Review of 3 years of IFC Performance Standards

Prompted by client questions, I revisited IFC’s Report on the First Three Years of Application of IFC’s Policy and Performance Standards on Social and Environmental Sustainability and Policy on Disclosure of Information. IFC’s client surveys shows that 21 percent said the cost of PS implementation might negatively influence future decisions to work with IFC.

IFC’s new framework came into effect in April 2006. IFC's review captured statistics and lessons from three years of implementation. For the period covered in IFC's report, approximately 560 projects had been presented to IFC’s Board for approval, amounting to more than $25 billion in investments.

In IFC’s client surveys, over 60 percent of respondents said the cost associated with meeting IFC Performance Standard requirements is higher than the average cost of meeting social and environmental requirements for their sector. But only 21 percent said the cost of PS implementation might negatively influence future decisions to work with IFC.

In IFC’s report, the key challenges identified with regard to the IFC Performance Standards include management of global environmental issues such as climate change and biodiversity protection; and social development issues, including  consultation, broad community support and human rights.  

Of particular relevance to the mining and oil and gas sector are probably these two topics and related commentary:

Meeting the full requirements of Performance Standard 5 (Land Acquisition and Involuntary Resettlement) on resettlement continued to be very challenging. Meeting the requirement related to displaced people who have no recognizable legal right or claim to the land remains a difficult area for private sector clients.

IFC Performance Standard 6 (Biodiversity Conservation and Sustainable Natural Resource Management) seem to pose significant challenges. Here, the challenge of collection of, or access to, biodiversity baseline information (multi-seasonal, geographical coverage) was highlighted. IFC will be re-examining its critical habitat definition.

What is your experience working with IFC and the IFC Performance Standards? Helpful, headaches or dealbreaker? IFC's 3 year review report can be found here. Links to tow of my recent blog posts about IFC Performance Standards are copied below.

About the author: Mehrdad Nazari (MBA, MSc, LEAD Fellow) is a Corporate Responsibility, Sustainability Reporting & ESIA Advisor, and Director of Prizma. He was previously an environmental consultant with Dames & Moore, Principal Environmental Specialist at the EBRD and CSR Research Director at CoreRatings. Mehrdad is a GRI-approved trainer on GRI's sustainability reporting framework and a licensed AA1000 Assurance Provider. He has also delivered over a dozen short courses on the application and interpretation of the IFC Performance Standards and Equator Principls for project financed capital developments.