Was
hington, D.C., May 12, 2011
—IFC, a member of the World Bank Group, today updated its Sustainability Framework, strengthening its commitment to critical issues such as climate change, business and human rights, supply-chain management, and transparency.
IFC’s Board of Directors approved this update, culminating an 18-month, comprehensive consultation process with stakeholder groups around the world. The Sustainability Framework consists of IFC’s Policy on Social and Environmental Sustainability, which defines the Corporation’s responsibility in supporting project performance; the Performance Standards, which define clients’ responsibilities for managing their environmental and social risks; and the Access to Information Policy, which articulates IFC’s commitment to transparency.
“In the five years since the Framework was originally adopted, IFC’s standards have become a global benchmark for environmental and social performance,” said Lars Thunell, IFC Executive Vice President and CEO. “With this update, IFC expects to increase and better communicate its development impact; help client companies compete in a fast-changing, global economy; improve transparency and accountability; and better engage with communities who are affected by our projects.”
The updated Performance Standards recognize that resource efficiency is inherently good business in a world increasingly resource constrained. They include new measures to enhance energy and water efficiency and target greenhouse-gas reduction, allowing IFC to better capture the greenhouse-gas footprint in its portfolio and expand the scope of its support for energy-efficiency analysis to a larger number of projects.
“IFC’s Sustainability Framework is one of the bedrock policies that differentiates our institution from others, public or private,” said Rachel Kyte, IFC Vice President. “We believe we have succeeded in striking the right balance by listening to the interests of shareholders and stakeholders. The updates to the Framework and the guidance that accompanies it will continue our global leadership on current and emerging environmental and social issues.”
The Framework recognizes the responsibility of the private sector to identify adverse risks and impacts through environmental and social due diligence and provide effective grievance mechanisms. Updates to the Performance Standards also address human trafficking, forced evictions, and communities’ access to cultural heritage, among other issues. For projects with potential significant adverse impacts on indigenous peoples, IFC has adopted the principle of “Free, Prior, and Informed Consent” informed by the 2007 United Nations Declaration on the Rights of Indigenous Peoples.
The updated Performance Standards take into account the complexities of supply chain management. It expands requirements for clients to assess whether their primary suppliers are contributing to the degradation of natural habitats and requires them to shift their purchasing to suppliers who are not, or to work with suppliers to improve practices.
IFC’s new Access to Information Policy represents a major shift from the previous Policy on Disclosure of Information. It will improve IFC’s ability to communicate about its projects and investments, including project-level disclosure of environmental and social impacts, and development outcomes. It also increases transparency regarding IFC’s investments with financial intermediaries and advisory services. IFC will now disclose information throughout the project’s lifecycle. In addition to the existing requirement for revenue transparency for extractive-industry projects, new requirements in the updated Sustainability Framework will result in contract disclosure for these projects. Increased transparency and accountability will also improve development outcomes.
IFC’s Performance Standards are the basis for the Equator Principles, a voluntary environmental and social risk-management framework used by 71 financial institutions worldwide. In addition, 15 European Development Financial Institutions and 32 export credit agencies from the Organization for Economic Co-operation and Development refer to the Performance Standards in their operations. In 2008, the European Bank for Reconstruction and Development modeled its own Performance Requirements on IFC’s Performance Standards.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit
www.ifc.org
.
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