04/08/2011 (Bank Information Center) - The IFC's policy updates, approved by the board in May and coming into effect on the first of the upcoming year, have now been released to the public. BIC and partners will be writing an analysis of the gains and gaps in the new policies soon, but we congratulate the IFC on strengthening these vital policies.

Beginning in September 2009, the IFC was involved in a year and a half long process to revise a number of its key policies: the Policy on Social and Environmental Sustainability, the Performance Standards, and the Disclosure Policy. Together, these three are called the IFC's "Sustainability Framework." All three were updated in May 2011.  

Context of the Review
In 2008, IFC invested over $16 billion in private companies operating in the developing world, including firms engaged in activities that produce significant social and environmental impacts, such as gold mining, oil and gas pipelines, oil palm plantations, pulp and paper mills, among others.

Apart from its function as a lender, IFC also plays an important role in setting social and environmental standards for investments in developing countries. In particular, IFC exerts an increasing influence on the standards applied by private banks involved in project finance. As of June 2009, 68 private financial institutions such as CitiGroup and ABN Amro, have adopted a set of social and environmental standards, called the Equator Principles, which are based on the IFC’s Performance Standards. This amounts to a commitment that the projects they finance abide by the same environmental and social requirements as IFC-sponsored projects. IFC estimates that over 70 percent of project finance in emerging markets falls under the Equator Principles.

Because the influence that it wields is disproportionate to the amount that it invests, IFC represents an important target for civil society advocacy to not only strengthen requirements in IFC's own projects, but also potentially to a host of private banks and across the industries in which it invests.

revisions
The revision process led to many important changes, which BIC and partners will be analyzing soon. Some of the major successes for civil society include requirements to:

■disclose principal contracts for extractives projects
■require free, prior, and informed consent for indigenous peoples
■disclose whether and how FPIC (or broad community support for non-IP communities) was obtained by the client
■disclose project-level information on the environmental & social impacts and development outcomes
With the release of the Board Paper and text of the updated Performance Standards, all that remains are the guidance notes, planned to be released by the end of October.