Environmental Standards in Multilateral Banks

Environmental & Social Standards in Multilateral Financial Institutions & Safe Guard Policies of the World Bank

• Dis ples i ant longwan blong ol kantri blong help ol rae i stap fasin
• Ol i givim ol advaes na support long ol wok blong fasin i gohed
• Ol i help long ol plan blong fasin, na givim mani long ol i gohed
• Ol i gat olsem wan sistem blong karekim ol fesin na sosal
• Olsem ol i fasin long hem, ol i no save stap long ol taim i gat ol prublema

Module 1: Overview of the Course

• Ol Multilateral Financial Institutions (MFIs)
• Reason blong tekem wan fasin blong wok
• Wan nupela fasin blong save long fesin na sosial standad
• Ris na impak blong karekim olsemwan
• Olsim na diferens blong ol nupela fasin, olsem taem ol World Bank and ol narada bank i fasin i gohed

Session 1: Environmental & Social Standards in Multilateral Financial Institutions

• Wan explain blong MFIs, na givim 5 example
• 3 reason blong MFIs
• Reason blong tekem wan fasin blong environmental and sosial
• 2 reason blong wan nupela restructuring blong environmental and sosial standad
• Explain environmental and social risks, impacts and their coverage
• 2 potential environmental and social risks and impacts
• Similarities and differences among new safeguard standards

Session 1: Objectives

• Define Multilateral Financial Institutions (MFIs) using 5 examples.
• Mention 3 objectives that MFIs perform
• Explain the reasoning behind using an integrated approach to environmental and social safeguards.
• Provide two reasons for restructuring the Environment and Social Standards
• Explain environmental and social risks, impacts and coverage
• Mention two potential risks and impacts
• Compare and contrast various safeguard standards adopted by different Multilateral Financial Institutions (MFIs)

Lesson 1: Multilateral Financial Institutions

• Definition of Multilateral Financial Institutions (MFIs)
• MFIs play a major role in the social and economic development programs of nations.
• MFIs share some common goals and objectives
• MFIs were created to foster economic and social development

Examples of Multilateral Financial Institutions

• African Development Bank
• Asian Development Bank
• Caribbean Development Bank
• Inter-American Development Bank
• The World Bank
• European Bank for Reconstruction and Development
• Islamic Development Bank

Environment and Social Values

• Environmental Values: Air and water quality, Biodiversity, Landscape aesthetics, Spiritual value derived from nature, Natural resources, Ecosystem services
• Social Values: Human health, Property and belongings, Community integrity, Fairness and equity, Rights, Protections for the vulnerable

Rationale for the Harmonization of ES Safeguards

• Setting requirements for borrowers to undertake environmental and social assessments.
• A set of supplementary safeguards dealing with specific environmental and social risks.
• High degree of consistency in risk areas covered

Rationale for the Harmonization of ES Safeguards

• Greater impetus to harmonize environmental and social safeguards among development agencies
• Multilateral Development Banks (MDBs) established a working group to develop a common framework for environmental assessment

A New Approach and Common Objectives

• Safeguards should be integral to Sustainable Development Goals
• Address wider range of environmental and social risks
• Renew efforts to manage environmental and social risks with borrowers
• Improve policy harmonization, coherence and alignment with partners
• Enhance transparency by engaging stakeholders and sharing information

Lesson 2: Re-structuring of ESS among MFIs

• New MDB standards are compulsory
• Project classification incorporates environment, social and climate change
• New standards added, addressing labor and working conditions, community health and safety, vulnerability, disability, fragility.

RE-STRUCTURING OF ESS AMONG MFIs

• The new standards apply to the project and associated facilities.
• Pollution Management is now integrated into Resource Efficiency, Prevention and Management.
• Borrowers are now more responsible for monitoring, implementing, and reporting on environment and social requirements.

Risks and Impacts and their coverage

• Potential risks in investment projects, defined as the possibility of environmental or social value being lost or damaged.
• E&S impact is a realised risk, or a risk with 100% occurrence certainty.

Potential Risks & Impacts in the New ESS

• Human security threats
• Cultural heritage
• Community safety and worker health & safety
• Environmental impacts;
• Climate change
• Impacts on land use and tenure
• Biodiversity and natural habitats

Lesson 3: Overview of the New Safeguard Standards Adopted by the MFIs

• MFIs concentrate on providing financial and capacity building to developing nations.
• MFIs' priorities and resource allocation mechanisms evolve over time.
• MFIs have adopted diverse orientations and sectoral priorities.

Policy reform, institutional and capacity building

• MFIs have different methods of channeling resources
• Direct lending (to the public and private sector) and indirect lending (through financial intermediaries, public and private)

Indirect Lending through Financial Intermediaries

• Central Bank
• Financial Intermediaries
• Commercial Banks
• Saving & Loan Associations
• Insurance Companies

Similarities and Differences Between the New Safeguard Standards

• This section compares and contrasts the types of financing and borrowers for various MFIs.

Similarities and Differences Between the New Safeguard Standards Adopted by the MFIs

• This section shows the different financing types and types of borrowers for various MFIs.

Rationale for an Integrated Safeguard System (ISS)

• The AfDB concluded that its existing policies aren't suitable as an integrated set of safeguards.
• AfDB wants an integrated set of environmental and social safeguards that borrowers, AfDB officials, and external observers can easily understand.

Rationale for an ISS Contd.

• AfDB needed to develop an integrated system to build on its existing cross-cutting policies and environmental and social assessment procedures.
• Elements included in the system are safeguard policy, operational safeguards, and procedural guidance

Rationale for an ISS Contd.

• Needed to collate existing policies, adapt to MDB best practices, and provide a basis for operationalization.
• Aim to harmonize environmental and social safeguards with other multilateral development banks.

The Integrated Safeguard System (ISS)

• The system has components like Bank Policies (including cross-cutting aspects), Operational Safeguards, ESAP/Procedures, and Guidelines.

Objectives of the Operational Safeguards (OS)

• The objectives are to establish environmental and social requirements
• Strengthen the capacity of the Bank and borrowers/clients to integrate environmental and social considerations in operations
• Assist member countries to develop safeguard systems
• Prevent adverse effects on the environment and local communities
• Minimize, mitigate or compensate for unavoidable adverse effects

Objectives of the Operational Safeguards (OS) Contd

• Take into account climate change’s impact and projects' carbon emissions
• Establish roles and responsibilities for the bank, borrowers/clients, and local participation
• Promote harmonization of practices with other multilateral development banks

The Five Operational Safeguards (OS) of the ISS

• Environmental and Social Assessment (including Strategic Environmental and Social Assessment, Management Frameworks and procedures)
• Involuntary Resettlement (including land acquisition, displacement and compensation)
• Biodiversity and Ecosystem Services (including water resources management)
• Pollution Prevention and Control (including greenhouse gases, hazardous materials and resources efficiency)
• Labor Conditions, Health and Safety (including ILO standards)

Safeguards Range of Application [1/2] and [2/2]

• World Bank safeguards apply to investment lending, community driven development and social funds

Important Information

• Objective(s), Trigger(s), Instruments, Timing
• Consultation requirements, Disclosure requirements, and Translation requirements

Lesson 3: Environmental and Social Framework

• The ESF applies to all new World Bank investment projects (effective October 1, 2018).
• Addresses labour, non-discrimination, climate change mitigation, biodiversity, community health and safety, and stakeholder engagement.

Environmental and Social Framework

• Comprehensive environmental and social standards addressing risk and impact assessment, labor, resource efficiency, pollution, community/land use, involuntary resettlement, biodiversity, and cultural heritage.
• Stakeholder engagement, and information disclosure.

The WB ESF builds on the Safeguard policies

• This section gives details of how the Environmental and Social Framework builds on the World Bank Safeguard Policies from previous versions.

Categories of Projects

• Projects are classified into Category A, B, or C.
• Category A projects have significant adverse environmental impacts while Category C have minimal or no adverse impacts.