International Standards for Environmental & Social Management

Transcription

1 International Standards for Environmental & Social Management Navigating the Sea of Standards Julia Richard de Chicourt, Proparco Camille Maclet, Partner, ERM

2 The presenters Julia Richard de Chicourt Senior Environmental and Social Specialist Environment, Social and Impact Department (ESI) Tel: +33 (0) Mob: +33 (0) Camille Maclet Partner, Western Europe and North Africa Environmental & Social Assessment Practice Tel: +33 (0) Mob: +33 (0)

3 Introducing PROPARCO Created in 1977, PROPARCO is a development finance institution dedicated to financing the private sector. A subsidiary of the Agence Française de Développement 3.8bn in PROPARCO s portfolio 1,1bn of commitments Key Figures countries 180 staff members 370 clients A Public/Private & North/South community of investors, governance split between the AFD and the private sector A full and customized range of financial tools equity and quasi-equity, loans and guarantees, to supplement the activity of commercial banks. An international presence on 4 continents and more than 70 countries. A high level of environmental, social and corporate governance requirements. A catalyst action, attracting and mobilizing additional public and private sector funding for its clients projects. Our mission: to promote private investment in developing and emerging countries with the aim of supporting inclusive growth and sustainable development 3

4 PROPARCO s E&S Policy Promotion of sustainable development in all the operation that PROPARCO finances Implementation of the E&S Policy of AFD Group (2008) Implementation of the climate strategy of AFD Group Adoption in 2009 of the «Principles for Responsible Financing» common to all European DFI s Management of E&S risks of the financed operations Improvement of the quality of these operations and of the E&S performance of its clients Improvement of the positive impacts of the projects on the development Harmonized EDFI Environmental and Social Standards for direct financing, FI s and funds 4

5 Introducing ERM 5 Leading consultancy providing environment, health, safety, process safety and social services for over 40 years Delivering innovative solutions to enable our clients to maximize performance, comply with regulations, improve corporate reputation and public perception Sustainability is at the heart of the services we provide and how we operate our business Key Facts Over staff 150 offices in 40 countries Completed projects in > 160 countries Worked closely with 50% of the Global Fortune 500 companies in the past 3 years Sustainability report published on

6 Presentation overview 1. Common requirements of international E&S standards 2. From management of E&S risk to adding value 3. Defining a roadmap for Project development 6

7 Why does E&S matter? Improve project performance Reduce regulatory risk Avoid liability Secure project acceptability (government, stakeholders, society) Manage reputational risk Increase project value Sustain long-term business growth Meet / exceed expectations of stakeholders and shareholders

8 Civil society campaigns 8

9 Broad array of E&S risks Institutional stability Stakeholders Communities Emissions & Effluent Archaeology Labour Land acquisition Health & Safety Natural environment Shareholders Cultural value 9

10 Why not just use local regulations? In some countries, regulatory framework is not fully defined Focusing on emissions and nuisances limited integration with other topics (such as biodiversity, land tenure, labour conditions) Limited definition of performance requirements (eg. effluents limits, waste classification etc) Environmental authorities often have limited enforcement capacity Stakeholder engagement often limited to basic public enquiry, limited focus on affected communities and specific groups 10

11 Case study fertilizer project, coast of Africa The Project International private developer > 1mtpa ammonia-urea complex using gas from nearby offshore field Gas pipeline from third party facilities. Freshwater pipeline from pumping station on river. Greenfield construction port and export berth Project already permitted by Government ( local EIA ) The Site ~ 200 ha greenfield site Fishermen communities Estuary, coastal swamps, mangrove, manatee Migratory turtles nesting on the beach Humpback whale breeding in coastal water The Lenders Consortium Private EPFIs DFIs (multilateral & bilateral) Export credit agencies Questions on E&S The Project is permitted, but is that sufficient to manage E&S risk? Has the entire Project been covered in the permitting process? Gas pipeline? Water pipeline? Dredging for port terminal? Has the Project already considered all environmental aspects? Importance of site for marine mammals? Habitat reduction for nesting turtles? What about social aspects? Government has provided land free of tenure and claims but have local communities been fairly compensated? How will the Project enhance local employment? Will the influx of workforce change the life of nearby communities? Will the Project affect the safety and health of communities? 11

12 Typical E&S clauses in financial agreements... Environmental and Social Standards means, in respect of environmental, health and safety, and social issues: Legal compliance International standards (a) the standards which are mandatory under applicable Governmental Rules (including applicable Environmental and Social Laws) for Borrower and its Subsidiaries to follow, (b) any Governmental Authorizations required at any time under applicable Environmental and Social Laws, (c) the IFC Performance Standards (2012), (d) Equator Principles (June 2013), (e) the World Bank Group Guidelines entitled: (i) General Environmental, Health and Safety Guidelines, (ii) Environmental, Health and Safety Guidelines for Onshore Oil and Gas Developments, (iii)., and (iv) as appropriate, any other relevant World Bank Group Environmental, Health and Safety Guidelines, (f) the International Labour Organisation Conventions on Terms and Conditions of Employment, (g) the Voluntary Principles on Security and Human Rights, and (h) Guiding Principles on Business and Human Rights 12 Source: screenshot of an international financing agreement between banks and oil & gas project sponsor

13 E&S standards over the past 20 years Pre-1990s 1990s Early 2000s Present Environmental regulations World Bank standards / operational policies & PPAH Economic globalization & civil society awareness accountability of financial institutions Development of integrated standards 2007 IFC Performance Standards 2008 Equator Principles Civil society organisations (e.g. WCD, Banktrack, Greenpeace) & professional organisations (e.g. IAGC, OGP, RSPO, FSC) Review of DFI Standards: 2012 IFC PS 2013 EIB & AfDB 2014 EBRD Development Institutions seeking improved consistency & convergence Move from Risk Mitigation to Added Value 13

14 Typical topics in DFI standards 14

15 Different standards, consistent topics 15 Source: African Development Bank Group Safeguards and Sustainability Series: African Development Bank Group s Integrated Safeguards System Policy statement and operational safeguards December

16 How the Equator Principles fit in Client requirements Equator Principles: 1. Review & Categorisation 2. Environmental & Social Assessment 3. Applicable Environmental & Social Standards 4. E&S Management System & Action Plan 5. Stakeholder Engagement 6. Grievance Mechanism 7. Independent Review 8. Covenants 9. Independent Monitoring & Reporting 10. Reporting & Transparency Country EHSS Laws & Regulations E&S Standards For non-designated countries 16 IFC Performance Standards: PS1: Assessment & Management of E&S Risks & Impacts PS2: Labour & Working Conditions PS3: Resource Efficiency & Pollution Prevention PS4: Community Health, Safety & Security PS5: Land Acquisition & Involuntary Resettlement PS6: Biodiversity Conservation & Sustainable Management of Living Natural Resources PS7: Indigenous Peoples PS8: Cultural Heritage IFC EHS Guidelines: General EHS Guidelines Environmental Occupational Health & Safety Community Health & Safety Industry-Specific Guidelines

17 The sea of standards Legal compliance Integrated risk management & value added Host country regulations International Financial Institutions Equator Principles 17 Prevention of pollution and nuisances Biodiversity conservation, protected species, protected areas Labour Land tenure EIAs & Environmental permitting Public enquiry process WB Operational policies / IFC Performance Standards / Other DFI and Lenders E&S standards EHS Guidelines (sectorspecific, issue-specific) Independent review (for certain IFIs and projects) Covenants/ Action Plan / supervision & monitoring requirements Stakeholder engagement requirements for client IFI commitment to public disclosure and reporting Reference to IFC PS Covenants / action plan / supervision & monitoring requirements Independent review (for certain projects) Stakeholder engagement requirements for client IFI commitment to public reporting

18 The sea of standards Project compliance requirements / impact on basis of design Third party review / due diligence requirements External communication by Sponsor External communication by IFI Host country regulations International Financial Institutions Equator Principles 18 Prevention of pollution and nuisances Biodiversity conservation, protected species, protected areas Labour Land tenure EIAs & Environmental permitting Public enquiry process WB Operational policies / IFC Performance Standards / Other DFI and Lenders E&S standards EHS Guidelines (sectorspecific, issue-specific) Independent review (for certain IFIs and projects) Covenants/ Action Plan / supervision & monitoring requirements Stakeholder engagement requirements for client IFI commitment to public disclosure and reporting Reference to IFC PS Independent review (for certain projects) Covenants / action plan / supervision & monitoring requirements Stakeholder engagement requirements for client IFI commitment to public reporting

19 Navigating the standards 19 The nature of applicable standards will influence the Project roadmap Project basis of design (BOD) / acceptable technology / emissions standards Project cost structure IFI standards will require to extend Project scope to Associated Facilities Roadmap for legal permitting & wider acceptance Some long-lead studies & processes may be in addition to purely legal requirements, eg Land acquisition, sharing of natural resources, biodiversity IFI standards will raise focus on Project Acceptability and Added Value Focus on Net Positive Impact Importance of proactive and participative stakeholder engagement Internal IFI process may affect Project schedule to financial close Independent Review process may take several months IFI disclosure requirements may affect timeline to financial close

20 Applicable standards & IFI leverage Client commitments included in the legal documentation: E&S covenants in financing agreement Compliance with the international standards (IFC PS, ILO fundamental conventions ) and other requirements (Exclusion list, EITI ) E&S Action Plan implementation Monitoring and reporting Legal leverages Conditions Precedent to signing and disbursements Event of default mechanism Acceleration repayment Other leverages (in particular with DFIs) Margin reduction, technical assistance 20

21 Adding value through the IFI standards Enhancing the project s sustainability performance DEFINITION AND MONITORING OF AN E&S ACTION PLAN DON T HARM Compliance with E&S local laws and with international standards (IFC PS, ILO ) ASSESSING AND MANAGING E&S RISKS AND IMPACTS ADDING VALUE Applying best practice / Certification of companies: SA 8000, ISO 14001, OHSAS 18001, FSC, RSPO Development of policies (client protection principles, HIV, gender, supply chain ) Increasing of accessibility of populations to services ( health, electricity) and of revenues GENERATING POSITIVE IMPACTS ENHANCING SUSTAINABILITY AVAILABILITY OF A TECHNICAL ASSISTANCE 21

22 Typical hot topics GHG emissions and climate change impacts E&S impact outside of the Project s direct control - eg associated facilities, supply chain, and induced impacts Free, prior and informed stakeholder engagement / public disclosure Demonstrating appropriate management of social aspects with a focus on affected communities & vulnerable groups Managing land acquisition, resettlement, compensation and livelihood restoration Biodiversity & ecosystems services mitigation strategy Cultural heritage archaeology, sites of cultural or religious significance, intangible cultural heritage The IFI standards do not specify a unique approach to those topics they should be addressed pragmatically to reflect the Project specifics 22

23 Integrated management of risks and impacts 23

24 Pollution prevention & liability management 24

25 Health, safety, security, labour conditions 25

26 Giving communities an opportunity 26

27 Developing a biodiversity management strategy 27

28 Defining a roadmap Legal permitting is necessary but not sufficient There may be more ambitious performance requirements than under local permitting only Results of E&S studies may influence BoD & technical guarantee Compliance with IFI standards is not easily retrofitted Importance of project-specific, integrated E&S assessment Importance of stakeholder engagement Some E&S studies will take a long time eg seasonal monitoring, resettlement The financing process may also take a long time (ESDD, disclosure requirements) Factor-in E&S standards as early as possible in the Project development plan Successful implementation of IFI standards will add value and contribute to Project sustainability 28

29 Thank you