Revise or Mainstream the IFC Performance Standards?

The current IFC Performance Standards emerged in 2006 as one of the major outcomes of the World Bank Group’s self-critical Extractive Industry Review. Is it really time to revise the IFC Performance Standards, which is now under way, instead of focusing more on their broader adoption and application? Are we allowing the perfect to be the enemy of the good?

It seems that over the past decade or so, we have started to see a shift towards more responsible development, financing, and implementation of extractive projects in emerging markets. The publication of the IFC Performance Standards and infusing it through the Equator Principles to project finance banks and Export Credit Agencies (such as the Export Development Canada, a major player in the mining sector) has contributed to this by sending the appropriate signals -  especially for projects not financed by the World Bank Group. The IFC Performance Standards have emerged as the de facto industry benchmark, and are being complemented by, the Voluntary Principles on Security and Human Rights, the Extractive Industry Transparency Initiative (EITI), and the Global Reporting Initiative’s sustainability reporting framework.

Looking at some of the complaints lodged with the Compliance/Advisory Ombudsman office of IFC/MIGA, and scanning other cases highlighting/alleging major failures, it seems to me that the underlying problem is not related to lack of good standards, guidelines and best practices. The fundamental drivers of failures seem to include lack of capacity and poor application of existing standards and guidelines. This insight is also emerging from my conversations with participants from 20 courses on IFC Performance Standards and Equator Principles I delivered in Canada, China, Peru, Panama, UK and Venezuela over the past two years.

Without denying the value of capturing lessons learned and adjusting to rapidly evolving CSR and impact assessment state of practice, I sometimes wonder if there is not more value to be gained by more effectively addressing issues such as capacity building and mainstreaming.

Do you think that IFC should continue to push the frontier of best practice or focus more on mainstreaming? How could IFC and/or other players support capacity building efforts and further leverage existing good international practice in the extractive sector?

Mehrdad Nazari - Blog: