World Bank Environmental and Social Policy for Investment Project Financing PDF

A Vision for Sustainable Development 1.  The World Bank Group Strategy 1 sets out 2.  Inspired by this vision, the World Bank Group is the corporate goals of ending extreme pov- globally committed to en...

A Vision for Sustainable Development 1.  The World Bank Group Strategy 1 sets out 2.  Inspired by this vision, the World Bank Group is the corporate goals of ending extreme pov- globally committed to environmental sustainabil- ity, including stronger collective action to support erty and promoting shared prosperity in climate change mitigation and adaptation, recog- all its partner countries. Securing the long- nizing this as essential in a world of finite natu- term future of the planet, its people and ral resources. This is reflected in the various Bank its resources, ensuring social inclusion, and Group’s thematic strategies2 for the coming decade. limiting the economic burdens on future These strategies recognize that all economies, par- generations will underpin these efforts. The ticularly developing ones, still need to grow, but they need to do so sustainably, so that income- two goals emphasize the importance of eco- producing opportunities are not pursued in ways nomic growth, inclusion and sustainability— that limit or close off opportunities for future gen- including strong concerns for equity. erations. It recognizes that climate change is affect- ing the nature and location of projects, and that World Bank-financed projects should reduce their impact on the climate by choosing alternatives with lower carbon emissions. The World Bank works on climate change because it is a fundamental threat to development in our lifetime. The World Bank is committed to supporting its client countries to manage their economies, to decarbonize and invest in resilience, while ending poverty and boosting shared prosperity. 3. Equally, social development and inclusion are critical for all of the World Bank’s development interventions and for achieving sustainable devel- opment. For the Bank, inclusion means empower- ing all people to participate in, and benefit from, the development process. Inclusion encompasses policies to promote equality and nondiscrimination by improving the access of all people, including the poor and disadvantaged, to services and benefits such as education, health, social protection, infra- structure, affordable energy, employment, financial services and productive assets. It also embraces Vision action to remove barriers against those who are often excluded from the development process, such as women, children, persons with disabilities, youth and minorities, and to ensure that the voice of all can be heard. In this regard, the World Bank’s activities support the realization of human rights expressed in the Universal Declaration of Human See the World Bank Group Strategy 2013 at http://imagebank 1.worldbank.org/servlet/WDSContentServer/IW3P/IB/2013/10/09/ For example, Toward a Green, Clean and Resilient World for All: 2 000456286_20131009170003/Rendered/PDF/816970WP0REPLA00 A World Bank Group Environment Strategy 2012–2022, which envi- Box379842B00PUBLIC0.pdf sions a green, clean and resilient world for all. 1 1707130_Environmental_and_Social_Framework.indd 1 5/25/17 8:34 AM  Rights. Through the projects it finances, and in a Maximize stakeholder engagement through manner consistent with its Articles of Agreement,3 enhanced consultation, participation and the World Bank seeks to avoid adverse impacts and accountability. will continue to support its member countries as they strive to progressively achieve their human 6. The Bank’s vision goes beyond ‘do no harm’ to rights commitments. maximizing development gains. Where the Bor- rower’s environmental and social assessment has 4.  The World Bank uses its convening ability, finan- identified potential development opportunities cial instruments, and intellectual resources to associated with the project, the Bank will discuss embed this commitment to environmental and with the Borrower the feasibility of including these social sustainability across all its activities, which opportunities in the project. Where appropriate, range from the Bank’s global engagement in issues such opportunities may be utilized to promote fur- such as climate change, disaster risk management, ther development. and gender equality, to ensuring that environmen- tal and social considerations are reflected in all 7.  The Bank will also work with Borrowers to identify sector strategies, operational policies, and country strategic initiatives and goals to address national dialogues. development priorities, where appropriate, as part of country engagement. In supporting such devel- 5. At the project level, these global aspirations opment priorities, the Bank will seek cooperative translate into enhancing development opportuni- relationships with Borrowers, donors and other ties for all, particularly the poor and vulnerable, and international organizations. The Bank will maintain promoting the sustainable management of natural dialogue on environmental and social issues with and living resources. Therefore, within the param- donor governments, international organizations, eters of a project, the Bank seeks to: countries of operation and civil society. Avoid or mitigate adverse impacts to people and 8. The Bank recognizes that the achievement of the environment; sustainable development is dependent on effective Conserve or rehabilitate biodiversity and natural collaboration with everyone who has a stake in the development outcome of a project, including public habitats, and promote the efficient and equi- table use of natural resources and ecosystem and private sector development partners. The Bank services; is committed to the use and development of bor- rower’s frameworks to avoid unnecessary duplica- Promote worker and community health and tion of effort, build national capacity and achieve safety; development outcomes that are materially con- Ensure that there is no prejudice or discrimina- sistent with the objectives of the Environmental tion toward project-affected individuals or com- and Social Framework. The Bank is committed to munities and give particular consideration to open dialogue, public consultation, timely and full Indigenous Peoples, minority groups, and those access to information, and responsive grievance disadvantaged or vulnerable, especially where mechanisms. adverse impacts may arise or development ben- efits are to be shared; 9. This Environmental and Social Framework con- Address project-level impacts on climate change verts these aspirations and principles into practical, project-level applications within the context of the and consider the impacts of climate change on the selection, siting, planning, design and imple- Bank’s mandate as set out in its Articles of Agree- mentation and decommissioning of projects; ment. While this Framework will not by itself guaran- and tee sustainable development outcomes, its proper implementation will ensure the application of stan- dards that provide a necessary foundation for that objective, and provide a leading example for activi- Especially Article III, Section 5 (b) and IV, Section 10. 3 ties outside the scope of Bank-supported projects. 2 1707130_Environmental_and_Social_Framework.indd 2 5/25/17 8:34 AM  World Bank Environmental and Social Policy for Investment Project Financing Purpose Objectives and principles 1.  This Environmental and Social Policy for 2.  The Bank is committed to supporting Borrowers4 Investment Project Financing1 sets out the in the development and implementation of proj- ects that are environmentally and socially sustain- mandatory requirements of the Bank2 in able, and to enhancing the capacity of Borrowers’ relation to the projects it supports through environmental and social frameworks to assess Investment Project Financing.3 and manage the environmental and social risks5 and impacts6 of projects. To this end, the Bank has defined specific Environmental and Social Stan- dards (ESSs), which are designed to avoid, minimize, reduce or mitigate the adverse environmental and social risks and impacts of projects. The Bank will assist Borrowers in their application of the ESSs to projects supported through Investment Project Financing in accordance with this Environmental and Social Policy for Investment Project Financing world bank environmental and social policy (Policy). 3.  To carry out this Policy, the Bank will: (a) Undertake its own due diligence of proposed projects, proportionate to the nature and potential significance of the environmental and social risks and impacts related to the project; (b) As and where required, support the Borrower to carry out early and continuing engage- ment and meaningful consultation with stakeholders,7 in particular affected communi- ties, and in providing project-based grievance mechanisms; This Policy replaces the following Operational Policy (OP) and 1 Bank Procedures (BP): OP/BP4.00, Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects, OP/BP4.01, Environmental Assess- ment, OP/BP4.04, Natural Habitats, OP4.09, Pest Management, OP/BP4.10, Indigenous Peoples, OP/BP4.11, Physical Cultural In this Policy, unless the context requires otherwise, the term 4 Resources, OP/BP4.12, Involuntary Resettlement, OP/BP4.36, For- “Borrower” means a borrower or recipient of Bank financing for ests, and OP/BP4.37, Safety of Dams. This Policy does not replace an investment project, and any other entity responsible for the OP/BP4.03, Performance Standards for Private Sector Activities, implementation of the project. OP/BP7.50, Projects on International Waterways, and OP/BP7.60, Environmental and social risk is a combination of the probability 5 Projects in Disputed Territories. of certain hazard occurrences and the severity of impacts result- In this Policy, unless the context requires otherwise, the term 2 ing from such an occurrence. “Bank” means IBRD and/or IDA (whether acting on its own Environmental and social impacts refer to any change, potential 6 account or in its capacity as administrator of trust funds funded or actual, to: (i) the physical, natural, or cultural environment, by donors). and (ii) impacts on surrounding community and workers, result- See OP 10.00, Investment Project Financing. Investment Project 3 ing from the project activity to be supported. Financing is comprised of Bank Loans and Bank Guarantees, as Further requirements for Borrowers on stakeholder engage- 7 defined in OP 10.00. ment are set out in ESS10. 3 1707130_Environmental_and_Social_Framework.indd 3 5/25/17 8:34 AM  (c) Assist the Borrower in identifying appropriate resources and project benefits, particularly in methods and tools to assess and manage the the case of those who may be disadvantaged potential environmental and social risks and or vulnerable; (iv) negative economic and impacts of the project; social impacts relating to the involuntary tak- (d) Agree with the Borrower on the conditions ing of land or restrictions on land use; (v) risks under which the Bank is prepared to provide or impacts associated with land and natural support to a project, as set out in the Environ- resource tenure and use, including (as rel- mental and Social Commitment Plan (ESCP);8 evant) potential project impacts on local land and use patterns and tenurial arrangements, land access and availability, food security and land (e) Monitor the environmental and social perfor- values, and any corresponding risks related to mance of a project in accordance with the ESCP conflict or contestation over land and natural and the ESSs.9 resources; (vi) impacts on the health, safety 4.  The environmental and social risks and impacts and well-being of workers and project-affected which the Bank will take into account in its due dili- communities; and (vii) risks to cultural heritage. gence are project-related and include the following: 5. Projects supported by the Bank through Invest- (a) Environmental risks and impacts, including: ment Project Financing are required to meet the fol- (i) those identified in the World Bank Group lowing Environmental and Social Standards: Environmental, Health, and Safety Guidelines (EHSGs);10 (ii) those related to community safety Environmental and Social Standard 1: Assess- ment and Management of Environmental and (including dam safety and safe use of pes- Social Risks and Impacts; ticides); (iii) those related to climate change and other transboundary or global risks and Environmental and Social Standard 2: Labor and impacts; (iv) any material threat to the protec- Working Conditions; tion, conservation, maintenance and restora- Environmental and Social Standard 3: Resource tion of natural habitats and biodiversity; and Efficiency and Pollution Prevention and (v) those related to ecosystem services and the Management; use of living natural resources, such as fisher- ies and forests; and Environmental and Social Standard 4: Commu- nity Health and Safety; (b) Social risks and impacts, including: (i) threats to human security through the escalation of Environmental and Social Standard 5: Land Acquisition, Restrictions on Land Use and Invol- personal, communal or interstate conflict, untary Resettlement; crime or violence; (ii) risks that project impacts fall disproportionately on individuals or groups Environmental and Social Standard 6: Biodiver- sity Conservation and Sustainable Management who, because of their particular circumstances, of Living Natural Resources; may be disadvantaged or vulnerable;11 (iii) any prejudice or discrimination toward individuals Environmental and Social Standard 7: Indig- or groups in providing access to development enous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities; Environmental and Social Standard 8: Cultural The ESCP is addressed in Section E. 8 Heritage; See OP 10.00 for details on monitoring requirements. 9 Environmental and Social Standard 9: Financial The Environmental, Health, and Safety Guidelines (EHSGs) are 10 Intermediaries; and technical reference documents with general and industry-specific statements of Good International Industry Practice. The EHSGs con- Environmental and Social Standard 10: Stake- tain the performance levels and measures that are generally con- holder Engagement and Information Disclosure. sidered to be achievable in new facilities by existing technology at reasonable cost. For complete reference, consult the World Bank 6. The Environmental and Social Standards are Group Environmental, Health, and Safety Guidelines, http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_ designed to help Borrowers to manage the risks and co r p o ra te _ s i te / i fc + s u s t a i n a b i l i t y/o u r + a p p ro a c h /r i s k + impacts of a project, and improve their environmen- management/ehsguidelines tal and social performance, through a risk and out- Disadvantaged or vulnerable refers to those who may be more 11 likely to be adversely affected by the project impacts and/or more comes based approach. The desired outcomes for limited than others in their ability to take advantage of a proj- the project are described in the objectives of each ect’s benefits. Such an individual/group is also more likely to be ESS, followed by specific requirements to help Bor- excluded from/unable to participate fully in the mainstream con- sultation process and as such may require specific measures and/ rowers achieve these objectives through means that or assistance to do so. This will take into account considerations are appropriate to the nature and scale of the proj- relating to age, including the elderly and minors, and including in ect and proportionate to the level of environmental circumstances where they may be separated from their family, the community or other individuals upon whom they depend. and social risks and impacts. 4 1707130_Environmental_and_Social_Framework.indd 4 5/25/17 8:34 AM  Scope of application one set of project-related materials for stakeholder engagement. 7. This Policy and the ESSs apply to all projects supported by the Bank through Investment Project 10. This Policy also requires the application of the Financing.12, 13 The Bank will only support projects ESSs to Associated Facilities. Associated Facilities that are consistent with, and within the boundar- will meet the requirements of the ESSs, to the extent ies of, the Bank’s Articles of Agreement and are that the Borrower has control or influence over such expected to meet the requirements of the ESSs in Associated Facilities.17 a manner and within a timeframe acceptable to the Bank. 11. For the purpose of this Policy, the term “Asso- ciated Facilities” means facilities or activities that 8. For the purpose of this Policy, the term “project” are not funded as part of the project and, in the refers to the activities for which the Bank support judgment of the Bank, are: (a) directly and signifi- referred to in paragraph 7 above is sought by the cantly related to the project; and (b) carried out, Borrower, as defined in the project’s legal agree- or planned to be carried out, contemporaneously ment between the Borrower and the Bank.14 Projects with the project; and (c) necessary for the project may include new facilities or activities and/or exist- to be viable and would not have been constructed, ing facilities or activities, or a combination of the expanded or conducted if the project did not exist.18 same. Projects may include subprojects. 12. Where: 9. Where the Bank is jointly financing a project with other multilateral or bilateral funding agencies,15 (a) A common approach has been agreed for the the Bank will cooperate with such agencies and the project, the common approach will apply to the Borrower in order to agree on a common approach Associated Facilities; for the assessment and management of environ- (b) Associated Facilities are being funded by other mental and social risks and impacts of the project. multilateral or bilateral funding agencies, the A common approach will be acceptable to the Bank, Bank may agree to apply the requirements of provided that such an approach will enable the such other agencies for the assessment and project to achieve objectives materially consistent management of environmental and social risks with the ESSs.16 The Bank will require the Borrower and impacts of the Associated Facilities, pro- to apply the common approach to the project. The vided that such requirements will enable the world bank environmental and social policy Bank will also coordinate with such agencies so that project to achieve objectives materially consis- the Bank and the Borrower may be able to disclose tent with the ESSs. 13. Where the Bank is providing support to a proj- ect involving a Financial Intermediary (FI), and other These are projects to which OP/BP10.00, Investment Project 12 multilateral or bilateral funding agencies will or Financing, applies. The World Bank Environmental and Social Pol- have already provided financing to the same FI, the icy for Investment Project Financing does not apply to operations supported by Development Policy lending (for which the environ- Bank may agree to rely on the requirements of such mental and social provisions are set out in OP/BP8.60, Develop- other agencies for the assessment and manage- ment Policy Lending), or those supported by Program-for-Results ment of environmental and social risks and impacts Financing (for which the environmental and social provisions are set out in OP/BP9.00, Program-for-Results Financing). of the project, including the institutional arrange- These projects may include technical assistance supported by 13 ments already established by the FI, provided that the Bank through Investment Project Financing, whether pro- such requirements will enable the project to achieve vided through a stand-alone project or as part of a project. The requirements set out in paragraphs 14–18 of ESS1 will be applied objectives materially consistent with the ESSs. to technical assistance activities as relevant and appropriate to the nature of the risks and impacts. The terms of reference, work 14. Where a Borrower is deemed by the Bank to: plans or other documents defining the scope and outputs of (a) be in urgent need of assistance because of a nat- technical assistance activities will be drafted so that the advice and other support provided is consistent with ESSs 1–10. Activi- ural or man-made disaster or conflict; or (b) expe- ties implemented by the Borrower following the completion of rience capacity constraints because of fragility or the project that are not financed by the Bank, or activities that specific vulnerabilities (including for small states), are not directly related to the technical assistance, are not sub- ject to the World Bank Environmental and Social Policy for Invest- the applicable provisions of OP 10.00 will apply.19 ment Project Financing. The scope of activities for which Investment Project Finance 14 can be provided, together with the approval process, is set out in OP 10.00. Such agencies will include IFC and MIGA. 15 The Bank will require the Borrower to demonstrate the extent 17 to which it cannot exercise control or influence over the Associ- In determining whether the common approach, or the require- 16 ated Facilities by providing details of the relevant considerations, ments referred to in paragraphs 9, 12 and 13 are acceptable, the which may include legal, regulatory and institutional factors. Bank will take into account the policies, standards and imple- mentation procedures of the multilateral or bilateral funding For facilities or activities to be Associated Facilities, they must 18 agencies. The measures and actions that have been agreed under meet all three criteria. the common approach will be included in the ESCP. Further details are set out in OP 10.00. 19 5 1707130_Environmental_and_Social_Framework.indd 5 5/25/17 1:20 PM  Bank requirements proposed alternatives through the environmen- tal and social assessment. This justification must 15. The Bank will require Borrowers to conduct envi- demonstrate, to the satisfaction of the Bank, that ronmental and social assessment of projects pro- the choice of any alternative performance level is posed for Bank support in accordance with ESS1.20 consistent with the objectives of the ESSs and the 16. The Bank will require the Borrower to prepare applicable EHSGs, and is unlikely to result in any and implement projects so that they meet the significant environmental or social harm. requirements of the ESSs in a manner and a time- frame acceptable to the Bank. In establishing the A. Environmental and social manner and an acceptable timeframe, the Bank risk classification will take into account the nature and significance 20. The Bank will classify all projects (including of the potential environmental and social risks and projects involving Financial Intermediaries (FIs)) impacts, the timing for development and implemen- into one of four classifications: High Risk, Substan- tation of the project, the capacity of the Borrower tial Risk, Moderate Risk or Low Risk. In determining and other entities involved in developing and imple- the appropriate risk classification, the Bank will take menting the project, and the specific measures and into account relevant issues, such as the type, loca- actions to be put in place or taken by the Borrower tion, sensitivity, and scale of the project; the nature to address such risks and impacts. and magnitude of the potential environmental and 17. Where the Bank has agreed that the Borrower social risks and impacts; and the capacity and com- may plan or take specific measures or actions to mitment of the Borrower (including any other entity avoid, minimize, reduce or mitigate specific risks and responsible for the implementation of the project) impacts of the project over a specified timeframe, to manage the environmental and social risks and the Bank will require that the Borrower commit to impacts in a manner consistent with the ESSs. Other not carrying out any activities or taking any actions areas of risk may also be relevant to the delivery of in relation to the project that may cause material environmental and social mitigation measures and adverse environmental or social risks or impacts outcomes, depending on the specific project and until the relevant plans, measures or actions have the context in which it is being developed. These been completed in accordance with the ESCP. could include legal and institutional considerations; the nature of the mitigation and technology being 18. If the project comprises or includes existing proposed; governance structures and legislation; facilities or existing activities that do not meet the and considerations relating to stability, conflict or requirements of the ESSs at the time of approval by security. The Bank will disclose the project’s clas- the Bank, the Bank will require the Borrower, as part sification and the basis for that classification on the of the ESCP, to adopt and implement measures sat- Bank’s website and in project documents. isfactory to the Bank so that the material aspects of such facilities or activities meet the requirements of 21. The Bank will review the risk classification the ESSs within a timeframe acceptable to the Bank. assigned to the project on a regular basis, including In determining satisfactory measures and an accept- during implementation, and will change the classifi- able timeframe, the Bank will take into account the cation where necessary, to ensure that it continues nature and scope of the project and the technical to be appropriate. Any change to the classification and financial feasibility of the proposed measures. will be disclosed on the Bank’s website. 19. The Bank will require the Borrower to apply the 22. Where the Bank is providing support to one or relevant requirements of the EHSGs.21 The EHSGs more FIs, the risk classification of the project will contain the performance levels and measures that be determined by the Bank taking into account the are normally acceptable and applicable to projects. type of financial instrument or product involved to When host country requirements differ from the lev- be provided, the nature of the FI’s existing portfolio, els and measures presented in the EHSGs, the Bank and the level of risk associated with the proposed will require the Borrower to achieve or implement subprojects. whichever is more stringent. If less stringent levels or measures than those provided in the EHSGs are B. Use and strengthening of borrower’s appropriate in view of the Borrower’s limited techni- environmental and social framework cal or financial constraints or other specific project 23. The Bank supports the use of the Borrower’s circumstances, the Bank will require the Borrower ES Framework in the assessment, development to provide full and detailed justification for any and implementation of projects supported through Investment Project Financing, provided this is likely to address the risks and impacts of the project, and See ESS1, paragraph 23. 20 enable the project to achieve objectives materially 6 See footnote 10. 21 consistent with the ESSs. The use of all, or part, of 1707130_Environmental_and_Social_Framework.indd 6 12/11/17 1:47 PM  the Borrower’s ES Framework will be agreed between require revisions to the ESCP as necessary to meet the Bank and the Borrower, following completion of the requirements of the ESSs and take such other the assessment referred to below.22 measures as the Bank deems appropriate, including applying the Bank’s remedies.25 24.  The Borrower’s ES Framework will include those aspects of the country’s policy, legal and institu- 29.  To support increasing use and strengthening of tional framework, including its national, subna- the Borrower‘s ES Framework, the Bank may, at the tional, or sectoral implementing institutions and request of the Borrower and where the Bank deems applicable laws, regulations, rules and procedures, this to be feasible, conduct an overview assessment and implementation capacity, which are relevant to of the Borrower’s existing policy, legal and institu- the environmental and social risks and impacts of tional framework for addressing environmental and the project. The aspects that are relevant will vary social risks and impacts, and related implementa- from project to project, depending on such factors tion capacity. The overview assessment will iden- as the type, scale, location and potential environ- tify aspects of the existing framework that can be mental and social risks and impacts of the project strengthen, and the capacity-building needed to and the role and authority of different institutions.23 support this. The overview assessment will not be a prerequisite for the use of all, or part of, the Bor- 25.  If the Bank and the Borrower propose to use all, rower’s ES Framework for a specific project. How- or part, of the Borrower’s ES Framework, the Bank ever, where the overview assessment has been will review the Borrower’s ES Framework to assess completed, it will inform the Bank’s assessment whether such use will meet the requirement of of the Borrower’s ES Framework, as referred to in paragraph 23. paragraph 26. 26.  The Bank will disclose the intention to conduct the assessment as early as possible, specifying the C. Environmental and social due diligence aspects of the Borrower’s ES Framework that will be 30.  The Bank will conduct environmental and social assessed. The Bank will engage with relevant stake- due diligence of all projects proposed for support holders, so that their views can inform the assess- through Investment Project Financing. The purpose ment. In conducting the assessment, the Bank may of the environmental and social due diligence is to consider recent studies, reviews and other assess- assist the Bank in deciding whether to provide sup- ments conducted by the Bank, other funding agen- port for the proposed project and, if so, the way in world bank environmental and social policy cies, or the Borrower or relevant stakeholders, to the which environmental and social risks and impacts extent these are relevant to the proposed project. will be addressed in the assessment, development When an assessment of the Borrower’s ES Frame- and implementation of the project. work has been completed, the Bank will disclose a summary of the assessment on its website. 31. The Bank’s environmental and social due dili- gence will be appropriate to the nature and scale of 27. The Bank will work with the Borrower to iden- the project, and proportionate to the level of environ- tify and agree on measures and actions to address mental and social risks and impacts, with due regard gaps24 and strengthen the Borrower’s ES Framework, to the mitigation hierarchy.26 The due diligence will to the extent that such measures and actions are assess whether the project is capable of being devel- necessary to meet the requirement of paragraph 23. oped and implemented in accordance with the ESSs. The agreed measures and actions, together with the timeframes for completion of such measures and 32. The Bank’s due diligence responsibilities will actions, will form part of the ESCP. include, as appropriate: (a) reviewing the infor- mation provided by the Borrower relating to the 28.  Where the Bank becomes aware of a change in environmental and social risks and impacts of the the Borrower’s ES Framework that may materially project,27 and requesting additional and relevant adversely affect the project, the Bank will discuss information where there are gaps that prevent the the change with the Borrower. If, in the opinion of Bank from completing its due diligence; and (b) pro- the Bank, such change is inconsistent with para- viding guidance to assist the Borrower in developing graph 23 and the ESCP, the Bank will have the right to appropriate measures consistent with the mitiga- tion hierarchy to address environmental and social risks and impacts in accordance with the ESSs. The The decision to use all, or parts, of the Borrower’s ES Framework 22 will not relieve the Bank of any of its due diligence obligations set out in Section C of this Policy. Where there are inconsistencies or lack of clarity within the Bor- 23 OP 10.00 sets out the Bank’s recourse and remedies. The Bank’s 25 rower’s ES Framework as to relevant authorities or jurisdiction, legal remedies are specified in the relevant legal agreement. these will be identified. The mitigation hierarchy is defined in ESS1, paragraph 27. 26 This may require measures and actions to address specific risks 24 For example, pre-feasibility studies, scoping studies, national 27 or impacts of the project. environmental and social assessments, licenses and permits. 7 1707130_Environmental_and_Social_Framework.indd 7 5/25/17 8:34 AM  Borrower is responsible for ensuring that all rele- to manage29 the environmental and social risks and vant information is provided to the Bank so that the impacts of subprojects as required by paragraph 37. Bank can fulfill its responsibility to undertake envi- When necessary, the project will include measures ronmental and social due diligence in accordance to strengthen the capacity of the Borrower. with this Policy. 37.  The Bank will require the Borrower to carry out 33. The Bank recognizes that Borrowers may have appropriate environmental and social assessment different levels of information regarding the environ- of subprojects, and prepare and implement such mental and social risks and impacts available at the subprojects, as follows: time the Bank carries out its due diligence. In such circumstances, the Bank will assess the risks and (a) High Risk subprojects, in accordance with the impacts of the proposed project based on the infor- ESSs; mation that is available to the Bank, together with an (b) Substantial Risk, Moderate Risk and Low Risk assessment of: (a) the risks and impacts inherent to subprojects, in accordance with national law the type of project and the specific context in which and any requirement of the ESSs that the Bank the proposed project will be developed and imple- deems relevant to such subprojects.30 mented; and (b) the capacity and commitment of the Borrower to develop and implement the project 38.  If the Bank is not satisfied that adequate capac- in accordance with the ESSs. The Bank will assess ity exists on the part of the Borrower, all High Risk the significance of the gaps in information, and the and, as appropriate, Substantial Risk subprojects potential risk this may present to achieving the objec- will be subject to prior review and approval by the tives of the ESSs. The Bank will reflect this assessment Bank until it is established that adequate capacity in the relevant project documents at the time the pro- exists. posed financing is submitted for Board approval. 39. If the risk rating of a subproject increases to 34.  Where the Bank is approached to provide sup- a higher risk rating, the Bank will require the Bor- port for a project that is under construction, or rower to apply relevant requirements of the ESSs31 where the project has already received national in a manner agreed with the Bank. The measures permits, including the approval of local environ- and actions agreed will be included in the ESCP, and mental and social impact assessments, the Bank’s will be monitored by the Bank. due diligence will include a gap analysis against the Projects involving financial intermediaries (FI) ESSs to identify whether any additional studies and/ or mitigation measures are required to meet the 40.  Where the Bank is providing support to an FI,32 Bank’s requirements. the Bank will review the adequacy of national envi- ronmental and social requirements relevant to the 35. Depending on the potential significance of project, taking into account the type of FI subproj- environmental and social risks and impacts, the ects33 being undertaken and the level of risk associ- Bank will determine whether the Borrower will be ated with the FI’s portfolio and the capacity of the required to retain independent third-party special- FI to manage environmental and social risks and ists to assist in the assessment of environmental impacts. The Bank will require FIs to put in place and social impacts. and maintain an Environmental and Social Manage- ment System (ESMS) to identify, assess, manage, D. Special project types Projects involving multiple small subprojects 36. For projects involving multiple small sub­ The Bank will assess the capacity of the Borrower to (a) screen 29 subprojects; (b) obtain the necessary expertise to carry out the projects,28 that are identified, prepared and imple- environmental and social assessment; (c) review the findings and mented during the course of the project, the Bank results of the environmental and social assessment for individual will review the adequacy of national environmen- subprojects; (d) implement mitigation measures; and (e) conduct monitoring on the environmental and social performance during tal and social requirements relevant to the sub- project implementation. projects, and assess the capacity of the Borrower Where subprojects are likely to have minimal or no adverse 30 environmental or social risks and impacts, such subprojects do not require further environmental and social assessment follow- ing the initial screening. The ‘relevant requirements of the ESSs’ will relate to the rea- 31 sons for which the risk rating has increased. Such support may be provided directly by the Bank to the FI, 32 or from the Borrower to the FI. Financial intermediation also includes provision of financing or guarantees by FIs to other FIs. Paragraphs 36 to 39 apply to a Bank supported project with 28 “FI subproject” refers to projects financed by FIs with support 33 multiple small subprojects, as in the case of community-driven from the Bank. Where the project involves on-lending by the FI to development (CDD) projects, projects involving matching grant another FI, the term “FI subproject” will include the subprojects 8 schemes, or similar projects designated by the Bank. of each subsequent FI. 1707130_Environmental_and_Social_Framework.indd 8 5/25/17 8:34 AM  and monitor the environmental and social risks and E. Environmental and Social impacts of FI subprojects on an ongoing basis. The Commitment Plan (ESCP) ESMS will be commensurate with the nature and magnitude of environmental and social risks and 46. The Bank will agree on an ESCP with the Bor- impacts of FI subprojects, the types of financing, rower.35 The ESCP will set out the material measures and the overall risk aggregated at the portfolio level. and actions required for the project to meet the ESSs The Bank will review the adequacy of the ESMS. over a specified timeframe. The ESCP will form part of the legal agreement. The legal agreement will 41.  The Bank’s requirements and the scope of their include, as necessary, obligations of the Borrower to application for a project involving an FI will depend support the implementation of the ESCP. on the type of Bank support being provided to the FI, the type of FI subprojects being undertaken and 47.  The Bank will require the Borrower to implement the level of risk associated with the FI’s portfolio. the measures and actions identified in the ESCP diligently, in accordance with the timeframes speci- 42. The Bank will require that the ESMS of the FI fied in the ESCP, and to review the status of imple- sets out requirements to (a) screen all FI subproj- mentation of the ESCP as part of its monitoring and ects against any exclusions in the legal agreement; reporting. The draft ESCP will be disclosed as early (b) screen all FI subprojects for environmental and as possible, and before project appraisal. social risks and impacts; (c) require that FI subproj- ects be prepared and implemented in accordance 48.  The Bank will require the Borrower to prepare, with relevant environmental and social national and submit to the Bank for approval and implement a local laws and regulations; (d) require specified FI process that allows for adaptive management of subprojects (as identified in paragraph 44) to apply proposed project changes or unforeseen circum- the relevant requirements of the ESSs; and (e) con- stances. The agreed adaptive management process duct appropriate environmental and social due dili- will be set out in the ESCP. The process will specify gence of FI subprojects, including environmental and how such changes or circumstances are to be man- social assessment. aged and reported, and how any necessary changes will be made to the ESCP and the management tools 43.  The Bank may require the FI to adopt and imple- used by the Borrower. ment additional or alternative environmental and social requirements, depending on the environ- F. Information disclosure world bank environmental and social policy mental and social risk and impacts of the poten- 49. The Bank will apply the World Bank Policy on tial FI subprojects and the sectors in which the FI is Access to Information with regard to all documents operating. provided to it by the Borrower. 44.  Where a project involving an FI is classified by 50. The Bank will require the Borrower to provide the Bank as High Risk or Substantial Risk and the sufficient information about the potential risks and Bank is not satisfied that adequate capacity exists impacts of the project for the Borrower’s consulta- for categorizing, carrying out environmental and tions with its stakeholders. Such information will be social assessment or reviewing the results of envi- disclosed in a timely manner, in an accessible place, ronmental and social assessment, all FI subproj- and in a form and language understandable to proj- ects that involve resettlement (unless the risks or ect-affected parties and other interested parties as impacts of such resettlement are minor), adverse set out in ESS10, so they can provide meaningful risks or impacts on Indigenous Peoples or signifi- input into project design and mitigation measures. cant risks or impacts on the environment, commu- nity health and safety, labor and working conditions, 51. The Bank will disclose documentation relating biodiversity or cultural heritage will be subject to to the environmental and social risks and impacts prior review and approval by the Bank until it is of High Risk and Substantial Risk projects prior to established that adequate capacity within the FI project appraisal. This documentation will reflect exists. the environmental and social assessment of the project, and be provided in draft or final form (if 45. If the risk profile of a FI subproject increases available). The documentation will address, in an significantly, the Bank will require the FI to (a) notify adequate manner, the key risks and impacts of the the Bank; (b) apply relevant requirements of the project, and will provide sufficient detail to inform ESSs34 in a manner agreed with the Bank as set out in the ESMS; and (c) monitor the measures and actions agreed, and report to the Bank as appropriate. As set out in paragraph 3 of this Policy, the Bank will assist the 35 Borrower in identifying appropriate methods and tools to assess and manage the potential environmental and social risks and impacts of the project, and agree with the Borrower the condi- The ‘relevant requirements of the ESSs’ will relate to the reasons 34 tions under which the Bank is prepared to support the project, for which the risk profile of the FI subproject has increased. which will be set out in the ESCP. 9 1707130_Environmental_and_Social_Framework.indd 9 5/25/17 8:34 AM  stakeholder engagement and Bank decision making. accordance with ESS7.37 The outcome of the mean- Final or updated documentation will be disclosed ingful consultation will be documented. The Bank when available. will undertake the necessary due diligence and ascertain the outcome of the meaningful consulta- 52. For High Risk and Substantial Risk projects, the tion, and this will contribute to the Bank’s decision Bank will indicate in the Project Appraisal Document making as to whether to proceed with the proposed the project-related documents that will be prepared project or not. and disclosed after Board approval. For each key document, the Bank will provide, where possible, 55.  In addition, the Bank recognizes that Indigenous the following details: the objectives and proposed Peoples (or as they may be referred to in the national content of the document; the rationale for the tim- context) may be particularly vulnerable to the loss ing of preparation; the estimated costs associated of, alienation from or exploitation of their land and with the preparation of the document and its imple- access to natural and cultural resources. In recogni- mentation; the source of funding; and the arrange- tion of this vulnerability, the Bank will require the ments for preparation. These details and timing for Borrower to obtain the Free, Prior and Informed Con- delivery of the document will be set out in the ESCP, sent (FPIC) of the affected Indigenous Peoples when as appropriate. such circumstances described in ESS7 are present.38 There is no universally accepted definition of FPIC. G. Consultation and participation It does not require unanimity and may be achieved even when individuals or groups within or among 53. The Bank recognizes the importance of early affected Indigenous Peoples explicitly disagree. For and continuing engagement and meaningful con- the purposes of ESS7, consent refers to the collec- sultation with stakeholders. The Bank will require tive support of affected Indigenous Peoples com- the Borrower to engage with stakeholders, including munities for the project activities that affect them, communities, groups, or individuals affected by pro- reached through a culturally appropriate process. It posed projects, and with other interested parties, may exist even if some individuals or groups object through information disclosure, consultation, and to such project activities. When the Bank is unable informed participation in a manner proportionate to ascertain that such consent is obtained from the to the risks to and impacts on affected communi- affected Indigenous Peoples, the Bank will not pro- ties. The Bank will have the right to participate in ceed further with the aspects of the project that consultation activities to understand the concerns are relevant to those Indigenous Peoples for which of affected people, and how such concerns will be FPIC cannot be ascertained. In such cases, the Bank addressed by the Borrower in project design and will require the Borrower to ensure that the project mitigation measures in accordance with ESS10. The will not cause adverse impacts on such Indigenous Bank will monitor, as part of its due diligence, the Peoples. implementation of consultation and stakeholder engagement by the Borrower. H. Monitoring and implementation support 54.  In order to determine the applicability of ESS7, 56. The Bank will monitor the environmental and the Bank will undertake a screening in accordance social performance of the project in accordance with with the criteria in paragraphs 8 and 9 of ESS7, to the requirements of the legal agreement, including determine whether Indigenous Peoples (or as they the ESCP, and will review any revision of the ESCP may be referred to in the national context) are pres- including changes resulting from changes in the ent in, or have collective attachment to, the pro- design of a project or project circumstances. The posed project area. In conducting this screening, extent and mode of Bank monitoring with respect the Bank may seek the technical advice of special- to environmental and social performance will be ists with expertise on the social and cultural groups proportionate to the potential environmental and in the project area. The Bank will also consult the social risks and impacts of the project. The Bank will Indigenous Peoples concerned and the Borrower. monitor projects on an ongoing basis as required by The Bank may follow the Borrower’s national pro- OP 10.00.39 A project will not be considered complete cesses during project screening for identification36 until the measures and actions set out in the legal of Indigenous Peoples, where these processes meet agreement (including the ESCP) have been imple- the requirements of ESS7. Where Indigenous Peo- mented. To the extent that the Bank evaluation at ples are present in, or have a collective attachment the time of project completion determines that such to, the proposed project area, the Bank will require measures and actions have not been fully imple- the Borrower to undertake a process of meaning- ful consultation tailored to Indigenous Peoples in See ESS7, paragraph 23. 37 Further details are set out in ESS7, Section B. 38 The Bank will monitor and provide implementation support for 39 10 In accordance with paragraphs 8 and 9 of ESS7. 36 the time periods stipulated in OP 10.00. 1707130_Environmental_and_Social_Framework.indd 10 5/25/17 8:34 AM  mented, the Bank will determine whether further Borrower’s environmental and social performance. measures and actions, including continuing Bank The grievance mechanism will be proportionate to monitoring and implementation support, will be the risks and impacts of the project.41 required. 61. Project-affected parties may submit complaints 57. The Bank will provide implementation support regarding a Bank-financed project to the project regarding the environmental and social perfor- grievance mechanism, appropriate local grievance mance of the project, which will include reviewing mechanism, or the World Bank’s corporate Griev- the Borrower’s monitoring reports on compliance ance Redress Service (GRS). The GRS ensures that of the project with the requirements of the legal complaints received are promptly reviewed in order agreement, including the ESCP. to address project-related concerns. After bringing their concerns directly to the World Bank’s attention 58. Where appropriate and as set out in the ESCP, and giving Bank Management a reasonable oppor- the Bank will require the Borrower to engage stake- tunity to respond, project-affected parties may sub- holders and third parties, such as independent mit their complaint to the World Bank’s independent experts, local communities or nongovernmental Inspection Panel to request an inspection to deter- organizations (NGOs), to complement or verify proj- mine whether harm has occurred as a direct result ect monitoring information. Where other agencies of World Bank noncompliance with its policies and or third parties are responsible for managing spe- procedures. cific risks and impacts and implementing mitiga- tion measures, the Bank will require the Borrower to collaborate with such agencies and third parties Institutional and implementation to establish and monitor such mitigation measures. arrangements 59. Where the Bank has identified and agreed with 62. The Bank will allocate responsibilities and the Borrower and, as relevant, other agencies,40 on appropriate resources to support an effective imple- corrective or preventive measures and actions, all mentation of this Policy. material measures and actions will be included in the ESCP. Such measures and actions will be 63. Projects receiving initial approval by Bank man- addressed in accordance with the timeframe set out agement prior to the entry into force of this Policy in the ESCP or, if they are not included in the ESCP, in will be subject to the Bank’s existing Policies identi- world bank environmental and social policy a reasonable timeframe, in the opinion of the Bank. fied in footnote 1 of this Policy. The Bank will have the right to apply the Bank’s rem- 64. The Bank will develop and maintain directives, edies if the Borrower fails to implement such mea- procedures and appropriate guidance and informa- sures and actions in the timeframes specified. tion tools to assist in implementing this Policy. I. Grievance mechanism and accountability 65. This Policy will be reviewed on an ongoing basis 60. The Bank will require the Borrower to provide and will be amended or updated as appropriate, a grievance mechanism, process, or procedure to subject to approval by the Board of Directors. receive and facilitate resolution of concerns and grievances of project-affected parties arising in connection with the project, in particular about the The grievance mechanism may utilize existing formal or infor- 41 Where the Bank has agreed on a common approach with other 40 mal grievance mechanisms, provided they are properly designed multilateral or bilateral funding agencies, the Bank will review and implemented, and deemed suitable for project purposes; any corrective or preventive measures and actions agreed with these may be supplemented as needed with project-specific the Borrower in accordance with paragraph 9. arrangements. 11 1707130_Environmental_and_Social_Framework.indd 11 3/20/18 1:51 PM 1707130_Environmental_and_Social_Framework.indd 12 5/25/17 8:34 AM  Borrower Requirements— Environmental and Social Standards 1–10 13 1707130_Environmental_and_Social_Framework.indd 13 4/12/17 4:16 PM 1707130_Environmental_and_Social_Framework.indd 14 5/25/17 8:34 AM  Assessment and Management 1 of Environmental and Social Risks and Impacts Introduction 2.  The ESSs are designed to help Borrowers to man- age the risks and impacts of a project, and improve 1. ESS1 sets out the Borrower’s responsi- their environmental and social performance, through bilities for assessing, managing and moni- a risk and outcomes based approach. The desired toring environmental and social risks and outcomes for the project are described in the objec- tives of each ESS, followed by specific requirements impacts associated with each stage of a to help Borrowers achieve these objectives through project supported by the Bank through means that are appropriate to the nature and scale Investment Project Financing, in order to of the project and proportionate to the level of envi- achieve environmental and social out- ronmental and social risks and impacts. comes consistent with the Environmental 3. Borrowers1 will conduct environmental and social and Social Standards (ESSs). assessment of projects proposed for Bank financing to help ensure that projects are environmentally and socially sound and sustainable. The environmental and social assessment will be proportionate to the risks and impacts of the project. It will inform the design of the project, and be used to identify mitiga- tion measures and actions and to improve decision making. 4.  Borrowers will manage environmental and social risks and impacts of the project throughout the project life cycle in a systematic manner, propor- tionate to the nature and scale of the project and the potential risks and impacts. 5. In assessing, developing and implementing a project supported by Investment Project Financing, the Borrower may, where appropriate, agree with the Bank to use all or part of the Borrower’s national environmental and social framework to address the risks and impacts of the project, providing such use will enable the project to achieve objectives materi- ally consistent with the ESSs. ESS1 It is recognized that the Borrower may not be the entity directly 1 implementing the project. Nevertheless, the Borrower is respon- sible for ensuring that the project is prepared and implemented so that it meets all applicable requirements of the ESSs in a man- ner and timeframe agreed with the Bank. The Borrower will ensure that any entity involved in implementing the project supports all obligations and commitments of the Borrower in accordance with the requirements of the ESSs and the specific conditions of the legal agreement, including the ESCP. Contractors retained by or acting on behalf of the Borrower or an implementing agency are considered to be under the direct control of the Borrower. 15 1707130_Environmental_and_Social_Framework.indd 15 5/25/17 8:34 AM  6.  ESS1 includes the following annexes, which form Scope of application part of ESS1, and set out certain requirements in more detail: 7. ESS1 applies to all projects4, 5 supported by the Bank6 through Investment Project Financing.7 Annex 1: Environmental and Social Assessment; Annex 2: Environmental and Social Commitment 8. The term “project” refers to the activities for which the Bank financing referred to in paragraph 7 Plan; and is sought by a Borrower and as defined in the legal Annex 3: Management of Contractors. agreement between the Borrower and the Bank.8 9.  Where the Bank is jointly financing a project with Objectives other multilateral or bilateral funding agencies,9 To identify, evaluate and manage the environ- the Borrower will cooperate with the Bank and such agencies in order to agree on a common approach ment and social risks and impacts of the project in a manner consistent with the ESSs. for the assessment and management of environ- mental and social risks and impacts of the project. A To adopt a mitigation hierarchy approach to: common approach will be acceptable, provided that (a) Anticipate and avoid risks and impacts; such approach will enable the project to achieve (b) Where avoidance is not possible, minimize objectives materially consistent with the ESSs.10 or reduce risks and impacts to acceptable The Borrower will be required to apply the common levels; approach to the project. (c) Once risks and impacts have been mini- 10. ESS1 also applies to all Associated Facilities. mized or reduced, mitigate; and Associated Facilities will meet the requirements of (d) Where significant residual impacts remain, compensate for or offset them, where tech- nically2 and financially3 feasible. To adopt differentiated measures so that adverse impacts do not fall disproportionately on the disadvantaged or vulnerable, and they are not disadvantaged in sharing development These are projects to which OP/BP10.00 Investment Proj- 4 benefits and opportunities resulting from the ect Financing applies. The World Bank Environmental and project. Social Policy for Investment Project Financing and ESSs do not apply to operations supported by Development Pol- To utilize national environmental and social icy lending (for which the environmental and social provi- sions are set out in OP/BP8.60 Development Policy Lending), institutions, systems, laws, regulations and