Download PS 1 - American Bar Association

Ecosystems, Infrastructure and the Environment:
Emerging Markets Considerations
June 9, 2006
Motoko Aizawa
IFC: Part of the
World Bank Group
IFC is owned by its 178 member countries,
which collectively determine policies.
International Bank for
Reconstruction and
Development, 1945
International Development
Association, 1960
International Centre for
Settlement of Investment
Disputes, 1966
International Finance
Corporation, 1956
Multilateral Investment
Guarantee Agency, 1988
World Bank Group
Institutional Roles

IBRD lends to governments of middle-income developing
countries.

IDA provides concessional loans to governments of the
poorest developing countries.

ICSID facilitates the settlement of investment disputes
between governments and foreign investors.

MIGA provides guarantees to foreign investors against
noncommercial risk.
IFC’s Mission
To promote sustainable private sector
investment in developing countries,
helping to reduce poverty and improve
people’s lives
IFC Sustainability Policy Framework
PROJECT LEVEL
CLIENT –
IFC INSTITUTIONAL
REQUIREMENTS
Disclosure Policy
Sustainability Policy
8 Performance Standards
IMPLEMENTATION
Environmental and
Social Review
Procedure
• 8 Guidance Notes
• Environmental, Health &
Safety Guidelines
• Good Practice Materials
Overview Performance Standards

PS 1: Social & Environmental Assessment and
Management System

PS 2: Labor and Working Conditions

PS 3: Pollution Prevention and Abatement

PS 4: Community Health, Safety & Security

PS 5: Land Acquisition and Involuntary Resettlement

PS 6: Biodiversity Conservation and Sustainable Natural
Resource Management

PS 7: Indigenous Peoples

PS 8: Cultural Heritage
Key Features of Performance Standards
Principles based, not rules based
 Outcomes oriented, not procedure based
 PSs / GNs refer to relevant international agreements
 Human rights relevant to private sector operations are
embedded in the standards
 Most comprehensive set of social standards for the
private sector
 New climate, ecosystems and natural resources
features

Climate, Ecosystems and Natural Resources
under the Performance Standards



PS 1 requires project sponsors to assess all potential adverse
risks to the environment and people
PS 6 requires particular attention to threats to biodiversity,
including ecosystems services
PS 3 requires:
― Incorporation
of resource conservation and energy efficiency
measures
― GHG quantification and monitoring for projects with potential GHG
emission over 100,000t annually



PS 4 requires projects to have emergency preparedness and
response plans
PS 1 requires assessed risks to be managed through an
appropriate social and environmental management system
IFC reviews project proposals for compliance; also provides
technical and financial assistance
Expected Impacts on the Market


Easier for lenders to communicate & for business
people to apply requirements
Modular structure is adaptable to various business
models
―Adoption of the Performance Standards via the Equator
Principles
Levels the playing field for lenders
 Helps developers prepare projects for financing
 Multiplier effect beyond projects financed by IFC – 80% of
global project financing arranged

World Bank Group’s Clean Energy &
Development Investment Framework
Following the Gleneagles Communiqué:
Three-prong structure of an Investment Framework:
1. Meeting the challenge of clean energy needs with no
carbon constraints for developing countries
2. Investments to realize low carbon economy and
reduce GHGs
3. Actions needed to adapt to climate change
Clean Energy for Development



IEA estimates: from 2003 to 2030, $8 trillion capital
investments (average of $300 billion annually) needed
for developing / transition country energy needs
Much needed are energy sector reform & mobilization
of energy demand and supply technologies
Climate change presents an urgent and additional
challenge
―Poorest countries and people are the most vulnerable
Financing Options for Clean Energy

Clean Energy Financing Vehicle
―A mechanism to transfer high efficiency technology for
mitigation
Power Rehabilitation Facility for rehab of inefficient
power plants
 Project development fund for public and private sector
participation
 Venture capital funds for technology adoption

―For financing and clean energy technologies
penetration
for market
Adaptation to Climate Change

Priority areas = countries with highest % of population
affected by climate change
―Zimbabwe, Malawi, Samoa, China, Cambodia and
Swaziland



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Transfer of existing and new technologies; revision of
planning standards & systems
Development of information and tools
Disaster preparedness
R&D
Private sector considerations