Washington D.C., February 21, 2006 -
The Board of Directors of the International Finance Corporation adopted
today new environmental and social standards for the organization. The
new standards build upon the environmental and social requirements that
IFC currently applies to private sector projects it finances in the developing
world. A new policy on disclosure, adopted at the same time, will increase
transparency requirements.
IFC currently has in place safeguards to minimize the impact of projects
on the environment and on affected communities. The new standards will
replace these safeguards.
“The new IFC standards are stronger, better,
and more comprehensive than those of any other international finance institution
working with the private sector,“ said Lars Thunell, IFC’s Executive
Vice President. “We aim, with these new policies, to increase the development
impact of projects in which we invest. We also seek to give companies
operating projects in emerging markets the capacity to manage fully their
environmental and social risks and to compete better in a global economy.”
The new standards cover more areas than the
old safeguards and expand on areas already covered. Specifically, the standards
contain new requirements for community health, safety, and security; labor
conditions; pollution prevention and abatement; integrated social and environmental
assessments; and management systems.
The new standards contain stronger requirements
for community engagement and consultation; biodiversity protection; community
and worker grievance mechanisms; use of security forces; greenhouse gas
monitoring; and greater disclosure of information to the public by IFC
and client companies.
The standards adopt a new outcomes-based
approach, which requires client companies to have in place effective management
systems that allow them to handle social and environmental risks as an
integral part of their basic operations and business model.
The new standards are the result of an extensive
process of consultation and public comment in which stakeholders, including
governments, industries, and civil society organizations, took an active
part. The review was triggered both by the realization that the old safeguards
had proved inadequate in complex project situations, and by IFC’s transition
to a new business model, which is based on the premise that long-term profitability
and strong project outcomes are better secured by companies that manage
all of their risks well.
The Equator Principles are also expected
to be updated in accordance with the new IFC standards. These are
a set of environmental and social guidelines, based on IFC’s safeguards,
that are now applied by 40 leading commercial financial institutions which
collectively represent some 80 percent of global project finance.
In approving the new set of standards, IFC’s
Board requested some refinement of the language. Accordingly, the final
version of the Performance Standards and Disclosure Policy will be issued
as a complete text in the coming weeks.
The International Finance Corporation is
the private sector arm of the World Bank Group and is headquartered in
Washington, D.C. IFC coordinates its activities with the other institutions
of the World Bank Group but is legally and financially independent. Its
178 member countries provide its share capital and collectively determine
its policies.
The mission of IFC is to promote sustainable
private sector investment in developing and transition countries, helping
to reduce poverty and improve people’s lives. IFC finances private sector
investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
From its founding in 1956 through FY05, IFC has committed more than $49
billion of its own funds and arranged $24 billion in syndications for 3,319
companies in 140 developing countries. IFC’s worldwide committed portfolio
as of FY05 was $19.3 billion for its own account and $5.3 billion held
for participants in loan syndications. For more information, visit www.ifc.org.