ANNEX B Mark up of Draft Policy and Performance Standards on Social and Environmental Sustainability (Against April 30, 2006 Version) Track Changes References: Insertions: Underline Deletions: Strikethrough Moved from: Double strikethrough Moved to: Double underline International Finance Corporation April 14, 2010
Introduction 1. Performance Standard 3 recognizes that increased industrialeconomic activity and urbanization often generate increased levels of pollution to air, water, and land, and consume finite resources in a manner that may threaten people and the environment at the local, regional, and global levels. 1 On the other hand, along with international trade, In recent years, there has also been a growing consensus that the current and projected atmospheric concentration of greenhouse gases (GHG) threatens the public health and welfare of current and future generations. At the same time, more efficient and effective resource use and pollution prevention 2 and control and GHG mitigation technologies and practices have become more accessible and achievable in virtually all parts of the world. These are often implemented through continuous improvement methodologies similar to those used to enhance quality or productivity, and which are generally well known to most industrial, agricultural, and service sector companies. 1.2. This Performance Standard outlines a project approach to resource efficiency and pollution prevention and abatement in line with internationally disseminated technologies and practices. In addition, this Performance Standard promotes the private sector s ability to integrate such technologies and practices as far as their use is technically and financially feasible and cost effective in the context of a project that relies on commercially available skills and resources. Objectives To avoid or minimize reduce adverse impacts on human health and the environment by avoiding or minimizing reducing pollution from project activities To promote more sustainable use of resources, including energy and water To promote the reducetion of project-related GHG emissions that contribute to climate change Scope of Application 2.3. The applicability of this Performance Standard is established during the ssocial and eenvironmental risks and impacts identification Assessment process, while the implementation of the actions necessary to meet the requirements of this Performance Standard is managed through the client s Ssocial and eenvironmental mmanagement Ssystem. The assessment and management system requirements are outlined in Performance Standard 1. Requirements General Requirements 4. During the design, construction, operation and decommissioning of the project (the project life-cycle), the client will consider ambient conditions and apply resource efficiency and pollution prevention and control technologies and practices (principles and techniques) that are best suited 1 For the purposes of this Pperformance Sstandard, the term pollution is used to refer to both hazardous and non-hazardous chemical pollutants in the solid, liquid, or gaseous phasesforms, and is intended to include other forms such as pests, pathogens, thermal discharge to water, GHG emissions, nuisance odors, noise, vibration, radiation, electromagnetic energy, and the creation of potential visual impacts including light. 2 For the purpose of this Performance Standard, the term pollution prevention does not mean absolute elimination of emissions, but the avoidance at source and subsequent minimization of pollution to the extent that the Performance Standard objectives are satisfied. 61
to avoid or, and if not possible, where avoidance is not feasible, minimize or reduce adverse impacts on human health and the environment. while remaining technically and financially feasible and cost effective. 3 The principles and techniquesproject-specific pollution prevention and control techniques applied during the project life-cycle will be tailored to the hazards and risks associated with the nature of the project emissions and consistent with good international industry practice (GIIP), 4 as reflected in various internationally recognized sources, including IFC s the World Bank Group Environmental, Health and Safety Guidelines (the EHS Guidelines). 3.5. The client will refer to the current most recent version of the EHS Guidelines when evaluating and selecting pollution prevention and control techniques for the project. These EHS Guidelines contain the performance levels and measures that are normally acceptable and applicable to projects. When host country regulations differ from the levels and measures presented in the EHS Guidelines, clients will be required to achieve whichever is more stringent. If less stringent levels or measures than those provided in the EHS Guidelines are appropriate in view of specific project circumstances, the client will provide full and detailed justification for any proposed alternatives through the social and environmental risks and impacts identification process. This justification must will demonstrate that the choice for any alternate performance levels is consistent with the overall requirements of this Performance Standard. Resource EfficiencyGreenhouse Gas Emissions 4. The client will promote the reduction of project-related greenhouse gas (GHG) emissions in a manner appropriate to the nature and scale of project operations and impacts. 5.6. The client will evaluate and implement technically and financially feasible and cost effective 5 measures for improving efficiency in its consumption of energy, water, as well as other resources and material inputs, especially in areas that are considered core business activities. Such measures will integrate the principles of cleaner production into product design and production processes with the objective of conserving raw materials, energy, and water. Where benchmarking data is available, the client will make a comparison of efficiency. Energy Use and Greenhouse Gases 6.7. The type and quantity of energy utilized will determine the level of GHG emissions associated with energy consumption. Energy efficiency measures often represent significant opportunities for achieving resource efficiency and productivity outcomes. The client should demonstrate that measures to reduce project-related GHG emissions are evaluated during the design and operation of the project and will implement measures that are technically and financially feasible and cost effective. 3 Technical feasibility is based on whether the proposed measures and actions can be implemented with commercially available skills, equipment and materials, taking into consideration prevailing local factors such as climate, geography, demography, infrastructure, security, governance, capacity and operational reliability. and Ffinancial feasibility are defined in Performance Standard 1is based upon the ability to apply sufficient financial resources to install the measures and maintain them in operation in the long term. Cost effectiveness is based on the effectiveness of reducing emissions relative to the additional cost required to do so. 4 Defined as the exercise of professional skill, diligence, prudence, and foresight that would reasonably be expected from skilled and experienced professionals engaged in the same type of undertaking under the same or similar circumstances globally and originally. The circumstances that skilled and experienced professionals may find when evaluating the range of pollution prevention and control techniques available to a project may include, but are not limited to, varying levels of environmental degradation and environmental assimilative capacity, as well as varying levels of financial and technical feasibility. 5 Cost-effectiveness is determined according to the capital and operational cost and also financial benefits of the measure considered over the life of the measure. 62
7.8. For projects that are expected to or currently produce more than 20,000 tons of CO 2-equivalent annually, 6 significant quantities of GHGs 7 the client will quantify direct emissions from the facilities owned or controlled within the physical project boundary, 8 as well as and indirect emissions associated with the off-site production of energy 9 power used by the project. Quantification and monitoring of GHG emissions will be conducted by the client annually in accordance with internationally recognized methodologies and good practice. 10 In addition, the client will evaluate technically and financially feasible and cost-effective options to reduce or offset project-related GHG emissions during the design and operation of the project. These options may include, but are not limited to, carbon financing, energy efficiency improvement, the use of renewable energy sources, alterations of project design, emissions offsets, and the adoption of other mitigation measures such as the reduction of fugitive emissions and the reduction of gas flaring. Water Consumption 9. When the project is a potentially significant consumer of water, in addition to applying the resource efficiency requirements of this Performance Standard, the client shall adopt measures that avoid or reduce water usage so that the project s water consumption does not have significant adverse impacts upon others. These measures include, but are not limited to, the use of additional technically feasible water conservation measures within the client s operations, the use of alternative water supplies, water consumption offsets to reduce total demand for water resources to within the available supply, and evaluation of alternative project locations. Pollution Prevention, Resource Conservation and Energy Efficiency The client will avoid the release of pollutants or, when avoidance is not feasible, minimize or control the intensity or load of their release. This applies to the release of pollutants due to routine, nonroutine or accidental circumstances with the potential for local, regional, and transboundary impacts. 11 In addition, the client should examine and incorporate in its operations resource conservation and energy efficiency measures, consistent with the principles of cleaner production. Wastes The client will avoid or minimize the generation of hazardous and non-hazardous waste materials as far as practicable. Where waste generation cannot be avoided but has been minimized, the client will recover and reuse waste; where waste can not be recovered or reused, the client will treat, destroy, and dispose of it in an environmentally sound manner. If the generated waste is considered hazardous, 12 the client will explore commercially reasonable alternatives for its environmentally sound disposal considering the limitations applicable to its transboundary movement. 13 When waste disposal is conducted by third parties, the client will use contractors that are reputable and legitimate enterprises licensed by the relevant regulatory agencies. 6 The quantification of emissions should consider all significant sources of greenhouse gas emissions, including non-energy related sources such as methane and nitrous oxide, among others. 7 The significance of a project s contribution to GHG emissions varies between industry sectors. The threshold for this Performance Standard is 100,000 tons CO 2 equivalent per year for the aggregate emissions of direct sources and indirect sources associated with purchased electricity for own consumption. This or similar thresholds will apply to such industry sectors or activities as energy, transport, heavy industry, agriculture, forestry, and waste management in order to help promote awareness and reduction of emissions. 8 Project-induced changes in soil carbon content, or above ground biomass may contribute to direct emissions sources and shall be included in this emissions quantification. 9 Refers to off-site generation by others of electricity, and heating and cooling energy used in the project. 10 Estimation methodologies are provided by the Intergovernmental Panel on Climate Change (IPCC), various international organizations, and relevant host country agencies. 11 In reference to transboundary pollutants, including those covered under the Convention on Long-range Transboundary Air Pollution. 12 As defined by local legislation or international conventions. 13 Consistent with the objectives of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes. 63
Hazardous Materials The client will avoid or, when avoidance is not feasible, minimize or control the release of hazardous materials resulting from their production, transportation, handling, storage and use for project activities. The client will avoid the manufacture, trade, and use of chemicals and hazardous materials subject to international bans or phase-outs due to their high toxicity to living organisms, environmental persistence, potential for bioaccumulation, or potential for depletion of the ozone layer, 14 and consider the use of less hazardous substitutes for such chemicals and materials. Emergency Preparedness and Response The client will be prepared to respond to process upset, accidental, and emergency situations in a manner appropriate to the operational risks and the need to prevent their potential negative consequences. This preparation will include a plan that addresses the training, resources, responsibilities, communication, procedures, and other aspects required to effectively respond to emergencies associated with project hazards. Additional requirements on emergency preparedness and response are found in paragraph 12 of Performance Standard 4. 8. Technical Guidance The client will refer to the current version of the EHS Guidelines when evaluating and selecting pollution prevention and control techniques for the project. These Guidelines contain the performance levels and measures that are normally acceptable and applicable to projects. When host country regulations differ from the levels and measures presented in the EHS Guidelines, clients will achieve whichever is more stringent. If less stringent levels or measures are appropriate in view of specific project circumstances, the client will provide full and detailed justification for any proposed alternatives. This justification will demonstrate that the choice for any alternate performance levels is consistent with the overall requirements of this Performance Standard. Ambient Considerations 9. To address adverse project impacts on existing ambient conditions, 15 the client will: (i) consider a number of factors, including the finite assimilative capacity 16 of the environment, existing and future land use, existing ambient conditions, the project s proximity to ecologically sensitive or protected areas, and the potential for cumulative impacts with uncertain and irreversible consequences; and (ii) promote strategies that avoid or, where avoidance is not feasible, minimize or reduce the release of pollutants, including strategies that contribute to the improvement of ambient conditions when the project has the potential to constitute a significant source of emissions in an already degraded area. These strategies include, but are not limited to, evaluation of project location alternatives and emissions offsets. Greenhouse Gas Emissions 10. The client will promote the reduction of project-related greenhouse gas (GHG) emissions in a manner appropriate to the nature and scale of project operations and impacts. 14 Consistent with the objectives of the Stockholm Convention on Persistent Organic Pollutants and the Montreal Protocol on Substances that Deplete the Ozone Layer. Similar considerations will apply to certain World Health Organization (WHO) classes of pesticides. 15 Such as air, surface and groundwater, and soils. 16 The capacity of the environment for absorbing an incremental load of pollutants while remaining below a threshold of unacceptable risk to human health and the environment. 64
11. During the development or operation of projects that are expected to or currently produce significant quantities of GHGs, 17 the client will quantify direct emissions from the facilities owned or controlled within the physical project boundary and indirect emissions associated with the off-site production of power used by the project. Quantification and monitoring of GHG emissions will be conducted annually in accordance with internationally recognized methodologies. 18 In addition, the client will evaluate technically and financially feasible and cost-effective options to reduce or offset project-related GHG emissions during the design and operation of the project. These options may include, but are not limited to, carbon financing, energy efficiency improvement, the use of renewable energy sources, alterations of project design, emissions offsets, and the adoption of other mitigation measures such as the reduction of fugitive emissions and the reduction of gas flaring. Pollution Prevention, Resource Conservation and Energy Efficiency Pollution Prevention 12. The client will avoid the release of pollutants or, when avoidance is not feasible, reduce and/minimize or control the intensity or load and mass flow of their release so as to avoid adverse impacts to human health and the environment. This applies to the release of pollutants to air, water, and land due to routine, non-routine, and or accidental circumstances with the potential for local, regional, and transboundary impacts. 19 In addition, the client should examine opportunities to, and incorporate in its operations resource conservation and energy efficiency measures, consistent with the principles of cleaner production. Where historical pollution such as land or ground water contamination exists, the client will seek to determine whether it is responsible for mitigation measures. If it is determined that the client is legally responsible, then these liabilities will be resolved in accordance with national law, or where this is silent, with GIIP. 20 12.13. To address potential adverse project impacts on existing ambient conditions, 21 the client will: (i) consider relevanta number of factors, including, for example (i) the finite assimilative capacity 22 of the environment;, (ii) existing and future land use;, (iii) existing ambient conditions;, (iv) the project s proximity to areas of importance to biodiversity; ecologically sensitive or protected areas, and (v) the potential for cumulative impacts with uncertain and/or irreversible consequences. In addition to applying resource efficiency and pollution control measures as required in this Performance Standard, ; and (ii) promote strategies that avoid or, where avoidance is not feasible, minimize or reduce the release of pollutants, including strategies that contribute to the improvement of ambient conditions when the project has the potential to constitute a significant source of emissions in an already degraded area., the client will consider strategies and adopt measures that 17 The significance of a project s contribution to GHG emissions varies between industry sectors. The threshold for this Performance Standard is 100,000 tons CO 2 equivalent per year for the aggregate emissions of direct sources and indirect sources associated with purchased electricity for own consumption. This or similar thresholds will apply to such industry sectors or activities as energy, transport, heavy industry, agriculture, forestry, and waste management in order to help promote awareness and reduction of emissions. 18 Estimation methodologies are provided by the Intergovernmental Panel on Climate Change (IPCC), various international organizations, and relevant host country agencies. 19 In reference to transboundary pollutants, including those covered under the Convention on Long-Range Transboundary Air Pollution. 20 This may require coordination with national and local government, communities, and other contributors to the encountered contamination and that any assessment follows a risk -based approach consistent with GIIP as presented in the World Bank Group Environmental, Health and Safety Guidelines, 21 Such as air, surface and groundwater, and soils. 22 The capacity of the environment for absorbing and incremental load of pollutants while remaining below a threshold of unacceptable risk to human health and the environment. 65
avoid or reduce ambient effects. These strategies include, but are not limited to, evaluation of project location alternatives and emissions offsets. Wastes 14. The client will avoid or minimizereduce the generation of hazardous and non-hazardous waste materials as far as practicable. Where waste generation cannot be avoided but has been minimized, the client will reduce the generation of waste, and recover and reuse waste in a manner that is safe for human health and the environment.; w Where waste can not be recovered or reused, the client will treat, destroy, andor dispose of it in an environmentally sound manner, including the appropriate control of emissions and residues resulting from the handling and processing of the waste material. If the generated waste is considered hazardous, 23 the client will exploreadopt commercially reasonable alternatives for its environmentally sound disposal while adhering to considering the limitations applicable to its transboundary movement. 24 When hazardous waste disposal is conducted by third parties, the client will use contractors that are reputable and legitimate enterprises licensed by the relevant government regulatory agencies. and obtain chain of custody documentation to the final destination. The client should ascertain whether licensed disposal sites are being operated to acceptable standards and where they are, the client will use these sites. Where this is not the case, clients should reduce waste sent to such sites and consider alternative disposal options, including the possibility of developing their own recovery or disposal facilities at the project site. Hazardous Materials Management 15. Hazardous materials are sometimes used as raw material or produced as product by the project. The client will avoid or, when avoidance is not possiblefeasible, minimize, reduce and/ or control the use and/or generation release of hazardous materials resulting from their as far as feasible. In this context, the production, transportation, handling, storage, and use of hazardous materials for project activities should be assessed. The client will consider less hazardous substitutes where hazardous materials are intended to be used. The client will avoid the manufacture, trade, and use of chemicals and hazardous materials subject to international bans or phase-outs 25 including where their high toxicity to living organisms, environmental persistence, potential for bioaccumulation, or potential for depletion of the ozone layer, 26 and consider the use of less hazardous substitutes for such chemicals and materials. Pesticide Use and Management Pesticide Use and Management 13.16. The client will formulate and implement an integrated pest management (IPM) and/or integrated vector management (IVM) approach for pest management activities including malaria control. The client s IPM and IVM program will entail coordinated use of pest and environmental information along with available pest control methods, including cultural practices, biological, genetic, and, as a last resort, chemical means to prevent unacceptable levels of pest damage or risk to worker and public health. 23 As defined by national conventions or local legislation. or international conventions 24 Transboundary movement of hazardous materials should be cconsistent with the objectives of the Basel Convention on the Control of Tranbsboundary Movements of Hazardous Wastes, and the London Convention for Ocean Disposal. 25 Included in, for example, the Stockholm Convention on Persistent Organic Pollutants and the Montreal Protocol on Substances that Deplete the Ozone Layer. 26 Consistent with the objectives of the Stockholm Convention on Persistent Organic Pollutants and the Montreal Protocol on Substances that Deplete the Ozone Layer. Similar considerations will apply to certain World Health Organization (WHO) classes of pesticides. 66
14.17. When pest management activities include the use of pesticides, the client will select pesticides that are low in human toxicity, that are known to be effective against the target species, and that have minimal effects on non-target species and the environment. When the client selects pesticides, the selection will be based on whether the pesticides are packaged in safe containers, are clearly labeled for safe and proper use, and have been manufactured by an entity currently licensed by relevant regulatory agencies. 15.18. The client will design its pesticide application regime to minimize reduce damage to natural enemies of the target pest, and prevent the development of resistance in pests. In addition, pesticides will be handled, stored, applied, and disposed of in accordance with the Food and Agriculture Organization s International Code of Conduct on the Distribution and Use of Pesticides or other GIIP. 16.19. The client will not use, manufacture, or trade in products that fall in World Health Organization Recommended Classification of Pesticides by Hazard Class Ia (extremely hazardous) and;, Ib (highly hazardous); or Class II (moderately hazardous), if the project host country lacks restrictions on distribution and use of these chemicals, or if they are likely to be accessible to personnel without proper training, equipment, and facilities to handle, store, apply, and dispose of these products properly. 67