IFC – A Strategic Approach for Social and Environmental Sustainability

1. IFC – A Strategic Approach for Social and Environmental Sustainability

2. IFC: A Member of the World Bank Group International Bank for Reconstruction and Development, 1945 International Finance Corporation, 1956 International Development Association, 1960 International Centre for Settlement of Investment Disputes, 1966 Multilateral Investment Guarantee Agency, 1988

3. IFC’s Mission To promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives.

4. Mainstreaming Social and Environmental Issues New Social and Environmental Standards

5. IFC’s S&E due diligence framework • Exclusion List • 8 new Social and Environmental Performance Standards • Environmental, Health & Safety and Industry Guidelines – updates soon to be released • Updated Social and Environmental Review Procedure questionnaires, appraisal, E&S Review Document, loan agreement, annual monitoring and supervision • Best Practice and Guidance Notes • Creating Business Opportunity through Improved Animal Welfare • Addressing the Social Dimensions of Private Sector Projects • Non Discrimination and Equal Opportunity • Managing Retrenchment • HIV/AIDS in the Workplace • Addressing Child Labour in the Workplace and Supply Chain • New Labor Toolkit for Investment Officers • New Biodiversity Guide • Updated Disclosure Policy

6. New Policy and Performance Standards on Social and Environmental Sustainability • IFC introduced new policy and performance standards on April 30, ,2006 • New standards • fill gaps left by earlier policies • outcomes orientation • recognize importance of management systems and community engagement • becoming an international benchmark (Equator Principles)

7. Equator Principles • Voluntary association of private banks (currently 41) • Currently use IFC’s old policies as their principal social and environment risk management tool. Effective July 1, 2006 the banks will start migrating to the new IFC Policy and Performance Standards on Social and Environmental Sustainability • The banks account for over 85% of global project finance in emerging markets details available at www.equator-principles.com

8. IFC Policy & Performance Standards • Basis of IFC’s leadership & approach to E&S sustainability • Ensure projects financed by IFC are environmentally and socially sound • Provide comprehensive risk and opportunities framework for IFC and its clients • Can be used to improve project performance

9. IFC’s Policy Framework Requirements Implementation Disclosure Policy Environmental & Social Review Procedure IFC – Institutional Sustainability Policy 8 Performance Standards • 8 Guidance Notes • Environmental, Health & Safety Guidelines • Best Practice Materials Client – Project Level

10. 8 Performance Standards • PS 1: S&E Assessment and Management Systems • 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 14

11. IFC Resources to help clients Almost 50 social and environmental experts on staff • approximately 25% are working in field offices (4 in Africa) • provide advice and support during appraisal and supervision • Broad range of Technical Assistance and other support for clients • donor funded support through Trust Funds and SME facilities • Social and Environment staff an integral part of IFC team

12. Walking the Talk Highlights of IFC Leadership and Case for Sustainable Finance

13. IFC’s value add • Global experience in sustainable finance – mainstreaming S&E issues • Provider of technical assistance and incubator financing to support new sustainable business opportunities • Sustainable Energy • Biodiversity • Cleaner Technologies • Social Responsibility • Sustainable Finance • Carbon Finance • Gender • S&E site is the most visited part of the IFC website after Careers, in May 2006: • visits to CES external website = 11,492 • total number of document downloads from CES external website = 8,088

14. Responding to climate change challenge • World Bank Group went carbon neutral on World Environment Day, June 5, 2006 • offset GHG emissions from DC headquarters and travel from HQ (field offices next) by investments in renewable energy and energy efficiency projects • direct and indirect carbon dioxide emissions of approximately 148,000 metric tons = 60 percent from operations and 40 percent from airline travel • First IFC project in Asia – biogas-based power and heat generation in Korat, Thailand • IFC now also guaranteeing carbon finance purchases for European buyers

15. IFC supports first FT Sustainable Banking Awards • Financial Times launches 1st Sustainable Banking Awards, in association with IFC • 90 entries from 48 institutions around the world • HSBC – Sustainable Bank of the Year • Banco ABN Amro Real of Brazil - emerging markets bank of the year • WestLB, the German bank - sustainable bankers of the year • Citigroup, its Mexican arm Banamex and Financiera Compartamos, a Mexican microfinance provider - sustainable deal of the year for the first peso-denominated investment grade bond issue to finance loans to poor entrepreneurs, mainly women in rural areas • Credit Suisse - sustainable energy deal of the year - for last year's flotation of Suntech Power Holdings, a Chinese solar energy company, on the New York Stock Exchange

16. IFC’s 2005 Sustainability Report • Outlines IFC’s response to global challenges • climate change, poverty, corruption, HIV/AIDS, participation of women in private sector development, and the preservation of natural resources • Provides more information than ever before about how sustainability is integrated into decision-making throughout IFC's investment cycle • Presents progress in how IFC manages its own social and environmental footprint and is leading by example through its new E&S standards and by promoting the business case for sustainability among its financial sector clients • Adopts the Global Reporting Initiative’s Sustainability Reporting Guidelines

17. The case for sustainable finance • Protecting the environment and ensuring fair treatment of people and communities affected by projects is recognized as a fundamental requirement of long-term economic success • Increasing activism coupled with ease of access to global communications has significantly increased the risks presented by poor environmental and social performance • Investors now increasingly demand good environmental and social performance as a condition of investment – growth of SRI funds, Equator Principles, etc • Demonstrated business case for good environment and social performance – positive impacts on costs, market access, risk and reputation