IFC EHS Guidelines, Project Finance and Environmental ... B/IFC EHS Guidelines, Project... ·...

ABRAHAM JACOB

OPERATIONS MANAGER, ECB

IFC EHS Guidelines, Project Finance and Environmental Impact Assessments

ABRAHAM JACOB


Presentation Outline

1. EHS Issues and Project Finance

2. Equator Principles

3. IFC’s Performance Standards

4. IFC’s EHS Guidelines & World Bank PPAH

5. Environmental & Social Impact Assessments

6. Experience and Lessons

ABRAHAM JACOB


1. Project Finance involves review of:

Revenue potential from a project

Terms of Repayment

Risks and Exposure to Risks

2. Need to consider EHS Issues in Project Finance:

Minimize adverse impacts to the Environment

Minimize adverse impacts to the Community

Reduce Risk to Project from interruptions & delays

Reduce Risk to Financers (loss of revenue, delays in repayments, reputation, etc)

EHS Issues and Project Finance

ABRAHAM JACOB


Equator Principles & Project Finance

1. A set of Voluntary Guidelines for assessing and managing Social and Environmental Risks to Project Financing

2. An Initiative from the Banking and Financing Sector. First Initiated in 2002 by various Banks and the World Bank’s International Financing Corporation (IFC)

3. First Released in 2003, subsequently revised in 2006 - Adopted by over 40 Financing Institutions during a Three Year Implementation Period. Applicable to projects with a total capital cost of USD 10 Million or More!

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4. A Financing Institution (Bank) which has adopted the principles is referred to as an Equator Principle Finance Institution

5. An EPFI will not finance a project, unless the Project Proponents demonstrate compliance to the agency’s procedures for implementing the principles

6. Financing Institutions that have adopted the EPs include - ABN AMRO, Bank of America, Citigroup Inc, Credit Suisse Group, HSBC Group, Royal Bank of Canada, Standard Chartered Bank, Westpac Banking Corporation - Over 40 Institutions Worldwide

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Projects in Non OECD countries to comply with IFC Performance Standards and EHS Guidelines

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IFC Performance Standards

IFC Performance

Standard NoTitle Focus Issues

1 Social and

Environmental

Assessments and

Management

Systems

Social and Environmental Impacts.

Engagement of Affected Communities.

Social and Environmental Performance through

effective Management Systems.

2 Labour and

Working Conditions

Worker-Management Relationship.

Fair Treatment, Non Discrimination and Equal

Opportunity.

Compliance to Legal Requirements.

Prevent Child Labour and Forced Labour.

Safe and Healthy Work Conditions.

3 Pollution Prevention

and Abatement

Avoid/Minimize adverse impacts on human health

and environment

Reduction of emissions contributing to climate

change

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IFC Performance


4 Community, Health,

Safety and Security

Avoid/Minimize risk to and impacts on the health

and safety of the local community during the

project cycle from both routine and non routine

circumstances

Safeguarding of personnel and property

5 Land Acquisition

and Involuntary

Resettlement

Avoid or minimize involuntary resettlement

wherever feasible

Mitigate adverse social and economic impacts from

land acquisition or restrictions on affected persons’

use of land by: (i) providing compensation for loss

of assets at replacement cost and (ii) ensuring that

resettlement activities are implemented with

appropriate disclosure of information, consultation,

and the informed participation of those affected

Improve or at least restore the livelihoods and

standards of living of displaced persons

Improve living conditions among displaced persons

through provision of adequate housing with security

of tenure at resettlement sites

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IFC Performance


6 Biodiversity,

Conservation and

Sustainable Natural

Resource

Management

Protect and conserve biodiversity

Encourage sustainable management and use of

natural resources

7 Indigenous People Development process to consider needs of

indigenous people

Avoid adverse impacts on indigenous people

On-going relationship with indigenous people

Participation of indigenous people

Preserve culture, knowledge and practice of

indigenous people

8 Cultural Heritage Identify and protect cultural heritage sites from

project activities

ABRAHAM JACOB


IFC’s EHS Guidelines and WB-PPAH

1. IFC’s EHS Guidelines:

• Released in April of 2007

• Have replaced Part III of the World Bank’s Pollution Prevention Abatement Handbook (1998) (PPAH)

• Guidelines are a set of technical reference documents for Good International Industry Practice (GIIP)

• Provides performance levels and measures that are acceptable to IFC and achievable with reasonable cost

• Facilitates Project compliance to IFC Performance Standard No 3 (Pollution Prevention and Abatement)

• Is an EPFI/IFC Reference for Project Appraisal (Environmental & Social Review)

ABRAHAM JACOB



2. World Bank’s PPAH:

• Released in 1998

• Replaces the Environmental Guidelines of 1988

• Developed to achieve the World Bank’s Environmental Policies in Operational Policy 4.01 and 4.02

• Part I provides policies on pollution management

• Part II provides good practice recommendations

• Part III provides guidelines on preparation of World Bank projects (pollution control and reduction)

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3. Changes/Updates (PPAHEHS Guidelines)

Current organization of EHS Guidelines contained in Part III of the PPAH and on IFC's website

New organization as part of the EHS Guidelines Update

General Env. Guidelines Monitoring Hazardous Materials Mgmt.

Life & Fire Safety Occupational Health & Safety

Polychlorinated Biphenyls(PCBs) Wastewater Reuse

Wildland Management

General EHS Guidelines One Guideline to cover cross-cutting environmental, occupational /

community health and safety

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Agribusiness / Food Production Guidelines

Dairy Industry Fruit & Vegetable Processing

Sugar Manufacturing Vegetable Oil Processing

Meat Processing & Rendering Breweries Fish Processing

Food & Beverage Processing Plantations

Pesticide Handling

Mammalian Livestock Production Poultry Production

Plantation Crop Production Annual Crop Production

Aquaculture Sugar Manufacturing Vegetable Oil Processing

Dairy Processing Food and Beverage Processing

Meat Processing Poultry Processing Fish Processing

Breweries

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Chemicals Manufacturing Guidelines

Chlor-Alkali Plants Mixed Fertilizer Plants

Pesticides Formulation Pesticides Manufacturing

Petrochemicals Manufacturing Petroleum Refining Pharmaceutical Manufacturing

Phosphate Fertilizer Plants Nitrogenous Fertilizer Plants

Large Volume Petroleum-based Organic Chemicals Manufacturing

Petroleum-based Polymers Manufacturing Nitrogenous Fertilizer Production

Phosphate Fertilizer Production Pesticides Manufacturing, Formulation,

and Packaging

Pharmaceuticals and Biotechnology Manufacturing

Oleochemicals Manufacturing Natural Gas Processing Petroleum Refining

Coal Processing Large Volume Inorganic Compounds

Manufacturing and Coal Tar Distillation

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Oil & Gas Guidelines

Oil & Gas Dev (Onshore) Offshore Oil & Gas

Onshore O&G Development Offshore O&G Development

Liquefied Natural Gas (LNG) Facilities

Power Guidelines

Thermal Power for New Plants Thermal Power Rehabilitation Electric Power Transmission

Geothermal Projects Wind Energy Conversion

Electric Power Transmission and Distribution Geothermal Energy

Wind Energy Thermal Power

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4. Comparison of Standards (Thermal Power)

IFC/WB/PPAH IFC/EHS Guidelines

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5. Environmental and Social Impact Assessment

World Bank O.P 4.01 Annex C

• Projects are classified as Category A (Significant Impacts, B or C (not significant impacts)

• Minimum Content:

Executive Summary

Policy Legal & Administrative Framework

Project Description (includes Justification)

Baseline Assessment

Impact Assessment

Analysis of Alternatives

Environmental Management Plan

Appendices (EIA-Assessors, Consultations, etc)

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6. Environmental and Social Impact Assessment

Equator Principles(Social and Environmental Assessment – SEA)

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Lessons from our Experience

7. Lessons from our experience with the ESIA (SEA) process based on Equator Principles, IFC Standards and EHS Guidelines

• A comprehensive scoping study to be carried out prior to the formal SEA (to ensure assessment identifies and evaluates the main environmental and social issues)

• SEA process will be effective if it is part of the overall Project Planning Process

• Stakeholders to be identified and consultations to be carried out early in the project planning (e.g. Local communities who maybe relocated, Neighboring industries that could be affected by project impacts such as from discharge of cooling water, Environmental regulators, etc)

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7. Lessons from our experience with the ESIA (SEA) process based on Equator Principles, IFC Standards and EHS Guidelines - continued

• SEA to document the Project evaluation of alternatives and justify project specifications (includes process and technology, emission/discharge specifications, pollution controls, site selection)

• Any modeling studies to be in line with IFC EHS Guidelines (e.g. air, marine discharge). Modeling to justify to the satisfaction of the lenders the emissions/discharges specifications

• Mitigation and monitoring measures to be prescriptive, and precise to the extent possible, and derived from local regulatory requirements, IFC guidelines, assessment findings.

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7. Lessons from our experience with the ESIA (SEA) process based on Equator Principles, IFC Standards and EHS Guidelines - continued

• SEA report structure to be agreed with the Lenders/ Financers and Regulators (regulators in the middle east follow the OP 4.01 Annex C guidelines and are not familiar with Exhibit II for Category A/B assessments in the Equator Principles)

• SEA to classify projects based on Regulator’s and Lender’s classification

• Public disclosure to be in line with Lender’s policies.

• SEA to provide detailed recommendations for Social and Environmental Management System (includes grievance mechanism) & Action Plan for Mitigations

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