisions about project location, design, operation, or mitigatory measures. The section indicates the accuracy, reliability, and sources of the data.


Standards

Communities. Examples of cumulative impacts include: incremental contribution of gaseous emissions to an airshed; reduction of water flows in a watershed due to multiple withdrawals; increases in sediment loads to a watershed; interference with migratory routes or wildlife movement; or more traffic congestion and accidents due to increases in vehicular traffic on community roadways.

PS1, paragraph 9 states that, in the event of risks and impacts in the project’s area of influence resulting from a third party’s actions, the client will address those risks and impacts in a manner commensurate with the client’s control and influence over the third parties, and with due regard to conflict of interest.

PS1, paragraph 11 elaborates on the role of the privates sector as follows: Where the project involves specifically identified physical elements, aspects and facilities that are likely to generate environmental and social impacts, the identification of risks and impacts will take into account the findings and conclusions of related and applicable plans, studies, or assessments prepared by relevant government authorities or other parties that are directly related to the project and its area of influence. These include master economic development plans, country or regional plans, feasibility studies, alternatives analyses, and cumulative, regional, sectoral, or strategic environmental assessments where relevant. The risks and impacts identification will take account of the outcome of the engagement process with

Affected Communities as appropriate.

GN1, Paragraph 37 includes the following:

Government concessions and/or business developments often concentrate around available natural resources (e.g., watersheds with hydroelectric potential, wind resources, coastal port zones, oil reserves, mining resources, forests), potentially leading to multiple projects in the same


Guidance: In Scenarios #1 and #2, the joint team should discuss as early as possible the scope of and the responsibility for cumulative impact analysis, bearing in mind the risks for and sources of potential conflict of interest if the cumulative impact assessment is to address in detail impacts of other projects or investments that are not the responsibility of the IFC or Bank client. IFC

Investment Officers should then take into account possible consequences for project schedule. In scenario 3, IFC Investment Officers should notify

Bank colleagues as soon as the IFC team has a reasonable expectation that the Bank will later also be financing the project, and discuss the scope of and approach for the cumulative impact analysis work for the proposed project.



Standards geographical area. Multiple environmental and social impacts from existing projects, combined with the potential incremental impacts resulting from proposed and/or anticipated future projects may result in significant cumulative impacts that would not be expected in the case of a standalone project or business activity.

GN1, Paragraph 38. As outlined in paragraph 8 of

Performance Standard 1, where the project involves specifically identified physical elements, aspects and facilities that are likely to generate impacts, the risks and impacts identification process should include an assessment of the combined effects of the multiple components associated with the project (e.g., quarries, roads, associated facilities) in the context of the project’s area of influence. The determination of the project’s area of influence should take into consideration the findings and results of any related cumulative, regional, sectoral, or strategic environmental assessments that may have been undertaken by a government authority. In situations where multiple projects occur in, or are planned for, the same geographic area, as described above, it may also be appropriate for the client to conduct a Cumulative Impact

Assessment (CIA) as part of the risks and impacts identification process. In certain instances, however, it may not be practical or appropriate for the CIA to be performed by the client or individual project developers: for example (i) impacts from multiple existing and future third party projects or developments over a large area that may cross jurisdictional boundaries (e.g., watershed, airshed, forest), (ii) effects that may have occurred or will occur over a longer period of time,

(iii) impacts on specific ecosystem components or characteristics that will increase significance and/or irreversibility when evaluated in the context of a series of existing or future third party projects or developments, and not just in the context of effects associated with the project under review.

In those situations, where cumulative impacts are




Standards likely to occur from activities by third parties in the region and the impacts from the client’s own operations are expected to be a relatively small amount of the cumulative total, a regional or sectoral assessment may be more appropriate than a CIA. For further guidance on such assessments see paragraph GN54 below.

GN1, Paragraph 39 Cumulative impacts are those that result from the incremental impact of the project when added to other existing, planned and reasonably predictable future projects and developments. Examples of cumulative impacts include effects on ambient conditions such as incremental contribution of pollutant emissions in an airshed, increase in pollutant concentrations in a water body, in soil or sediments or bioaccumulation, reduction of water flow in a watershed due to multiple withdrawals, increases in sediment loads to a watershed or increased erosion, interference with migratory routes or wildlife movement, increased pressure on the carrying capacity or the survival of indicator species in a given ecosystem, wildlife population reduction due to increased hunting, road kills and forestry operation, depletion of a forest as a result of multiple logging concessions, secondary or induced social impacts, such as in-migration, or more traffic congestion and accidents along community roadways due to increases in transport activity in a project area of influence.

GN1, Paragraph 40. “Even though cumulative impacts may not necessarily be different in quality from impacts analyzed in an ESIA focused on the specific area and timeframe related to the project’s direct footprint and execution timetable, a CIA enlarges the scale and timeframe of the assessment. At a practical level, the critical element of such an assessment is to determine how large an area around the project should be assessed, what an appropriate period of time is, and how to practically assess the complex interactions among different projects occurring at




Standards different times. Because a CIA transcends a single project development, the resulting potential management or mitigation measures typically require participation from a larger and more diverse number of stakeholders in order to be coordinated and implemented. Furthermore, the active participation of government authorities is typically required to assess the incremental contribution of each project to the cumulative impacts, monitor and enforce the implementation of the mitigation measures corresponding to each project, identify the additional mitigation measures required, and coordinate, ensure and document their implementation. In all other ways a CIA is fundamentally similar to an ESIA and, therefore often relies on established ESIA practices, including scoping, analysis of effects, evaluation of significance, identification of mitigation measures, and followup.”

GN1, Paragraph 41. states that where the project to be financed involves specifically identified physical elements, aspects and facilities that are likely to generate impacts, the risks and impacts identification process by the client identifies and assesses cumulative impacts from further planned development of the project and other project-related developments, any existing project or condition whose impacts may be exacerbated by the project, and other developments of the same type that are realistically defined at the time of the risks and impacts identification process. Impacts from unplanned but predictable developments caused by the project that may occur later or at a different location should also be identified and assessed.

The assessment should be commensurate with the incremental contribution, source, extent, and severity of the cumulative impacts anticipated, and be limited to only those impacts generally recognized as important on the basis of scientific concerns and/or concerns from Affected

Communities. Potential impacts that would occur




Standards without the project or independently of the project should not be considered. The geographic and temporal boundaries of the assessment should depend on the screening and identification of potential cumulative impacts that correspond to the criteria indicated above. The assessment should determine if the project is incrementally responsible for adversely affecting an ecosystem component or specific characteristic beyond an acceptable predetermined threshold (carrying capacity) by the relevant government entity, in consultation with other relevant stakeholders.

Therefore, although the total cumulative impacts due to multiple projects are typically identified in government sponsored assessments, the client should ensure that its assessment determines the degree to which the project under review is contributing to the cumulative effects.

GN1, Paragraph 42. The client’s baseline study should identify any relevant condition associated with existing projects that could be exacerbated by the project to be financed and could lead to cumulative impacts. In terms of anticipated future projects, priority should be given to assessing cumulative impacts stemming from the project being considered for financing, such as further planned developments associated with the project and other future developments of the same type in the project's area of influence that are realistically defined at the time of the assessment

(this may include any combination of developments which are either proposed, licensed or for which permits exist).

GN1, Paragraph 43. Where appropriate, the client should use commercially reasonable efforts to engage relevant government authorities, other developers, Affected Communities, and, where appropriate, other relevant stakeholders, in the assessment, design, and implementation of coordinated mitigation measure to manage the potential cumulative impacts resulting from multiple projects in the same project’s area of


Associated

Facilities /

Project Area of

Influence


There is no explicit reference to or definition of associated facilities in Bank Safeguards; however,

OP 4.01 Annex A includes a reference to ‘all ancillary aspects’ of a project which need to be taken into account in defining the area of influence:

5. Project area of influence : The area likely to be affected by the project, including all its ancillary aspects, such as power transmission corridors, pipelines, canals, tunnels, relocation and access roads, borrow and disposal areas, and construction camps, as well as unplanned developments induced by the project (e.g., spontaneous settlement, logging, or shifting agriculture along access roads). The area of influence may include, for example, (a) the watershed within which the project is located; (b) any affected estuary and coastal zone; (c) off-site areas required for resettlement or compensatory tracts; (d) the airshed (e.g., where airborne pollution such as smoke or dust may enter or leave the area of influence; (e) migratory routes of humans, wildlife, or fish, particularly where they relate to public health, economic activities, or environmental conservation; and (f) areas used for livelihood activities (hunting, fishing, grazing, gathering, agriculture, etc.) or religious or ceremonial purposes of a customary nature.

The Bank’s OP 4.12 (Involuntary Resettlement) states: This policy applies to all components of the project that result in involuntary resettlement, regardless of the source of financing. It also applies to other activities resulting in involuntary resettlement, that in the judgment of the Bank, are:

(a) directly and significantly related to the Bankassisted project;


Standards influence.

PS 1, paragraph 8 states that

“Where the project involves specifically identified physical elements, aspects, and facilities that are likely to generate impacts, environmental and social risks and impacts will be identified in the context of the project’s area of influence. This area of influence defines associated facilities as those “that are not funded as part of the project and that would not have been constructed or expanded if the project did not exist and without which the project would not be viable. “

IFC seeks to ensure that the projects it finances achieve outcomes consistent with the

Performance Standards, even if the outcomes are dependent upon the performance of third parties.

IFC Sustainability Policy paragraph 23 recognizes that at times, the client

’s ability to achieve environmental or social outcomes consistent with the Performance Standards will be dependent on third party actions. A third party may be a government agency in a regulator capacity or contract party, a contractor or primary supplier with whom the business activity has a substantial involvement, or an operator or an associated facility (as defined in PS1). IFC, as part of its own due diligence process, will review clients’ identification of third party risks, and will determine whether such risks are manageable, and if so under what conditions, as to create outcomes consistent with the PSs. Certain risks may require IFC to refrain from supporting the proposed business activity.

Additional information is provided in GN1,

Paragraph 21: Where the project involves specifically identified physical elements, aspects and facilities that are likely to generate impacts, it should identify the extent and complexity of potential adverse impacts and risks in the context of the project’s entire area of influence, which is


Comparison : Both the Bank and the IFC discuss the need to consider the project area of influence, of which one key component is that of associated facilities. IFC defines Associated Facilities using a three part test: 1) facilities that are not funded as part of the project and 2) that would not have been constructed or expanded if the project did not exist and 3) without which the project would not be viable. The Bank OP does not use the term

“Associated Facilities,” but requires a consideration of “all ancillary aspects” of a project as part of the project area of influence, as well as unplanned developments induced by the project.

OP 4.12 although also making no explicit reference to nor defining associated facilities, refers to “other activities” that reflects in broad terms the concept of associated facilities, save for the IFC requirement that the facility would not have been constructed or expanded if the project did not exist .

Guidance: Teams should be aware that "project area of influence" in Bank policy can be broader because the government is considered responsible for actions within its borders, whereas in the IFC policy context it is recognized that the client's reach of control may be much more limited. Teams are encouraged to use the more precise IFC definition of associated facilities, and to discuss as early as possible what constitutes a third party in a joint project. In a joint project, the decision on what constitutes an associated facility, and the extent of due diligence required on such facilities, should be made jointly and early in project preparation. However, in certain projects where the application of the different definitions could lead to materially different outcomes, Teams should consider the broader

Bank definition of Area of Influence and ancillary facilities, and require the Bank borrower to address risks and impacts that IFC’s client is not

International

Treaties


(b) necessary to achieve its objectives as set forth in the project documents; and

(c) carried out, or planned to be carried out, contemporaneously with the project.

.

EA considers natural and social aspects in an integrated way. It also takes into account the variations in project and country conditions; the findings of country environmental studies; national environmental action plans; the country's overall policy framework, national legislation, and institutional capabilities related to the environment and social aspects; and obligations of the country, pertaining to project activities, under relevant


Standards the total area likely to be affected by both on-site and off-site impacts from project activities, assets and facilities, including associated facilities.

GN1, Paragraph 24 The ESIA process predicts and assesses the project’s potential adverse impacts and risks, in quantitative terms to the extent possible. It evaluates environmental and social risks and impacts from associated facilities and other third party activities.

GN1, Paragraph 52 states that, among these third parties are operators of associated facilities (see paragraph 8 of Performance Standard 1) that have a particularly close relationship with the project. Because of this relationship, the client should normally have some commercial leverage on the operators of such facilities. Where such leverage allows, undertakings can be secured from these operators to operate their facilities consistent with the applicable Performance

Standards. In addition, the client should identify its own actions, if any that could support or supplement the actions of the operators of the associated facilities.

GN1, Paragraph 66. The management program should apply broadly across the client’s organization, including its contractors and primary suppliers over which the client has control or influence, and to specific sites, facilities, or activities. The program will include provisions and agreements relevant to associated facilities, as appropriate.

IFC Sustainability Policy paragraph 18 states that

IFC is committed to notifying countries potentially affected by the transboundary effects of proposed business activities, so they can determine whether the proposed business activity has the potential for causing adverse effects through air pollution or deprivation of water from, or pollution of international waterways.

Comparison & Guidance required to address. In Scenarios #2 and #3, teams should consult the other institution as soon as there is a reasonable expectation that the project will become jointly financed.

Comparison: The Bank’s OP 4.01 is confined to international environmental treaties; the policy sets a clear proscription on financing activities that would contravene such obligations. IFC’s PS

1 is substantively broader, reaching any/all host country obligations under international law, but requires onl y that these obligations be “taken into account.”

Text from World Bank OP international environmental treaties and agreements. The Bank does not finance project activities that would contravene such country obligations, as identified during the EA. EA is initiated as early as possible in project processing and is integrated closely with the economic, financial, institutional, social, and technical analyses of a proposed project. (OP 4.01 paragraph 3)


Standards

The Overview page which accompanies each PSl states that in addition to meeting the requirements under the Performance Standards, clients must comply with applicable national law, including those laws implementing host country obligations under international law.

PS1, Paragraph 6 states that: The client

’s policy provides a framework for the environmental and social assessment and management process, and specifies that the project (or business activities, as appropriate) will comply with the applicable laws and regulations of the jurisdictions in which it is being undertaken, including those laws implementing host country obligations under international law. The policy should be consistent with the principles of the Performance Standards.

Under some circumstances, clients may also subscribe to other internationally recognized standards, certification schemes, or codes of practice and these too should be included in the policy.

PS1, Paragraph 7 states that, the client ’s risks and impacts identification process will consider the emissions of greenhouse gases, the relevant risks associated with a changing climate and the adaptation opportunities, and potential transboundary effects, such as pollution of air, or use or pollution of international waterways.

GN1, Paragraph 13 states: In addition to the commitment to comply with all applicable environmental and social laws and regulations of the host country(ies) in which the project is undertaken, the policy may include other major environmental and social commitments of the client such as compliance with international protocols or industry-specific codes of practice and standards to which the client has committed.

GN1, Paragraph 44. The key human rights concepts can be found in the International Bill of


Guidance: Joint teams should raise the issue with their respective legal departments as early as possible to determine if there are any potential inconsistencies with international treaty obligations. The B ank’s LEGEN office has expertise in this area and should be consulted in determining these potential inconsistencies.



Standards

Rights, consisting of the Universal Declaration of

Human Rights (UDHR), the International

Covenant on Civil and Political Rights (ICCPR), and the International Covenant on Economic,

Social and Cultural Rights (ICESCR).

GN1, Footnote 5 states, Other core international human rights treaties focus on women’s rights, torture, children’s rights, migrants, enforced disappearance, and persons with disabilities. For additional information, and the text of each treaty, see http://www2.ohchr.org/english/law/index.htm.

Based on their circumstances, clients may need to consider these and other instruments of international human rights and humanitarian law.

In regards to Labor and Working Conditions PS2, paragraph 2 states that, the requirements set out in Performance Standard 2 have been in part guided by a number of international conventions and instruments, including those of the

International Labour Organization (ILO) and the

United Nations (UN).

PS2, paragraph 5 states that, In addition to meeting the requirements under the Performance

Standards, clients must comply with applicable national law, including those laws implementing host country obligations under international law.

GN 2, Annotated Bibliography has a section on

International Agreements which states that

Several of the requirements in Performance

Standard 2 are partly guided by standards set by the international agreements negotiated through the International Labour Organization (ILO) and the United Nations (UN).

A list of the eight ILO conventions and the countries that have ratified them is available at the

ILOLEC Database of International Labour

Standards: http://www.ilo.org/ilolex/english/index.htm. The text of the ILO conventions and list of ratifying




Standards countries are available at http://www.ilo.org/ ilolex/english/convdisp2.htm.

In 1998, the members of the ILO agreed on a

“Declaration on Fundamental Principles and

Rights at Work”

(http://www.ilo.org/public/english/standards/relm/il c/ilc86/com-dt xt.htm), which declares that “all

Members, even if they have not ratified the

Conventions in question, have an obligation arising from the very fact of membership in the

Organization, to respect, to promote and to realize, in good faith and in accordance with the

Constitution, the principles concerning the fundamental rights which are the subject of those

Conventions.” A large majority of countries have ratified at least some of the eight ILO conventions that comprise the four core labor standards. In addition, most countries have labor laws in place that reflect the eight core standards, whether or not they have ratified the conventions. Where these standards have not been expressly incorporated into national law, clients should identify and implement the relevant standards as described in the Performance Standard 2 and its accompanying Guidance Note.

A list of the six UN conventions and the countries that have ratified each of them is available at http://www2.ohchr.org/english/law/index.htm. The ratification status of each convention by country is available at http://treaties.un.org/Pages/Treaties.aspx?id=4&s ubid=A&lang=en.

PS3, paragraph 12 If the generated waste is considered hazardous, the client will adopt GIIP alternatives for its environmentally sound disposal while adhering to the limitations applicable to its transboundary movement.

PS3, Footnote 15 states that transboundary movement of hazardous materials should be consistent with national, regional and international law, including the Basel Convention on the



Natural Habitats Natural habitats are land and water areas where

(i) the ecosystems' biological communities are formed largely by native plant and animal species, and (ii) human activity has not essentially modified the area's primary ecological functions.

(OP 4.04 paragraph 1(a))

Critical natural habitats are:

(i) existing protected areas and areas officially


Standards

Control of Transboundary Movements of

Hazardous Wastes and Their Disposal and the

London Convention on the Prevention of Marine

Pollution by Dumping of Wastes and Other

Matter.

PS3, Paragraph 13 states, The client will avoid the manufacture, trade, and use of chemicals and hazardous materials subject to international bans or phase-outs due to their high toxicity to living organisms, environmental persistence, potential for bioaccumulation, or potential for depletion of the ozone layer.

PS3, Footnote 16 Consistent with the objectives of the Stockholm Convention on Persistent

Organic Pollutants and the Montreal Protocol on

Substances that Deplete the Ozone Layer. Similar considerations will apply to certain World Health

Organization (WHO) classes of pesticides.

PS7, Paragraph 2 includes that Government often plays a central role in the management of

Indigenous Peoples’ issues, and clients should collaborate with the responsible authorities in managing the risks and impacts of their activities.

PS7, Footnote 1 states In addition to meeting the requirements under this Performance Standard, clients must comply with applicable national law, including those laws implementing host country obligations under international law.

PS6 addresses Protection and Conservation of

Biodiversity, Management of Ecosystem Services,

Sustainable Management of Living Natural

Resources and Supply Chains. PS6, paragraphs

9-20 defines habitat, natural habitat, critical habitat and legally protected areas and states what the requirements are for each type of habitat. Requirements for clients to examine


Comparison: IFC policy applies a quantitative test of measurable impacts; the Bank test is more qualitative. Both require baseline data. Compared to OP 4.01, OP 4.04, and O P 4.36, IFC’s PS6 is more explicit and comprehensive in coverage of biodiversity, ecosystem services, and living natural resource management.

Guidance: In all three scenarios, teams need to

Disadvantaged or Vulnerable

Status

Text from World Bank OP proposed by governments as protected areas

(e.g., reserves that meet the criteria of the World

Conservation Union [IUCN] classifications 2 ), areas initially recognized as protected by traditional local communities (e.g., sacred groves), and sites that maintain conditions vital for the viability of these protected areas (as determined by the environmental assessment process 3 ); or

(ii) sites identified on supplementary lists prepared by the Bank or an authoritative source determined by the Regional environment sector unit (RESU). Such sites may include areas recognized by traditional local communities (e.g., sacred groves); areas with known high suitability for biodiversity conservation; and sites that are critical for rare, vulnerable, migratory, or endangered species.

4 Listings are based on systematic evaluations of such factors as species richness; the degree of endemism, rarity, and vulnerability of component species; representativeness; and integrity of ecosystem processes. (OP 4.04 Annex A Definitions)

The Bank does not support projects that, in the

Bank's opinion, involve the significant conversion or degradation 3 of critical natural habitats. (OP

4.04 paragraph 4)

OP 4.01 requires the environmental assessment to take into account social aspects relevant to the project, including those addressed in OP 4.10 and

4.12. Both OP 4.10 and 4.12 have specific requirements for the treatment of vulnerable groups. Under Bank procedures, disadvantaged or vulnerable groups are to be examined as part of the environmental assessment, Resettlement

Action Plan (RAP), and/or Indigenous Peoples

Plan (IPP).


Standards ecosystem services are captured in PS6 paragraphs 24-25, and requirements to manage living natural resources including certification requirements are in paragraphs 26-29.

IFC Sustainability Policy, paragraph 9 states that

IFC is committed to ensuring that the costs of economic development do not fall disproportionately on those who are poor or vulnerable, that the environment is not degraded in the process, and that renewable natural resources are managed sustainably.

As part of the risks and impacts identification process, the client will identify individuals and groups that may be differentially or disproportionately affected by the project because of their disadvantaged or vulnerable status.

Where groups are identified as disadvantaged or

Comparison & Guidance be aware of the difference in scope of coverage and different tests involved, which may have consequences for a project’s timeline as well as its conditions or covenants to legal agreements.

Comparison: The Bank and IFC approaches are similar; however, IFC policy and Performance

Standards are more explicit as to specific circumstances in which these issues should be addressed.

Guidance: The joint team should be aware of the need to specifically assess disadvantaged or vulnerable groups in the process of environmental or social and environmental impact assessment, and to develop measures to address such groups.

Supply Chain


Supply Chain is not explicitly covered in Bank policy


Standards vulnerable, the client will propose and implement differentiated measures so that adverse impacts do not fall disproportionately on them and they are not disadvantaged in sharing development benefits and opportunities. (PS 1 paragraph 12)

Vulnerability is also addressed in regards to stakeholder consultation (PS1, paragraphs 27 &

30), labor and working conditions such as migrant workers, child labor, forced labor and nondiscrimination (PS2, paragraphs 11, 15, 17, 21, and 22) community health and safety (PS4 paragraph 1, 8,& 9) and indigenous peoples (PS7, paragraphs 1 &11).

PS 1 states that where clients can reasonably exercise control, the risks and impacts identification process will consider those risks and impacts associated with primary supply chains, as defined in PS2 (paragraphs 27-29) and PS6 (paragraph

30).

PS2 has the following information on labor supply chains:

Paragraph 27. Where there is a high risk of child labor or forced labor15 in the primary supply chain, the client will identify those risks consistent with paragraph 21 and 22 above. If child labor or forced labor cases are identified, the client will take appropriate steps to remedy them. The client will monitor its primary supply chain on an ongoing basis in order to identify any significant changes in its supply chain and if new risks or incidents of child and/or forced labor are identified, the client will take appropriate steps to remedy them.

Paragraph 28. Additionally, where there is a high risk of significant safety issues related to supply chain workers, the client will introduce procedures and mitigation measures to ensure that primary suppliers within the supply chain are taking steps


Comparison: IFC is explicit in covering supply chain issues related to child labor, forced labor, significant safety issues in the primary supply chain that is providing goods or materials essential for the core business operations; and where a client is purchasing primary production, that supply chain should not be causing significant conversion or degradation of natural or critical habitats.

Guidance: The IFC’s explicit reference to supply chain-associated impact should apply in a jointly financed project. In scenario #2, as soon as the

Bank team has a reasonable expectation that IFC will later also be financing the project, the impact associated with supply chains should be considered.



Standards to prevent or to correct life-threatening situations.

Paragraph 29. The ability of the client to fully address these risks will depend upon the client’s level of management control or influence over its primary suppliers. Where remedy is not possible, the client will shift the project’s primary supply chain over time to suppliers that can demonstrate that they are complying with this Performance

Standard.

Guidance Note 2 states:

Paragraph 93. Supply chain refers to materials, components, goods or products for use in ongoing operations. A supply chain of goods may include suppliers of raw material and suppliers of pieces or components for assembly and production. The supply chain of multinational corporations can be extensive and may be global in nature, whereas the supply chain of national or smaller enterprises will be smaller in scale and may be local in nature, involving local companies, and home-based workers. The term primary supplier refers to those suppliers who are providing goods, and materials essential for the core business processes of the project. The supply chain requirements of

Performance Standard 2 do not apply to material or components used in the construction phase of the project.

Paragraph

94. A company’s supply chain can be complex and include a large number of suppliers in different tiers. Although it might not be feasible to assess the entire supply chain, the client should identify the areas of risks and impacts related to paragraph 27 and 28, whether due to (i) suppliers’ operating context (e.g., inherent risk in country, region or sector); (ii) the particular materials, components, or products supplied (e.g., inherent risk in production, agricultural commodities or extracting process); or (iii) other




Standards relevant considerations, and prioritize assessment of those suppliers. The first step is to undertake a mapping of the supply chain. This will include the identification of suppliers, identification of the potential significant adverse risks and impacts associated with the supply chain, and prioritization of suppliers by levels of risk. Due to the dynamic character of most supply chains, this process needs to be updated periodically. Tracking of suppliers’ performance should be integrated into the overall management system. This will help clients to determine whether procedures and mitigation measures are being implemented correctly. It also provides feedback on new areas of risk and concern.

Paragraph 95. The effectiveness in addressing the supply chain will depend on the leverage that the client will likely be able to exercise. In situations where there is an integrated chain of suppliers that depend on the client for their business viability, this leverage and client risk from supplier nonperformance will be high. As the supply chain extends into commodity markets where the client’s operation has little significance, the client’s supply chain review will simply reflect sectoral issues, rather than opportunities for project-specific mitigation. Where the client has complex operations with multiple tiers of suppliers, its leverage will diminish toward the more distant tiers of suppliers.

Paragraph 96. With regard to child labor and forced labor as defined in Performance Standard

2, the client needs to exercise due diligence in its supply chain to avoid benefit or financial gain from these practices. Clients should make particular effort and engage in additional diligence when such practices are prevalent or known to exist within certain stages of the supply chain, in specific industries or in geographic areas.

Financial gain from child labor is a specific risk when the cost of labor is a factor in the




Standards competitiveness of the client’s goods or materials.

Clients should utilize their influence to the fullest extent to eradicate child labor and forced labor in their supply chain. Clients should also take steps to ensure that life-threatening situations (for example, exposure to significant fall and crushing hazards, exposure to hazardous substances, and exposure to electrical hazards) are either prevented or removed from the supply chain.

Paragraph 97. Where the client discovers forced labor and child labor in the supply chain, the client should seek professional advice on the appropriate steps to take to address this issue. In the case of child labor, immediately removing children from their work is likely to worsen their financial condition. Rather, clients should immediately remove children from tasks that are dangerous, harmful, or inappropriate given their age. Children who are over the national schoolleaving age should be moved to non-harmful tasks. Children under the national school-leaving age must only work in legal activities outside school hours, and in some cases it may be appropriate to provide compensation to cover their loss of wages. Implementing processes such as purchasing procedures will ensure that specific requirements on child labor, forced labor and work safety issues are included in orders and contracts with suppliers.

In regard to biodiversity and supply chains, PS6 paragraph 30 states “Where a client is purchasing primary production (especially but not exclusively food and fiber commodities) that is known to be produced in regions where there is a risk of significant conversion of natural and/or critical habitats, systems and verification practices will be adopted as part of the client’s ESMS to evaluate its primary suppliers. The systems and verification practices will (i) identify where the supply is coming from and the habitat type of this area; (ii) provide for an ongoing review of the client’s




Standards primary supply chains; (iii) limit procurement to those suppliers that can demonstrate that they are not contributing to significant conversion of natural and/or critical habitats (this may be demonstrated by delivery of certified product, or progress towards verification or certification under a credible scheme in certain commodities and/or locations); and (iv) where possible, require actions to shift the client’s primary supply chain over time to suppliers that can demonstrate that they are not significantly adversely impacting these areas.

The ability of the client to fully address these risks will depend upon the client’s level of management control or influence over its primary suppliers.”

Guidance Note 6 provides additional information on supply chains:

GN6, Paragraph 155.Clients may purchase food, fiber, wood, animals, and animal products, and related commodities for further processing or trade, while not being directly involved in the growing or harvesting of such products. In addition, such products may pass through several intermediaries before being acquired by clients.

Clients should be aware that there may be substantial reputational risks to their involvement in such supply chains where significant negative impacts on biodiversity and ecosystem services have been identified in the production of these products.

GN156.Negative concerns and impacts include areas and situations where there has been significant conversion of natural and critical habitat as defined in paragraphs 13 and 16, respectively, of Performance Standard 6, and/or over-harvesting of plant and animal populations which leads to degradation of priority ecosystem services with consequences for Affected

Communities, the living natural resource itself, or the client’s uninterrupted operations.




Standards

GN157.Clients involved with processing or trading of such commodities should develop and implement appropriate policies and procedures as part of their ESMS to identify their supply chains risks, and to assess their operational and reputational exposure to such risks. Clients should have appropriate quality assurance and traceability systems which allow them to identify with accuracy the source and origin of their products. Such traceability or chain-of-custody systems should be adequate to allow the client to eliminate products or suppliers who do not meet their policies and procedures and pose risks to biodiversity and ecosystem services.

GN158. In situations where such concerns are identified, clients will identify ways to address them and reduce their risks, in a manner commensurate with their degree of control and influence over their supply chain. In particular, clients should identify their primary suppliers, who, on an ongoing basis, provide the majority of the living natural resources, goods and materials essential for the core processes of the client’s business.

GN159.Clients should work with those primary suppliers to encourage and assist them in identifying where risks and concerns arise in their supply chains, and if possible, in identifying where and how those primary suppliers can work to prevent significant conversion and/or degradation of natural and critical habitat and secure sustainable management of living natural resources through the application of industryspecific good management practices and available technologies. As part of their ESMS, clients should develop and implement or adopt monitoring tools, metrics and methods to measure ongoing performance of primary suppliers, where relevant.

GN160.Where there are appropriate certification


Ongoing

Community

Engagement/


Environmental

Management

Plans and

Action Plan

The Bank requires the use of Environmental

Management Plans as part of EIA, and the use of

RAPs and IPPs. These are considered by the

Bank to be Action Plans, and commitment to their implementation is a key component of legal agreements.

Ongoing community engagement

[T]he borrower consults with project-affected groups and local nongovernmental


Standards and verification systems in place for sustainable natural resource management in the country of origin, clients are encouraged to consider the procurement of certified product and demonstrated certification or verification under a credible chain-of-custody scheme relevant to the commodity or product in question.

PS1, paragraph 5 states that “The client, in coordination with other responsible government agencies and third parties as appropriate, will conduct a process of environmental and social assessment, and establish and maintain an

ESMS appropriate to the nature and scale of the project and commensurate with the level of its environmental and social risks and impacts. The

ESMS will incorporate the following elements: (i) policy; (ii) identification of risks and impacts; (iii) management programs; (iv) organizational capacity and competency; (v) emergency preparedness and response; (vi) stakeholder engagement; and (vii) monitoring and review. “

Paragraphs 13-24 provide explicit requirements for the management program.

PS1, Footnote 8 defines government agencies and third parties as those parties legally obligated and responsible for assessing and managing specific risks and impacts (e.g., government-led resettlement).

Where IFC identifies gaps between the clients ongoing actions and the Performance Standards,

IFC and the client agree on an Environmental and

Social Action Plan which outlines the necessary conditions of IFC’s investment (IFC Sustainability

Policy, paragraph 28). Performance Standards 1 through 8 may require the client to take various actions like preparing a RAP or IPP, etc.

Stakeholder engagement is discussed in PS1, paragraphs 25-36. Ongoing community engagement is found in PS1, paragraph 36 as


Comparison: The Bank and IFC have equivalent requirements with respect to Environmental

Management Plans, RAPs, and IPPs. However, in IFC’s case, the client’s EMP or equivalent documents may have already been approved by governmental authorities. If there are gaps remaining with respect to IFC’s Performance

Standards, IFC and the client will agree on an

Environmental and Social Action Plan to bridge those gaps.

Comparison: Both Bank and IFC have a requirement for ongoing consultation during the implementation period. IFC has a requirement to

Updates to

Communities

Grievance

Mechanism

Text from World Bank OP organizations (NGOs) throughout project implementation as necessary to address EArelated issues that affect them. (OP4.01 paragraph 14)

Updates to Communities

No equivalent requirement in (OP 4.01)

Accessible procedures appropriate to the project to address grievances in the affected Indigenous

Peoples’ communities arising from project implementation. When designing the grievance procedures, the borrower takes into account the availability of judicial recourse and customary dispute settlement mechanisms among the

Indigenous Peoples. (OP 4.10 Annex B paragraph

2 (h))

Displaced persons and their communities, and any host communities receiving them, are provided timely and relevant information, consulted on resettlement options, and offered opportunities to participate in planning, implementing, and monitoring resettlement.

Appropriate and accessible grievance mechanisms are established for these groups.

(OP 4.12 paragraph 13 (a))

ICP/FPIC/Broad This policy contributes to the Bank's mission of


Standards follows

“The client will provide periodic reports to the Affected Communities that describe progress with implementation of the project Action Plans on issues that involve ongoing risk to or impacts on

Affected Communities and on issues that the consultation process or grievance mechanism have identified as a concern to those

Communities. If the management program results in material changes in or additions to the mitigation measures or actions described in the

Action Plans on issues of concern to the Affected

Communities, the updated relevant mitigation measures or actions will be communicated to them. The frequency of these reports will be proportionate to the concerns of Affected

Communities but not less than annually.”

PS1, paragraph 35 states that “Where there are

Affected Communities, the client will establish a grievance mechanism to receive and facilitate resolution of Affected Communities’ concerns and grievances about the client’s environmental and social performance. The grievance mechanism should be scaled to the risks and adverse impacts of the project and have Affected Communities as its primary user. It should seek to resolve concerns promptly, using an understandable and transparent consultative process that is culturally appropriate and readily accessible, and at no cost and without retribution to the party that originated the issue or concern. The mechanism should not impede access to judicial or administrative remedies. The client will inform the Affected

Communities.”

Requirements to provide grievance mechanisms for workers are found in PS2, paragraph 20; to address concerns about security forces and communities in PS4, paragraph 12; and land acquisition in PS5, paragraph 11.

PS1, paragraphs 25-33 describe the three levels

Comparison & Guidance provide updated information on the action plan and its implementation to affected communities

“not less than annually.” The Bank does not have this as an explicit requirement.

Guidance: The IFC requirement for annual updates of the Action Plan should be efficiently implemented in joint projects; the teams should collaborate to ensure consistent information. In scenario #2, as soon as the Bank team has a reasonable expectation that IFC will later also be financing the project, the IFC requirement for annual updates of the Action Plan should be incorporated into discussions with the client.

Comparison: The Bank’s requirement for a grievance mechanism is triggered for projects which affect Indigenous Peoples and which cause involuntary resettlement. IFC requires establishing a grievance mechanism if the client anticipates ongoing risks to, or adverse impacts on, affected communities in general.

Guidance:

The IFC’s broader standard should apply in a jointly- financed project. In scenario #2, as soon as the Bank team has a reasonable expectation that IFC will later also be financing the project, the IFC requirement that the private client establish a project-level grievance mechanism should be incorporated into project design and supervision plans.

Comparison: The Bank applies Free Prior

Community

Support

Text from World Bank OP poverty reduction and sustainable development by ensuring that the development process fully respects the dignity, human rights, economies, and cultures of Indigenous Peoples. (OP 4.10 paragraph 1)

For all projects that are proposed for Bank financing and affect Indigenous Peoples, the Bank requires the borrower to engage in a process of free, prior, and informed consultation.

The Bank provides project financing only where free, prior, and informed consultation results in broad community support to the project by the affected

Indigenous Peoples.

Such Bank-financed projects include measures to (a) avoid potentially adverse effects on the Indigenous Peoples’ communities ; or (b) when avoidance is not feasible, minimize, mitigate, or compensate for such effects. Bankfinanced projects are also designed to ensure that the Indigenous Peoples receive social and economic benefits that are culturally appropriate and gender- and intergenerationally inclusive. (OP

4.10 paragraph 1)

Projects that involve the physical relocation of

Indigenous Peoples, the commercial development of their cultural resources, or that touch on the rights to their land and natural resources, are subject to “special considerations” and a higher threshold of consultations leading to broad community support (paragraphs 16-19).

Broad Community Support. When the borrower forwards to the Bank the documentation on the

SA and the consultation process, the TT reviews it to verify that the borrower has gained the broad support from representatives of major sections of the community required under the policy. The TT proceeds with project processing once it confirms that such support exists. The Bank does not proceed further with project processing if it is


Standards of consultation (consultation; Informed

Consultation and Participation Process; and Free

Prior Informed Consent) which are linked to the level of impacts to Affected Communities. Each

PS may in turn build upon the PS1 requirements and require additional consultation for specific situations. PS7, paragraphs 10-17 elaborates on the requirements for Free Prior Informed Consent in three specific circumstances. In all cases, IFC will review the client’s documentation of the engagement process. When Broad Community

Support (BCS) verification is required, IFC through its own investigation, will assure itself that the client’s community engagement is one that involves an informed consultation and participation process and enables the informed participation of the affected communities, leading to BCS for the project within the affected communities, before presenting the project for approval by IFC’s Board of Directors. Broad community support is a collection of expressions by the affected communities, through individuals or their recognized representatives, in support of the project. There may be BCS support even if some individuals or groups object to the project.

After the Board approval of the project, IFC will continue to monitor the client’s community engagement process as part of its portfolio supervision. (Sustainability Policy, paragraph 30).

.


Informed Consultation and BCS for all projects that affect Indigenous Peoples, regardless of anticipated impact. Special considerations apply to projects that involve three situations: (i) the physical relocation of Indigenous Peoples; (iii) the commercial development of Indigeno us Peoples’ cultural resources; or (iii) that touch on Indigenous

Peoples’ rights to land and other natural resources. For the commercial development of

Indigenous Peoples’ cultural heritage, their “prior agreement” is explicitly required.

IFC makes a BCS determination for all projects that require the process of informed consultation and participation (ICP).The process of ICP is a client obligation under the Performance

Standards, and applies to all projects with significant adverse impacts on affected communities. In addition, IFC also applies the ICP requirement in projects with adverse impacts on affected communities of Indigenous Peoples with the exception of 3 situations where Free Prior

Informed Consent (FPIC) is required. When FPIC is required, IFC does not undertake a stand-alone

BCS verification. The requirement to ascertain

Broad Community Support is an IFC obligation in its Sustainability Policy. It is a validation by IFC to its Board of Directors of the impact of the client's

ICP process.

Guidance: Joint teams need to be aware that there are potential differences in interpretation of the policy particularly on the provisions concerning FPIC. Joint teams also need to be aware that the Bank has expressed the position that free, prior and informed consultations leading to broad community support is operationally equivalent to FPIC. In all cases, it is key that there is proper documentation of the nature, extent and conclusions of the consultations undertaken with

Indigenous Peoples, and specific evidence of broad community support.

Labor and

Working

Conditions/

Core Labor

Standards

Human Rights

Text from World Bank OP unable to ascertain that such support exists.

Bank policies do not explicitly refer to labor and working conditions or core labor standards in its policies, although OP 4.01 requires the EA to take account of both human health and safety and social aspects of projects proposed for Bank support. The Environmental Health and Safety

General Guidelines contain sections on

Occupational Health and Safety, Community

Health and Safety and Construction and

Decommissioning which must be considered.

Human rights are not referred to in any Bank policy except OP 4.10. The Bank’s position with respect to explicit recognition and support for human rights is a complex one, related to its specific mandate.

OP 4.10 states that `This policy contributes to the


Standards Comparison & Guidance

Performance Standard 2 on Labor and Working

Conditions reflects the core labor standards:

Workers’ Organizations (paragraph 13 and 14);

Non-Discrimination and Equal Opportunity

(paragraphs 15-17); Child Labor (paragraph 21) and Forced Labor (paragraph 22).

PS2, paragraph 2 states that ”The requirements set out in this Performance Standard have been in part guided by a number of international conventions negotiated through the International

Labor Organization (ILO) and the United Nations

(UN).

”

PS 2, paragraph 8, requires IFC clients to adopt and implement human resources policies and procedures appropriate to its size and workforce that set out its approach to managing workers consistent with the requirements of this

Performance Standard and national law.

PS 2, paragraph 9, requires the client to provide workers with documented information that is clear and understandable, regarding their rights under national labor and employment law and any applicable collective agreements, including their rights related to hours of work, wages, overtime, compensation, and benefits upon beginning the working relationship and when any material changes occur.

IFC also recognizes the responsibility of business to respect human rights, independent of the state duties to respect, protect, and fulfill human rights.

(IFC Policy on Environmental and Social

Sustainability paragraph 12)

PS1, paragraph

3 states “Business should respect human rights, which means to avoid infringing on

Comparison: IFC reflects all four core labor standards (CLS) in project requirements.

Regardless of the lack of specific policy requirement regarding labor issues, the Bank now incorporates all four core labor standards in its

Standard Bidding Documents for large works but

(i) only the CLS on child labor and forced labor are mandatory as part of the General Conditions of Contract —to which all MDBs subscribe; (ii) the two other CLSs are in the Particular Conditions of

Contract, but these are optional and left to the

Borrower to require from contractors; (iii) the

Bank’s Procurement Guidelines have not been amended to reflect this, or IFC policy.

While there is basic symmetry of language on

CLS, not all CLS are reflected in the General

Conditions or the Bank’s procurement guidelines.

In addition to CLS, IFC policy draws expressly on other relevant ILO/UN conventions related to labor and work conditions. Bank policy does not reference these conventions, although it is the

Bank’s own borrowers, i.e., governments that are parties to these conventions.

Guidance: In jointly-financed projects, the joint team should require the private sector client to adhere to PS 2. The Bank should conduct a review with respect to the borrower’s ratification of the ILO core conventions, and consider the reputational risk of borrower commitment to core labor standards.

Comparison: Bank policies contain no general reference to human rights comparable to that contained in the IFC Policy. IFC Performance

Standards and Guidance Notes are designed to enable IFC clients to address a broad range of human rights.

Guidance: Bank staff in a jointly- financed project

Community

Health, Safety and Security


Bank’s mission of poverty reduction and sustainable development by ensuring that the development process fully respects the dignity, human rights, economies, and cultures of

Indigenous Peoples. (OP4.10 paragraph 1). For all projects that are proposed for Bank financing and affect Indigenous Peoples, the Bank requires the borrower to engage in a process of free, prior, and informed consultation. The Bank provides project financing only where free, prior, and informed consultation results in broad community support to the project by the affected Indigenous

Peoples.

Such Bank-financed projects include measures to (a) avoid potentially adverse effects on the Indigenous Peoples’ communities; or (b) when avoidance is not feasible, minimize, mitigate, or compensate for such effects. Bankfinanced projects are also designed to ensure that the Indigenous Peoples receive social and economic benefits that are culturally appropriate and gender and intergenerationally inclusive.

EA takes into account the natural environment

(air, water, and land); human health and safety; social aspects (involuntary resettlement, indigenous peoples, and physical cultural resources); and transboundary and global environmental aspects.


Standards the human rights of others and address adverse human rights impacts business may cause or contribute to. Each of the Performance Standards has elements related to human rights dimensions that a project may face in the course of its operations. Due diligence against these

Performance Standards will enable the client to address many relevant human rights issues in its project.”

PS1, Footnote

12 states that “In limited high risk circumstances, it may be appropriate for the client to complement its environmental and social risks and impacts identification process with specific human rights due diligence as relevant to the particular business.

”

The Objectives in PS7 state that

“To ensure that the development process fosters full respect for human rights, dignity, aspirations, culture, and natural resources-based livelihoods of Indigenous

Peoples.

”

PS 4, paragraph 13, requires that the client will assess and document risks arising from the project’s use of government security personnel deployed to provide security services.

PS 4, paragraph 15, requires that the client will consider and, where appropriate, investigate all allegations of unlawful or abusive acts of security personnel, take action (or urge appropriate parties to take action) to prevent recurrence, and report unlawful and abusive acts to public authorities.

PS4: Community Health, Safety, and Security contains the requirements that clients must take to protect communities. The client will evaluate the risks to and impacts on the health and safety of the affected community during the design, construction, operation, and decommissioning of

Comparison & Guidance should be aware that IFC staff may encourage their client to carry out a human rights impact assessment for high risk projects. Disclosure requirements for such a document need to be carefully considered, and brought to the attention of the Bank client.

Bank clients should also be made aware that IFC client

’s are required to assess and document risks arising from the project’s use of government security personnel deployed to provide security services. Again, disclosure requirements for such a document need to be carefully considered, and brought to the attention of the Bank client.

Comparison: Bank policy states that human health and safety aspects are to be taken into account in the EA. IFC specifically defines client roles and responsibilities with respect to community health, safety and security in PS4.

Guidance: The IFC standard should apply in joint



Standards the project, and will establish preventive measures to address them in a manner commensurate with the identified risks and impacts. These measures will favor the prevention or avoidance of risks and impacts over minimization.

Where the project poses risks to or adverse impacts on the health and safety of affected communities, the client will disclose relevant project-related information to enable the affected communities and relevant government agencies to understand these risks and impacts, and will engage the affected communities and agencies on an ongoing basis consistent with the requirements of the Performance Standards.

When the client retains direct or contracted workers to provide security to safeguard its personnel and property, it will assess risks posed by its security arrangements to those within and outside the project site. In making such arrangements, the client will be guided by the principles of proportionality and good international practice3 in relation to hiring, rules of conduct, training, equipping, and monitoring of such workers, and by applicable law. The client will make reasonable inquiries to ensure that those providing security are not implicated in past abuses; will train them adequately in the use of force (and where applicable, firearms), and appropriate conduct toward workers and Affected

Communities; and require them to act within the applicable law. The client will not sanction any use of force except when used for preventive and defensive purposes in proportion to the nature and extent of the threat. The client will provide a grievance mechanism for Affected Communities to express concerns about the security arrangements and acts of security personnel.

Comparison & Guidance projects. The Bank team should consult with IFC at the earliest possible time.

Bank clients should be made aware that IFC clients are required to assess and document risks arising from the project’s use of government security personnel deployed to provide security services. Disclosure requirements for such a document need to be carefully considered, and brought to the attention of the Bank client.


Land

Acquisition and

Involuntary

Resettlement

This policy covers direct economic and social impacts that both result from Bank-assisted investment projects, and are caused by (a) the involuntary taking of land resulting in (i) relocation or loss of shelter; (ii) loss of assets or access to assets; or (iii) loss of income sources or means of livelihood, whether or not the affected persons must move to another location; or (b) the involuntary restriction of access to legally designated parks and protected areas resulting in adverse impacts on the livelihoods of the displaced persons. (OP 4.12 paragraph 3)

This policy applies to all components of the project that result in involuntary resettlement, regardless of the source of financing. It also applies to other activities resulting in involuntary resettlement that in the judgment of the Bank, are

(a) directly and significantly related to the Bankassisted project, (b) necessary to achieve its objectives as set forth in the project documents; and (c) carried out, or planned to be carried out, contemporaneously with the project. (OP 4.12 paragraph 4)


Standards

The client will assess and document risks arising from the project’s use of government security personnel deployed to provide security services.

The client will seek to ensure that security personnel will act in a manner consistent with paragraph 12 above, and encourage the relevant public authorities to disclose the security arrangements for the client’s facilities to the public, subject to overriding security concerns.

The client will consider and, where appropriate, investigate all allegations of unlawful or abusive acts of security personnel, take action (or urge appropriate parties to take action) to prevent recurrence, and report unlawful and abusive acts to public authorities.

Performance Standard 5: Land Acquisition and

Involuntary Resettlement applies to physical and/or economic displacement resulting from the following types of land-related transactions:

Land rights or land use rights acquired through expropriation or other compulsory procedures in accordance with the legal system of the host country;

Land rights or land use rights acquired through negotiated settlements with property owners or those with legal rights to the land if failure to reach settlement would have resulted in expropriation or other compulsory procedures;

Project situations where involuntary restrictions on land use and access to natural resources cause a community or groups within a community to lose access to resource usage where they have traditional or recognizable usage rights;

Certain project situations requiring evictions of people occupying land without formal, traditional, or recognizable usage rights; or

Restriction on access to land or use of other resources including communal property and natural resources such as marine and aquatic


Comparison: The approaches of the two policies are complementary. IFC PS 5 requires that when land acquisition and resettlement are the responsibility of the host government, the client should collaborate with the responsible government agency, to the extent permitted by the agency, to achieve outcomes consistent with the objectives of PS 5. In addition, where government capacity is limited, the client should play an active role during resettlement planning, implementation, and monitoring. If Government measures do not meet the requirements of PS5, the client is required to prepare a Supplemental

Action plan that, together with such Government measures, will ensure that PS5 requirements are met. However, PS5 includes a caveat that: the supplemental measures to achieve the requirements of this Performance Standard as described in paragraphs 19 –29 in a way that is permitted by the responsible agency and

implementation time schedule.

Guidance: In Scenario #1 and #2, the responsibility should fall on the Government to ensure that land acquisition and resettlement


To address the impacts covered under paragraph

3(a) of this policy, the borrower prepares a resettlement plan or a resettlement policy framework (see paragraph 25-30) that covers the following:

(a) The resettlement plan or resettlement policy framework includes measures to ensure that the displaced persons are (i) informed about their options and rights pertaining to resettlement; (ii) consulted on, offered choices among, and provided with technically and economically feasible resettlement alternatives; and

(iii) provided prompt and effective compensation at full replacement cost for losses of assets attributable directly to the project.

(b) If the impacts include physical relocation, the resettlement plan or resettlement policy framework includes measures to ensure that the displaced persons are (i) provided assistance

(such as moving allowances) during relocation; and (ii) provided with residential housing, or housing sites, or, as required, agricultural sites for which a combination of productive potential, locational advantages, and other factors is at least equivalent to the advantages of the old site.

(c) Where necessary to achieve the objectives of the policy, the resettlement plan or resettlement policy framework also include measures to ensure that displaced persons are (i) offered support after displacement for a transition period based on a reasonable estimate of the time likely to be needed to restore their livelihood and standards of living; and (ii) provided with development assistance in addition to compensation measures described in paragraph 6(a); (iii) such as land preparation, credit facilities, training, or job opportunities. (OP4.12 paragraph 6)

The borrower is responsible for preparing, implementing, and monitoring a resettlement plan, a resettlement policy framework, or a process


Standards resources, timber and non-timber forest products, freshwater, medicinal plants, hunting and gathering grounds and grazing and cropping areas.

This Performance Standard does not apply to resettlement resulting from voluntary land transactions (i.e., market transactions in which the seller is not obliged to sell and the buyer cannot resort to expropriation or other compulsory procedures sanctioned by the legal system of the host country if negotiations fail). It also does not apply to impacts on livelihoods where the project is not changing the land use of the affected groups or communities.

The applicability of this Performance Standard is established during the Social and Environmental

Assessment process, while implementation of the actions necessary to meet the requirements of this Performance Standard is managed through the client’s Social and Environmental

Management System. The assessment and

Comparison & Guidance have been conducted in accordance with OP

4.12. In Scenario #3, PS 5 would apply, and the

Bank would require the conduct of due diligence, and the implementation of supplemental actions, if required, to bring what has been done to date in line with OP 4.12. Timing issues should be carefully considered, as OP 4.12 does not include a similar caveat as IFC with respect to implementation time schedule.

Given differences in the IFC concept of

‘associated’ and the Bank concepts of ‘ancillary’

(OP 4.01) and ‘related’ (OP 4.12), the teams will need to review the scope of any PS 5 application to land acquisition and resettlement and, if necessary, include any activities which would be included as a consequence of the broader Bank definition to land acquisition and resettlement and, if necessary, include any activities which would be included as a consequence of the broader Bank definitions.

Text from World Bank OP framework (the "resettlement instruments"), as appropriate, that conform to this policy. The resettlement instrument presents a strategy for achieving the objectives of the policy and covers all aspects of the proposed resettlement.

Borrower commitment to, and capacity for, undertaking successful resettlement is a key determinant of Bank involvement in a project.

(OP4.12 paragraph 18)

The full costs of resettlement activities necessary to achieve the objectives of the project are included in the total costs of the project. The costs of resettlement, like the costs of other project activities, are treated as a charge against the economic benefits of the project; and any net benefits to resettlers (as compared to the

"without-project" circumstances) are added to the benefits stream of the project. Resettlement components or freestanding resettlement projects need not be economically viable on their own, but they should be cost-effective. (OP 4.12 paragraph

20)

The borrower's obligations to carry out the resettlement instrument and to keep the Bank informed of implementation progress are provided for in the legal agreements for the project. (OP

4.12 paragraph 23)

The borrower is responsible for adequate monitoring and evaluation of the activities set forth in the resettlement instrument. The Bank regularly supervises resettlement implementation to determine compliance with the resettlement instrument. Upon completion of the project, the borrower undertakes an assessment to determine whether the objectives of the resettlement instrument have been achieved. The assessment takes into account the baseline conditions and the results of resettlement monitoring. If the assessment reveals that these objectives may not be realized, the borrower should propose followup


Standards management system requirements are outlined in

Performance Standard 1.

PS5, paragraph 24, makes clear that forced evictions will not be carried out except in accordance with law and the requirements of

PS5.

PS5, paragraphs 30-32 describe the client requirements under government-managed resettlement as follows:

30. “Where land acquisition and resettlement are the responsibility of the government, the client will collaborate with the responsible government agency, to the extent permitted by the agency, to achieve outcomes that are consistent with this

Performance Standard. In addition, where government capacity is limited, the client will play an active role during resettlement planning, implementation, and monitoring, as described below.

31. In the case of acquisition of land rights or access to land through compulsory means or negotiated settlements involving physical displacement, the client will identify and describe government resettlement measures. If these measures do not meet the relevant requirements of this Performance Standard, the client will prepare a Supplemental Resettlement Plan that, together with the documents prepared by the responsible government agency, will address the relevant requirements of this Performance

Standard (the General Requirements and requirements for Physical Displacement and

Economic Displacement above). The client will need to include in its Supplemental Resettlement

Plan, at a minimum (i) identification of affected people and impacts; (ii) a description of regulated activities, including the entitlements of displaced persons provided under applicable national laws and regulations; (iii) the supplemental measures to achieve the requirements of this Performance


Pollution

Prevention and

Abatement

Text from World Bank OP measures that may serve as the basis for continued Bank supervision, as the Bank deems appropriate (see also BP 4.12 paragraph 16).

(OP4.12 paragraph 24)

The Pollution Prevention and Abatement

Handbook (PPAH) describes pollution prevention and abatement measures and emission levels that are normally acceptable to the Bank.

However, taking into account borrower country legislation and local conditions, the EA may recommend alternative emission levels and approaches to pollution prevention and abatement for the project. The EA report must provide full and detailed justification for the levels and approaches chosen for the particular project or site. The new WBG Environmental, Health, and

Safety Guidelines ('EHS Guidelines') have been in effect since April 2007 and replace the Industry

Guidelines contained in the 1998 PPAH. These

EHS guidelines were drafted jointly between the

Bank and IFC and therefore apply to both institutions (OP4.01 paragraph 6).


Standards

Standard as described in paragraphs 19 –29 in a way that is permitted by the responsible agency and implementation time schedule; and (iv) the financial and implementation responsibilities of the client in the execution of its Supplemental

Resettlement Plan.

32. In the case of projects involving economic displacement only, the client will identify and describe the measures that the responsible government agency plans to use to compensate

Affected Communities and persons. If these measures do not meet the relevant requirements of this Performance Standard, the client will develop an Environmental and Social Action Plan to complement government action. This may include additional compensation for lost assets, and additional efforts to restore lost livelihoods where applicable .”

PS3: Resource Efficiency and Pollution

Prevention is established during the risks and impacts identification process and applied during the project life-cycle. The client will consider ambient conditions and apply technically and financially feasible resource efficiency and pollution prevention principles and techniques that are best suited to avoid, or where avoidance is not possible, minimize adverse impacts on human health and the environment. The principles and techniques applied during the project life-cycle will be tailored to the hazards and risks associated with the nature of the project and consistent with good international industry practice (GIIP), as reflected in various internationally recognized sources, including the World Bank Group

Environmental, Health and Safety Guidelines

(EHS Guidelines). (PS3, paragraph 4)

The client will refer to the EHS Guidelines or other internationally recognized sources, as appropriate, when evaluating and selecting resource efficiency and pollution prevention and


Comparison: The two policies are consistent.

Guidance: Joint teams should highlight the need for implementation of pollution prevention and abatement measures, with resulting emissions levels consistent with the EHS Guidelines or national law, whichever is more stringent. IFC policy contains reference to use time-bound action plans. When such is the case, Bank and

IFC teams should work together to address any differences in timing.


Projects in

Disputed Areas

The Bank may support a project in a disputed area if the governments concerned agree that, pending the settlement of the dispute, the project proposed for country A should go forward without prejudice to the claims of country B. (OP 7.60 paragraph 2). The Policy requires Bank staff to consider the nature of the dispute and to ensure that the PAD for a project in a disputed area discusses the nature of the dispute and affirms that Bank staff have considered it and are satisfied that either: (a) the other claimants to the disputed area have no objection to the project; or

(b) in all other instances, the special circumstances of the case warrant the Bank's support of the project notwithstanding any objection or lack of approval by the other claimants. “Special circumstances” under (b) above include: (i) that the project is not harmful to


Standards control techniques for the project. The EHS

Guidelines contain the performance levels and measures that are normally acceptable and applicable to projects. When host country regulations differ from the levels and measures presented in the EHS Guidelines, clients will be required to achieve whichever is more stringent. If less stringent levels or measures than those provided in the EHS Guidelines are appropriate in view of specific project circumstances, the client will provide full and detailed justification for any proposed alternatives through the environmental and social risks and impacts identification and assessment process. This justification must demonstrate that the choice for any alternate performance levels is consistent with the objectives of this Performance Standard. (PS3, paragraph 5)


IFC Performance Standards do not contain any specific guidance for projects in disputed areas

Comparison: As a practical matter, in deciding whether an area should be appropriate for IFC investment, IFC looks to the Bank to indicate whether an area is subject to a dispute within the meaning of OP 7.60, and the prevailing practice of the relevant Bank Region/country team.

Guidance: OP 7.60 applies whenever there is

Bank financing involved. Considering the approach followed by IFC in this regard, jointly financed projects should be processed in accordance with the requirements of OP 7.60.

Text from World Bank OP the interest of other claimants, or (ii) that a conflicting claim has not won international recognition or been actively pursued. In all cases, the project documentation bears a disclaimer stating that, by supporting the project, the Bank does not intend to make any judgment on the legal or other status of the territories concerned or to prejudice the final determination of the parties' claims.


Standards Comparison & Guidance

Part Two: Guidance on Procedural Differences

When preparing a joint project, it is as important to understand the procedural differences between the

Bank and the IFC as it is to understand the policy differences that were analyzed in Part One.

Some procedural differences reflect the inherent differences in the three client bases of the organizations, such as:

 Disclosure – As the Bank works with sovereign governments, disclosure of project-related documents occurs throughout the project cycle, including public disclosure of legal agreements.

IFC, in contrast, works with private corporations that have business confidentiality concerns. As a result, legal agreements between IFC and its clients are not disclosed, although disclosure of documents on projects’ social and environmental performance is required.



Conditions – The Bank seeks to minimize the number of ‘conditions of effectiveness’ and ongoing disbursement conditions with its public sector borrowers, while IFC uses ‘conditions of disbursement’ as a routine management technique to assure ongoing compliance with its requirements by its private sector clients. Joint teams need to be aware of these procedural differences early, and attend to them in detail.

Other procedural differences reflect the differences in the two business models, among them:



Accountability –The Bank is subject to Inspection Panel review that reports to the Board of

Directors, while IFC’s independent accountability mechanism is the Compliance

Advisor/Ombudsman (CAO) reporting to the President.



Appraisal – Joint teams need to understand that there are significantly different meanings of

“appraisal” in the two sets of procedures. Appraisal is an important stage in Bank project processing. It occurs later in the project cycle, and is authorized only after the potential borrower has disclosed the required safeguard documents and reports according to the Bank’s requirements.

Safeguard reports can include an Environmental Assessment, Resettlement Instruments, and

Indigenous Peoples Development Plans, as appropriate to the specific project under review. Such reports may also be required for Bank processing of any Associated Facilities (see Part One, above) related to a proposed project. The Appraisal phase of project review at IFC occurs in the early phase of its project cycle, and begins with the signing of the mandate letter with the client. It includes social and environmental due diligence activities that proceed at increasing levels of detail until the disclosure of documents by IFC and the client prior to Board of Directors’ consideration of the project.



Supervision: Both institutions supervise the activities of their clients/borrowers against the commitments made in their respective legal agreements. Activities typically include review of monitoring reports, participation in supervision and site visits, and regular reporting on compliance status. The Bank's supervision findings and recommendations are recorded in an Aide

Memoire which is shared and agreed with the Government, and normally is publicly disclosed.

The Bank also discloses a very brief summary of each project annually in the Status of IBRD/IDA

Projects in Execution (SOPE) report. IFC discloses a Summary of Investment Information (SII) and for Category A and B projects an Environmental and Social Review Summary (ESRS), and, if applicable, an Environmental and Social Action Plan (ESAP) prior to Board consideration. The

SIL is updated as necessary, along with the status of implementation of the ESAP throughout the life of the investment. ESIA’s developed post-Board and third-party monitoring reports that are required by IFC are also made public on an on-going basis.

53

Part One provided guidance on how a joint team can ameliorate the two institutions’ policy differences by preplanning to achieve processing efficiencies and reduce duplication of effort. Equally important, joint teams need to be aware of procedural differences and to act early on them in project processing; the two institutions’ procedural requirements can be met most efficiently through detailed preplanning and coordination. This is accomplished most easily in Scenario #1, when the linked IFC and Bank projects are processed contemporaneously. But the potential benefits in processing efficiencies are as great in

Scenarios #2 and #3, when one institution’s project leads and the other’s follows. Early identification of activities that will require more time to resolve allows them to be given priority and will minimize impacts on the timelines for linked projects.

Figures 1 and 2 provide an overview of the Bank (IDA/IBRD) and IFC project cycles for the Standard

Processing of projects, and highlight the major decision points and the points at which documents are publicly disclosed.

54

Decision

Points

Figure 1

IDA/IBRD Project Cycle

Project Concept

Note (PCN) Review

Decision Meeting—

Before Appraisal

Decision/Clearance—

Negotiations

Board of Directors

Approval

Disclosed

Documents

Conditions of

Effectiveness

Project Information

Document (PID) &

Integrated Safeguards

Data Sheet (ISDS)

Safeguard Reports or Drafts*

Updated PID

Updated ISDS

Project Appraisal

Document (PAD) and

Legal Agreements after Approval

Status of IBRD/IDA

Projects in

Execution (SOPE)

Implementation

Completion

Report (ICR)

Independent

Evaluation Group

(IEG) reports

55

Figure 2

IFC Project Cycle

56

57

Environmental and Social Policy and Procedural Guidelines for

NVIRONMENT AND

OCIAL

OLICY AND

ROCEDURAL

UIDELINES

FOR

ROJECTS IN

OUNTRIES

INANCED

OINTLY BY

ANK AND

Table of Contents

Overview

Part One (A): Guidance on Policy Issues by Scenario

Part One (B): Comparison and Guidance on Policy Issues by Topic

Part Two: Guidance on Procedural Differences

Decision

Points

Figure 1

IDA/IBRD Project Cycle

Project Concept

Note (PCN) Review

Decision Meeting—

Before Appraisal

Decision/Clearance—

Negotiations

Board of Directors

Approval

Disclosed

Documents

Conditions of

Effectiveness

Project Information

Document (PID) &

Integrated Safeguards

Data Sheet (ISDS)

Safeguard Reports or Drafts*

Updated PID

Updated ISDS

Project Appraisal

Document (PAD) and

Legal Agreements after Approval

Status of IBRD/IDA

Projects in

Execution (SOPE)

Implementation

Completion

Report (ICR)

Independent

Evaluation Group

(IEG) reports

Figure 2

IFC Project Cycle

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