Environmental Risk Management
1. Covenants: IFC should develop specific environmental performance indicators and include them as covenants to secure better compliance. This should apply to equity investments as well as loans, and also for sub-projects.
2. Supervision and monitoring: Environmental supervision should be regularly carried out by IFC staff to:
- ensure compliance with covenants or guidelines; and
- verify results, particularly where local company management may not have appropriate technical skills.
This is particularly important at the early stages of a project, or where there are environmental concerns or past experience of non-compliance.
3.
Compliance with environmental guidelines: IFC should ensure that clients and local staff are fully aware of environmental guidelines. IFC should provide manuals and training courses in addition to on-the-job training. Changes in the guidelines should be communicated to all clients. IFC should also require an independent environmental audit as part of the project completion tests.
The above lessons are based on 24 lessons from past IFC investments.
Last updated July 16, 1998.
