Presentation by Morgan Landy, IFC on Dinant

Report
IFC’S ENVIRONMENTAL
AND SOCIAL LESSONS LEARNED
APRIL 9, 2014
CSO SESSION
AGENDA
• Dinant: Lessons Learned / CAO Audit
• Learning & Adapting
 Key themes
 Links to recent cases
• Dinant: Update on Action Plan
• Discussion
2
DINANT: KEY LESSONS LEARNED
IFC acknowledges deficiencies in the handling of the Dinant
investment:
• During project preparation, IFC underestimated the broader risks in
the Aguan Valley (land conflict, security issues, political instability)
• When acute problems emerged, neither IFC nor client was prepared
• IFC’s project supervision was not commensurate with level of risk
• Internal communication and documentation sub-optimal
Scope of the challenges in the Aguan Valley go beyond Dinant:
• Complex history of land conflict/violence requires long-term solutions
• Limited ability of IFC and client to address this
3
DINANT: KEY IFC ACTIONS
We must:
• Take credible steps on the ground in Honduras with our client
• Internalize and disseminate lessons learned
• Ensure we are building these lessons into our operations
• Continually adapt our approach to E&S risk management
• Continue to build our capacity to identify and mitigate risks
(especially in fragile and conflict-affected project locations)
• Strengthen ownership of E&S issues across the institution
* More details and discussion to follow…
4
HOW IFC IS LEARNING FROM RECENT
EXPERIENCES
5
KEY ISSUES
• Country/Sector Context
• Stakeholder Engagement
• Land & Water
• Supply Chains
• Labor
• Financial Intermediaries
6
IFC FACING INCREASINGLY COMPLEX CHALLENGES
• IFC’s target markets are high risk environments
• Fragile and conflict situations
• Limited capacity and resources on the ground
 Low client capacity
 Weak Institutions
• Robust E&S risk management will be a key
factor in our ability to achieve objectives
• Broader contextual risks often cannot be
addressed through a single transaction alone
• Enhanced collaboration across WBG is key to
success
7
WHAT ARE
ABOUT
LEARNING AND DOING
COUNTRY/SECTOR CONTEXT?
WE
What we are learning
• Narrow transaction focus insufficient (Agrokasa, Dinant, Wilmar)
• Broader contextual and inherent risks, e.g. conflict, security forces (Dinant)
• Cumulative impacts (Tata Mundra), legacy issues
What we are doing
• Deepen Country Situation Analysis (e.g., for palm oil investments)
• Broader use of country studies and data from independent sources
• Enhanced engagement with WBG on the ground
8
WHAT
LEARNING AND DOING
STAKEHOLDER ENGAGEMENT?
ARE WE
ABOUT
What we are learning
• Insufficient consultation can lead to community conflicts
(Tata Mundra, Cambodia Airports)
• Clients still struggle to do this well (Maple Energy, Agrokasa)
• Just having a Grievance Mechanism is not enough
(Nicaragua Sugar, Harmon Hall)
What we are doing
• Strengthened requirements in 2012 Sustainability Framework, including
grievance mechanisms
• Verification of Broad Community Support, Free Prior & Informed Consent
• Portfolio review, tools, lessons on Stakeholder Engagement
• Technical training & guidance for staff and clients
9
WHAT
LEARNING AND DOING
LAND AND WATER?
ARE WE
ABOUT
What we are learning
• Frequent source of conflict (Dinant, Agrokasa, Yanacocha, Oyu Tolgoi)
• Challenges of Government-led resettlement (Agri-Vie/New Forest Company)
• Poor land governance: public to private land transfers; watershed issues are
difficult
What we are doing
•
•
•
•
Strengthened Performance Standards requirements (PS3, PS6)
New risk screening and assessment tools (GMAP, Guidance Note on Land)
Applying Principles on Responsible Agriculture Investments
Engagement with World Bank, other multilaterals (e.g. FAO, UN Compact)
10
WHAT ARE
ABOUT
LEARNING AND DOING
SUPPLY CHAIN ISSUES?
WE
What we are learning
• Verification in extended supply chains is difficult (Bujagali)
• Clients often have limited leverage to improve practices
• Need for better screening on High Risk Commodities (Wilmar)
 Labor
 Biodiversity
What we are doing
• Good practice guidance
 Agro-commodities and supply chain
 Child Labor Monitoring Tool
 Commodity roundtables
• Expanded scope of verification
• Better screening tools (Trade Finance due diligence)
11
WHAT ARE
WE
LEARNING
AND
DOING
ABOUT
LABOR?
What we are learning
• Increasing concern and source of complaints
(Standard Profil, Avianca, Bujagali,Tata Tea, Harmon Hall)
 Weak implementation of national laws
 Frequently not under clients’ direct control
 Freedom of association & collective bargaining;
supply chain; working conditions
What we are doing
• Greater use of external experts on appraisal
and supervision
• Engagement with global unions, ILO
• Technical training for staff
• New guidance for staff and clients
(contractor management; child labor)
12
WHAT
LEARNING AND DOING
FINANCIAL INTERMEDIARIES?
ARE WE
ABOUT
What we are learning
• Effective E&S Risk Management Systems are key
• Time lag: From system to results
• Need for enhanced IFC supervision
(esp. for high risk)
 Sample of sub-projects
• Clients need capacity building
What we are doing
•
•
•
•
Implementing the Action Plan approved by CODE
Increased supervision of high risk FIs
Expanded capacity building for FI clients
Engagement with broader stakeholder groups,
strengthening of authorizing environment
13
GOING FORWARD
We will:
• Share these lessons broadly across IFC
• Continue to build capacity – internal as well as client
• Increase attention to E&S issues in decision-making at all
levels of IFC
• Strengthen our dialogue with the CAO
• More actively engage with the Board
However, challenges will remain—we cannot guarantee outcomes
14
DINANT: UPDATE ON ACTION PLAN
15
APPROACH
FOR REVISING THE
DINANT ACTION PLAN
• Guided by commitments made to the Board and publicly posted in
January—Revised Plan is now more comprehensive and robust
• Sought input and advice from CAO, outside experts, NGOs, Board
members, WB colleagues and the client
• Taking an iterative & consultative approach to build out/refine the
Plan – “Consultation Draft”
• Little IFC or external precedent with respect to backward-looking
investigation
• Plan was presented for feedback to Board Members on April 4 and
was publicly released April 8
• Consultations with local communities on Draft Action Plan
16
THE SECURITY ACTION PLAN AND DINANT'S
INVESTIGATION
• Revised Dinant Action Plan comprises four components (all of which
will be further informed by consultation):
 Dinant Security Action Plan (training, new protocols, compliance
investigation of past allegations as per PS 4)
 Community Engagement Plan (special focus on Aguan Valley Communities,
conflict mapping, baseline surveys)
 Establish Grievance Mechanism (conflict-sensitive)
 Ongoing Implementation of ESAP (ISO 14000/18000, air emissions, OHS)
Result is a comprehensive document that includes all actions Dinant
will take to ensure compliance with IFC's performance standards
17
IFC
TO
MONITOR AS GUIDED BY EXTERNAL EXPERTISE
Investigation of past allegations
• No IFC precedent nor expertise for the investigation that Dinant is required to
undertake in compliance with PS 4
• IFC will hire a security expert to advise us, review ToR, and monitor
implementation
• Stakeholder, CAO and expert input indicates need for reputable third party
investigator to lead investigation – candidate must be acceptable to IFC
• “Compliance” investigation by client versus “criminal” investigation by GoH
• If wrongdoing is found corrective actions will be taken (including disciplinary
measures and compensation as warranted)
Community Engagement
• Recognize that some communities may be in conflict with Dinant – consultations
facilitated by international consultants with participation of client and IFC
• There is a need for specialized expertise familiar with working on dispute
resolution and in conflict zones
• IFC will hire its own conflict mediation consultants to support client’s
consultation process with affected Aguan Valley communities
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NEXT STEPS
• “Consultation Draft” of Revised Action Plan has been posted on IFC’s
website, and will be reviewed with civil society at Spring Meetings
• Dinant will develop the Security Action Plan and the Community
Engagement Plan (including Grievance Mechanism) in consultation
with local communities (now through December)
• IFC will hire its own expert advisor on security issues/investigations
• IFC will monitor Action Plan implementation directly and via
input/guidance from external experts
• “Lessons Learned” has also been posted on IFC’s website
• WBG to continue outreach to the Government of Honduras & partners
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DISCUSSION
20
ANNEX: ADDRESSING
BROADER CHALLENGES
AGUAN
THE
IN THE
• Stakeholders have made clear that resolving Dinant-specific issues via
the Action Plan is a start but not the answer to what drives conflict in
the Aguan
• There seem to be at least two key areas of focus to reduce tensions:
 Restore the rule of law and personal security/prosecute human rights crimes
 Establish a stakeholder dialogue that enables farmer, community, private
sector and Government representatives to map the sources of conflict and
define a future vision for economic and social development for the Aguan
• The World Bank Group is reviewing what role we might play based on
expertise and convening power (or lack thereof)
• The Government is central to any solution and multiple partnerships
will be necessary
21

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