IFC Policy and Performance Standards on Social and Environmental Sustainability Review and Update Overview of Consultation and Engagement Process International Finance Corporation August 26, 2009
CONTENTS PAGE Acronyms... 3 Executive Summary... 4 I. Background... 5 II. Consultation and Communications... 6 A. Community Consultation... 7 B. Dedicated Interactive Website... 7 C. Three Consultation Phases... 8 Annexes A. Overall Review-and-Update Timeline... 10 2
ACRONYMS CAO CODE CSOs DP E&S ECAs EPFIs IEG NGOs PPS PS WBG Compliance Advisor Ombudsman Committee on Development Effectiveness Civil Society Organizations Policy on Disclosure of Information Environmental and Social Export Credit Agencies Equator Principles Financial Institutions Independent Evaluation Group Nongovernmental Organizations Policy and Performance Standards on Social and Environmental Sustainability Performance Standards World Bank Group 3
EXECUTIVE SUMMARY This paper provides an overview of the proposed consultation and engagement process, how stakeholders can participate, and a timeline that IFC will follow in the review and update of the Policy and Performance Standards on Social and Environmental Sustainability (PPS). Issues related to the review-and-update process of IFC Policy on Disclosure of Information (DP) are addressed in a separate paper entitled IFC Policy on Disclosure of Information Review and Update, Overview of Consultation and Engagement Process. IFC s PPS became effective on April 30, 2006. IFC recently reported to the Board s Committee on Development Effectiveness (CODE) on its experience from the past three years in implementing the PPS and sent the accompanying report IFC s Policy and Performance Standards on Social and Environmental Sustainability and Policy on Disclosure of Information: Report on the First Three Years of Application (IFC/CODE2009-0061). CODE concluded that while in many ways three years of application is not a very long timeframe in which to gain implementation experience, there are clarifications and modifications that would improve the effectiveness of the PPS. Additional clarity will also be provided through the review and update of the supporting Performance Standard Guidance Notes, which are the main interpretation tool for those who use the Performance Standards (PS). IFC is committed to a collaborative and transparent review-and-update process which will be divided into three phases. Phase 1: consultation for 60 days on identifying the key issues and challenges in the PPS; Phase II: consultation for 60 days on version 1 of the draft PPS and the Guidance Notes; and Phase III: consultation for 30 days on version 2 of the draft PPS and Guidance Notes. IFC will actively engage stakeholders through a combination of web-based tools to disseminate information and web-based and live consultations to receive input. Feedback from communities directly affected by IFC s projects is especially important and will be solicited through in country face-to-face meetings. It is anticipated that this process will take 15 months and is estimated to conclude in December 2010. 4
I. BACKGROUND On February 21, 2006, IFC s Board of Directors approved management s proposal to adopt a new risk-management framework governing the social and environmental aspects of IFC s operations. This framework consists of the Policy on Social and Environmental Sustainability, and the Performance Standards on Social and Environmental Sustainability, which work in tandem with the DP. The eight Performance Standards are as follows: PS1: Social and Environmental Assessment and Management Systems PS2: Labor and Working Conditions PS3: Pollution Prevention and Abatement PS4: Community Health, Safety and Security PS5: Land Acquisition and Involuntary Resettlement PS6: Biodiversity Conservation and Sustainable Natural Resource Management PS7: Indigenous Peoples PS8: Cultural Heritage Each PS is accompanied by a detailed Guidance Note, which offers guidance on the requirements contained in the PS, including reference materials and good sustainability practices to help clients improve project performance. The Guidance Notes will also be reviewed and updated as part of this process. This framework, which became effective on April 30, 2006, is part of IFC s longstanding commitment to sound environmental management and social development, accountability, and transparency going back almost 20 years. It put into practice IFC s commitment to social and environmental sustainability and clearly articulates clients environmental and social (E&S) responsibilities. When the Board approved the PPS, it also requested IFC to review its experience in the implementation of the framework after the initial three years and to report back. In response to this request, IFC submitted the report entitled IFC s Policy and Performance Standards on Social and Environmental Sustainability and Policy on Disclosure of Information: Report on the First Three Years of Application which was discussed July 29, 2009 by the Board s CODE. It was concluded that while in many ways three years of application is not a very long timeframe in which to gain implementation experience there are clarifications and modifications that would improve the effectiveness of the PPS. Additional clarity will also be provided through the review and update of the supporting Performance Standard Guidance Notes, which are the main interpretation tool for those who use the PS. The above-mentioned report proposed an emerging agenda of key issues for the review-and-update process. This paper further elaborates on the consultation and engagement process and updates the overall timeline (Annex A). 5
In terms of the impacts on market practices, the PS have made a positive contribution to the global convergence of E&S risk-management practices. There are now 69 financial institutions that have adopted the Equator Principles. Public development financial institutions such as the Organization for Economic Co-operation and Development, export credit agencies (ECAs), and European development finance institutions have also publicly referenced the use of the PS. With a growing number of financial institutions using the PS, IFC can review and consider what these institutions have done to supplement the PS and assess the relevance and desirability of these enhancements for IFC s own policy framework. II. CONSULTATION AND COMMUNICATIONS IFC is committed to a collaborative and transparent review process. The public consultations will allow stakeholders to provide input through the entire cycle of this review, beginning with this Approach to Consultation and Engagement paper and ending in a revised PPS roughly in December 2010. IFC will consult on an ongoing basis with multilateral banks, bilateral banks, ECAs, commercial banks including the Steering Committee of EPFIs, trade unions, UN agencies, IFC clients and business organizations, communities directly affected by PS projects, international and local NGOs/Civil Society Organizations (CSOs), and the External Advisory Group. IBRD/IDA and MIGA colleagues will also be consulted throughout the process on areas in which further policy coherence and process efficiencies can be achieved, with a view to strengthening World Bank Group (WBG) collaboration. IFC will also work with WBG to explore the most efficient ways for linking the PPS consultation process with the WBG Environment Policy Update and any other consultation. The consultation process will be conducted in English. This Overview to Consultation and Engagement Process paper and the final Board approved PPS will be available in Arabic, Chinese, English, French, Portuguese, Russian, and Spanish on our website in due course. A. Community Consultation Feedback from communities and individuals directly affected by IFC s projects that have applied the PPS is especially important and will be specifically solicited through incountry face-to-face meetings. IFC will perform an analysis of these projects in order to select a representative sample of communities that: i) are from a variety of geographical locations; ii) collectively have encountered a range of environmental, social, and labor issues addressed in the PS; iii) are unique large, complicated projects; iv) are typical small, straight forward projects; and v) have not been surveyed multiple times by various other studies. Input from these communities and individuals will be sought specifically regarding their level of awareness of the project and the project s mitigation measures; their experience with project implementation during construction, if applicable, and ongoing operation; and suggestions on how to improve the experience. Translation 6
services will be provided during the meetings, as needed, in addition to producing a meeting summary in the local language. B. Dedicated Interactive Website A dedicated website will be launched at the beginning of September with the goal of promoting transparency and providing an avenue for participants to stay informed and to easily participate. The website is being designed so that when stakeholders enter they will be directed to three choices: Learn, Participate, and Stay Informed. The Learn area will provide information on the process, background documents, learning resources, timeline, consultation summaries, and a Frequently Asked Questions tab. The Participate section will allow users who are familiar with the PPS to provide very specific feedback to the text of the PPS, and those who are not as familiar may provide general feedback in a community-based platform, where they can experience the process of drafting policy, vote, and comment on others versions. The Stay Informed area provides the latest information about the consultation in a blog platform, video interviews, highlights of materials related to the PPS, press releases, and monitoring of significant news. Users can register to receive updates on the process, subscribe to the site s RSS feeds, and follow the process via Twitter. IFC will launch this site through a press release and by notifying our list serve, which includes individuals in academia, financial institutions, industry associations, NGOs, CSOs, clients, etc. The website will post announcements on consultation venues and dates, which will be updated throughout the process. C. Three Consultation Phases The review and update will be divided in to three distinct phases aimed to achieve different objectives, but stakeholders are welcome to provide feedback at anytime during the process. IFC will disclose summaries of each consultation round on the dedicated interactive website. IFC will solicit feedback through a combination of web-based consultations, faceto-face consultations in Washington, D.C. and in different regions. Some meetings will be by invitation only while others will be open to anyone. We will also consult with project-affected communities in addition to organizing a limited number of thematic faceto-face meetings to examine the most pressing challenges related to PPS implementation. IFC will also use available electronic tools to organize live e-discussion meetings open to a broad spectrum of stakeholders. Information on specific dates and venues will be provided on the consultation webpage. Phase 1: Approach to Consultation and Engagement The goal of this 60-day consultation period will be to solicit feedback on the key issues and challenges encountered during the application of the PPS. IFC has identified some preliminary key issues and challenges in IFC s Policy and Performance Standards on Social and Environmental Sustainability and Policy on Disclosure of Information: Report on the First Three Years of Application and thus will use this report to start the dialog. During this consultation period, IFC would find it especially useful to receive feedback on the following: 7
1. Clarity of Language: IFC is seeking advice on how to increase clarity and reduce ambiguity in language wherever necessary. 2. Implementation Effectiveness: IFC is interested in suggestions on how to improve PPS implementation, especially from those who have implemented the PS on projects, or from those who have been directly impacted by projects that implemented the PS. 3. Gaps in Current Coverage: In an effort to adapt to a rapidly changing environment, IFC is interested in identifying missing areas and accompanying guidance on ways to implement new requirements on the ground. Phase 2: Draft PPS and Guidance Notes, Version 1 Following on the dialog in phase I on the key issues and challenges, IFC will submit version 1 (V1) of the revised PPS and Guidance Notes to CODE for review. Once CODE approves these documents for public consultation, V1 of the PPS and Guidance Notes, marked to clearly show where any changes are proposed, will be made public and a formal 60-day consultation period will begin. The goal of this consultation period will be to solicit detailed feedback on the proposed changes. Phase 3: Draft PPS and Guidance Notes, Version 2 Building upon the comments received during the previous two consultation periods, IFC will issue the second version of draft text changes to the PPS and Guidance Notes for a 30-day review and comment period. The documents will be marked to clearly show where any changes are proposed in comparison to V1. The goal of this consultation period will be to solicit specific feedback on the near-final changes to the text before they are submitted to IFC s Board for review and approval. Annex A contains an overall process timeline, including important milestones such as the expected delivery dates of reviews by the Compliance Advisor Ombudsman (CAO) and the Independent Evaluation Group (IEG). The review-and-update process is expected to take about 18 months to be completed. In December 2010, IFC will seek final Board approval of the revised PPS. Subject to final approval, IFC proposes that the revised policy framework become effective in January, 2011. Any significant deviations from the proposed timeline will be communicated to all stakeholders. 8
.ANNEX A: INDICATIVE REVIEW-AND-UPDATE TIMELINE July 29, 2009: Presentation to CODE of IFC s Policy and Performance Standards on Social and Environmental Sustainability and Policy on Disclosure of Information: Report on the First Three Years of Application, July 29, 2009. September November 2009: Phase I 60-day consultation period on this Approach to Consultation and Engagement paper along with the key issues and challenges. November/December2009: Issue summary of the consultation outcomes from Phase I. March 2010: Review of findings from CAO s Advisory Note on IFC s Policy and Performance Standards Portfolio Review. March 2010: Review of findings of IEG s report on Evaluation of the World Bank Group s Experience with Safeguard and Sustainability Policy (1999 2008). May 2010: Presentation of version 1 of the revised PPS to CODE for review and authorization to initiate consultation on proposed language. May July 2010: Phase II 60-day consultation period open to all stakeholders to comment on Version 1 draft text changes. August September 2010: Preparation of a revised draft V2 reflecting stakeholders comments. October 2010: Submit V2 of the revised final text changes to CODE for information. October 2010: Phase III 30-day consultation period open to all stakeholders to comment on the draft final text changes. December 2010: Presentation of the complete final draft text to the Board. January 2011: Revised PPS becomes effective. 9