A cross-sector guide for implementing the. Mitigation Hierarchy. Executive summary and Overview. Prepared by The Biodiversity Consultancy

Transcription

1 A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Prepared by The Biodiversity Consutancy

2 Prepared by The Biodiversity Consutancy. CSBI woud ike to express its thanks to the Internationa Finance Corporation (IFC) for substantia technica input and financia contribution to this document. Photographs reproduced courtesy of the foowing: front cover: Rio Tinto; page 5: AngoGod Ashanti/Kar Schoemaker; page 10 (eft): Betty Sheton/Shutterstock.com; page 10 (right): Sura Nuapradid/Shutterstock.com. Date of pubication: 2015 CSBI 2015 A rights reserved. No part of this pubication may be reproduced, stored in a retrieva system, or transmitted in any form or by any means, eectronic, mechanica, photocopying, recording or otherwise, without the prior consent of CSBI. Discaimer Whie every effort has been made to ensure the accuracy of the information contained in this pubication, neither CSBI, IPIECA, ICMM or Equator Principes nor any of their members past, present or future warrants its accuracy or wi, regardess of its or their negigence, assume iabiity for any foreseeabe or unforeseeabe use made of this pubication. Consequenty, such use is at the recipient s own risk on the basis that any use by the recipient constitutes agreement to the terms of this discaimer. The information contained in this pubication does not purport to constitute professiona advice from the various content contributors and neither CSBI, IPIECA, ICMM or Equator Principes nor their members accept any responsibiity whatsoever for the consequences of the use or misuse of such documentation. This document may provide guidance suppementa to the requirements of oca egisation. However, nothing herein is intended to repace, amend, supersede or otherwise depart from such requirements. In the event of any confict or contradiction between the provisions of this document and oca egisation, appicabe aws sha prevai.

3 For the compete guide visit CSBI s website: Executive summary The mitigation hierarchy is a too designed to hep users imit, as far as possibe, the negative impacts of deveopment projects on biodiversity and ecosystem services (BES). It invoves a sequence of four key actions avoid, minimize, restore and offset and provides a bestpractice approach to aid in the sustainabe management of iving, natura resources by estabishing a mechanism to baance conservation needs with deveopment priorities. This guidance document is designed to guide users through the practica impementation of the mitigation hierarchy, and offers guidance for understanding each step in the sequence described above, both at the initia design and panning stages of a project and throughout the project s ifespan. It is aimed primariy at environmenta professionas, working in, or with, the extractive industries, and who are responsibe for managing the potentia risks of project impacts on biodiversity and ecosystem services. The deveopment of this document was, in part, motivated by the Internationa Finance Corporation (IFC) Performance Standards on Environmenta and Socia Sustainabiity, in particuar Performance Standard 6 (PS6) on Biodiversity Conservation and Sustainabe Management of Living Natura Resources (IFC, 2012a). The CSBI recognizes that not every project is governed by IFC PS6, and that the extractive industry, biodiversity science, performance standards and other expectations may evove and change. This guidance is not, therefore, constrained by IFC PS6 but more broady refects the state of the art and good practice of operationaization of the mitigation hierarchy for biodiversity and ecosystem services impact management in the extractive industries. The structure of the document is described beow. The Overview The Overview introduces the mitigation hierarchy as a framework for managing the risks and potentia impacts of deveopment projects on biodiversity and ecosystem services. It provides a forma definition of the mitigation hierarchy according to the Cross-Sector Biodiversity Initiative (CSBI), and carifies the meanings of the terms avoid, minimize, restore and offset as used in the context of this guidance document (simiar terms may have different ega impications in some jurisdictions). The Overview presents the ecoogica, economic, reguatory and reputationa drivers for appying the mitigation hierarchy, and describes its uses in terms of performance measurement, scheduing, achieving costeffectiveness in project operations, and as a risk assessment and management too. Lasty, the Overview emphasizes the importance of engaging financers, and interna and externa stakehoders, in the decision making process, and the consequent need for maintaining effective communication and documentation. Exampes of key communication materias are provided. Section 1: Avoidance Section 1 introduces the concept of avoidance the first and most important step in the mitigation hierarchy. The benefits and potentia considerations of avoidance are summarized, and the different types of avoidance are expained, with detais provided on how each type of avoidance can be undertaken. A number of practica exampes are presented to iustrate how avoidance has been used by the extractives industry in a range of different circumstances. Guidance on the genera practice of avoidance is provided, together with a summary of the potentia constraints and chaenges that may be encountered. This section coses with a summary of how improved ecoogica information and new technoogy can combine to give rise to new ideas for avoidance, and exampes of recent innovative approaches are provided. A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Page 3

4 Executive summary Section 2: Minimization Section 2 is dedicated to the second step in the mitigation hierarchy minimization. The principes and types of minimization are presented, together with a summary of the advantages and considerations that may need to be borne in mind. Practica exampes of minimization are provided to demonstrate how this step has been used effectivey by the extractives industry in a variety of different circumstances. This section coses with guidance on the genera practice of minimization, a summary of potentia constraints and chaenges, and a note on innovative ideas for its appication. References and further information A References section is provided at the back of the guidance, foowed by a ist of usefu webinks and a comprehensive seection of reevant tites for further reading. Terminoogy used within the scope of the guidance is carified in a Definitions section, and a summary of the acronyms used within the guidance is aso provided. Finay, the two Appendices provide (1) an anaysis of future deveopments and (2) detais of knowedge gaps, for both avoidance and minimization. Section 3: Restoration Restoration is presented in Section 3 of the guidance. The rationae for restoration is presented and, as with avoidance and minimization, the advantages of, and potentia considerations for, restoration are aso summarized. A summary of the key principes and steps for impementing restoration are presented, together with guidance on the practice of restoration, incuding reaistic goa-setting, effective management of the process, and performance evauation. A number of exampes describing how restoration has been successfuy empoyed in practice are aso presented. Section 4: Offsets Section 4 presents the fourth and fina step in the mitigation hierarchy offsets. An expanation of the rationae for offsets is provided, together with a brief anaysis of the business case for BES offsets. The key principes for using biodiversity offsets are summarized, as are the different types of offsets and the steps invoved in the practice of offsetting. A practica exampe is incuded to demonstrate how offsetting has been used to aid habitat recovery for threatened fauna and fora species in a marine environment. The section coses with a summary of significant issues emerging as industry continues to design and impement biodiversity offsets. Page 4 A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview

5 About this document What is the mitigation hierarchy? The mitigation hierarchy is a framework for managing risks and potentia impacts reated to biodiversity and ecosystem services 1 (BES). The mitigation hierarchy is used when panning and impementing deveopment projects, to provide a ogica and effective approach to protecting and conserving biodiversity and maintaining important ecosystem services. It is a too to aid in the sustainabe management of iving, natura resources, which provides a mechanism for making expicit decisions that baance conservation needs with deveopment priorities. As defined by the CSBI (Framework for Guidance on Operationaizing the Biodiversity Mitigation Hierarchy, December 2013), the mitigation hierarchy is: the sequence of actions to anticipate and avoid impacts on biodiversity and ecosystem services; and where avoidance is not possibe, minimize 2 ; and, when impacts occur, rehabiitate or restore 3 ; and where significant residua impacts remain, offset. The mitigation hierarchy is not a standard or a goa, but an approach to mitigation panning. It can be used in its own right or as an impementation framework for BES conservation goas such as no net oss (NNL) or net gain/net positive impact (NPI), reguatory requirements and/or interna company standards. It provides a mechanism for measurabe conservation outcomes for BES that can be impemented on an appropriate geographic scae (e.g. ecosystem, regiona, nationa, oca). 1 See the Definitions section on page 79 of the compete guide and, for further expanation, the A-Z of Biodiversity: 2 In the mitigation hierarchy, and in this guidance, minimization is used in a genera sense to mean reduce or imit as far as feasibe. It is not used in the ega sense current in some jurisdictions, where the term minimize means reduce to zero. In many instances, it is not possibe to reduce a biodiversity-reated risk or impact to zero, and if it is possibe, the net incrementa environmenta/socia benefit may not justify the significant additiona cost. 3 In the mitigation hierarchy, and in this guidance, restoration is used in a broad and genera sense. Restoration does not impy an intention to restore a degraded ecosystem to the same state and functioning as before it was degraded (which is the meaning in some specific jurisdictions, and may be an impossiby chaenging or costy task). Restoration may instead invove and recamation or ecosystem rehabiitation to repair project impacts and return some specific priority functions and biodiversity features to the ecosystems concerned. There are many terms inked to restoration, incuding rehabiitation, recamation and remediation: these activities ony amount to restoration when they ensure gains for the specific BES features of concern that are targets for mitigation. A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Page 5

6 What is this document for? This document provides high-eve guidance, with pointers to further information, for using the mitigation hierarchy effectivey to manage the potentia impacts 4 of extractive activities on BES, at a andscape scae, throughout project ifespans. It aims to refect state-of-the-art good practice of operationaizing the mitigation hierarchy for biodiversity impact management for extractive industries. The guidance is aimed at those working in, or with, industry and financia institutions, who are responsibe for overseeing the appication of the mitigation hierarchy, and who need a sound grasp of current good practice and its ongoing evoution, as we as a quick and simpe way to find additiona detaied information when necessary. It draws upon experts in reevant fieds and current scientific iterature, recognizes gaps and chaenges in the impementation of each step of the mitigation hierarchy and eaves room for adaptabiity to future advances in these areas. This guidance aims to: ceary define the mitigation hierarchy and its appication to extractive projects; offer practica guidance for understanding and impementing each step of the mitigation hierarchy throughout the ifespan of an extractive project; outine how to determine and demonstrate oss or gain of biodiversity and/or ecosystem services as a resut of mitigation action or inaction; offer practica measures for predicting and verifying conservation outcomes over time; aow fexibe appication, adaptabe to site-specific environmenta, operationa and reguatory circumstances; and be systematicay appicabe across a range of extractive industry projects and natura environments 5. The guidance is framed to be compatibe with other IPIECA and ICMM guidance on biodiversity, ecosystem services and offsets, and with the CSBI Timeine Too and Baseine Biodiversity Data Coection Guidance 6. It focuses mainy on mitigating impacts on biodiversity, but aso addresses ecosystem services (the benefits peope receive from ecosystems) when appropriate. The two are cosey reated, but not in a straightforward way. Conserving biodiversity is ikey to maintain existing ecosystem services, but the reverse may not aways be so. Appication of the mitigation hierarchy to ecosystem services is reativey new. As more experience is gained, this guidance may be updated accordingy. For both biodiversity and ecosystem services, this guidance assumes a focus on significant (or materia) impacts. This means that the impacts are on a BES feature that has substantia intrinsic or ecosystem service vaue, for exampe because it is highy threatened, unusua and ocaized, or of major cutura or economic importance, or in an intact and unmodified state. It aso means that the potentia impacts are not minor or trivia for exampe they woud severey reduce a species viabiity, or the abiity of a habitat to maintain viabe popuations of its native species. BES performance standards of the Mutiatera Financia Institutions, such as the IFC s Performance Standard 6 (IFC, 2012a), provide usefu frameworks and guidance for assessing the materiaity of impacts. Identifying the BES features of concern is an important first step in appying the mitigation hierarchy. Once these features have been identified, they form the target for appication of a the mitigation hierarchy components. This guidance covers the mitigation of impacts that coud be expected to arise from a project s routine activities reated to exporation, construction, operation and cosure. It does not address the risk of accidents and emergencies. Whie engineering and panning to prevent, contain and manage emergencies are a crucia part of project design and operation, they are beyond the scope of this document. How this document is structured This document is structured according to the components of the mitigation hierarchy, i.e. avoidance, minimization, restoration and offsetting: The Overview (this section) introduces the mitigation hierarchy and its operationaization as a whoe. It covers the primary drivers for impementing the mitigation hierarchy over the ifespan of an asset and touches on topics that are common to a the components of the mitigation hierarchy. 4 Direct, indirect and cumuative. See the Definitions section on page 79 of the compete guide. 5 This guidance does not cover offshore ecosystems, where there is as yet very imited experience of how to appy the mitigation hierarchy. 6 Fu references and webinks (where avaiabe) are given in the References section of the compete guide. Page 6 A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview

7 Section 1 focuses on the first, and often the most important, component of the mitigation hierarchy avoidance. This preventive step is intended to avoid impacts on the most sensitive BES, through site seection, project design and/or scheduing. Section 2 presents the second component of the mitigation hierarchy minimization 7. This is aso a preventive step, and aims to reduce impacts that cannot be avoided through physica, operationa or abatement contros. Section 3 discusses the first remediative component of the mitigation hierarchy restoration 8. Where damage or degradation to biodiversity vaues cannot be avoided or further minimized, there may be scope for remediation via rehabiitation or restoration efforts. Section 4 covers the ast component of the mitigation hierarchy offsets. This step is the ast resort to address those significant residua impacts that coud not be prevented through avoidance and minimization, or adequatey corrected through restoration/rehabiitation. Additiona conservation actions are aso covered in this section. Sections 3 and 4 are ess detaied than Sections 1 and 2. Extensive information and guidance aready exists for restoration and offsets. This document outines the key issues for these components and provides signposts to reevant materia esewhere. Rationae for use of the mitigation hierarchy There are ecoogica, economic, reguatory and reputationa drivers for appying the mitigation hierarchy: consequences on human we-being. It may aso affect the viabiity of projects that have significant dependencies on those ecosystem services. Reguatory drivers: the mitigation hierarchy is used by many financia institutions, industries, governments and NGOs. Severa financia standards and safeguards (Internationa Finance Corporation Performance Standard 6 (IFC PS6), European Bank for Reconstruction and Deveopment Performance Reguation 6 (EBRD PR6), Word Bank Environmenta and Socia Standard 6 (ESS6), and the Equator Principes) a require appication of the mitigation hierarchy for management of impacts on BES. The US Wetand Banking, the European Union Birds and Habitats Directives and Austraia s Environment Protection and Biodiversity Conservation Act are exampes of reguatory frameworks that aso require appication of the mitigation hierarchy. Economic drivers: effective appication of the mitigation hierarchy can reduce risks, costs and deays for industry and financia institutions during project deveopment. Companies that foow good practice in environmenta management, incuding appication of the mitigation hierarchy, may secure easier and ess costy access to finance, and and resources 9. Reputationa drivers: stakehoders increasingy expect that the mitigation hierarchy shoud be carefuy appied, as good practice towards achieving sustainabe deveopment. Ecoogica drivers: these incude protecting and conserving biodiversity, maintaining ecosystem services, and sustainaby managing iving natura resources, through imiting and/or repairing project impacts on BES. Impacts on biodiversity can adversey affect the deivery of ecosystem services, and this may in turn have negative 7 In the mitigation hierarchy, and in this guidance, minimization is used in a genera sense to mean reduce or imit as far as feasibe. It is not used in the ega sense current in some jurisdictions, where the term minimize means reduce to zero. In many instances, it is not possibe to reduce a biodiversity-reated risk or impact to zero, and if it is possibe, the net incrementa environmenta/socia benefit may not justify the significant additiona cost. 8 In the mitigation hierarchy, and in this guidance, restoration is used in a broad and genera sense. Restoration does not impy an intention to restore a degraded ecosystem to the same state and functioning as before it was degraded (which is the meaning in some specific jurisdictions, and may be an impossiby chaenging or costy task). Restoration may instead invove and recamation or ecosystem rehabiitation to repair project impacts and return some specific priority functions and biodiversity features to the ecosystems concerned. There are many terms inked to restoration, incuding rehabiitation, recamation and remediation: these activities ony amount to restoration when they ensure gains for the specific BES features of concern that are targets for mitigation. 9 e.g. Rainey et a. (2014). A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Page 7

8 Uses and components of the mitigation hierarchy The mitigation hierarchy is usefu as a framework because it can: Promote performance measurement: it is the too by which biodiversity conservation goas (e.g. NNL, net gain/npi, reguatory or company interna poicy goas) can be achieved. Inteigent appication of the mitigation hierarchy can reduce the costs of achieving such goas. Reduce scheduing deays and instigate costeffective approaches: the mitigation hierarchy is a feedback optimization process to make the most costeffective investment whie effectivey managing impacts on biodiversity and ecosystem services. Science, stakehoders, finance and industry schedues a factor into the judicious use of each component of the mitigation hierarchy. Function as a risk assessment and management too: the mitigation hierarchy is a risk management too and an Environmenta and Socia Impact Assessment (ESIA) panning too. Appropriate appication reduces business costs and scheduing/financing deays. The effective appication of the mitigation hierarchy provides the opportunity for eary identification of BES risks and mitigation options. This faciitates eary business forecasting of potentia mitigation requirements and options, schedue and cost estimates, and impications for project feasibiity. Figure 1 iustrates the iterative process of avoiding and minimizing unti remaining risks and impacts can be managed through the remediative measures of restoration and offsetting. The mitigation hierarchy can be viewed as a set of prioritized, sequentia components that are appied to reduce the potentia negative impacts of project activities on the natura environment. It is not a one-way inear process but usuay invoves iteration of its steps. It can be appied to both biodiversity and reated ecosystem services. There are two preventive components, avoid and minimize, and two remediative components, restore (or rehabiitate) and offset (see Figure 3). As a rue, preventive measures are aways preferabe to remediative measures from ecoogica, socia and financia perspectives. Preventive measures Avoidance, the first component of the mitigation hierarchy, is defined by the CSBI 10 as Measures taken to anticipate and prevent adverse impacts on biodiversity before actions or decisions are taken that coud ead to such impacts. Figure 1 Schematic diagram showing the impementation of the mitigation hierarchy 10 Definitions in this section are from CSBI (2013a), Framework for Guidance on Operationaizing the Biodiversity Mitigation Hierarchy, December See aso the Definitions section on page 79 of the compete guide, for comparison with other definitions that are avaiabe. Page 8 A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview

9 Avoidance is often the most effective way of reducing potentia negative impacts. Its proper impementation requires biodiversity and ecosystem services to be considered in the pre-panning stages of a project. When avoidance is considered too ate, after key project panning decisions have been taken, cost-effective options can easiy be missed. 11 Minimization, the second component of the mitigation hierarchy, is defined by the CSBI as Measures taken to reduce the duration, intensity, significance and/or extent of impacts (incuding direct, indirect and cumuative impacts, as appropriate) that cannot be competey avoided, as far as is practicay feasibe 12. We-panned minimization can be effective in reducing impacts to beow significance threshods. Remediative measures Restoration is used to repair BES features of concern that have been degraded by project activity. It invoves measures taken to repair degradation or damage to specific BES features of concern which might incude species, ecosystems/habitats or priority ecosystem services foowing project impacts that cannot be competey avoided and/or minimized. In the context of the mitigation hierarchy, restoration shoud focus on the BES features identified as targets for mitigation. 13 Restoration is usuay carried out on-site and to repair impacts caused (directy or indirecty) by the project. Impementation of offsets (see beow) may aso invove restoration activities carried out off-site to repair impacts not caused by the project. These different kinds of restoration activities shoud not be confused. minimized and/or rehabiitated/restored. Offsets shoud have a specific and preferaby quantitative goa that reates directy to residua project impacts. Often (but not necessariy) this is to achieve no net oss or a net gain of biodiversity. Offsetting is a measure of ast resort after a other components of the mitigation hierarchy have been appied. Offsets can be compex, expensive and uncertain in outcome. The need for offsets shoud therefore be reduced as far as possibe through considered attention to earier components in the mitigation hierarchy. In the exampe shown in Figure 2, a project s potentia impact (a) is reduced by taking measures to avoid, minimize and restore impacts (b) but a significant residua impact remains; this can be remediated via an offset (c), which in this case eads to a net gain in biodiversity. Figure 2 Appication of the mitigation hierarchy components Offsetting forms the fina component of the mitigation hierarchy. Offsets are defined by the CSBI as Measurabe conservation outcomes, resuting from actions appied to areas not impacted by the project, that compensate for significant, adverse project impacts that cannot be avoided, 11 The CSBI Timeine Too party aims to address this: 12 In the mitigation hierarchy, and in this guidance, minimization is used in a genera sense to mean reduce or imit as far as feasibe. It is not used in the ega sense current in some jurisdictions, where the term minimize means reduce to zero. In many instances, it is not possibe to reduce a biodiversity-reated risk or impact to zero, and if it is possibe, the net incrementa environmenta/socia benefit may not justify the significant additiona cost. 13 In the mitigation hierarchy, and in this guidance, restoration is used in a broad and genera sense. Restoration does not impy an intention to restore a degraded ecosystem to the same state and functioning as before it was degraded (which is the meaning in some specific jurisdictions, and may be an impossiby chaenging or costy task). Restoration may instead invove and recamation or ecosystem rehabiitation to repair project impacts and return some specific priority functions and biodiversity features to the ecosystems concerned. There are many terms inked to restoration, incuding rehabiitation, recamation and remediation: these activities ony amount to restoration when they ensure gains for the specific BES features of concern that are targets for mitigation. A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Page 9

10 Box 1 Differentiated appication of the mitigation hierarchy for biodiversity and ecosystem services The mitigation hierarchy can be appied to both biodiversity and ecosystem services. However, the approach may need to be differentiated to refect their distinct characteristics. Whie biodiversity represents the stock of nature (genes, species and ecosystems), ecosystem services are the benefits to peope that fow from this stock when it is combined into integrated and functioning systems. Where there are significant potentia impacts on ecosystem services, the foowing points shoud be borne in mind when appying the mitigation hierarchy: Identifying the beneficiaries, and the extent of their dependence on the service(s), requires both socioogica expertise, and appropriate stakehoder consutation. This information on demand and dependence needs to be brought together with information on how impacts wi affect ecosystems and the fow of services. In practica terms, this means bringing together the socia and environmenta components of impact assessment which often operate separatey. Dependencies may extend not ony to Affected Communities (defined as a group of stakehoders using an ecosystem service that is affected by the project and reiant on that ecosystem service for their we-being) but to the project itsef. Understanding the spatia aspect of impacts is crucia. Whie Affected Communities typicay are cose to the project site, this is not aways the case for exampe where there are impacts on water suppy or quaity which can affect distant communities downstream. Offsets for ecosystem services shoud be ocated so that they deiver to the Affected Communities. This coud necessitate a composite offset for the project, with separate ocations to offset residua impacts on biodiversity and on ecosystem services. Ecosystem services that were previousy out of reach can sometimes be made accessibe by changes in tenure, targeted training, or faciitation of trave. In some situations, compensation for ecosystem services can ony feasiby be provided through substitution (e.g. a borehoe repacing fowing surface water) and/or monetary compensation. Engineering or monetary compensation is usuay ess satisfactory than an ecosystem-based approach. It may aso not be possibe to compensate for some important ecosystem services (e.g. spiritua vaue) in this way. There may often be mitigation trade-offs between different ecosystem services, between services provided to different stakehoder groups, and between biodiversity and ecosystem services. For exampe, increasing access to, or use of, productive services (such as wood fue or fisheries) coud be incompatibe with improved biodiversity conservation, and with some reguating or cutura services. Situations often aso arise where the ecosystem services reied upon by Affected Communities invove unawfu activities (e.g. timber or bushmeat harvesting). Where compex trade-offs and dependencies are invoved, it is particuary important to obtain a sound understanding of the ecoogica, socia, poitica and economic contexts, materiaity of impacts, and the avaiabe options and their consequences. Extensive stakehoder consutations (and probaby negotiations), wi be necessary. Many toos are avaiabe to guide the identification and prioritization of ecosystem services, such as those from IPIECA/IOGP ( or WRI ( e.g. Landsberg et a., 2013: Weaving Ecosystem Services into Impact Assessment: A Stepby-Step Method). Modeing toos such as InVEST ( or ARIES ( may be usefu in determining current baseines and trends, and potentia project impacts. Page 10 A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview

11 The first components of the mitigation hierarchy are often the most usefu and effective The mitigation hierarchy is a hierarchy in terms of priorities. As a genera rue, this means that the earier components need specia emphasis. Whie a components of the mitigation hierarchy are important, rigorous efforts to avoid and minimize as far as feasibe are ikey to achieve significant reductions in potentia impacts (Figure 2). Carefu impementation of the eary components of the mitigation hierarchy wi reduce the project s iabiity for restoration and offsets measures. This is important as these ater mitigation components may often but not aways encounter the foowing (see aso Figure 3): 1. Increasing technica, socia and poitica risks (e.g. technica faiure of restoration, or poitica faiure of a biodiversity offset). 2. Increasing uncertainty of costs, and risk of cost escaation. 3. Increasing costs per unit of BES. 4. Increasing requirements for externa stakehoder engagement and speciaist expertise. 5. Decreasing opportunity to correct mistakes. 6. Decreasing confidence and trust among key stakehoders. However, the opportunity costs of avoidance and minimization may often be arger for the project site (because it contains vauabe minera, oi or gas resources) than for other ecoogicay simiar areas. There may thus be a strong economic rationae for restoration and (especiay) offsets to be favoured over avoidance and minimization in addressing potentia impacts. In practice, therefore, tradeoffs between environmenta and economic effectiveness may need to be considered and resoved. There is no simpe formua for doing this, and different risks and considerations wi need to be weighed carefuy in the context of societa preferences and stakehoder concerns. There are often fewer options and higher risks further aong the mitigation hierarchy. Where it is feasibe, avoidance tends to have fixed, known costs and in many cases a higher probabiity of success than ater components. Beyond avoidance, mitigation options usuay diminish, and chaenges reated to cost, schedue and stakehoders often become more significant. Exceptions occur however (e.g. restoration may in some cases be riskier and more expensive than offsetting) and projects wi need to be considered on a case-by-case basis. Figure 3 Avoid, minimize, restore, offset Increasing risk of time ag between oss and compensation Decreasing trust and faith among stakehoders in the ikeihood of success Avoid Minimize Restore Offset Decreasing probabiity of mitigation success; increasing uncertainty about the costs of mitigation options Decreasing options for mitigation; decreasing opportunity to correct mistakes A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Page 11

12 The mitigation hierarchy and the project ifespan The CSBI Timeine Too 14 iustrates how options for the preventive components (avoidance and minimization) occur primariy, but not excusivey, eary in the project panning cyce, and options for the remediative components (restoration and offsets) occur ater and throughout operations. Figure 4 iustrates the appication of the mitigation hierarchy across the project ifespan and highights the components most ikey to be of importance during each broad stage. Seection of project sites through ecosystem-eve BES screening occurs at the pre-feasibiity assessment stage. Once a site has been chosen, further avoidance and minimization occurs within the project site. During construction and operation, impementation of the mitigation hierarchy invoves adaptive management. Work undertaken during each stage incudes defining study areas, assessing BES vaues and impacts, and choosing and impementing mitigation options. Iterative decision making (shown by the green arrows in Figure 4) is desirabe at each stage. Using the mitigation hierarchy before, during and after the ESIA The mitigation hierarchy has traditionay been used during the ESIA and, more recenty, the offset design process. However, it is proving vauabe in current good practice to aso use the approach before and after the ESIA. Before the ESIA, the mitigation hierarchy functions as a risk assessment framework to assess the magnitude of BES risks, for exampe to consider whether it is feasibe to mitigate impacts at the site, whether the site can be restored, and whether an NNL can be achieved. Questions to ask incude: Is there a risk of irreversibe or nonoffsettabe impacts? Are there ess-damaging aternatives that are feasibe? And, with respect to ecosystem services: Is the proposed deveopment ikey to be sustainabe in this ocation, given its natura resource dependencies? Figure 4 Appying the mitigation hierarchy across three broad stages of the project timeine 14 CSBI Timeine Too Page 12 A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview

13 Tabe 1 Financia institutions and industry use the mitigation hierarchy for different purposes at different stages of the project ifespan Project stage Industry use of the mitigation hierarchy Financia institution use of the mitigation hierarchy Key mitigation hierarchy components impemented Pre-ESIA Risk assessment: first screening for potentia offset ocations Risk Assessment Avoidance by site ocation (Offsets) ESIA Mitigation design Feedback optimization approach to mitigation investment Residua impact assessment Offset design Conceptua framework Guidance for cients Avoidance by project design and scheduing Minimization (Restoration) (Offsets) Post-ESIA Performance tracking Adaptive management Performance tracking for oan and/or financing agreement actions 15 (ESAPs, EPAPs 16 ) Performance audits (Avoidance) Minimization Restoration Offsets During ESIA, the mitigation hierarchy can function as the principa ESIA organizing framework for BES. It guides panning and communication. Haf way through the ESIA process, it is good practice to use the mitigation hierarchy as a feedback optimization too (see beow). This invoves checking to determine whether impacts remaining after avoidance and minimization can be remediated (with restoration and offsets). If remediation woud incur unacceptaby high costs or risks, it may be necessary to go back and reassess the earier components of the mitigation hierarchy. After the ESIA, during the construction and operations phase, the mitigation hierarchy functions as an adaptive management framework for practitioners, as an audit too for reguators and financia institutions, and as an NNL too in offset design. Both industry and financia institutions appy the mitigation hierarchy across the different stages of the project cyce, but for sighty different purposes. For industry, the mitigation hierarchy is mainy a too for panning and adaptive management; for financia institutions it provides a framework to guide cients, and a means to audit performance (Tabe 1). How to move to the next component of the mitigation hierarchy and use feedback to optimize investments The mitigation hierarchy is not a one-way inear process, and entais both feedback and adaptive management to optimize investments (see Figure 5 on page 14). The principe The question, How much avoidance is enough? depends on the mitigation options remaining for the biodiversity features of concern, after this component has been appied. Iteration may therefore be necessary (Figure 5). The method 1. Appy avoidance and minimization measures to potentia BES impacts using a risk-based approach. 2. Characterize and estimate the magnitude of the potentia remaining impacts to be addressed by restoration and, if necessary, offsetting. 3. Assess the environmenta, socia, poitica and economic feasibiity of restoring or offsetting this type and magnitude of impact on BES vaues. 15 Equator Principes (2014). Guidance for EPFIs [Equator Principes Financia Institutions] on incorporating environmenta and socia consideration into oan documentation Environmenta and Socia Action Pans (mainy mutiatera finance institutions (MFIs)), and Equator Principe Action Pans (Equator Institutions). For an exampe see: A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Page 13

14 Figure 5 The iterative stages in the assessment of options and impacts, to optimize investment in components of the mitigation hierarchy 4. If risks and/or costs are too high, return to avoidance and minimization and repeat the evauation process 5. Throughout the process, communicate the options with panners, engineers and decision makers. The outcome Figure 6 (beow) shows an exampe of how changes in emphasis across the mitigation hierarchy may resut during the design phases as new information becomes avaiabe and further consutation takes pace. Severa rounds of appication (iterations) of the mitigation hierarchy are ikey through a project s panning and operationa phases. When using a no net oss/net gain framework, scenarios need to be informed by quantitative assessment of osses and gains. In the hypothetica exampe presented in Figure 6, the iterative appication of the mitigation hierarchy at the design stage eads to increased use of avoidance and minimization, utimatey reducing the scae of restoration and offsets needed for remediation. Figure 6 Increasing the use of avoidance and minimization in project design through iterative appication of the mitigation hierarchy In this hypothetica exampe, assessment eads to modification of Design 1, which woud have eft unacceptabe potentia impacts remaining after avoidance and minimization. In the next iteration, Design 2 achieves further avoidance, but it woud sti not be unfeasibe to restore or offset the potentia impacts. Design 3 further minimizes potentia impacts, reducing the scae of restoration and offsets needed for remediation. Page 14 A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview

15 Box 2 Biodiversity and ecosystem services risks, impacts and dependencies Risks associated with BES take two forms: the risk that deveopment projects pose to BES, and the risk that impacts on BES (if not adequatey addressed through the mitigation hierarchy) can pose to deveopment projects. Intrinsic risk This is the risk of significanty damaging important and sensitive biodiversity features or ecosystem services. This may aso pose a direct risk to a project that is dependent on specific ecosystem services. Compiance risk This is the risk of faiure to compy (or being perceived not to compy) with government reguation or finance safeguards. This coud resut in fines, deays and increased costs, as we as sower and more troubesome approvas for future projects and reduced access to finance, natura capita and and. Reputationa risk This is the risk that sharehoders, stakehoders and wider society may perceive that good practice has not been foowed in reation to BES. This coud resut in weakened reationships with stakehoders, and reduced trust (with an increased chance of protests or poitica obstaces causing deays and costs), a diminished socia icence to operate ocay, nationay and/or internationay, diminished investor confidence and oyaty, and ower staff morae. As with compiance risk, it coud aso resut in reduced access to finance, and and natura resources. Avoidance and minimization hep to prevent potentia impacts, and the intrinsic, compiance or reputationa risks that these woud pose. Restoration and offsets hep to remediate impacts that have aready happened. Faiure to remediate adequatey may aso pose intrinsic, compiance or reputationa risk. For a more detaied discussion of risks and impacts see the IPIECA-IOGP Ecosystem services guidance, avaiabe at: Appication of the mitigation hierarchy incuding offsets to achieve BES targets No net oss (NNL) can be defined as the point at which project-reated impacts on biodiversity are baanced by measures taken through appication of the mitigation hierarchy, so that no oss remains. Where the gains are greater than the osses, net gain resuts. NNL and net gain are therefore targets which can be used to drive performance in the appication of the mitigation hierarchy. NNL or net gain may be required for specific biodiversity vaues by some reguatory frameworks or financing conditions. Where feasibe, IFC PS6 requires NNL for impacts on Natura Habitat and net gain for impacts on Critica Habitat 17, and this approach is increasingy regarded as best practice. Projects may take many years to achieve NNL, and many miestones wi be set aong this journey. However, the mitigation hierarchy may be appied without having NNL or net gain as a goa. Setting cear targets for the biodiversity features of concern and taking a quantitative approach are sti desirabe to ensure effective deivery. Currencies and metrics to demonstrate BES osses and gains exist but are sti being refined and tested. 18 BES target feasibiity assessments BES target feasibiity assessments evauate the ikeihood that a project wi achieve specific targets, such as NNL or net gain. Some financia institutions ook for such predictions quaitative feasibiity and quantitative forecasts in oan-supporting documents 19 to provide a greater degree of certainty of BES targets being met. 17 For projects financed by the IFC or financia institutions adopting PS6. Definitions of Natura Habitat and Critica Habitat can be found in IFC Performance Standard 6 ( and the accompanying Guidance Note 6 ( 18 An exampe framework for measurement is outined in ICMM-IUCN (2013) Independent report on biodiversity offsets. Avaiabe at 19 Project exampes incude Oyu Togoi (Mongoia, and severa others not yet at financia cose. A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Page 15

16 Figure 7 Steps in assessing the technica and poitica/business feasibiity of a biodiversity conservation target (e.g. no net oss) Define study area Define BES vaues of concern Assess residua impacts on vaues foowing avoidance, minimization and rehabiitation/restoration Assess the andscape significance of these impacts (e.g. within migratory routes). Assess the avaiabiity of potentia offset sites (or other options for intervention) within the andscape Assess the additionaity and equivaence of potentia offset sites (or other options for intervention) Are offsets ecoogicay feasibe? Review avaiabe conservation interventions and their ikey effectiveness Cacuate potentia net gains, considering time ags and uncertainties Estimate costs Are offsets technicay feasibe? Assess the socio-economic and poitica contexts Assess the potentia for ecoogica, economic and poitica sustainabiity Are offsets socio-economicay and poiticay feasibe? Offsets options narrow (and certainty increases) as the process moves from stage to stage. Feasibiity assessments consider technica, socia, poitica and economic issues. To answer the question, Is it possibe to achieve a target? (such as NNL), the burden of proof goes through the stages of theoretica feasibiity, technica feasibiity (incuding cost considerations) and socio-poitica feasibiity (incuding sustainabiity consid - erations) (Figure 7). As greater certainty is achieved, the project mitigation and offset options are narrowed down, as in any project design process. At a coarse scae, such assessments can initiay be competed as a desktop exercise, before a fied assessment is undertaken. Financia institutions wi aso be interested in the track record or capacity of cients to undertake such work. Measuring the contribution of mitigation hierarchy components towards a BES target A BES target forecast (such as for NNL) can be done by assessing osses versus gains predicted from the appication of each step of the mitigation hierarchy through the project ife span. 20 Once appropriate metrics for BES features (or surrogate measures, if appropriate) have been chosen, a precautionary approach, with speciaist input, can be used to predict the gains expected from avoidance, minimization, restoration and offsets. For averted oss offsets, the determination of net gain can be achieved through estimates of change predicted in the absence of the offset (the counterfactua scenario). Appying the mitigation hierarchy retroactivey The mitigation hierarchy is ideay appied from the eariest stages of a new project, or an existing project s expansion. It is more chaenging to appy the mitigation hierarchy retrospectivey to a project that is aready operationa. In this case, the potentia for avoidance and minimization is ikey to be imited, but opportunities coud become apparent when, for exampe, site ayout and timetabing of activities are reviewed. However, an ongoing project may sti provide significant oppor - tunities for restoration and, especiay, offsetting. One chaenge is that, frequenty, baseine (pre-project) data 20 For exampes, see the gains forecast for the QIT Madagascar Mineras project (Tempe et a., and the oss/gain tabe of habitats and species for Bardon Hi Quarry, UK (Tempe et a., Page 16 A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview

17 for priority BES features are imited, making it hard to assess project impacts quantitativey (or even quaitativey). This may require back-casting, inferences based on current status in reation to and-use and other changes since the project started. Communication and documentation The reputationa benefits of, and indeed recognition for, seecting certain design options can be recognized if financiers 21, and interna and externa stakehoders, have been consuted and engaged in the process of decision making. Therefore, the communication of the design options, key choices to be made, the technica, economic and poitica constraints, and the refined business case can be beneficia to a project. Communication materias coud incude the foowing: maps and avaiabe quantitative data on oss, potentia gains, costs and socia issues, to better demonstrate options on constraints and opportunities; an estimate of residua impacts after the mitigation hierarchy has been appied; figures in terms of simpe metrics, such as quaity hectares 22 of habitat, which can hep stakehoders to understand and comment on the significance of impacts, predicted gains and the proposed/adopted avoidance and/or other mitigation measures (some design options may need to remain confidentia for commercia or other sensitive reasons); and a Biodiversity Action Pan (BAP) or environmenta management pan, which foows the mitigation hierarchy. 21 Lenders often require a biodiversity management pan, a biodiversity monitoring pan, and in some cases a biodiversity offset pan or demonstration of approach to no net oss. A these documents can be effectivey based on the appication of the mitigation hierarchy. 22 Quaity hectares : a biodiversity metric that weights habitat area by its quaity (often assessed on a scae of 0 1, or 0 100%) in terms of intactness or suitabiity for specific biodiversity features of interest. See Tempe et a. (2012) for an exampe at A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Page 17

18 For the compete guide visit CSBI s website: Contents Executive summary 6 Overview 8 About this document 8 What is the mitigation hierarchy? 8 What is this document for? 9 How this document is structured 9 Rationae for use of the mitigation hierarchy 10 Uses and components of the 11 mitigation hierarchy Preventive measures 11 Remediative measures 12 The first components of the mitigation hierarchy 14 are often the most usefu and effective The mitigation hierarchy and the 15 project ifespan Using the mitigation hierarchy before, 15 during and after the ESIA How to move to the next component of the 16 mitigation hierarchy and use feedback to optimize investments Appication of the mitigation hierarchy 18 incuding offsets to achieve BES targets BES target feasibiity assessments 18 Measuring the contribution of mitigation hierarchy 19 components towards a BES target Appying the mitigation hierarchy retroactivey 19 Communication and documentation 20 Section 1: Avoidance 21 Definitions 21 Rationae 21 Key principes 21 Key steps in avoidance 23 Key types of avoidance 23 Avoidance through site seection 23 Avoidance through project design 24 Avoidance through scheduing 26 Exampes of avoidance in practice 27 The practice of avoidance 32 Start eary, but don t stop: avoidance 32 through the project ifespan Think big: understanding the project site 32 within the wider andscape Synthesize, map, discuss: assessing BES 33 vaues and sensitivities Constraints and chaenges 34 Cost considerations: is expensive avoidance worth it? 34 An emerging chaenge: avoidance of indirect 35 and cumuative impacts Keeping track: monitoring and evauation 35 for avoidance actions Creative thinking: innovative ideas 36 for avoidance Section 2: Minimization 37 Definitions 37 Rationae 37 Key principes 38 Key steps in minimization 38 Types of minimization 39 Exampes of minimization in practice 42 The practice of minimization 44 Start eary, but don t stop: minimization 44 through the project ifespan Understand what s reay needed: investing 44 in research to minimize more effectivey Execute the pans: ensuring that minimization 44 is carried out effectivey Check to see whether it s working: estabishing 44 monitoring and an adaptive approach Constraints and chaenges 45 Cost considerations for minimization actions 45 Deaing with data-poor and uncertain situations 45 Whether and when to move to restoration and offsets 45 Creative thinking: innovative ideas 46 for minimization Page 18 A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview

19 Contents Section 3: Restoration 47 Definitions 47 Rationae 48 Key principes and steps for 50 impementing restoration Start eary and buid a soid information base 51 Define reaistic restoration goas 51 Take practica steps to support restoration success 52 Monitor and manage adaptivey 52 Exampes of restoration in practice 52 The practice of restoration 54 Anayse constraints: reaistic goa setting 54 Manage using threshods: piars of restoration success 56 Assess trajectories: evauating performance criteria 57 and success Learn by doing: the adaptive management approach 57 Section 4: Offsets 59 Definitions 59 Rationae 60 Government reguation 60 Requirements for financing 60 The business case for BES offsets 60 Key principes 61 Types of offsets 61 Key steps in offsetting 62 Phase 1: BES offset contextuaization 63 Phase 2: BES offset strategy 63 Phase 3: BES offset design and 63 management panning Phase 4: BES offset impementation 64 Exampe of offsets in practice 65 The practice of offsetting 66 Buy off the shef? Reguatory offsets 66 Engage stakehoders and buid partnerships: 66 vountary and finance-requirement offsets Add up oss and gain: biodiversity accounting 66 Find the right site: some practica short cuts 67 Think ong term: ensuring offset permanence 68 Patience is needed: how ong do offsets take to set up? 69 Keep on track: monitoring offset performance 69 Constraints, chaenges and creative thinking 69 Joined-up thinking? The pros and cons of 69 aggregated offsets How it works on water: offsets at sea 70 Offset socia success: worth striving for 70 References 71 Webinks 75 Further reading 76 Definitions 79 Acronyms 83 Appendices 84 Appendix 1: Horizon scan of future 84 deveopments for avoidance and minimization Appendix 2: Knowedge gaps in 85 avoidance and minimization A cross-sector guide for impementing the Mitigation Hierarchy Executive summary and Overview Page 19

20 The Cross-Sector Biodiversity Initiative (CSBI) is a partnership between IPIECA, the Internationa Counci on Mining and Metas (ICMM) and the Equator Principes Association. Formed in 2013, the CSBI is a unique coaboration for bringing together the knowedge and expertise of biodiversity matters from its three participating sectors: finance; oi and gas; and mining. Prepared by The Biodiversity Consutancy Lead authors: Jon Ekstrom, Leon Bennun and Robin Mitche The Biodiversity Consutancy Ltd 3E King s Parade, Cambridge, CB2 1SJ, UK Teephone: Emai: enquiries@thebiodiversityconsutancy.com Website: Company Number: VAT Number: Prepared by The Biodiversity Consutancy