Download OP 4.03: World Bank Performance Standards for Private Sector

Performance Standards
John Butler
WB Safeguards Training Workshop
November, 2013
Outline/Objectives
 Overview of the Performance Standards
 Outcomes
 Requirements
 Review key differences between Performance Standards and
Safeguard Policies
IFC Business Model
 Large share of business is investment in
existing projects and companies
 Infrastructure projects normally entail an
awarded concession prior to IFC
involvement
IFC vs. Bank Project Cycle
 IFC/MIGA typically arrive late in client’s project
development process:
Marketing, feasibility, design studies already
completed
Costs & benefits already considered
Safeguards (EIA) work often already well underway
or completed ( and approved by Govt authorities)
Prospective client looking for project financing;
IFC is an option
IFC Performance Standards (Updated 2012)
 PS 1: Assessment and Management of Environmental and
 PS 2:
 PS 3:
 PS 4:
 PS 5:
 PS 6:
 PS 7:
 PS 8:
Social Risks and Impacts
Labor and Working Conditions
Resource Efficiency and Pollution Prevention
Community Health, Safety, and Security
Land Acquisition and Involuntary Resettlement
Biodiversity Conservation and Sustainable
Management of Living Natural Resources
Indigenous Peoples
Cultural Heritage
PS 1: Assessment and Management of
Environmental and Social Risks and Impacts
 Identify and evaluate E&S risks and impacts
 Adopt a mitigation hierarchy (avoid, minimize,
compensate/offset)
 Improve E&S performance of clients through effective
use of [risk] management systems
 Establish a responsive and effective grievance
mechanism
 Develop an effective community engagement program
for the life of the project
PS2: LABOR AND WORKING CONDITIONS
 Promote fair treatment, non-discrimination, and equal





opportunity
Establish, maintain, improve worker-management
relationship
Promote compliance with national law
Protect workers, including children, migrant workers,
workers engaged by third parties, and workers in the supply
chain
Promote safe and healthy working conditions, and the health
of workers
Prohibit the use of forced labor
PS3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION
 Consider ambient conditions and apply technically and
financially feasible resource efficiency and pollution
prevention principles and techniques (GIIP –> WBG EHSGs)
[Good International Industry Practice]
 Resource efficiency
 Cleaner production principles
 GHGs
 Water consumption
 Pollution prevention
 GIIP/WBG EHSGs
 Wastes
 Hazardous material management
 Pesticide use and management
PS4: COMMUNITY HEALTH, SAFETY, AND SECURITY
 Community Health and Safety
 Infrastructure and equipment design and safety
 Hazardous materials management and safety
 Ecosystem services [resulting in H&S risks]
 Community exposure to disease
 Emergency preparedness and response
 Security Personnel
 Direct or contract workers
 Government security personnel
PS5: LAND ACQUISITION AND INVOLUNTARY RESETTLEMENT
 Avoid, minimize displacement by exploring alternative
designs
 Avoid forced eviction
 Anticipate, avoid, minimize adverse social and economic
impacts from land acquisition or restrictions on land use by:
 Providing compensation for loss of assets at replacement cost
 Ensuring that resettlement activities are implemented with
appropriate disclosure, consultation, and informed participation
 Improve or restore livelihoods and standards of living for
displaced persons
 Improve living conditions among physically displaced
persons through provision of adequate housing with security
of tenure
PS6:BIODIVERSITY CONSERVATION AND SUSTAINABLE
MANAGEMENT OF LIVING NATURAL RESOURCES
 Protection and Conservation of Biodiversity
 Modified habitat
 Natural habitat
 Critical habitat
 Legally protected and internationally recognized areas
 Invasive alien species
 Management of Ecosystem Services
 Sustainable Management of Living Natural Resources
 Supply Chain
 [Where a client is purchasing primary production that is known to be
produced in regions where there is a risk of significant conversion of
natural and/or critical habitats]
PS7: INDIGENOUS PEOPLES
 Avoidance of adverse impacts
 Participation and consent
 Circumstances Requiring FPIC
 Impacts on lands and natural resources subject to traditional
ownership or under customary use
 Relocation of IPs from lands and natural resources subject to
traditional ownership or under customary use
 Critical cultural heritage
 Mitigation and Development Benefits
 Private Sector Responsibilities where Government is
Responsible for Managing IP Issues
PS8: CULTURAL HERITAGE
 Protection of Cultural Heritage in Project Design and
Execution
 Comply with national law and internationally recognized practices
 Retain competent professionals
 Chance find procedures
 Consultation
 Community access
 Removal of replicable cultural heritage
 Removal of non-replicable cultural heritage
 Critical cultural heritage
 Project’s Use of Cultural Heritage
OP 4.03: World Bank Performance Standards for Private Sector
 Approved by World Bank Board in June 2012
 Applies to projects (or components) that are designed, owned,
constructed and/or operated by a Private Entity
 Optional: OP sets out the circumstances under which the WB PS may
be applied, but application is not mandatory
 Objectives:
 to facilitate Bank support for private sector-led projects (by
applying an approach better suited to private sector)
 To enhance policy coherence and cooperation across the World
Bank Group (e.g. a common approach for WB Group staff and
Borrowers, for jointly financed projects)
 The actual PS (1-8) are the same as for IFC and MIGA; some differences
in how they are applied
 Interim Guidance Note for WB staff on implementation procedures
(closely parallels IFC procedures)… final instructions under
preparation
Definition of “Private Entity”
 Any natural or legal person, whether privately or publicly owned,
which:
 Is carrying out or is established for a business purpose and is operating
on a commercial basis;
 Is financially and managerially autonomous; and
 Has day-to-day management that is not controlled by the government
Examples of Private Sector Activities:
• Public-Private Partnership (PPP) – e.g. in infrastructure sector
• Activity involving medium or long term management contracts,
concessions, build-own-operate arrangements, etc.
•Activity involving a financial intermediary, if sub-projects
supported by WB are implemented by Private Entities
Private Sector
Activity
comprises the
entire project
Bank applies WB PS to the
entire project
Private Sector
Activity comprises
part of Banksupported Project,
rest of which is
non-Private Sector
Activity
Private Sector
Activity falls
within the “Area
of Influence” of
a Banksupported
project, rest of
which is nonPrivate Sector
Activity
Bank applies WB PS to the Private
Sector Activity and WB Safeguard
Policies to the rest of the project
WB Safeguard Policies, not Performance Standards Apply to:
 Activities involving provision of goods, services, or civil works for
facilities that will be operated by public sector (i.e. Private sector
involvement is limited to winning a public service contract)
 Activities where responsibilities for identifying, assessing and
managing Env. & Social risks are shared between Private Entity and
member country and can’t be separated (then WB Safeguard policies
apply)
OP 7.50 (International Waters Policy) applies to any WBsupported Private Sector Activity. Notification of Riparians
may be done by Private Entity, Government or WB Group