Guidelines for Private Sector Category A Projects
Table 1
Environmental Guidelines for Private Sector Category A Projects
Note: Application of the following Guidelines is Required for Category A projects structured as limited recourse project finance. They also are Recommended for Category A projects structured as corporate risk, although applicants/buyers involved in such projects have the option of instead complying with the Guidelines listed in Table II.
Consistent with the OECD Common Approaches, Category A projects that are structured as project finance transactions will be evaluated using the Performance Standards on Social and Environmental Sustainability (Performance Standards) of the International Finance Corporation (IFC), and the IFC Environmental Health and Safety Guideline (EHS Guidelines) applicable to the underlying sector of the project.
Ex-Im Bank recommends that Category A projects structured as corporate risk also be evaluated using these IFC Performance Standards and EHS Guidelines, though applicants and/or buyers involved in corporate risk projects have the option of electing compliance with the guidelines listed in Table II.
If Ex-Im Bank identifies an operational link or facility associated with the project and determines that the identified operations should be included within the scope of the environmental evaluation, it will inform the project as to the identity of the associated operations, the nature of the environmental information about the facility that is required, and the guidelines that will be used in evaluating the associated operations.
The applicant shall prepare and submit to Ex-Im Bank an Environmental Impact Assessment (EIA) as described in Annex E of the project (and associated operations, if required) as well as other environmental information sufficient to show compliance with the applicable Performance Standards and EHS Guidelines described in this Table. This information will enable Ex-Im Bank to evaluate the project's level of compliance with host country environmental guidelines as well as the applicable IFC Performance Standards and EHS Guidelines. Information about the IFC Performance Standards and EHS Guidelines is presented below:
The Performance Standards of the IFC
The IFC Performance Standards apply to private sector projects and provide foreign buyers and project participants with instruments to structure, design, construct and manage the operations of projects in an environmentally and socially acceptable manner, while providing measures to avoid or mitigate adverse environmental and social impacts resulting from the projects. These Performance Standards are intended to focus on outcomes rather than process, thereby stressing the implementation of sound environmental and social management systems that achieve desired outcomes, including the mitigation of adverse impacts.
There are eight IFC Performance Standards:
- Social & Environmental Assessment and Management Systems
- Labor and Working Conditions
- Pollution Prevention and Abatement
- Community Health and Safety
- Land Acquisition and Involuntary Resettlement
- Biodiversity Conservation and Sustainable Natural Resource Management
- Indigenous Peoples
- Cultural Heritage
Copies of the full text of the IFC Performance Standards are available from Ex-Im Bank, the IFC, or at: http://www.ifc.org/ifcext/enviro.nsf/Content/PerformanceStandards.
In order to assist users in understanding the scope and content of the IFC Performance Standards, Ex-Im Bank's Engineering & Environment Division has prepared a summary of the objectives and requirements of each Standard. In the case of ambiguity between the following summaries and the official language of the respective Performance Standards set forth by the IFC, the language of the IFC will prevail. Ex-Im Bank's Engineering & Environment Division will decide on a case-by-case basis the appropriate application of the IFC Performance Standards to a particular project in consultation with the transaction parties, in a manner consistent with Ex-Im Bank's Charter.
Performance Standard #1 : Social & Environmental Assessment and Management Systems
Objectives:
a) Identify and assess environmental and social impacts in the project's area of influence
b) Avoid, minimize, mitigate or compensate for adverse impacts
c) Ensure that affected communities are engaged on issues that may affect them
d) Promote improved environmental and social performance through effective management systems
Major Requirements:
- Conduct an Environmental and Social Impact Assessment (ESIA or EIA)[1] of the project, appropriate to the nature of the project's environmental and social risks and potential impacts, to include issues identified in Performance Standards 2 through 8.
- Establish Environmental and Social Management Plans commensurate with the findings of the ESIA and consultation with affected communities.
- Establish Action Plans where specific mitigation measures and actions are required for the project to comply with applicable laws, regulations and the requirements of these Performance Standards.
- Provide organizational capacity and contractor/employee training to enable project to achieve continuous environmental and social performance
- Establish and maintain a timely process of community engagement, including a grievance mechanism, focusing on disclosure of information and consultation with local communities affected by project risks or adverse impacts that is free from external manipulation, interference or coercion to ensure relevant and understandable access to project information.
- Establish procedures to monitor and measure the effectiveness of the environmental and social management program, including internal reporting of the program's effectiveness to the project's senior management, disclosure of Action Plans (including material changes to such Plans) to affected communities, and external reporting to affected communities on the results of Action Plans, commensurate with the concerns of the affected communities.
Performance Standard #2: Labor and Working Conditions
Objectives:
a) Establish, maintain and improve the worker-management relationship
b) Promote fair treatment and equal opportunity for workers, in compliance with national laws
c) Protect workforce by addressing child labor and forced labor
d) Promote safe working conditions and protect/promote the health of workers
(Refer to the text of IFC Performance Standard#2 for definitions of the term "workers" and the scope of its applicability to employees related to the project.)
Major Requirements:
- Establishment of a Human Resources Policy consistent with the requirements of this Standard that informs employees of their rights under national labor and employment laws
- Document and communicate to all employees conditions and terms of employment
- Respect collective bargaining agreements with worker organizations and provide reasonable conditions and terms of employment that, at a minimum, comply with national law, and enable alternative means for worker expression of grievances where national law restricts worker organizations
- Practice non-discrimination and equal opportunity in making employment decisions
- Provide a mechanism for workers to raise workplace concerns
- Protect the workforce from forced labor and illegal or economically exploitative child labor
- Provide workers with a safe and healthy work environment, taking into account risks inherent to the particular project sector.
Performance Standard #3: Pollution Prevention and Abatement
Objectives:
a) Avoid or minimize pollution from project activities to avoid or minimize adverse impacts on the environment and human health
b) Promote the reduction of emissions that may contribute to climate change
Major Requirements:
- Consider ambient conditions over the project cycle and apply pollution prevention and control technologies & practices that are best suited to avoid, minimize or reduce adverse impacts on human health and the environment, consistent with good industry practice
- Avoid, or where unavoidable, control the intensity of the release of pollutants, and include measures to control their accidental release.
- Avoid or minimize the generation of hazardous waste, and where such generation is unavoidable recover and reuse to the extent possible or treat, destroy or dispose of it in an environmentally sound manner.
- Avoid, or where unavoidable, minimize or control the release of hazardous wastes. Avoid the manufacture, trade or use of chemicals or hazardous materials subject to international bans or phase-outs.
- Establish plans and make preparations to respond to process upset, accidental and emergency situations in a manner appropriate to the operational risks and the need to prevent potential negative consequences.
- Refer to the Environmental Health and Safety Guidelines (EHS) of the IFC that is appropriate to the project sector to evaluate and select pollution prevention and control techniques and to determine emission and effluent levels that are normally acceptable to the project. If, due to specific project circumstances, alternative levels that deviate from the EHS or host Country levels are selected, a full and detailed justification for any proposed alternatives is required.
- Address adverse project impacts on existing ambient conditions such as land use, proximity to ecologically sensitive or protected areas, the capacity of the air and water to absorb incremental pollutants while remaining at an acceptable level, and the potential for cumulative impacts with uncertain consequences. In addition, promote strategies to avoid or minimize the release of pollutants and improve ambient conditions when project produces significant emissions in an already degraded area.
- Promote the reduction of project-related greenhouse gas emissions in a manner appropriate to the nature and scale of the project operations and impact. Annually quantify and monitor GHG emissions, and evaluate options to reduce or offset project related GHG emissions.
- Formulate and implement an integrated pest management program for pest management activities, including selection of pesticides that are low in human toxicity and design of an application regime to minimize damage to natural enemies and prevent the development of resistance in pests.
Performance Standard #4: Community Health & Safety
Objectives:
a) Avoid or minimize the risks to, and impacts on, the health and safety of the local community over the project life cycle, from both routine and non-routine circumstances.
b) Ensure that the safeguarding of personnel and property is carried out in a legitimate manner that avoids or minimizes risks to the community's safety and security.
Requirements :
- Evaluate risks and impacts of the project to the health and safety of affected communities, from design through decommissioning and establish preventive measures to address them in a manner commensurate with the identified risks and impacts.
- Disclose Action Plans and other relevant information to affected communities and government agencies to enable them to understand the risks and impacts while engaging them on this matter on an ongoing basis.
- Design, construct, operate and decommission the project's structural elements in accordance with good international industry practice with particular consideration to exposure to natural hazards. In cases of dams or ash ponds situated in high-risk locations, engage an independent expert to conduct a review of the structure design early in the project stage. Take measures to ensure safety and prevent accidents when moving equipment on public roads.
- Prevent or minimize the potential for community exposure to hazardous materials that may be released by the project, and exercise commercially reasonable efforts to control the safety of hazardous raw materials and the transportation and disposal of wastes.
- Avoid or minimize the exacerbation of impacts caused by natural hazards, such as landslides or floods from land use changes due to project activities. Avoid or minimize impacts of project activities on soil, water and other natural resources in use by the affected communities.
- Prevent or minimize the potential for community exposure to water-borne, water-related, or vector-borne disease and other communicable diseases resulting from project activities or associated with the influx of project labor. Where specific diseases are endemic in communities in the project area, explore opportunities to improve environmental conditions that could reduce their incidence.
- Assist the community in preparing to respond effectively to emergency situations. Where local governments lack the capacity to respond effectively, assume an active role in preparing for and responding to project related emergencies. Document emergency procedures and responsibilities and disclose in the Action Plan.
- Assess risks to those within and outside the project site posed by arrangements with employees or contractors providing security to safeguard personnel and property. Investigate security forces to ensure they are not implicated in past abuses, provide them with adequate training with respect to conduct towards project workers and the local community.
- Investigate any credible allegations of unlawful or abusive acts of security personnel, take action to prevent recurrence, and report unlawful and abusive acts to public authorities when appropriate.
Performance Standard #5: Land Acquisition and Involuntary Resettlement
Objectives:
a) Avoid or minimize involuntary resettlement whenever feasible by exploring alternative project designs.
b) Mitigate adverse social and economic impacts by providing compensation for loss of assets at replacement cost and ensuring that resettlement activities are implemented with appropriate disclosure of information, consultation and informed participation of those affected.
c) Improve or at least restore livelihoods and living standards of displaced persons.
d) Improve living conditions among displaced persons through provision of adequate housing with security of tenure at resettlement sites.
Requirements:
- Consider feasible alternative project designs to avoid or at least minimize physical or economic displacement while balancing environmental, social and financial costs and benefits.
- Offer displaced persons and communities compensation for loss of assets at full replacement cost and assistance to improve or at least restore their living standards or livelihoods. Compensation standards will be transparent and consistent within the project. If land based, or where land is collectively owned, offer land-based compensation where feasible, and provide opportunities to displaced persons and communities to derive appropriate development benefits from the project.
- Following full disclosure, consult with and facilitate the informed participation of affected persons and communities in decision making processes related to resettlement. Consultation during implementation, monitoring and evaluation of compensation payment and resettlement will continue to achieve outcomes consistent with objectives.
- Establish a grievance mechanism to receive and address specific concerns about compensation and relocation raised by displaced persons or members of host communities, including a recourse mechanism to resolve disputes in an impartial manner.
- Where involuntary resettlement is unavoidable, carry out a census with socio-economic baseline data to identify persons who will be displaced, determine eligibility for compensation and assistance, and discourage inflow of people ineligible for these benefits. In the absence of local government procedures, establish a cut-off date for eligibility, and document and disseminate through the project area information regarding the cut-off date.
- Develop a Resettlement Action Plan for acquisition of land through the exercise of eminent domain or through negotiated settlements involving physical displacement of people that is based on a Social and Environmental Assessment regardless of the number of people affected, consistent with the requirements set forth in the language of Paragraph 12 of the IFC's Performance Standard #5.
- For negotiated settlements involving economic displacement, develop procedures to offer affected people and communities compensation and other assistance, consistent with the requirements set forth in the language of Paragraph 13 of the IFC's Performance Standard #5.
- In the case of physical displacement, offer displaced persons choices among feasible resettlement options, including adequate housing or cash compensation where appropriate prior to relocation, and provide relocation assistance suited to the needs of each group, with particular attention to the poor and vulnerable. New resettlement sites will offer improved living conditions.
- In the case of displacement of persons having no recognizable legal right or claim to the land they occupy, offer them a choice of options for adequate housing with security of tenure enabling them to resettle legally without the subsequent risk of forced eviction. Provide these persons with compensation for occupied structures and other improvements to the land at full replacement provided they occupy the land prior to the eligibility cut-off date.
- In the case of physical displacement of communities of indigenous peoples from their communally held traditional or customary lands under use, meet the applicable requirements of this Standard as well as those of Performance Standard 7.
- Compensate persons facing loss of income or livelihood (economic displacement) regardless of whether they are physically displaced in accordance with the requirements set forth in the text of Paragraph 20 and 21 of the IFC Performance Standard #5.
- In the case of host government-managed resettlement, collaborate with the responsible government agency to achieve outcomes consistent with the objectives set forth in the official text of Paragraphs 22 through 25 of Performance Standard #5.
Performance Standard #6: Biodiversity Conservation and Sustainable Natural Resource Management
Objectives :
a) Protect and conserve biodiversity
b) Promote sustainable management and the use of natural resources through the adoption of practices that integrate conservation needs and development priorities
Requirements:
- Assess the significance of project impacts on all levels of biodiversity as an integral part of the ESIA process, taking into account the differing values attached to biodiversity by specific stakeholders, and identify impacts on ecosystem services. The assessment will focus on the major threats to biodiversity, which include habitat destruction and invasive species. Retain qualified and experienced external experts to assist in conducting the Assessment as required below.
- In areas of modified habitat, exercise care to minimize conversion or degradation of such habitat while identifying opportunities to enhance habitat and protect and conserve biodiversity as part of operations.
- In areas of natural habitat, the project will not significantly convert or degrade such habitat unless there are no technical and financially feasible alternatives, or unless the overall benefits of the project outweigh the costs, including those to the environment and biodiversity and unless conversion or degradation is appropriately mitigated.
- In areas of natural habitat, mitigation measures will be designed to achieve no net loss of biodiversity where feasible and may include post-operation restoration of habitats, offsets of losses through the creation of ecologically comparable areas managed for biodiversity, and/or compensation to direct users of biodiversity.
- In areas of critical habitat (as defined in the official text of Paragraph 9 of Performance Standard #6), no project activities will be implemented unless there are no measurable adverse impacts on the ability of the critical habitat to support the established population of critically endangered or endangered species, and activities result in no reduction in the population of any such species, and mitigation measures are taken to address lesser impacts.
- In addition to the requirements noted above for critical habitat, where the project is located in a legally protected area, consult protected area sponsors and managers, local communities and other key stakeholders on the proposed project, proceed in a manner consistent with the defined area management plans, and implement additional programs, as appropriate, to promote and enhance the conservation aims of the protected areas.
- Do not intentionally introduce any new alien species unless this is carried out in accordance with the existing regulatory framework for such introduction or is subject to a risk assessment (as part of the ESIA) to determine the potential for invasive behavior. Do not deliberately introduce any alien species having a high risk of invasive behavior or of any known invasive species, while exercising diligence to prevent accidental introductions.
- Manage renewable natural resources in a sustainable manner, and where possible, demonstrate the sustainable management of the resources through an appropriate system of independent certification.
- Projects involved in natural forest harvesting or plantation development will not cause any conversion or degradation of critical habitat. Locate such plantation projects on un-forested land or land already converted. Also, ensure that all natural forests and plantations are independently certified as meeting performance standards compatible with internationally accepted principles and criteria for sustainable forest management. If it is determined that the operation does not yet meet the requirements of such an independent forest certification system, develop and adhere to a time-bound, phased action plan for achieving such certification.
- Projects involved in the production and harvesting of fish populations or other aquatic species must demonstrate that their activities are being undertaken in a sustainable manner, through application of an internationally accepted system of independent certification or through appropriate studies carried out in conjunction with the ESIA.
Performance Standard 7: Indigenous Peoples
Objectives:
- Ensure that the process fosters full respect for the dignity, human rights, aspirations, cultures and natural resource-based livelihoods of indigenous peoples.
- Avoid adverse impacts of projects on communities of indigenous peoples or when avoidance is not feasible, minimize, mitigate or compensate for such impacts, while providing opportunities for development benefits in a culturally appropriate manner.
- Establish and maintain an ongoing relationship with indigenous peoples affected by a project throughout the life of the project.
- Foster good faith negotiation based on informed participation with indigenous peoples when projects are located on traditional or customary lands under use by those peoples.
- Respect and preserve the culture, knowledge and practices of indigenous peoples.
Requirements :
- Identify, through the ESIA process, all communities of indigenous peoples who may be affected by the project within the project's area of influence as well as the nature and degree of the expected (though unavoidable) social, cultural and environmental impacts on them.
- If unavoidable, minimize, mitigate or compensate for identified impacts in a culturally appropriate manner. Develop proposed action with informed participation and contained in a time-bound Indigenous Peoples Development Plan, or a broader community development action plan with separate components for indigenous peoples.
- Establish an ongoing relationship with the affected communities of indigenous peoples from early design through the life of the project. In projects with adverse impacts on such peoples, the consultation process will ensure their free, prior and informed consultation and facilitate their informed participation on matters directly affecting them, such as proposed mitigation measures, the sharing of development benefits and implementation issues. The process of engagement will be culturally appropriate and commensurate with the risks and potential impacts to the indigenous peoples, and will include involvement of indigenous peoples' representative bodies (councils of elders, etc.), will include both women and men of various age groups as culturally appropriate, will provide sufficient time for collective decision-making by the peoples, will facilitate the peoples' expression of views, concerns and proposals in the language of their choice, without manipulation or coercion, and will ensure that the project grievance mechanism is culturally appropriate and accessible for the indigenous peoples.
- Seek to identify through the process of free, prior and informed consultation, opportunities for culturally appropriate development benefits, commensurate with the degree of project impacts with the aim of improving their standard of living and fostering the long-term sustainability of the natural resource on which they depend.
- Address any identified "Special Requirements" for indigenous peoples as set forth in the text of paragraphs 11 through 13 of the IFC's Performance Standard #7.
- Consider feasible alternative project designs to avoid any relocation of indigenous peoples from their community held traditional or customary lands under use. If such relocation is unavoidable, the client will not proceed with the project unless it enters into a good faith negotiation with the affected communities of indigenous peoples and documents their informed participation and the successful outcome of negotiations. (Any relocation will be consistent with the Resettlement Planning and Implementation requirements of Performance Standard #5, and the relocated indigenous peoples should be able to return to their traditional or customary lands should the reasons for their relocation cease to exist.
- Where the project uses or proposes to use the cultural resources, knowledge, innovations or practices of indigenous peoples for commercial purposes, apply the requirements set forth in the text of paragraph 15 of the IFC's Performance Standard #7.
Performance Standard #8: Cultural Heritage
Objectives:
a) Protect cultural heritage from the adverse impacts of project activities and support its preservation
b) Promote the equitable sharing of benefits from the use of cultural heritage in business activities
Requirements:
- Comply with relevant national law on protection of cultural heritage, including national law implementing the host country's obligations under the Convention Concerning the Protection of the World Cultural and Natural Heritage and other relevant international laws, and protect and support cultural heritage by undertaking internationally recognized practices for the protection, field-based study and documentation of cultural heritage. Retain qualified experts to assist in the ESIA where required, based on the requirements which follow.
- The project site selections and design will be undertaken to avoid significant damage to cultural heritage. Where the project location is expected to be within an area where cultural heritage is found, either during construction or during operations, chance find procedures must be established through the ESIA. Findings will not be disturbed until an assessment by a competent specialist is made and actions are identified consistent with the requirements of this Performance Standard.
- Where a project may affect cultural heritage, consult with affected communities who use, or have used within living memory, the cultural heritage for longstanding cultural purposes to identify cultural heritage of importance, and incorporate into the decision-making process the views of the affected communities. Consultation will also extend to relevant national or local regulatory agencies entrusted with the protection of cultural heritage.
- No removal of cultural heritage is permitted unless there are no technically or financially feasible alternatives or the overall benefits of the project outweigh the anticipated cultural heritage loss. Any removal of cultural heritage will be conducted by the best available technique.
- In the case of critical heritage (internationally recognized heritage of communities who use, or have used within living memory, the cultural heritage for long standing cultural purposes) such heritage will not be significantly altered, damaged or removed. In exceptional cases, where a project may significantly damage such heritage and the damage or loss may endanger the cultural or economic survival of communities within the host country, consult with the affected communities, conduct good faith negotiation and document the successful outcome. Any other impacts on such heritage must be appropriately mitigated with informed participation of the affected communities.
- In the case of legally protected cultural heritage where the project is located within a legally protected area or defined buffer zone, in addition to the requirements stated above for critical cultural heritage, the project will comply with defined national or local cultural heritage regulations of the protected area management plans; consultation will be undertaken with area sponsors and manager, local communities and other key stakeholders on the proposed project, and additional programs will be implemented to promote and enhance the conservation aims of the protected area.
- Where a project proposes to use cultural resources, knowledge, innovations or practices of local communities for commercial purposes, follow the requirements set forth in the text of paragraph 11 of the IFC's Performance Standard #8.
IFC Environmental Health and Safety (EHS) Guidelines
The EHS Guidelines of the IFC are intended to supplement the Performance Standards . They provide technical references with general and industry-specific examples of Good International Industry Practices as defined in Performance Standard #3, on Pollution Prevention and Abatement. The EHS Guidelines can be downloaded at:
http://www.ifc.org/ifcext/enviro.nsf/Content/EnvironmentalGuidelines
The EHS Guidelines contain environmental performance levels and measures for projects in various industrial sectors that are considered to be achievable in new facilities at reasonable costs using existing technology. The ESIA process may recommend alternative levels or measures, which, if acceptable to Ex-Im Bank, become project requirements. When host country regulations differ from the levels and measures presented in the EHS Guidelines, projects are expected to achieve whichever is more stringent. If less stringent levels or measures are proposed in view of project circumstances, a full and detailed justification for any proposed alternatives is required as part of the site-specific environmental assessment, demonstrating that selection of the alternative performance level is protective of human health and the environment.
Ex-Im Bank's Engineering & Environment Division will decide on a case-by-case basis the appropriate application of the EHS Guidelines to a particular project in consultation with the transaction parties, in a manner consistent with Ex-Im Bank's Charter.
The following is a list of the various EHS Guidelines:
I: General EHS Guidelines
The General EHS Guidelines contain information on cross-cutting environmental, health, and safety issues potentially applicable to all industry sectors . They are designed to be used together with the relevant industry sector guideline(s) that are listed below.
1. Environmental (air emissions, ambient air quality, wastewater and ambient water quality, hazardous materials management, waste management, noise, etc.)
2. Occupational Health and Safety (general facility design & operation, communications & training, physical hazards, chemical hazards, biological hazards, radiological hazards, personal protective equipment, special hazard environments, monitoring, etc.)
3. Community Health and Safety (water quality and availability, structural safety of project infrastructure, life and fire safety, traffic safety, transport of hazardous materials, disease prevention, emergency preparedness & response, etc.)
4. Construction and Decommissioning (environment, occupational health & safety, community health & safety)
II: Industry Sector Guidelines
Forestry
Agribusiness/Food Production
Oil and Gas
Infrastructure
Chemicals
Large Volume Petroleum-based Organic Chemicals Manufacturing
Large Volume Inorganic Compounds Manufacturing and Coal Tar 
Distillation
Mining
Power
Table 1
Environmental Guidelines for Private Sector Category A Projects
Note: Application of the following Guidelines is Required for Category A projects structured as limited recourse project finance. They also are Recommended for Category A projects structured as corporate risk, although applicants/buyers involved in such projects have the option of instead complying with the Guidelines listed in Table II.
Consistent with the OECD Common Approaches, Category A projects that are structured as project finance transactions will be evaluated using the Performance Standards on Social and Environmental Sustainability (Performance Standards) of the International Finance Corporation (IFC), and the IFC Environmental Health and Safety Guideline (EHS Guidelines) applicable to the underlying sector of the project.
Ex-Im Bank recommends that Category A projects structured as corporate risk also be evaluated using these IFC Performance Standards and EHS Guidelines, though applicants and/or buyers involved in corporate risk projects have the option of electing compliance with the guidelines listed in Table II.
If Ex-Im Bank identifies an operational link or facility associated with the project and determines that the identified operations should be included within the scope of the environmental evaluation, it will inform the project as to the identity of the associated operations, the nature of the environmental information about the facility that is required, and the guidelines that will be used in evaluating the associated operations.
The applicant shall prepare and submit to Ex-Im Bank an Environmental Impact Assessment (EIA) as described in Annex E of the project (and associated operations, if required) as well as other environmental information sufficient to show compliance with the applicable Performance Standards and EHS Guidelines described in this Table. This information will enable Ex-Im Bank to evaluate the project's level of compliance with host country environmental guidelines as well as the applicable IFC Performance Standards and EHS Guidelines. Information about the IFC Performance Standards and EHS Guidelines is presented below:
The Performance Standards of the IFC
The IFC Performance Standards apply to private sector projects and provide foreign buyers and project participants with instruments to structure, design, construct and manage the operations of projects in an environmentally and socially acceptable manner, while providing measures to avoid or mitigate adverse environmental and social impacts resulting from the projects. These Performance Standards are intended to focus on outcomes rather than process, thereby stressing the implementation of sound environmental and social management systems that achieve desired outcomes, including the mitigation of adverse impacts.
There are eight IFC Performance Standards:
- Social & Environmental Assessment and Management Systems
- Labor and Working Conditions
- Pollution Prevention and Abatement
- Community Health and Safety
- Land Acquisition and Involuntary Resettlement
- Biodiversity Conservation and Sustainable Natural Resource Management
- Indigenous Peoples
- Cultural Heritage
Copies of the full text of the IFC Performance Standards are available from Ex-Im Bank, the IFC, or at: http://www.ifc.org/ifcext/enviro.nsf/Content/PerformanceStandards.
In order to assist users in understanding the scope and content of the IFC Performance Standards, Ex-Im Bank's Engineering & Environment Division has prepared a summary of the objectives and requirements of each Standard. In the case of ambiguity between the following summaries and the official language of the respective Performance Standards set forth by the IFC, the language of the IFC will prevail. Ex-Im Bank's Engineering & Environment Division will decide on a case-by-case basis the appropriate application of the IFC Performance Standards to a particular project in consultation with the transaction parties, in a manner consistent with Ex-Im Bank's Charter.
Performance Standard #1 : Social & Environmental Assessment and Management Systems
Objectives:
a) Identify and assess environmental and social impacts in the project's area of influence
b) Avoid, minimize, mitigate or compensate for adverse impacts
c) Ensure that affected communities are engaged on issues that may affect them
d) Promote improved environmental and social performance through effective management systems
Major Requirements:
- Conduct an Environmental and Social Impact Assessment (ESIA or EIA)[1] of the project, appropriate to the nature of the project's environmental and social risks and potential impacts, to include issues identified in Performance Standards 2 through 8.
- Establish Environmental and Social Management Plans commensurate with the findings of the ESIA and consultation with affected communities.
- Establish Action Plans where specific mitigation measures and actions are required for the project to comply with applicable laws, regulations and the requirements of these Performance Standards.
- Provide organizational capacity and contractor/employee training to enable project to achieve continuous environmental and social performance
- Establish and maintain a timely process of community engagement, including a grievance mechanism, focusing on disclosure of information and consultation with local communities affected by project risks or adverse impacts that is free from external manipulation, interference or coercion to ensure relevant and understandable access to project information.
- Establish procedures to monitor and measure the effectiveness of the environmental and social management program, including internal reporting of the program's effectiveness to the project's senior management, disclosure of Action Plans (including material changes to such Plans) to affected communities, and external reporting to affected communities on the results of Action Plans, commensurate with the concerns of the affected communities.
Performance Standard #2: Labor and Working Conditions
Objectives:
a) Establish, maintain and improve the worker-management relationship
b) Promote fair treatment and equal opportunity for workers, in compliance with national laws
c) Protect workforce by addressing child labor and forced labor
d) Promote safe working conditions and protect/promote the health of workers
(Refer to the text of IFC Performance Standard#2 for definitions of the term "workers" and the scope of its applicability to employees related to the project.)
Major Requirements:
- Establishment of a Human Resources Policy consistent with the requirements of this Standard that informs employees of their rights under national labor and employment laws
- Document and communicate to all employees conditions and terms of employment
- Respect collective bargaining agreements with worker organizations and provide reasonable conditions and terms of employment that, at a minimum, comply with national law, and enable alternative means for worker expression of grievances where national law restricts worker organizations
- Practice non-discrimination and equal opportunity in making employment decisions
- Provide a mechanism for workers to raise workplace concerns
- Protect the workforce from forced labor and illegal or economically exploitative child labor
- Provide workers with a safe and healthy work environment, taking into account risks inherent to the particular project sector.
Performance Standard #3: Pollution Prevention and Abatement
Objectives:
a) Avoid or minimize pollution from project activities to avoid or minimize adverse impacts on the environment and human health
b) Promote the reduction of emissions that may contribute to climate change
Major Requirements:
- Consider ambient conditions over the project cycle and apply pollution prevention and control technologies & practices that are best suited to avoid, minimize or reduce adverse impacts on human health and the environment, consistent with good industry practice
- Avoid, or where unavoidable, control the intensity of the release of pollutants, and include measures to control their accidental release.
- Avoid or minimize the generation of hazardous waste, and where such generation is unavoidable recover and reuse to the extent possible or treat, destroy or dispose of it in an environmentally sound manner.
- Avoid, or where unavoidable, minimize or control the release of hazardous wastes. Avoid the manufacture, trade or use of chemicals or hazardous materials subject to international bans or phase-outs.
- Establish plans and make preparations to respond to process upset, accidental and emergency situations in a manner appropriate to the operational risks and the need to prevent potential negative consequences.
- Refer to the Environmental Health and Safety Guidelines (EHS) of the IFC that is appropriate to the project sector to evaluate and select pollution prevention and control techniques and to determine emission and effluent levels that are normally acceptable to the project. If, due to specific project circumstances, alternative levels that deviate from the EHS or host Country levels are selected, a full and detailed justification for any proposed alternatives is required.
- Address adverse project impacts on existing ambient conditions such as land use, proximity to ecologically sensitive or protected areas, the capacity of the air and water to absorb incremental pollutants while remaining at an acceptable level, and the potential for cumulative impacts with uncertain consequences. In addition, promote strategies to avoid or minimize the release of pollutants and improve ambient conditions when project produces significant emissions in an already degraded area.
- Promote the reduction of project-related greenhouse gas emissions in a manner appropriate to the nature and scale of the project operations and impact. Annually quantify and monitor GHG emissions, and evaluate options to reduce or offset project related GHG emissions.
- Formulate and implement an integrated pest management program for pest management activities, including selection of pesticides that are low in human toxicity and design of an application regime to minimize damage to natural enemies and prevent the development of resistance in pests.
Performance Standard #4: Community Health & Safety
Objectives:
a) Avoid or minimize the risks to, and impacts on, the health and safety of the local community over the project life cycle, from both routine and non-routine circumstances.
b) Ensure that the safeguarding of personnel and property is carried out in a legitimate manner that avoids or minimizes risks to the community's safety and security.
Requirements :
- Evaluate risks and impacts of the project to the health and safety of affected communities, from design through decommissioning and establish preventive measures to address them in a manner commensurate with the identified risks and impacts.
- Disclose Action Plans and other relevant information to affected communities and government agencies to enable them to understand the risks and impacts while engaging them on this matter on an ongoing basis.
- Design, construct, operate and decommission the project's structural elements in accordance with good international industry practice with particular consideration to exposure to natural hazards. In cases of dams or ash ponds situated in high-risk locations, engage an independent expert to conduct a review of the structure design early in the project stage. Take measures to ensure safety and prevent accidents when moving equipment on public roads.
- Prevent or minimize the potential for community exposure to hazardous materials that may be released by the project, and exercise commercially reasonable efforts to control the safety of hazardous raw materials and the transportation and disposal of wastes.
- Avoid or minimize the exacerbation of impacts caused by natural hazards, such as landslides or floods from land use changes due to project activities. Avoid or minimize impacts of project activities on soil, water and other natural resources in use by the affected communities.
- Prevent or minimize the potential for community exposure to water-borne, water-related, or vector-borne disease and other communicable diseases resulting from project activities or associated with the influx of project labor. Where specific diseases are endemic in communities in the project area, explore opportunities to improve environmental conditions that could reduce their incidence.
- Assist the community in preparing to respond effectively to emergency situations. Where local governments lack the capacity to respond effectively, assume an active role in preparing for and responding to project related emergencies. Document emergency procedures and responsibilities and disclose in the Action Plan.
- Assess risks to those within and outside the project site posed by arrangements with employees or contractors providing security to safeguard personnel and property. Investigate security forces to ensure they are not implicated in past abuses, provide them with adequate training with respect to conduct towards project workers and the local community.
- Investigate any credible allegations of unlawful or abusive acts of security personnel, take action to prevent recurrence, and report unlawful and abusive acts to public authorities when appropriate.
Performance Standard #5: Land Acquisition and Involuntary Resettlement
Objectives:
a) Avoid or minimize involuntary resettlement whenever feasible by exploring alternative project designs.
b) Mitigate adverse social and economic impacts by providing compensation for loss of assets at replacement cost and ensuring that resettlement activities are implemented with appropriate disclosure of information, consultation and informed participation of those affected.
c) Improve or at least restore livelihoods and living standards of displaced persons.
d) Improve living conditions among displaced persons through provision of adequate housing with security of tenure at resettlement sites.
Requirements:
- Consider feasible alternative project designs to avoid or at least minimize physical or economic displacement while balancing environmental, social and financial costs and benefits.
- Offer displaced persons and communities compensation for loss of assets at full replacement cost and assistance to improve or at least restore their living standards or livelihoods. Compensation standards will be transparent and consistent within the project. If land based, or where land is collectively owned, offer land-based compensation where feasible, and provide opportunities to displaced persons and communities to derive appropriate development benefits from the project.
- Following full disclosure, consult with and facilitate the informed participation of affected persons and communities in decision making processes related to resettlement. Consultation during implementation, monitoring and evaluation of compensation payment and resettlement will continue to achieve outcomes consistent with objectives.
- Establish a grievance mechanism to receive and address specific concerns about compensation and relocation raised by displaced persons or members of host communities, including a recourse mechanism to resolve disputes in an impartial manner.
- Where involuntary resettlement is unavoidable, carry out a census with socio-economic baseline data to identify persons who will be displaced, determine eligibility for compensation and assistance, and discourage inflow of people ineligible for these benefits. In the absence of local government procedures, establish a cut-off date for eligibility, and document and disseminate through the project area information regarding the cut-off date.
- Develop a Resettlement Action Plan for acquisition of land through the exercise of eminent domain or through negotiated settlements involving physical displacement of people that is based on a Social and Environmental Assessment regardless of the number of people affected, consistent with the requirements set forth in the language of Paragraph 12 of the IFC's Performance Standard #5.
- For negotiated settlements involving economic displacement, develop procedures to offer affected people and communities compensation and other assistance, consistent with the requirements set forth in the language of Paragraph 13 of the IFC's Performance Standard #5.
- In the case of physical displacement, offer displaced persons choices among feasible resettlement options, including adequate housing or cash compensation where appropriate prior to relocation, and provide relocation assistance suited to the needs of each group, with particular attention to the poor and vulnerable. New resettlement sites will offer improved living conditions.
- In the case of displacement of persons having no recognizable legal right or claim to the land they occupy, offer them a choice of options for adequate housing with security of tenure enabling them to resettle legally without the subsequent risk of forced eviction. Provide these persons with compensation for occupied structures and other improvements to the land at full replacement provided they occupy the land prior to the eligibility cut-off date.
- In the case of physical displacement of communities of indigenous peoples from their communally held traditional or customary lands under use, meet the applicable requirements of this Standard as well as those of Performance Standard 7.
- Compensate persons facing loss of income or livelihood (economic displacement) regardless of whether they are physically displaced in accordance with the requirements set forth in the text of Paragraph 20 and 21 of the IFC Performance Standard #5.
- In the case of host government-managed resettlement, collaborate with the responsible government agency to achieve outcomes consistent with the objectives set forth in the official text of Paragraphs 22 through 25 of Performance Standard #5.
Performance Standard #6: Biodiversity Conservation and Sustainable Natural Resource Management
Objectives :
a) Protect and conserve biodiversity
b) Promote sustainable management and the use of natural resources through the adoption of practices that integrate conservation needs and development priorities
Requirements:
- Assess the significance of project impacts on all levels of biodiversity as an integral part of the ESIA process, taking into account the differing values attached to biodiversity by specific stakeholders, and identify impacts on ecosystem services. The assessment will focus on the major threats to biodiversity, which include habitat destruction and invasive species. Retain qualified and experienced external experts to assist in conducting the Assessment as required below.
- In areas of modified habitat, exercise care to minimize conversion or degradation of such habitat while identifying opportunities to enhance habitat and protect and conserve biodiversity as part of operations.
- In areas of natural habitat, the project will not significantly convert or degrade such habitat unless there are no technical and financially feasible alternatives, or unless the overall benefits of the project outweigh the costs, including those to the environment and biodiversity and unless conversion or degradation is appropriately mitigated.
- In areas of natural habitat, mitigation measures will be designed to achieve no net loss of biodiversity where feasible and may include post-operation restoration of habitats, offsets of losses through the creation of ecologically comparable areas managed for biodiversity, and/or compensation to direct users of biodiversity.
- In areas of critical habitat (as defined in the official text of Paragraph 9 of Performance Standard #6), no project activities will be implemented unless there are no measurable adverse impacts on the ability of the critical habitat to support the established population of critically endangered or endangered species, and activities result in no reduction in the population of any such species, and mitigation measures are taken to address lesser impacts.
- In addition to the requirements noted above for critical habitat, where the project is located in a legally protected area, consult protected area sponsors and managers, local communities and other key stakeholders on the proposed project, proceed in a manner consistent with the defined area management plans, and implement additional programs, as appropriate, to promote and enhance the conservation aims of the protected areas.
- Do not intentionally introduce any new alien species unless this is carried out in accordance with the existing regulatory framework for such introduction or is subject to a risk assessment (as part of the ESIA) to determine the potential for invasive behavior. Do not deliberately introduce any alien species having a high risk of invasive behavior or of any known invasive species, while exercising diligence to prevent accidental introductions.
- Manage renewable natural resources in a sustainable manner, and where possible, demonstrate the sustainable management of the resources through an appropriate system of independent certification.
- Projects involved in natural forest harvesting or plantation development will not cause any conversion or degradation of critical habitat. Locate such plantation projects on un-forested land or land already converted. Also, ensure that all natural forests and plantations are independently certified as meeting performance standards compatible with internationally accepted principles and criteria for sustainable forest management. If it is determined that the operation does not yet meet the requirements of such an independent forest certification system, develop and adhere to a time-bound, phased action plan for achieving such certification.
- Projects involved in the production and harvesting of fish populations or other aquatic species must demonstrate that their activities are being undertaken in a sustainable manner, through application of an internationally accepted system of independent certification or through appropriate studies carried out in conjunction with the ESIA.
Performance Standard 7: Indigenous Peoples
Objectives:
- Ensure that the process fosters full respect for the dignity, human rights, aspirations, cultures and natural resource-based livelihoods of indigenous peoples.
- Avoid adverse impacts of projects on communities of indigenous peoples or when avoidance is not feasible, minimize, mitigate or compensate for such impacts, while providing opportunities for development benefits in a culturally appropriate manner.
- Establish and maintain an ongoing relationship with indigenous peoples affected by a project throughout the life of the project.
- Foster good faith negotiation based on informed participation with indigenous peoples when projects are located on traditional or customary lands under use by those peoples.
- Respect and preserve the culture, knowledge and practices of indigenous peoples.
Requirements :
- Identify, through the ESIA process, all communities of indigenous peoples who may be affected by the project within the project's area of influence as well as the nature and degree of the expected (though unavoidable) social, cultural and environmental impacts on them.
- If unavoidable, minimize, mitigate or compensate for identified impacts in a culturally appropriate manner. Develop proposed action with informed participation and contained in a time-bound Indigenous Peoples Development Plan, or a broader community development action plan with separate components for indigenous peoples.
- Establish an ongoing relationship with the affected communities of indigenous peoples from early design through the life of the project. In projects with adverse impacts on such peoples, the consultation process will ensure their free, prior and informed consultation and facilitate their informed participation on matters directly affecting them, such as proposed mitigation measures, the sharing of development benefits and implementation issues. The process of engagement will be culturally appropriate and commensurate with the risks and potential impacts to the indigenous peoples, and will include involvement of indigenous peoples' representative bodies (councils of elders, etc.), will include both women and men of various age groups as culturally appropriate, will provide sufficient time for collective decision-making by the peoples, will facilitate the peoples' expression of views, concerns and proposals in the language of their choice, without manipulation or coercion, and will ensure that the project grievance mechanism is culturally appropriate and accessible for the indigenous peoples.
- Seek to identify through the process of free, prior and informed consultation, opportunities for culturally appropriate development benefits, commensurate with the degree of project impacts with the aim of improving their standard of living and fostering the long-term sustainability of the natural resource on which they depend.
- Address any identified "Special Requirements" for indigenous peoples as set forth in the text of paragraphs 11 through 13 of the IFC's Performance Standard #7.
- Consider feasible alternative project designs to avoid any relocation of indigenous peoples from their community held traditional or customary lands under use. If such relocation is unavoidable, the client will not proceed with the project unless it enters into a good faith negotiation with the affected communities of indigenous peoples and documents their informed participation and the successful outcome of negotiations. (Any relocation will be consistent with the Resettlement Planning and Implementation requirements of Performance Standard #5, and the relocated indigenous peoples should be able to return to their traditional or customary lands should the reasons for their relocation cease to exist.
- Where the project uses or proposes to use the cultural resources, knowledge, innovations or practices of indigenous peoples for commercial purposes, apply the requirements set forth in the text of paragraph 15 of the IFC's Performance Standard #7.
Performance Standard #8: Cultural Heritage
Objectives:
a) Protect cultural heritage from the adverse impacts of project activities and support its preservation
b) Promote the equitable sharing of benefits from the use of cultural heritage in business activities
Requirements:
- Comply with relevant national law on protection of cultural heritage, including national law implementing the host country's obligations under the Convention Concerning the Protection of the World Cultural and Natural Heritage and other relevant international laws, and protect and support cultural heritage by undertaking internationally recognized practices for the protection, field-based study and documentation of cultural heritage. Retain qualified experts to assist in the ESIA where required, based on the requirements which follow.
- The project site selections and design will be undertaken to avoid significant damage to cultural heritage. Where the project location is expected to be within an area where cultural heritage is found, either during construction or during operations, chance find procedures must be established through the ESIA. Findings will not be disturbed until an assessment by a competent specialist is made and actions are identified consistent with the requirements of this Performance Standard.
- Where a project may affect cultural heritage, consult with affected communities who use, or have used within living memory, the cultural heritage for longstanding cultural purposes to identify cultural heritage of importance, and incorporate into the decision-making process the views of the affected communities. Consultation will also extend to relevant national or local regulatory agencies entrusted with the protection of cultural heritage.
- No removal of cultural heritage is permitted unless there are no technically or financially feasible alternatives or the overall benefits of the project outweigh the anticipated cultural heritage loss. Any removal of cultural heritage will be conducted by the best available technique.
- In the case of critical heritage (internationally recognized heritage of communities who use, or have used within living memory, the cultural heritage for long standing cultural purposes) such heritage will not be significantly altered, damaged or removed. In exceptional cases, where a project may significantly damage such heritage and the damage or loss may endanger the cultural or economic survival of communities within the host country, consult with the affected communities, conduct good faith negotiation and document the successful outcome. Any other impacts on such heritage must be appropriately mitigated with informed participation of the affected communities.
- In the case of legally protected cultural heritage where the project is located within a legally protected area or defined buffer zone, in addition to the requirements stated above for critical cultural heritage, the project will comply with defined national or local cultural heritage regulations of the protected area management plans; consultation will be undertaken with area sponsors and manager, local communities and other key stakeholders on the proposed project, and additional programs will be implemented to promote and enhance the conservation aims of the protected area.
- Where a project proposes to use cultural resources, knowledge, innovations or practices of local communities for commercial purposes, follow the requirements set forth in the text of paragraph 11 of the IFC's Performance Standard #8.
IFC Environmental Health and Safety (EHS) Guidelines
The EHS Guidelines of the IFC are intended to supplement the Performance Standards . They provide technical references with general and industry-specific examples of Good International Industry Practices as defined in Performance Standard #3, on Pollution Prevention and Abatement. The EHS Guidelines can be downloaded at:
http://www.ifc.org/ifcext/enviro.nsf/Content/EnvironmentalGuidelines
The EHS Guidelines contain environmental performance levels and measures for projects in various industrial sectors that are considered to be achievable in new facilities at reasonable costs using existing technology. The ESIA process may recommend alternative levels or measures, which, if acceptable to Ex-Im Bank, become project requirements. When host country regulations differ from the levels and measures presented in the EHS Guidelines, projects are expected to achieve whichever is more stringent. If less stringent levels or measures are proposed in view of project circumstances, a full and detailed justification for any proposed alternatives is required as part of the site-specific environmental assessment, demonstrating that selection of the alternative performance level is protective of human health and the environment.
Ex-Im Bank's Engineering & Environment Division will decide on a case-by-case basis the appropriate application of the EHS Guidelines to a particular project in consultation with the transaction parties, in a manner consistent with Ex-Im Bank's Charter.
The following is a list of the various EHS Guidelines:
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I: General EHS Guidelines |
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1. Environmental (air emissions, ambient air quality, wastewater and ambient water quality, hazardous materials management, waste management, noise, etc.) |
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2. Occupational Health and Safety (general facility design & operation, communications & training, physical hazards, chemical hazards, biological hazards, radiological hazards, personal protective equipment, special hazard environments, monitoring, etc.) |
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3. Community Health and Safety (water quality and availability, structural safety of project infrastructure, life and fire safety, traffic safety, transport of hazardous materials, disease prevention, emergency preparedness & response, etc.)
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II: Industry Sector Guidelines
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Large Volume Petroleum-based Organic Chemicals Manufacturing |
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