IFC New Standards in January 2011

EDMUND SMITH-ASANTE

The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has announced that its new environmental and social standards will become operational by January 2011.

According to the IFC, consultations are currently ongoing around the world with stakeholders and it is envisaged that reviewed and new standards to aid the institution in its work with the private sector would be completed by the end of this year and become functional next year.

Disclosing this in Accra on Friday at a press conference after a stakeholders consultation on the IFC’s operating standards involving about 45 participants from Ghana, Liberia, Nigeria, South Africa, Uganda and the United States of America, Greg Radford, IFC Director for Environment and Social Development, said “at IFC we have environmental and social performance standards that we apply to all our investments, we want to ensure that we protect the environment as well as local communities when we invest in projects.”

He said the IFC’s experiences over the years have shown that companies that do not manage their environment and social issues face both financial and reputational risks, adding that at IFC, one of their core principles is to manage climate change and sustainable business.

Greg Radford said it was in line with this that IFC was in Ghana as part of a global consultation process and that the finance institution networks a wide range of stakeholders, clients, private sector representatives, environmental and social consultants, government representative and civil society.

He explained that the IFC’s experience in applying their environment and social standards does not only apply to IFC, but a wide range of other financial institutions globally. The IFC Director for Environment and Social Development revealed that there are close to 100 financial institutions that use the IFC environment and social performance standards.

“So what we are talking about here today in Ghana and what we talked about on Tuesday in Dakar, is about creating new environmental and social standards that are used globally,” he said.

The IFC director opined that the feedback that was received from the consultations in Ghana on Friday was very valuable, not only in what IFC does, but all the other financial institutions that use the IFC’s performance standards.

He revealed that there is a collection of commercial banks that have adopted the equator principles and that there are close to 70 commercial banks and financial institutions around the world that apply IFC performance standards when they finance projects.

Touching on the global consultations, Greg Radford said its importance lies in setting a new global standard. “We heard today from our stakeholders on a wide range of issues ranging from climate change issues, water, biodiversity, importance of disclosure and transparency and equally important consultation and dialogue with local communities,” he volunteered.

He asserted that participants had been pleased with the consultation, calling it a transparent process and that they were very interested in the IFC’s performance standards and how it manages environmental and social issues “because they know that IFC is a global leader among financial institutions and the changes that IFC makes to its environmental and social performance standards will be adopted by many other institutions around the world.”

Greg Radford informed that the consultation process was already half way through, and that it will wrap up at the end of the year “and in 2011 we will have new environmental and social standards that we will apply to all our investments.

According to him, that meant that the feedback they received at the consultation on Friday is critical to the IFC’s consultation process “so that we get it right and make changes that can be used and applicable to West Africa, to all of Africa to ensure that clients manage their environmental and social risks, but they are done in a balanced way; they are done in a way that companies can manage their risks but also stay in business.”

He added that there was no point in having a global standard that people don’t use if it is not economical, intimating that at the consultation held earlier, the IFC’s clients spoke of the need to have a balanced approach to its standards, to be pragmatic and make sure that when they create their new environment and social standards they will be able to implement them.

For her part, Mary-Jean Lindile Ndlovu, IFC’s Country Manager for Ghana and Sub Saharan Africa, said, “Updating IFC’s performance standards is important for Africa, as it will help IFC  continue to implement innovative projects that will enable the region to continue its sustainable economic growth.”

“It is important to ensure that the people who are affected by our projects are adequately consulted so that we can address their concerns and improve the impact of our initiatives,” she concluded.