INTRODUCTION TO ESG & IFC PERFORMANCE

STANDARDS
Sustainability Policy and Performance Standards Overview

16 August 2023
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 WHAT IS ESG?
A set of environmental, social, and governance (ESG) factors considered by companies
when managing their operations, and investors when making investments, in respect of
the risks, impacts, and opportunities relating to but not limited to:

Environmental issues: potential or actual changes to the physical or natural environment

(e.g., pollution, biodiversity impacts, carbon emissions, climate change, natural resource use);

Social issues: potential or actual changes on surrounding community and workers (e.g., land,
health and safety, supply chain, diversity and inclusion); and

Governance: corporate governance structures and processes by which companies are

directed and controlled (e.g., board structure and diversity, ethical conduct, risk management,
disclosure and transparency), including the governance of key environmental and social
policies and procedures.

IFC’s ESG Standards comprise the Performance Standards (PS), which define clients'
responsibilities for managing their environmental and social risks, and the Corporate
Governance Methodology, which sets out an approach to evaluate and improve the
corporate governance of clients.

1
 Environmental and social risks present themselves
to as business risks
The main types of risks are:
Impacts

Credit risk: A company is unable • Fines/penalties due to non-compliance with national E&S requirements
to repay a loan on account of • Loss of production capacity (e.g. closure of business)
social and environmental issues • Poor efficiency leading to low competitiveness/low sales
• Increased insurance costs
• Escalation of project costs (e.g. delays, additional investments)

Liability risk: Legal complications,

fees, and/or fines for rectifying • Direct liability in the case of strict lender-liability laws
social and environmental damage • Class action suits if made responsible for negative impacts
• Obtaining ownership of contaminated collateral

Reputational risk: Negative • Media coverage

aspects of a project may harm a • Local resistance/consumer campaigns
financial intermediary’s • Government investigations
reputation

2
 The business case for environment, social and governance –
empirical perspective
Companies with robust ESG practices tend to:
Better Risk Management - Without proper management of ESG
1 risks there can be severe impacts from project development. IFC
▪Financially outperform their peers
Performance Standards suggest the RIGHT THING TO DO for the ▪Attract and retain talents
identification and management of ESG risks and impacts.
▪Achieve higher productivity in the workplace
Higher Returns - Increasing evidence shows that investors who
consider ESG risks as part of their investment decision-making also
2 have lower risk, less volatile portfolios and higher returns. IFC
▪Create competitive advantage
reviewed the performance of 656 investments and found that clients ▪Improve company reputation
with better E&S performance financially outperform companies with
worse E&S performance by 210 basis points on return on equity and ▪Better prepare for uncertainty
by 110 basis points on return on assets.
▪Avoid activist intervention
3 ESG Premium Companies are willing to pay about a 10 percent
median premium to acquire a company with a positive record for ▪Attract long-term investors
ESG issues over one with a negative record (McKinsey Global
Survey) ▪Access to cheaper financing
ESG Reporting Matters - IFC also found that reporting really
4 matters: firms with a well-established practice of reporting on more
▪Attract customer loyalty

than half of SASB material sustainability indicators outperform firms ▪Reduce regulatory and legal intervention
with a weak reporting culture. This is in line with the findings by
Harvard Business School that reporting on material issues is ▪Maintain their Social License to Operate (SLO)
associated with increased firm value.

3
 IFC’s ESG approach has evolved over the past 25 years

Pioneering World Bank Setting the Standard Refining & Implementing

Safeguard Policies

The ‘90s ‘11-present

The ‘00s

4
 IFC’s Sustainability Framework articulates our strategic commitment to sustainable development and
approach to E&S risk management

Compliance Requirements Implementation Tools and Guidance

Performance Standards Environmental Health and Safety Guidance and Interpretation Notes
IFC’s Performance Standards define clients’ (EHS) Guidelines Guidance and interpretation notes explain the
responsibilities for managing their The EHS Guidelines are technical reference requirements of the Performance Standards.
environmental and social risks. documents with general and industry-specific
examples of Good International Industry Practice. Good Practice Notes and
Clients

Handbooks

Tip Sheets

Clients are responsible for complying with EHS

Guidelines to the extent relevant and applicable. Additional client guidelines summarize good practice
and provide practical tools for clients.

5
 Access to Information Policy

Defines the scope of information that IFC makes available to

the public, such as:

▪ Institutional information
▪ Project-level information
▪ E&S
▪ Development impact information

6
 Sustainability Policy

▪ Defines IFC’s commitments toward sustainability.

▪ Emphasizes our prioritization of cross-cutting issues
such as low carbon growth, human rights, corporate
governance, gender, ecosystem services, and
others.
▪ Describes the categorization system to rate the level
of environmental and/or social risk of proposed
business activities.

7
 Environmental, Health, and Safety (EHS) Guidelines

▪ Technical reference documents.

▪ Available in 6 languages.
▪ One General EHS Guidelines and over 60
Industry Sector EHS Guidelines.
▪ Contain performance levels and measures
considered generally acceptable by the WBG.

8
 What are the IFC Performance Standards?

• Describe potential environmental and social risks

IFC clients must pay particular attention to these risks
Help the client to manage these risks and conduct
business in a sustainable manner

PS 1 Management system
PS 2-8 Performance criteria

12
9
 IFC’s Performance Standards

PS1: Assessment and PS2: Labor and Working PS3: Resource Efficiency PS4: Community Health,
Management of E&S Conditions and Pollution Prevention Safety, and Security
Risks and Impacts

PS5: Land Acquisition and PS6: Biodiversity PS7: Indigenous Peoples PS8: Cultural Heritage
Involuntary Resettlement Conservation and
Sustainable Management
of Living Natural Resources
10
 Risk Mitigation Hierarchy

Anticipate and avoid

Minimize

Compensate
or offset

11
 PS1: Assessment and Management of Environmental and Social
Risks and Impacts

Importance:
▪ Integrated assessment to identify the E&S impacts, risks,
and opportunities of projects.
▪ Effective community engagement through disclosure of
project-related information and consultation with local
communities on matters that directly affect them.
▪ The client’s management of E&S performance throughout
the lifetime of a project.

12
 Why do we consider PS1 our “umbrella” PS?

It applies to 100%
of our investment projects!

A systematic approach to managing environmental

and social performance…

… an investment that enables clients to identify and manage

E&S risks that can affect the viability of their business

13
 PS1: Assessment and Management of Environmental and Social
Risks and Impacts

PLAN
Objectives:
ESIA
Action Plans
Procedures
▪ Identify and assess project E&S risks and
impacts, and adopt mitigation hierarchy.
▪ Develop an Environmental and Social
ACT DO Management System (ESMS) to manage
Corrective
Actions E&S MANAGEMENT SYSTEM Implementation
E&S risks and impacts.
▪ Engagement with Stakeholders:
▪ throughout project cycle
CHECK ▪ includes communications, grievance
M&E: Internal,
Participatory, Third
Party
mechanisms

14
 Environmental and Social Assessment and
Management System

Policy

Monitoring and Identification of

review risks and
impacts

Stakeholder Management
engagement programs

Emergency Organizational
preparedness capacity and
and response competency

15
 PS2: Labor and Working Conditions

Importance: Objectives:
▪ Comply with national employment
▪ Workforce as a valuable asset. and labor laws

▪ A sound relationship between ▪ Promote the fair treatment, non-

discrimination, and equal
workers and management is opportunity of workers.
critical.
▪ Protect workers, including: migrant
▪ A strained worker- workers, workers engaged by third
parties, and workers in the client’s
management relationship can supply chain.
undermine worker commitment ▪ Freedom of association
and retention and ultimately ▪ Workers’ grievance mechanism
▪ Occupational health and safety
jeopardize a project. ▪ Workers’ accommodations
(IFC/EBRD Guidelines)
▪ It can also lead to significant ▪ NO forced or child labor
reputational risks. ▪ NO sexual harassment

16
 PS3: Resource Efficiency and Pollution Prevention

Importance: Objectives:
▪ Increased economic activity and
urbanization can consume great ▪ Avoid, minimize, and reduce
amounts of natural resources and project-related pollution.
generate high levels of pollution. ▪ Energy efficiency and more
▪ Performance Standard 3 outlines a sustainable use of
project-level approach in line with resources, including energy
good international industry practice. and water.
▪ PS3 has a strong emphasis on the ▪ Reduced project-related
mitigation hierarchy. Greenhouse Gas (GHG)
▪ Client adherence to Performance emissions.
Standard 3 depends on the nature of
the client’s business activities.

17
 PS4: Community Health, Safety and Security​

Objectives:
Importance:
▪ To anticipate and avoid adverse impacts on
▪ Project activities, equipment and the health and safety of the Affected
infrastructure may expose local Community (e.g. gender-based
communities to increased health, violence, traffic, STDs, vectors,
safety, and security risks. influx, etc).

▪ Performance Standard 4 helps ▪ To safeguard personnel and property in

accordance with relevant human rights
companies adopt responsible practices principles.
to avoid or reduce risks including: • Use of security forces in accordance
▪ emergency response, with local law, proportionality and
▪ addressing community exposure to good practice.
disease, • Will not accept use of force
▪ management of security except for preventive and
arrangements, defensive purposes.
▪ hazardous materials management, and
▪ designing safety measures for the
project.

18
 PS5: Land Acquisition and Involuntary Resettlement​

Importance: Objectives:

▪ When companies acquire land for ▪ Avoid/minimize adverse social and economic
their development, it can lead to impacts from land acquisition or restrictions on
relocation and loss of shelter or land use:
livelihoods for communities or
individual households. ▪ avoid, minimize displacement
▪ alternative project designs
▪ Involuntary resettlement occurs ▪ avoid forced eviction
when affected people do not have
the right to refuse land acquisition ▪ If economic or physical displacement can’t be
and are displaced. avoided, improve, or at least restore, incomes and
living standards
▪ Involuntary resettlement may
result in long-term ▪ Improve living conditions among displaced
impoverishment for affected persons:
communities, as well as ▪ adequate housing
environmental damage, and ▪ security of tenure
social stress in areas to which
▪ Ongoing consultation and participation
they have been displaced.
▪ Resettlement / Livelihood Restoration Plan
▪ Solution provided before impact (e.g. payment)
▪ Monitoring & Evaluation
19
 PS6: Biodiversity Conservation and Sustainable Management
of Living Natural Resources​

Importance: Objectives:
▪ Biodiversity is the variety of life in ▪ Protection and conservation of
all its forms, including genetic, biodiversity.
species, and ecosystem ▪ Maintenance of benefits from
diversity. ecosystem services.
▪ Biodiversity loss can result in ▪ Promotion of sustainable
critical reductions in the management of living natural
resources provided by the earth’s resources.
ecosystems, which contribute to
economic prosperity and human ▪ Integration of conservation
development. needs and development
priorities.

20
 PS7: Indigenous Peoples

Importance: Objectives:
▪ Indigenous Peoples (IPs) are social ▪ Ensure full respect for IPs:
groups with identities that are ▪ human rights, dignity, aspirations
distinct from mainstream groups in ▪ livelihoods
national societies. ▪ culture, knowledge, practices

▪ IPs may be particularly vulnerable to ▪ Avoid/minimize adverse impacts.

the adverse impacts associated with
▪ Sustainable and culturally-
project development, including risk
appropriate development benefits
of impoverishment and loss of
and opportunities.
identity, culture, and natural
resource-based livelihoods. ▪ Free, Prior, and Informed Consent
(FPIC) in certain circumstances.

21
 PS7: Indigenous Peoples

IP CRITERIA (IFC) Indonesian Law based on the Minister of Internal Affairs

• Self-identification and recognition by others; Regulation No. 52 of 2014 on the Guidelines of the
• Collective attachment to geographically distinct habitats Acknowledgement and Protection of Indigenous Peoples
or ancestral territories in the project area and to the (Peraturan Menteri Dalam Negeri
natural resources in these habitats and territories; No. 52 tahun 2014 tentang Pedoman Pengakuan dan Perlindungan Masyarakat
• Customary cultural, economic, social, or political
Hukum Adat)
institutions that are separate from those of the
mainstream society or culture; or
• A distinct language or dialect. Masyarakat Hukum Adat adalah Warga Negara Indonesia
yang memiiki karakteristik khas, hidup berkelompok
Applies to communities of Ips who maintain a collective
attachment, i.e., whose identity as a group or community is linked, secara harmonis sesuai hukum adatnya, memiliki ikatan
to distinct habitats or ancestral territories and the natural resources pada asal usul leluhur dan atau kesamaan tempat
therein. tinggal, terdapat hubungan yang kuat dengan tanah dan
FPIC Circumstances
lingkungan hidup, serta adanya sistem nilai yang
menentukan pranata ekonomi, politik, sosial, budaya,
a. Impacts on IPs’ land and natural resources subject to traditional hukum dan memanfaatkan satu wilayah tertentu secara
ownership or under customary use; turun temurun.
b. Relocation from IP lands;
c. Impacts on critical cultural heritage – tangible cultural heritage
that is essential to the identity and/or cultural survival Acknowledgement on Indigenous Peoples is evidenced by a
regent/mayor/regional government decree.
INPUT FROM COMPETENT PROFESSIONALS IS REQUIRED! Please see: https://www.aman.or.id/perda-dan-surat-keputusan-pemerintah-
daerah
22
 PS8: Cultural Heritage

Importance: Objectives:
▪ Cultural heritage encompasses
properties and sites of ▪ Protection and
archaeological, historical, cultural, preservation of cultural
artistic, and religious significance. heritage.

▪ It also refers to unique ▪ Promotion of equitable

environmental features and cultural sharing of cultural heritage
knowledge, as well as intangible benefits.
forms of culture embodying
traditional lifestyles that should be
preserved for current and future
generations.

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 Emerging E&S Issues

Gender- Modern Diversity Increased Greenhouse

Based Slavery and Risks on Gases and
Violence Inclusion Supply Climate
Chains Change
Sexual Child and Equal
Exploitation,
Forced Opportunity:
Abuse, and
Labor/Trafficking Gender and
Sexual
Harassment Disability

24
 CLIMATE RISK

Infographics: ADB, November 2017

25
 Managing Climate Transition Risks and Physical Risks
The risks from climate change to the economy have two basic channels, but many potentialimpacts, including
on financial stability
Transition risk Firms in sectors affectedby Financial
• Disruptive technological advance the transition Institutions
• Governments’ climate policies  Impacts on profits, changes
Exposure  Higher insurance claims
in valuation
to  Portfolio losses
Physical risk Physical assets, agriculture,
• Extreme weatherevents workers  Sentiment shocks
• Changing climatic conditions  Lower asset values, lower  Default on loans
productivity

Climate risk management support for FIs Physical

Transition Risks
• Trainings to identify coal-related projects and green Risks
projects
• Annual Coal ExposureAssessment Carbon footprint Alignment with Immediate impact TCFD reporting
of banksportfolios climate scenarios on transactions
• Scenario analysis and measurement of climate risk in the
bank’s portfolio
Looking back Looking forward Looking forward Public reporting
• Differentiation in credit conditions due to climate risks (current snapshot) (projected) (Physical risk and disclosure
and pricing screening)
• 100% of portfolio screened against 2 degree transition
PCAF* 2dI/PACTA** IFC
path and IFC’s Performance Standards

* Partnership for Carbon Accounting Financials (PCAF)

** 2˚ Investing Initiative (2dI) & Paris Agreement Capital Transition Assessment (PACTA)
26
 Unpredictable Challenge: Physical Risk

A study found that almost 2% of the world’s financial assets are at risk if the global mean surface
temperature rises by 2.5°C compared to pre-industrial levels.

Physical Risk
• Physical impacts include the economic costs
and financial losses resulting from the
increasing severity and frequency of extreme
climate change-related weather events (such
as heat waves, landslides, floods, wildfires
and storms) as well as longer term
progressive shifts of the climate (such as
changes in precipitation, extreme weather
variability, ocean acidification, and rising sea
levels and average temperatures).

• There have been fewer attempts to quantify

the physical risks to financial stability rather
than for the economy as a whole, but again
losses are likely to be significant. Studies
estimate that the financial value at risk
could be up to 17% depending on the mean
average temperature rise.
27
 Unpredictable Challenge: Transition Risk

Another analysis conducted by UNEP FI in 2019, shows that the more delay action on decarbonization, the higher resulting
costs will be for companies – in the order of USD 1.2 trillion for 30,000 of the largest listed companies– and the lower the
returns for investors.

Transition Risk
• Transition Risk relate to the process of
adjustment towards a low-carbon economy.
Emissions must eventually reach “net zero” to
prevent further climate change. The process of
reducing emissions is likely to have significant
impact on all sectors of the economy affecting
financial assets values. While urgent action is
desirable, an abrupt transition could also have
an impact on financial stability and the
economy more broadly.

• The potential risks to the financial system from

the transition are greatest in scenarios where
the redirection of capital and policy measures
such as the introduction of a carbon tax occur
in an unexpected or otherwise disorderly way.
28
 INDONESIA CLIMATE RISK CONDITION

• Warming in the range of 0.8°C–1.4°C is expected by the 2050s.

• Indonesia is ranked in the top-third of countries in terms of climate risk, with high exposure to all types of
flooding, and extreme heat. Without effective adaptation, population exposure will also rise. For example, the
population exposed to an extreme river flood could grow by 1.4 million by 2035–2044.

• Indonesia is particularly vulnerable to sea-level rise, with the country ranked fifth highest in the world terms of the
size of the population inhabiting lower elevation coastal zones. Without adaptation, the total population likely to
be exposed to permanent flooding by the period 2070–2100 could reach over 4.2 million people.

• Climate change is also likely to have impacts on water availability, disaster risk management, urban
development, particularly in the coastal zones, and health and nutrition, with implications for poverty and
inequality.

• While national-level vulnerability indexes, such as the ND-GAIN Country Index, suggest a reduction in overall
national-level climate vulnerability in Indonesia, there is high variation in the potential impacts of climate change at
the regional and local levels. Without well planned adaptation and disaster risk reduction efforts at these
levels, the poorest and most marginalized communities are likely to experience significant loss and damage
as a result of climate change impacts.

Source: Climate Risk Profile: Indonesia (2021): The World Bank Group and Asian Development Bank.
29
 A Large Business Opportunity for the Financial Sector

2030
Forecast of
2016 30% Bank lending
7%

Bank loans

Bank lending
for climate

US$ 22 trillion

US$ 44.5 trillion

*Source: IFC Report and G20 Input Paper Raising $23 Trillion – Greening Banks and Capital Markets for Growth. An IFC report that analyzes the level of bank
and capital markets financing required to finance the NDCs.

33
30
 The Climate Investment Opportunity:
US$23 trillion in Emerging Markets by 2030

South Africa
India 1,688
These 21 countries
represent a $23 trillion
2,500 Brazil
investment opportunity
for climate finance 1,315

CEA 16,046,
China Mexico Vietnam
67%
14,903 791 753
CLA 2,640, 11% Egypt
Russian
Argentina 73
Federation Ukraine
CSA 2,564, 11%
338 313 73
CAF 1,902, Colombia Morocco
8% Indonesia 68
195 Bangladesh
274 Nigeria 64
Ghana
CEU 656, 3% 142
Turkey Philippines
Kenya 23
40 Cote D Sri L
270 115 10 10

31
 SECTORAL EXAMPLES - OIL & GAS

Liquefied Natural Gas EHS issues IFC PS

• Hazardous material management PS 3 – Resource Efficiency and Pollution Prevention
• Wastewater discharges PS 3 - Resource Efficiency and Pollution Prevention

• Air emissions PS 3 - Resource Efficiency and Pollution Prevention

• Waste management PS 3 - Resource Efficiency and Pollution Prevention

• Noise generation PS 2 – Labor and Working Condition,

PS 3- Resource Efficiency and Pollution Prevention,
PS 4 – Community Health, safety and Security.
• LNG transport related issues (vessels and PS 2 – Labor and Working Condition,
shipping) PS 4 – Community Health, safety and Security,
• LNG fueling related issues (as fuel for vehicles) PS 4 – Community Health, safety and Security,

• Occupational Health and Safety PS 2 – Labor and Working Condition,

• Community Health and Safety PS 4 – Community Health, safety and Security,

32
 SECTORAL EXAMPLES - OIL & GAS

Offshore EHS issues IFC PS

Air Emissions PS 3 – Resource Efficiency and Pollution Prevention

Wastewater discharges PS 3 – Resource Efficiency and Pollution Prevention

Solid and liquid waste management PS 3 – Resource Efficiency and Pollution Prevention
Noise generation (including underwater) PS 2 – Labor and Working Condition
PS 6 – Biodiversity Conservation and Sustainable
Management of Living Natural Resources

Spills PS 3 – Resource Efficiency and Pollution Prevention

PS 6 – Biodiversity Conservation and Sustainable
Management of Living Natural Resources
Energy Efficiency and resource conservation PS 3 – Resource Efficiency and Pollution Prevention
Occupational Health and Safety PS 2 – Labor and Working Condition

Community Health and Safety (sea users – fisherman) PS 4 – Community Health, safety and Security,

33
 SECTORAL EXAMPLES - OIL & GAS

Onshore EHS issues IFC PS

Air emissions PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security,
Wastewater / effluent discharges PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security,
Solid and liquid waste management PS 3 – Resource Efficiency and Pollution Prevention
Noise generation PS 2 – Labor and Working Condition
PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security
Terrestrial and project footprint PS 6 – Biodiversity Conservation and Sustainable
Management of Living Natural Resources
PS 7 – Indigenous Peoples
PS 8 – Cultural Heritage
Spills PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security,
Decommissioning PS 4 – Community Health, safety and Security,
Occupational Health and Safety PS 2 – Labor and Working Condition
Community Health and Safety PS 4 – Community Health, safety and Security,

34
 SECTORAL EXAMPLES - OIL & GAS

Mining IFC PS
Water Use and Quality PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security,
Wastes PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security,
Hazardous Materials PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security,
PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources
Land Use and Biodiversity PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources
PS 7 – Indigenous Peoples
PS 8 – Cultural Heritage
Air Quality PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security,
Noise and Vibration PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security,
Energy Use PS 3 – Resource Efficiency and Pollution Prevention
Visual Impacts PS 2 – Labor and Working Condition
PS 4 – Community Health, safety and Security,
Occupational Health and Safety PS 2 – Labor and Working Condition
Community Health and Safety PS 4 – Community Health, safety and Security,
Mine Closure and Post-Closure PS 4 – Community Health, safety and Security,
PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources
PS 7 – Indigenous Peoples
35 PS 8 – Cultural Heritage
 SECTORAL EXAMPLES - INFRASTRUCTURE

Airports EHS issues IFC PS

Noise and vibrations PS 3- Resource Efficiency and Pollution Prevention,
PS 4 – Community Health, safety and Security.
Stormwater and wastewater PS 3 – Resource Efficiency and Pollution Prevention
Hazardous materials management PS 3 – Resource Efficiency and Pollution Prevention
Solid waste PS 3 – Resource Efficiency and Pollution Prevention
Air emissions PS 3 – Resource Efficiency and Pollution Prevention
Energy and water consumption PS 3 – Resource Efficiency and Pollution Prevention
Occupational Health and safety PS 2 – Labor and Working Condition
Community security, health and safety PS 4 – Community Health, safety and Security
PS 6 – Biodiversity Conservation and Sustainable
Management of Living Natural Resources

36
 SECTORAL EXAMPLES - INFRASTRUCTURE

Toll Roads EHS Issues IFC PS

Habitat alteration and fragmentation PS 6 – Biodiversity Conservation and Sustainable
Management of Living Natural Resources
PS 7 – Indigenous Peoples
PS 8 – Cultural Heritage
Stormwater PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security
Waste PS 3 – Resource Efficiency and Pollution Prevention

Noise PS 3 – Resource Efficiency and Pollution Prevention

PS 4 – Community Health, safety and Security
Air emissions PS 3 – Resource Efficiency and Pollution Prevention
Wastewater PS 3 – Resource Efficiency and Pollution Prevention
Occupational health and safety PS 2 – Labor and Working Condition
Community security, health and safety PS 4 – Community Health, safety and Security

37
 SECTORAL EXAMPLES - INFRASTRUCTURE

Ports EHS issues IFC PS

Terrestrial and aquatic habitat PS 6 – Biodiversity Conservation and Sustainable
alteration and biodiversity Management of Living Natural Resources
PS 7 – Indigenous Peoples
Climate change resilience -
Water quality PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security
Air emissions PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security
Waste management PS 3 – Resource Efficiency and Pollution Prevention
PS 4 – Community Health, safety and Security
Hazardous materials and oil management PS 3 – Resource Efficiency and Pollution Prevention
Noise and vibration (including underwater) PS 2 – Labor and Working Condition
PS 6 – Biodiversity Conservation and Sustainable
Management of Living Natural Resources
Occupational health and safety PS 2 – Labor and Working Condition
Community security, health and safety PS 4 – Community Health, safety and Security

38
 Assess if there is potential for environmental and/or social underperformance due to
adverse impacts of climate change-related events on the project and the project’s area
of influence, during the project’s useful life.

To identify and assess the E&S risks that result from potential environmental and/or
social underperformance of the project by the E&S specialists in the project’s appraisal
stage, and, where such risks are high, that a specific assessment is undertaken by the
client.

To identify and describe relevant mitigating actions to address climate E&S risks, as well
as actions related to opportunities to improve the project’s resilience to the ongoing
impacts of climate change (including risks and opportunities beyond the investment
period).

39 42
 CRM Stage IRM Stage
1. What are the project’s potential vulnerabilities to climate impacts and the current and
expected changes in climate relevant to those vulnerabilities? (response from CRM Question 1,
revised and updated where needed).
Q1. What are the project’s potential
vulnerabilities to climate impacts 2. Have the risks, as well as opportunities, that result from climate change impacts on the
project, project area, or the market during the project’s useful life been assessed?
and the current and expected
changes in climate relevant to those 3. What level of climate-related risk has been found (Low, Medium, High)?
vulnerabilities?
4. What are the relevant risks or opportunities, impacts, risk mitigating actions, and/or actions
related to opportunities (incl. risks and opportunities beyond the investment period)?

5. What is the estimated level of residual risk after possible mitigating actions?

Q2. Based on #1, is it likely that the

6. Is there any potential for maladaptation in the project activity?
current or expected climate change
impacts on the project are of such
characteristics that they will pose 7. Is the project not inconsistent with the national/broad context for climate resilience?
high and difficult to mitigate risk to
the project’s financial and/or E&S 8. Optional: What are the estimated additional costs, if any, for adaptation (risk mitigation)
performance? actions?

9. Optional: What are the broader adaptation benefits the project43may produce? Estimate the
40 portion of finance that can be directly attributed to those effects (with support from CBD).
THANK YOU!

Q&A SESSION
 Please feel free to reach IFC team through the below email:

[email protected]

[email protected]

45
 Comparison between Selected MFI Safeguard Standards

Source: ADB, Safeguard Policy Statement Review and Update, Draft, September 2021
 ESG Resources
IFC Sustainability Framework (2012) ESG Publications
www.ifc.org/sustainability For a full list, see:
www.ifc.org/sustainabilitypublications

Good Practice Good Practice

IFC Private Equity
IFC Sustainability IFC Performance Handbook: Handbook:
Guidance Notes to IFC’s Sustainability and Emerging
Framework - Effective Standards on Assessing and Cumulative Impact
Performance Standards - Resources Markets
January 1, 2012 Environmental and Managing Assessment and
Effective January 1, 2012 Brochure Agribusiness:
Social Sustainability - Environmental and Management:
Building Value
Effective January 1, Social Risks in an Guidance for the
Through
2012 Agro-Commodity Private Sector in
Sustainability
Supply Chain Emerging Markets

www.ifc.org/disclosure

WBG EHS Guidelines

www.ifc.org/ehsguidelines
World Bank Group (WBG) Raising the Bar Emerging Trends Corporate Corporate
Environmental, Health, and Safety on Corporate in Environmental, Governance Governance
(EHS) Guidelines Governance: A Social, and Success Success Stories
IFC has launched a three-year Study of Eight Governance Data Stories - - Europe and
consultative process to revise the WBG Stock Exchange and Disclosure: Middle East Central Asia
EHS Guidelines. See Indices Opportunities and North
www.ifc.org/EHSGuidelinesRevision and Challenges Africa

Also see: www.ifc.org/corporategovernance

 ESG Resources

Learning/Tools/Methodology See: www.ifc.org/sustainability and www.ifc.org/corporategovernance

▪ E-Learning Course on ▪ FIRST for Sustainability ▪ Corporate Governance

Managing Environmental See: www.firstforsustainability.org Methodology Tools
Available in English, French,
and Social Performance Chinese, Russian and Spanish
▪ Corporate Governance
Development Framework
Toolkit
▪ IFC Nominee Directors
▪ Sustainability Training ▪ Global Map of Training
and E-Learning Program Environmental and
▪ Environmental and
(STEP) for Financial Social Risks in Agro-
Social Management
Intermediaries Available in Commodity Production
English, French, Russian System (ESMS) Toolkit
(GMAP)
See: www.ifc.org/gmap
and Handbooks