The IFC brought in a team of those who have worked on the new performance standards to defend them against a series of probing questions from a room full of civil society organisations.
CSO: Will there be a template for client action plans and reporting?
IFC: A good practice manual update will include guidelines to companies on how to engage with communities on reporting on action plans.
CSO: Is the disclosure policy advisor a new position and what are the terms of reference for the position?
IFC: IFC is currently working on a more detailed ToR. This is not a full-time position. It will report to EDP.
CSO: Will financial intermediaries require clients to create action plans? Will financial intermediaries be required to release a list of financed projects?
IFC: Financial intermediaries need to have environmental and social management systems in place which meet performance standards. They do not need to publish a list – they are only reporting to the IFC.
CSO: Will the exclusion list be made public?
CSO: How will communities know if old safeguards or new performance standards will apply?
IFC: Very few projects will go through the system with the old safeguards applying. A “few no-risk financial transactions” which were processed in Feb-Mar will go ahead under old safeguards. Anything with community risks, the new performance standards will be the test.
We did a study to see what would have been the impact if we retro-fitted the new performance standards to the FY05 portfolio, and found that only 15 per cent of financial intermediary projects would have invoked the new performance standards.
CSO: What monitoring and evaluation of the new performance standards will take place?
IFC: There will be internal quality assurance and quality control. At a corporate level, information from the Development Outcome Tracking System (DOTS) will be made available to the Compliance Advisor Ombudsman, which can then make judgements about IFC decisions on project compliance. The same data will be used by the Independent Evaluation Group. There will be informal updates to the board, annual development and sustainability reports, a formal report to the board in eighteen months, and a full review in three years.
There will be a more extensive role for IFC to discuss “what works” with the Equator banks, financial markets, export credit agencies and other multilateral development banks. As more data becomes available, this will be fed into the good guidance notes. Keeping this up to date will be a full-time job, and will be done with peer review of CSOs and industry associations.
There has been a “large-scale discussion” about staff pay and performance incentives and how to link directly to development outcomes.
CSO: What happens if ‘broad community support’ shifts over time?
IFC: The company will have to report to the communities on a regular basis, this is new. While there is no formal requirement to establish broad community support on an ongoing basis, it will be integrated into company reporting to IFC.
CSO: How will the IFC ‘square the circle’ of aggregated indicators for reporting purposes, yet still needing project-specific measures to prove additionality? Is the IFC acquiring expertise in new areas, such as labour?
IFC: The indicators will evolve over time. Some build on existing indicators (GRI), others are fresh territory. In oil, gas and mining, we will use EIR indicators. The DOTS system tries to get at poverty impact – the first report from the DOTS will come out at the annual meetings in September.
IFC has hired 2 or 3 social specialists with expertise in labour. We are identifying labour consultants to be available for project audits. We are in conversation with the union movement – how do unions let their members know about the new performance standards? And we have had extensive consultations with the International Labour Organisation – relevant IFC staff will be travelling to Geneva in May. An external labour advisory group is being established.
CSO: What are the incentives for IFC investment officers to ensure project compliance with the performance standards? What capacity is there to ensure compliance?
IFC: Investment officers can’t be rewarded for projects which are rated ‘unsuccessful’ or ‘partially unsuccessful’ on the performance standards. It is impossible to win a long-term performance award if an investment officer has an “environmental dog” in their portfolio.
CSO: Why can you not release development outcomes on individual projects? Why only in aggregate?
IFC: We don’t think our role is to talk about the financial performance of companies. In 2 or 3 years, we may have “cracked the code” on how to disclose more at the project level, but at the moment it is beyond our reach.
CSO: Is the IFC considering gender?
IFC: A gender guide on impact assessment will be out later this year. The IFC was slow to come around to the importance of gender, but we are trying now to catch up. We have an IFC programme on gender, entrepreneurship and markets, which takes a gendered lens to the production supply chain and finance.