Guidance Note 1 - REV - 0 - Clean

Guidance Note 1 - REV -0
Assessment and Management of Social and Environmental Risks and

Impacts
May 19, 2010
Guidance Note 1 corresponds to Performance Standard 1. Please also refer to Performance

Standards 2–8, as well as their corresponding Guidance Notes for additional information.
Bibliographical information on all referenced materials appearing in the text of this Guidance
Note can be found in the References section at the end.
Introduction
1. Performance Standard 1 underscores the importance of managing the social and

environmental performance associated with a client’s business activities during the project
life-cycle (design, construction, operation, and decommissioning or closure, where
applicable). An effective social and environmental assessment and management system is a
dynamic and continuous process initiated and supported by management, and involves
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meaningful communication between the client and its stakeholders —workers, Affected
3 4
Stakeholders, and other stakeholders. Drawing on the elements of the established
business management process of “plan, do, check, and act,” the management system
entails a methodological approach to managing social and environmental risks and impacts
in a structured way on an ongoing basis. A good management system appropriate to the
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size and nature of the project activity promotes sound and sustainable social and
environmental performance, and can lead to improved financial, social, and environmental
outcomes.
2. At times, the assessment and management of certain social and environmental risks
and impacts may be the responsibility of the government or other third parties over which
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the client does not have control or influence. Examples of where this may happen include:
(i) when early planning decisions are made by the government or third parties which affect
the project site selection and/or design; and/or (ii) when specific actions directly related to
the project are carried out by the government or third parties such as providing land for a
project which may have previously involved the resettlement of communities or individuals
and/or land clearing of biodiversity. While the client cannot control or often even influence
these government or third party actions, an effective management system should identify
the different entities involved and the roles they play, and the corresponding risks they
present to the client in order to help achieve environmental and social outcomes that are
consistent with the Performance Standards.
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1
“Stakeholders” includes workers, Affected Stakeholders, and other Stakeholders.
2
Workers are defined as workers employed by the client, as well as other workers directly contracted by the
client to carry out work on the project.
3
Affected Stakeholders are people, groups, or communities, who are subject to actual or potential project-
related risks and/or adverse impacts on their physical environment, health, or livelihoods and who are often
located in the project's near geographical proximity, particularly those contiguous to the existing or proposed
project facilities.
4
Other stakeholders are defined as those people or groups that are not located in the project's geographical
area of influence and have an interest in a project and/or ability to influence its outcomes.
5
Recognizing the fact that the Performance Standards are used by financiers, insurers, and investors in
connection with financing and guarantees of specific or general business activities, and by companies generally
for compliance assessment and ongoing guidance, the term “project” as used in the Performance Standards
does not necessarily imply project finance or specific physical boundaries of business activities under
consideration. Instead, each user of the Performance Standards should define the business activity to which the
Performance Standards should apply, and build its approach to assessment and management of social and
environmental risks and impacts, consistent with this Performance Standard.
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Contractors retained by, or acting on behalf of the client(s), are not considered third parties for the purposes of
this Performance Standard.
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Objectives
To identify and evaluate social and environmental risks and impacts of the project
To adopt a mitigation hierarchy to avoid, or where avoidance is not possible, reduce,
restore, or compensate/offset for risks and impacts to workers, Affected Stakeholders,
and the environment
To promote improved social and environmental performance of clients through the
effective use of management systems
To ensure that relevant environmental and social information related to the project is
accessible to Affected Stakeholders and other interested parties
To build constructive relationships and to ensure that Affected Stakeholders are
appropriately engaged throughout the project life-cycle, on issues that could potentially
affect them
To ensure that projects manage communications and grievances from Affected
Stakeholders and other parties
G1. The assessment and management of social and environmental risks and impacts is part of
the larger overall set of processes that a client uses to manage its business activities (i.e., the
project), but is, however, essential for successful and sustainable performance of these
activities. Performance Standard 1 underscores the importance of managing the social and
environmental (including labor, health, safety, and security) performance throughout the life of
the investment. A good assessment and management system enables continuous improvement
of social and environmental performance, and can lead to improved economic, financial, social,
and environmental outcomes. For certain business activities and risks, it also explicitly
recognizes the role of responsible government agencies and other responsible third parties to
ultimately assure the desired social and environmental outcomes (i.e., it should extend to fully
encompass relevant and necessary third party relationships). The degree to which these
interactions can be managed so as to achieve desired outcomes will depend on the nature of
the third party and the relationship that governs interactions between the client and the third
party. The example in Performance Standard 1 paragraph 2 is that of location of the activity to
be funded. In this instance, the government agency that arbitrates land use (e.g., through a
regional planning approach or zoning code) plays a pivotal role in how the activity to be funded
can be designed or realized, but is an area where the client has little ability to control or
influence the outcome and hence, possible associated impacts. A contractual arrangement with
a supplier, on the other hand, is an example of a situation where the client may have
contractual, financial, and, therefore, operational leverage enabling a level of control to be
exerted that will directly influence how the supplier performs with respect to related impacts and
their avoidance, prevention, minimization, mitigation, or compensation. The appropriate
assessment and management of environmental and social risks and impacts will recognize the
differences in these relationships and will make provisions accordingly to best affect outcomes
given inherent limitations and constraints or opportunities.
G2. Before IFC proceeds with an investment, IFC reviews the client’s social and environmental
management system. For details on IFC’s process of social and environmental review, see the
Environmental and Social Review Procedure, and for further information on examples and
benefits of improving sustainability performance, see IFC’s sustainability resources (listed in the
References section below).
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Scope of Application
3. This Performance Standard applies to projects with social and/or environmental risks
and impacts that should be managed, from the early stages of project development, and on
an ongoing basis during the project life-cycle.
G3. Business activities supported and financed by IFC include a wide range of investment and
products. Products with longer tenor include (i) direct lending to private sector companies
(including corporate and project finance); (ii) lending to various types of FIs, funds, and facilities;
(iii) minority equity stakes in companies (including financial institutions); and (iv) guarantee
facilities, municipal finance, as well as investments by IFC’s Asset Management Company, all of
which must meet the requirements of the Performance Standards. Products with shorter tenor
include short-term guarantees and trade finance products, among others. These products, when
determined to have low social and environmental risk, are subject to the IFC Exclusion List and
relevant national laws.
G4. Recognizing the fact that the Performance Standards are used by financiers, insurers, and
investors in connection with financing and guarantees of specific or general business activities,
and by companies generally for compliance assessment and ongoing guidance, the term
“project” as used in the Performance Standards does not necessarily imply project finance or
specific physical boundaries of business activities under consideration. Instead, each user of the
Performance Standards should define the business activity to which the Performance Standards
should apply, and build its approach to assessment and management of social and
environmental risks and impacts, consistent with this Performance Standard.
Requirements
Social and Environmental Assessment and Management System

4. The client, in coordination with other responsible government agencies and third
parties as appropriate, will conduct a process of social and environmental assessment and
establish and maintain a management system appropriate to the nature and scale of the
project and commensurate with the level of its social and environmental risks and impacts.
The management system will incorporate the following elements: (i) Policy Statement; (ii)
Identification of Risks and Impacts (social and environmental assessment system); (iii)
Management Systems, Plans and Agreements; (iv) Organizational Capacity and
Competency; (v) Emergency Preparedness and Response; (vi) Stakeholder Engagement;
and (vii) Monitoring and Review.
A Social and Environmental Assessment and Management System can take a variety of forms
and complexities. It can be stand alone, fully integrated with all business processes, formal or
informal, externally certified or self-declared to be sufficient in its scope, content and operation.
The design and implementation of such an assessment system should, however, be singular in
its intent. It should provide an organization with a structure, within which a sufficient level of
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understanding of what the social and environmental risks and impacts associated with their
activities can be better gained, and a means to ensure these risks and impacts are
subsequently managed.
G5. The Social and Environmental Assessment and Management System required by this
Performance Standard can be considered to contain all the elements that are deemed to be
appropriate in order to “plan, do, check, act” with regard to social and environmental risks and
impacts. In this way it can be seen to be similar, but not identical, to the ISO 14001
environmental management system. Regardless, in the same manner as any management
system approach, it must be tailored to fit the needs of the organization. The management
system—and it must contain all four constituent parts to function as a management system—
governs a process. This process starts with planning (the identification of what is important (i.e.,
the risks and impacts). Next the organization must decide what it is going to do about these
risks and impacts (through development and implementation of management programs, plans
and agreements) and with what resources (organizational capacity and competency). While this
is happening, the organization must keep an eye on the unexpected (emergency preparedness
and response) and keep those informed who need to know while also learning from them
(external communication and grievance mechanisms). The organization must also check on
their own performance and act when that performance is not appropriate or needs enhancing,
so as to ensure progress stays on track (monitoring and review). Underpinning the process is
the policy at all stages, which is the statement of all that is summarily important to the
organization and a document that should constantly provide direction and context to all actions
related to social and environmental risks and impacts.
G6. The level of detail and complexity of the social and environment management system and
the resources devoted to it will depend on the level of impacts and risks of the business
activities to be financed, and the size and nature of the client’s organization. A satisfactory
management system appropriate to the nature and scale of the business activities to be
financed and commensurate with the level of social and environmental risks and impacts is a
condition of IFC’s investment. If the client does not have a satisfactory management system at
the time of IFC’s appraisal of the business activities to be financed, one should be developed
and implemented over a reasonable period of time agreed with IFC, and be in effect in time to
manage activities financed by IFC.
G7. A management system that meets the requirements of Performance Standard 1 should be
in place at the level of the client’s organization in which the funds from IFC’s investment will be
utilized (i.e., at the corporate or at the activity-specific level). In the case of financing of specific
operating units or activities, whether greenfield or existing, the system structure should address
the social and environmental issues arising from the business activities being financed. In the
case of corporate or financial intermediary investments without identified specific facilities (i.e.,
site-based assets) at the time of investment, this will often mean establishing, building on, or
maintaining a corporate- or institution-level management framework.
G8. The social and environmental assessment and management system requirements of
Performance Standard 1 draw on the established dynamic business management process of
“plan, do, check, and act”. In the context of accepted international frameworks for quality and
environmental management systems (for examples, see the References section), this
management process can be summarized as follows:
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• Definition of a set of policies and objectives for social and environmental

performance of the activities;
• Identification of the social and environmental impacts and risks of the activities;
• Establishment of programs of mitigation and improvement measures and specific
actions that address identified risks and impacts;
• Establishment of an organizational structure to implement the program;
• Monitoring and review effectiveness and performance of the impact and risk
mitigation program.
G9. The effort needed to establish a management system depends on the client’s existing
policies and practices. Production- and quality-based management systems operating within
the client’s organization can be used as a foundation on which to build the elements of a system
consistent with Performance Standard 1 in the absence of an existing environmental, health,
and safety, human resource or social management system. Where a client has an existing
environmental, health, and safety, human resource and/or social management system, its
elements may meet or can be appropriately modified or expanded to meet the requirements of
Performance Standard 1. Where a client has developed and implemented a formal
environmental, labor, health and safety, and/or social management system consistent with an
internationally accepted standard, the explicit incorporation of the applicable Performance
Standards in the policy and objectives elements of such system(s) (in addition to the relevant
laws and regulations applicable to their activities, and other corporate priorities and objectives)
and implementation of an appropriate management program may be sufficient to meet the
requirements of Performance Standard 1. Formal management systems certified under
international standards are not required by Performance Standard 1. While certified systems
are likely to meet most of IFC’s requirements, they may still need to be revised to incorporate all
the objectives of the applicable Performance Standards for the particular business activity.
G10. Even though many formal management systems address external communication
processes, paragraphs 31 and 32 of Performance Standard 1 requires these to be expanded to
include specific grievance mechanisms as an important process element in managing social
and environmental impacts and risks. These mechanisms serve as a way to meet Performance
Standard requirements, prevent and address community concerns, reduce risk, and assist
larger processes that create positive social change.
Policy Statement
5. The client will provide an overarching Policy Statement of the social and environmental
objectives and principles to guide the project and achieve sound social and environmental
performance. The Policy Statement provides a framework for the social and environmental
assessment and management process, and will specify that the project will comply with the
applicable laws and regulations of the jurisdictions in which they are being undertaken,
including those laws implementing host country obligations under international law. The
Policy Statement should be consistent with the principles of the Performance Standards.
Under some circumstances, clients may also subscribe to other internationally-recognized
standards, certification schemes, or codes of practice and these too should be included in
the Policy Statement. The Policy Statement will indicate who, within the client’s
organization, will ensure conformance with the Policy Statement and be responsible for its
execution (with reference to an appropriate responsible government agency or third party,
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as necessary). The client must ensure that the Policy Statement is properly communicated
to all levels of the client’s organization.
G11. Clients, companies, projects or organizations can have a need for many different types of
policies. For example, policies may affect matters of human resources, ethics, travel or any
number of other business-related activities that must be defined, understood and communicated
to those whose actions need to be governed or guided by its content. The Policy Statement as
required by this Performance Standard pertains i) in case of projects with defined scope and
assets (e.g. project finance) expressly to project to be financed and ii) in case of projects with
undefined scope of assets (e.g. corporate lending) to corporate level performance. A successful
Policy Statement for a green field investment,contains language that makes it clear it was
written specifically for the project tobe financed. In so being, employees, contractors, suppliers,
and others directly involved in the business activity can relate to the policy. They can apply it
when making decisions to ensure what was deemed to be important in governing social and
environmental risks and impacts when the policy was written is acted upon and reflected in
decision making and outcomes. In this way the policy becomes a “living document” and not
something that is written once and then forgotten.
G12. The Policy Statement will reflect the client’s investment philosophy regarding
management of social and environmental risks and impacts of the activities being financed, and
include specific objectives and aspiration’s the client has set in regard to its social and
environmental performance. The Policy Statement will have the commitment of, and be signed
by, a member of the client’s senior management. The Policy Statement should clearly reference
its commitment to ensuring that activities to be financed are operated in a manner consistent
with IFC’s Performance Standards.1
G13. In many cases, the Policy Statement will also include other major social and
environmental commitments of the client such as compliance with international protocols or
industry-specific codes of practice’ standards to which the client has committed.
G14. The Policy Statement will specify that the client’s activities being financed will comply with
all applicable social and environmental laws and regulations of the host country(ies) in which
these activities are undertaken and explicitly indicate that it will seek to ensure that these same
projects are operated in a manner consistent with IFC’s Performance Standards.
G15. .An effective Policy Statement is one that is actively endorsed by the client’s senior
management team and actively communicated to employees at all levels and all functions of the
client organization. Good practice will also include externally communicating the policy by
presenting it in client statements and reports, and verbally communicating it to all relevant
stakeholders. Communities or other stakeholders affected by a business activity to be funded
who are aware of the content of the policy can make informed statements regarding social and
environmental risks and impacts. This type of communication can be valuable in assisting a
business activity to be funded in improving social and environmental performance.
1
IFC’s Performance Standards can be found at http://www.ifc.org/ifcext/sustainability.nsf/Content/PerformanceStandards.
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G16. The Policy Statement for certain type of clients (financial institutions, funds, and some
corporate investments) will reference IFC’s Exclusion List2 and include a commitment that the
business activities to be financed will not include any of the activities contained in this Exclusion
List.
Risks and Impacts Identification

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6. The Client will identify the social and environmental risks and impacts of the project.
The type, scale, and location of the project guides the scope and level of effort devoted to
the risks and impacts identification process. The scope of the risks and impacts
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identification process will be consistent with good international industry practice, and will
determine the appropriate and relevant methods and assessment tools. The Assessment
may comprise a full-scale social and environmental impact assessment, a limited or focused
environmental or social assessment, or straightforward application of environmental siting,
pollution standards, design criteria, or construction standards. When the project involves
existing business activities, social and/or environmental audits may need to be performed
to determine any areas of concern or in other situations a risk/hazard assessment. The risks
and impacts identification process will be based on recent social and environmental
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baseline data at an appropriate level of detail. The process will consider all relevant social
and environmental risks and impacts of the project, including the issues identified in
Performance Standards 2 through 8, and communities or people who are likely to be
affected by such risks and impacts. The process will also consider potential transboundary
effects, such as pollution of air, or use or pollution of international waterways, as well as the
emissions of greenhouse gasses.
7. Risks and impacts will be identified in the context of the project’s area of influence. This
area of influence encompasses, as appropriate:
The client’s activities, assets, and facilities that are directly owned, operated, or
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managed (including by contractors) and that are related to the project;
Associated facilities are defined as those facilities that would not be constructed if the
client’s project did not exist and where the client’s project would not be viable without
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the other facility. Associated facilities may be funded, owned, constructed and
operated separately;
Areas potentially affected by cumulative impacts from further planned development of
the project, any existing project or condition, and other developments that are
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realistically defined at the time of the risks and impacts identification process;
_____________________
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Relevant risks and impacts to consider and identify if reasonably expected to be significant include, among
others, those relating to climate change, human health, human rights, gender differences, ecosystem functions,
and access to water resources.
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Defined as the exercise of professional skill, diligence, prudence and foresight that would reasonably be
expected from skilled and experienced professionals engaged in the same type of undertaking under the same
or similar circumstances globally.
2
IFC’s Exclusion List can be found at http://www.ifc.org/ifcext/sustainability.nsf/Content/IFCExclusionList.
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9
An example of an appropriate level of detail is accounting for projected variability in climatic and environmental
conditions due to potentially significant climate change that could occur over the life of the project which may
require some level of adaptation where this is practical. Practicality will depend upon the location of the project,
and the availability of data at a scale that is relevant.
10
Examples include power transmission corridors, pipelines, canals, tunnels, relocation and access roads,
borrow and disposal areas, construction camps, and contaminated land (e.g., soil, groundwater, surface water,
and sediments).
11
Examples include railways, roads, power plants or transmission lines, pipelines, utilities, warehouses, and
logistics terminals.
12
Other developments may, based on specific conditions, include any combination of planned, proposed, or
permitted developments.
Areas potentially affected by impacts from unplanned but predictable developments

caused by the project that may occur later or at a different location.
The area of influence does not include potential impacts that would occur without the
project.
8. Risks and impacts will be analyzed for the key stages of the project life-cycle, including
design, construction, operation, and decommissioning or closure, as appropriate. Where
relevant, the identification of risks and impacts will also consider the role and capacity of
third parties (such as local and national governments, and contractors and suppliers), to the
extent that they pose a risk to the project, recognizing that the client should address these
risks and impacts in a manner that is commensurate to the client’s control and influence
over the third party actions.
9. The impacts associated with supply chains will be considered where the resource
utilized by the project is ecologically sensitive (refer to Performance Standard 6), or in cases
where there is a high risk of child labor, forced labor, or significant occupational, health and
safety issues (refer to Performance Standard 2).
10. The identification of risks and impacts will take into account the findings and
conclusions of related and applicable plans, studies, or assessments prepared by relevant
government authorities that are directly related to the project. These include master
economic development plans, regional plans, feasibility studies, alternatives analyses, and
cumulative, regional, sectoral, or strategic environmental assessments where relevant. The
risks and impacts will reflect the outcomes of consultation with Affected Stakeholders.
11. As part of the process of identifying risks and impacts, the client will identify groups
and communities that may be directly and differentially or disproportionately affected by the
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project because of their disadvantaged or vulnerable status. Where groups are identified
as disadvantaged or vulnerable, the client will propose and implement differentiated
measures so that adverse impacts do not fall disproportionately on them and they are not
disadvantaged in sharing development benefits and opportunities.
12. The process of identification of risks and impacts will consist of an adequate, accurate,
and objective evaluation and presentation, prepared by qualified and experienced
individuals. For projects posing potentially significant adverse impacts or where technically
complex issues are involved, clients will involve external experts to assist in the risks and
impacts identification process and to verify its monitoring information.
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____________________________________________________________
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This disadvantaged or vulnerable status may stem from an individual’s or group’s race, color, sex, language,
religion, political or other opinion, national or social origin, property, birth, or other status. The client should also
consider factors such as gender, age, ethnicity, culture, literacy, sickness, physical or mental disability, poverty
or economic disadvantage, and dependence on unique natural resources.
G17. For real sector projects where the scope and assets of the project are known potential
impacts and risks should be identified and documented for each key stage of the development
cycleof the project, including design and planning, construction, operations, and
decommissioning or closure and for their short-term, long-term, and cumulative contexts,
keeping in mind the dynamic and shifting nature of these impacts and risks. In case of projects
with undefined scope and assets (e.g. corporate loans) identification process should be based
on inherent risks related to particular sector and project settings. IFC within its due diligence will
check client’s existing environment and social management system and capacity to address
those risks.
G18. In case of investment through Financial Intermediaries IFC will delegate to FIs the
responsibility for transaction appraisal and monitoring as well as overall portfolio management.
Environmental and social risk management is part of the responsibilities delegated to FIs. In
order to appropriately manage its environmental and social risks related to FI investments, IFC
conducts due diligence of the business portfolio of its FI client to identify activities where the FIs
and IFC could be exposed to reputational risks as a result of their investments and defines
requirements for managing these. IFC reviews implementation capacity of FIs against its
requirements as well as environmental and social management systems as required by
Performance Standard 1. These Systems should be commensurate with the level of
environmental and social risks associated with their projects and type of investment made by
with IFC. FI clients request their clients (sub-projects) to identify impacts and risks as described
below. They will also have a procedure(s) to verify risk and impact identification conducted by
their clients (see section on Social and Environmental Assessment and Management Systems)
G19. The process of identifying social and environmental risks and impacts addresses the full
scope of impacts and risks (including labor, health, safety, and security) associated with the
business activities to be financed. It is an important first step in managing and improving social
and environmental performance, as it helps the client to assess all relevant potential impacts
and risks associated with the business activities to be financed (whether addressed through the
Performance Standards or not), and identify any mitigation or corrective measures that will
enable the business activities to meet the applicable requirements in Performances Standards 2
through 8, any applicable local laws and regulations, as well as any additional priorities and
objectives for social or environmental performance identified by the client. For guidance on how
to address labor issues in the process of, or in addition to, the client’s process of risk and impact
identification, see Guidance Note 2. An example of health impact assessment process and
critical elements in a health assessment can be found in Guidance Note 4 and its References
section. Guidance on risk assessment related to security issues can also be found in Guidance
Note 4.
G20. The risk and impact identification process should be based on recent, up-to-date
information, including detailed description of the activities to be financed, in their geographic,
ecological, social, health and temporal context. For example, in case of greenfield project
finance, relevant information will include any related facilities that may be required (e.g.,
dedicated pipelines, access roads, power plants, water supply, housing, and raw material and
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product storage facilities). The description will encompass facilities and activities by third parties
that are essential for the successful operation of the business activities to be financed. The
collection and analysis of social and environmental baseline data, at an appropriate level of
detail for the business activities to be financed, is essential to assess the dimensions of the
business activities’ area of influence, and describe relevant physical, biological, socioeconomic,
health and labor conditions, including any changes anticipated to occur in the foreseeable
future, and current and proposed development activities within the business activities’ area but
not directly connected to the business activities to be financed.
Risks and Impacts Identification Methods
G21. The risk and impact identification process should include all the necessary steps and
methods that are required to screen, identify, analyze, measure, or assess, in quantitative terms
to the extent possible, the potential risks and impacts (including environmental, social, health,
and safety, and labor and security) associated with the business activities to be financed. It is
expected that the client will apply the methods, consistent with current internationally-
recognized best practice, which are appropriate and relevant to the type of business activities.
Those methods include, but are not limited to (i) full-scale Environmental and Social Impact
Assessments (ESIAs); (ii) special environmental and social studies such as climate impact
assessments, human rights impact assessments, health impact assessments, or risk/hazard
assessments; (iii) environmental and social audits for acquisitions; and (iv) environmental and
social due diligence for financial institutions and investment funds.
G22. Environmental and Social Impact Assessment. For certain business activities, and
particularly for greenfield investments and business activities (including, but not limited to, major
expansion or transformation-conversion activities) that are likely to have significant adverse
environmental and social impacts, the risk and impact identification effort will require a
comprehensive, full-scale ESIA process. The key process elements of an ESIA generally
consist of (i) initial screening of the business activity to be financed and the scoping of the
assessment process; (ii) examination of alternatives; (iii) stakeholder identification and gathering
of social and environmental baseline data; (iv) impact identification, prediction, and analysis;
(v) generation of mitigation or management measures and actions; (vi) significance evaluation
of residual impacts; and (vii) documentation of the assessment process (ESIA report). The
breadth, depth and type of analysis should be proportionate to the nature and scale of the
proposed activity(ies)’ potential impacts as identified during the course of the assessment
process. The ESIA must conform to the requirements of the host country’s environmental
assessment laws and regulations, including the relevant disclosure of information and public
consultation requirements, and should be developed following principles of international best
practice (see the References section for further guidance). In exceptional circumstances, a
regional, sectoral or strategic assessment may be required, as discussed in Paragraphs GX and
GX. Further guidance on mitigation measures and management programs is provided in
Paragraph GX through GX.
G23. The ESIA process will predict and assess the business activities’ likely positive and
negative impacts, in quantitative terms to the extent possible. It will evaluate social and
environmental impacts and risks from associated facilities and other third party activities. The
ESIA will identify and define a set of social and environmental mitigation and management
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measures to be taken during the implementation of the project to avoid, reduce, restore, or
compensate/offset for adverse social and environmental impacts, in the order of priority, and
their timelines, and will identify any residual negative impacts that cannot be mitigated. The
desired outcomes of the mitigation and management measures should be set as measurable
events to the extent possible, such as performance indicators, targets or acceptance criteria that
can be tracked over defined time periods. The assessment process will indicate the resources,
including budget, and responsibilities required for implementation for the mitigation and
management program. The assessment will explore opportunities for enhancement. The ESIA
will also provide an identification and estimate of the extent and quality of available data, key
data gaps, and uncertainties associated with predictions, and specifies topics that do not require
further attention. For those activities with potentially significant adverse impacts predominantly
in the social area (e.g., involuntary resettlement), the impacts and risks identification process
should largely focus on generating appropriate social baseline data, impacts analysis, and
mitigation measures (e.g., Resettlement Action Plan).
G24. The ESIA will include an examination of technically and financially feasible alternatives to
the source of such impacts, and documentation of the rationale for selecting the particular
course of action proposed. The purpose of alternative analysis is to improve project design,
construction, and operation decisions based on feasible alternatives to the proposed activities.
This analysis may facilitate the consideration of social and environmental criteria at the early
stages of development and make decisions based on the differences between real choices.
The alternatives analysis should be conducted as early as possible in the process and examine
feasible alternatives such as alternative locations, designs or operational processes, or
alternative ways of dealing with social and environmental impacts.
G25. It is best practice to ensure that appropriate follow up actions are conducted to verify that
the terms and condition of approvals are met and to implement a monitoring program on
impacts and effectiveness of mitigation measures.
G26. A formal ESIA report should be prepared in compliance with applicable and relevant legal
requirements and in accordance with accepted international practice. Guidance on international
best practice is provided by internationally-recognized organizations (see the References
section). Summaries of analyses should explain findings clearly and objectively, and be
understandable to laypersons.
G27. Environmental and Social Studies and Risk/Hazard Assessments. The business
activities to be financed may consist of specific activities with limited adverse social and
environmental impacts and risks, and for which the development of a comprehensive, full scale
ESIA is not required by the host country’s environmental assessment laws and regulations.
These activities may include, for example, modernization and upgrade of existing production
facilities, not involving major expansions; transformations or land conversions; real estate
projects in urban areas and/or developed areas with the needed infrastructure; development of
social infrastructure such as health and education facilities, etc. The methods for the risk and
impact identification process for such activities include streamlined social and environmental
assessments that are narrower in scope than a full-scale ESIA, and hazard/risk assessments
that are specific to potential social, environmental, and health and safety impacts, and risks
associated with the business activity.
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G28. The determination of the analyses and assessments needed should be conducted
through a process of screening, which is a systematic approach to reviewing and documenting
the social and environmental effects of the business activities to be financed and determining
the need to (i) eliminate or minimize (mitigate) the adverse effects; (ii) modify the business
activity plan; or (iii) determine the need of further assessment. Screenings will vary in time
required and depth of analysis, depending on the circumstances of the business activities, the
existing environment, and the likely social and environmental effects. Examples of streamlined
analyses and assessments include air quality impact studies, noise impact studies, water quality
impact and water sustainability studies, and traffic impact assessments.
G29. As discussed under Performance Standard 3, where a project has the potential to release
toxic, hazardous, flammable or explosive material, or where project operations could result in
injury to plant personnel or the public as identified by the risk and impact identification studies,
the client should conduct a hazard analysis of their operations, as part of their risks and impacts
identification process. Hazard analysis is often conducted in conjunction with Hazard
Identification (HAZID) studies and Hazard and Operability (HAZOP) studies. Other examples of
risk/hazard assessments include life and fire safety assessments (as required under
Performance Standard 4), quantitative risk assessments (QRA that are conducted for industrial
facilities with potential for major accidents), and human health and environmental risk
assessments (e.g., industrial facilities with significant emissions to the environment, brownfield
development projects with conversion from industrial to commercial or residential uses).
Environmental site assessments are used to identify the nature and extent of contamination on
a specific site. Further guidance on international practice on risk/hazard assessments is
provided in the References section.
G30. The client will document the activities to be financed, the screening process to identify
key social and environmental aspects, impacts and risks analysis contained in the specific
social and environmental studies and risk/hazard assessments, and proposed mitigation
measures and management program/plans. Compliance with the legal and regulatory
framework, the applicable Performance Standards and the environmental and health and safety
performance levels established for the activities to be financed will be also documented.
G31. Environmental and Social Audits for Acquisitions. These methods should be applied in
case of business activities that involve existing activities and facilities and include corporate
finance, as well as property and asset acquisitions by the IFC client. Audits (or due diligence)
should be used to evaluate the environmental and social management system in place,
conformity with IFC Performance Standards, and regulatory compliance of a specific operation.
Environmental and social audits should provide identification and quantification of environmental
and social aspects, risks and liability, in a systematic, documented and objective process. The
audit should document the main environmental and social aspects of company operations (e.g.,
air emissions, wastewater effluents, hazardous waste generated, contaminated sites, land
acquisition, occupational health and safety, public / community safety, labor management and
standards, impacts on cultural resources), and identify the key environmental and social
concerns associated to the business activities to be financed and the known areas of past,
current or future non-compliance with national law and requirements and with IFC Performance
Standards. In addition to assessing compliance with relevant statutory and IFC requirements,
the audit should assess management control of environmental and social practices, and state
corrective actions (in particular actions to address known environmental and social non-
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compliance situations and liabilities). Environmental and social improvement opportunities

should be considered and identified, including, but not limited to, energy efficiency, cleaner
technologies, water use reduction, emission reduction, safer working conditions, and community
development programs. Audits should be aimed at establishing the baseline for the
development of effective environmental and social management systems.
G32. Environmental and social audit reports should be prepared in accordance with accepted
international practice. A discussion of the process used to conduct environmental audits and
some examples of accepted practice are provided in Annex A.
G33. Environmental and Social Due Diligence for Financial Institutions and Investment Funds.
The level of environmental and social due diligence (ESDD) should be based on the project’s
environmental and social risk profile and potential impacts, for example, whether they are
significant (e.g., irreversible, unprecedented, involving large resettlement) or moderate
(generally site-specific, largely reversible and mitigable). The ESDD shall typically consist of: (i)
review of all relevant documents and information provided by the investee and other sources;
and (ii) site reconnaissance comprising visual observations of relevant areas and meetings and
interviews with relevant stakeholders (investee personnel, governmental officials, Affected
Stakeholders, etc.). Upon completion of the due diligence, the findings, conclusions, and
recommendations shall be presented in the ESDD report.
Impacts and Risks
G34. Even if social and environmental impacts and risks are not specifically identified in
Performance Standards 2 through 8, they should be assessed under Performance Standard 1
as part of the client’s approach to risk management. For example, all relevant adverse impacts
on the livelihoods and income of the Affected Stakeholders within the business activities’ area of
influence should be assessed. Of such impacts, those that result from land acquisition
associated with the activities to be financed should be addressed through Performance
Standard 5 on Land Acquisition and Involuntary Resettlement, while other adverse impacts on
livelihoods that result from other activities should be addressed under Performance Standard 1.
Examples of adverse impacts that should be addressed under Performance Standard 1 include
loss of access to state-owned sub-surface mineral rights3 by artisanal miners; loss of access to
marine fishing grounds due to business activities; restriction of access to resources located
within state-determined exclusion zones not acquired by the client; and demonstrated
decreases in agricultural, livestock, forest, hunting and fishing yields resulting from disturbance
and/or pollution related to the business activities. For related guidance, see Guidance Note 5.
Depending on the circumstance, it may be appropriate to model mitigation measures for
adverse impacts on livelihoods assessed under Performance Standard 1 after livelihood
restoration measures specified under Performance Standard 5 for economic displacement
resulting from land acquisition. Integrating social and environmental considerations in the
context of an overall assessment of the business activities will enable clients to articulate the
overall risks and benefits and inform the clients’ decisions.
G35. The size of the area of influence, as well as the social and environmental impacts and
risks within the area, can vary considerably depending on the nature of the activities to be
3
In most countries, surface land rights are legally distinct from sub-surface mineral rights.
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financed. Some of these impacts and risks, particularly those described in the Performance
Standards, may be attributable to third parties within the area of influence. The larger the area
of influence, the more likely that third party action or non-performance could pose risks to the
activities to be financed. Where relevant risk and impact identification process will include these
third party risks, particularly risks over which the client may have a degree of control or
influence.
Global Impacts - Climate Change
G36. Direct and indirect climate change impacts may affect social and environmental
performance associated with a client’s projects, and significantly impact on sustainable
development objectives. Changing weather patterns due to climate change may have an
impact on projects in a variety of ways, including physical risks arising from damage associate
with significant climatologic events, such as storms or floods, but also including impacts
associated with availability of natural resources such as water or other ecosystem services, and
potential effects on the supply chain (for instance increasing costs of raw materials), as well as
on operations or working practices of the projects . Other potential effects associated with
change in climatic conditions and temperature is related to possible changing patterns in
demand for goods and services provided by the projects to be financed.
G37. The client should incorporate certain aspects related to climate change into their baseline
analyses especially in case of projects located in climate sensitive areas, consuming significant
amounts of water, emitting significant amounts of GHG gases and having other significant
impacts on climate, using recently updated climatologic data and accounting for projected
variability in climatic and environmental conditions due to climate change that could occur over
the life of the projects. Recently updated climatologic data should be used in the design of
applicable associated infrastructure of the projects , or for modeling the fate and transport of
emitted pollutants from an industrial facility, or for water sustainability studies.
G38. In case of projects located in climate sensitive areas, consuming significant amounts of
water, emitting significant amounts of GHG gases and having other significant impacts on
climate the client should, where technically and financially feasible, conduct a climate change
risks and impacts assessment either as stand-alone process or as part of the social and
environmental risks and impacts identification process. Such an assessment should: (i) identify
all direct and indirect climate related impacts and risks that may affect the project during its life
cycle, including natural resources availability and other business-related Performance
Standards issues (i) identify the impact of climate change on natural resources availability and
other related impacts throughout the projects’ life cycle, (ii) identify potential risks of climate
change for the projects to be financed, as appropriate, and (iii) determine the need for
appropriate monitoring and risk management (adaptation) measures.
G39. Specific requirements and guidance on greenhouse gases and ozone-depleting

substances can be found in Performance Standard 3 and its accompanying Guidance Note, and
on biodiversity, in Performance Standard 6 and its accompanying Guidance Note.
Transboundary Impacts
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G40. Transboundary impacts are impacts that extend to multiple countries, beyond the host
country of the business activities to be financed, but are not global in nature. Examples include
air pollution extending to multiple countries, use or pollution of international waterways,4 and
transboundary epidemic disease transmission.5 If the Assessment determines that (i) the
business activities to be financed entail activities that may cause adverse effects through air
pollution or abstraction of water from or pollution of international waterways; (ii) the affected
countries and the host country have entered into any agreements or arrangements or have
established any institutional framework regarding the potentially affected airshed, waterway,
subsurface water, or other resources; or (iii) there are unresolved differences between the
affected and host countries regarding the potentially affected resource, and the likelihood of a
resolution is not imminent, the client may be required to provide notice of the proposed business
activities to the affected country or countries. When requested by the client, IFC will assist the
client with notifying competent authorities of the affected countries. IFC’s role in this regard is
outlined in paragraph X of the IFC Policy on Social and Environmental Sustainability
(Sustainability Policy). IFC’s procedure for notification of competent authorities can be found in
the Environmental and Social Review Procedure. Examples of regional systems of assessment
and notification of transboundary impacts can be found in the References section.
Cumulative Impacts
G41. Government concessions and/or business developers often concentrate around available
natural resources (e.g., watersheds with hydro-electric potential, wind resources, coastal port
zones, oil reserves, mining resources, forests), potentially leading to multiple business activities
in the same geographical area. Multiple environmental and social impacts from existing
business activities, combined with the potential incremental impacts resulting from the proposed
and/or anticipated future business activities may result in significant cumulative impacts that
would not be expected in the case of a stand-alone project or business activity.
G42. As outlined in paragraph 7 of Performance Standard 1, a good environmental and social

impact and risk evaluation or Environmental and Social Impact Assessment (ESIA) typically
includes an assessment of the combined effects of the multiple components associated with the
business activity or project (e.g., quarries, roads, associated facilities). In situations where
multiple business activities occur in, or are planned for, the same geographic area, as described
above, it may be appropriate to include a Cumulative Impact Assessment (CIA) as part of the
risk and impact identification process.
4
IFC defines an international waterway as: i) any river, canal, lake, or similar body of water that forms a boundary between, or any
river or body of surface water that flows through, two or more states, whether IFC members or not; ii) any tributary or other body of
surface water that is a component of any waterway described in i) above; and iii) any bay, gulf, strait, or channel bounded by two or
more states or, if within one state, recognized as a necessary channel of communication between the open sea and other states—
and any river flowing into such waters.
5
Transboundary epidemic disease transmission is well known and has been observed in many settings. Many infectious diseases,
such as cholera, influenza and meningitis, can be rapidly and easily spread across national borders, particularly when a project
attracts a large influx of potential job seekers during a construction phase. Similarly, a project may bring in large numbers of
overseas workers for short-term specialty construction work. In some situations, the disease spectrum of the imported workers may
be quite different than the host country, e.g., multi-drug resistant tuberculosis, vivax versus falciparum forms of malaria. In some
cases, it may be appropriate for very large scale transboundary projects to consider the potential for global or regional level disease
epidemic transmission, e.g., avian influenza and SARS.
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G43. In practice, however, it may not be appropriate for the CIA to be performed by business
activity sponsors or individual project developers, as it requires the consideration of some
concepts that are not always found in a conventional EIA process. For example (i) impacts over
a large area that may cross jurisdictional boundaries (e.g., watershed, airshed, forest), (ii)
effects that may have occurred or will occur over a longer period of time, (iii) impacts on specific
ecosystem components or characteristics that will increase significance and/or irreversibility
when evaluated in the context of a series of existing or planned business activities, projects or
developments, and not just in the context of effects associated to the single project or business
activity under review. Examples of cumulative impacts include ambient conditions such as
incremental contribution of SO2 emission in an airshed, increase in pollutant concentrations in a
water body, reduction of flow of multiple water withdrawals, erosion control or sediment load
(see Performance Standard 3), interference with migratory routes or wildlife free movement in a
Natural Habitat, increased pressure on the carrying capacity or the survival of indicator species
in a given ecosystem, wildlife population reduction associated to several unrelated business
actives in the same area such as hunting, road kills and forestry operation, or depletion of a
forest as a result of multiple wood product extraction concessions, (see Performance Standard
6), among others. Even secondary or induced social impacts, such as in migration or
substantially increased transport activity in an area of influence (see Guidance Note 4), can be
considered as cumulative impacts.
G44. Even though cumulative impacts may not necessarily be different in quality from impacts
analyzed in an ESIA focus on the specific area and timeframe related to the business activities’
direct footprint and execution timetable. A CIA simply enlarges the scale and timeframe of the
assessment in which the business activity is performed. At a practical level, the challenge will be
in determining how large an area around the business activity should be assessed, in what
period of time, and how to practically assess the often complex interactions among different
business activities occurring at different times. The main difference with an ESIA process is that
a CIA transcends a single project development or business activity, and the potential
management or mitigation measures resulting from a CIA typically require participation from a
more complex and diverse number of stakeholders in order to be implemented efficiently and
effectively. Furthermore, mitigation measures associated with a CIA will typically require the
active participation of government authorities to assess the incremental contribution of each
developer or business activity to the cumulative impacts, determine and coordinate the
mitigation measures corresponding to each business activity, and enforce and document their
implementation. In all other ways a CIA is fundamentally the same as an ESIA and, therefore
often relies on established ESIA practices, including scoping, analysis of effects, evaluation of
significance, identification of mitigation measures, and follow-up.6
G45. According to paragraph 7 of Performance Standard 1, the assessment of a business

activity considering IFC financing should include an evaluation of its potential cumulative
environmental and social impacts. However, this assessment necessarily has to be
commensurate with the incremental contribution, source, extent, and severity of the cumulative
impacts anticipated. As a result, the geographic and temporal boundaries of the CIA will depend
on the potential cumulative impacts that are attributable to the business activity under evaluation
and those that affect the business activity as a result of reasonably foreseeable activities by
third parties, and will influence the final definition of the area of influence or unit of evaluation.
6
A good practitioners CIA reference can be found in http://www.ceaa-acee.gc.ca/default.asp?lang=En&n=43952694-1&toc=show
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Furthermore, the assessment must determine if the business activity to be financed is

incrementally responsible for adversely affecting an ecosystem component or specific
characteristic beyond an acceptable predetermined threshold (carrying capacity) by the relevant
government entity, in consultation with other relevant stakeholders. Therefore, although the total
cumulative environmental and social impacts due to many business activities actions are
typically identified in a government sponsored CIA, the assessment must make clear the degree
to which the business activity under review is contributing to the cumulative effects.
G46. The client’s baseline study should identify any relevant existing business activity, project
or condition that could lead to cumulative impacts. In terms of anticipated future projects, priority
should be given to assessing cumulative impacts stemming from the business activity being
considered for financing, such as further planned development associated with of the business
activity or project and other future developments in the project's area of influence that are
realistically defined at the time of the assessment (this may include any combination of
developments which are either proposed, licensed or for which permits exist).
G47. If the business activity’s incremental contribution to the cumulative effects is likely to be
negligible, and the potential cumulative impacts are likely to occur regardless of the business
activity to be financed, then a standard assessment and associated mitigation measures will be
expected to suffice. While the client is responsible for gathering information on cumulative
impacts under paragraph 7 of Performance Standard 1, the client is expected to address risks
and impacts commensurate to its activities and its control and influence over third party actions.
G48. Whenever feasible, IFC will ensure that the Client uses best efforts to engage relevant
government authorities, other developers, and other relevant stakeholders, in the assessment,
design, implementation and enforcement of coordinated mitigation measure to manage the
potential cumulative impacts resulting from multiple business activities in the same geographical
area or unit of analysis. In situations where cumulative impacts are likely to occur from activities
by third parties in the region, a regional or sectoral assessment may be more appropriate than a
CIA. For further guidance on such assessments see Paragraphs GX and GX below.
Human Rights
G49. The key human rights concepts can be found in the International Bill of Rights, consisting
of the Universal Declaration of Human Rights, the International Covenant on Civil and Political
Rights (ICCPR), and the International Covenant to Economic, Social and Cultural Rights
(ICESC). While states have the primary duty to implement the obligations contained these
instruments, private sector companies have a responsibility to respect these human rights in
their operations. Several important human rights analyses recently examined the relevance of
rights in the International Bill of Rights to projects, and concluded that, while the possibility that
businesses can impact all human rights expressed in the International Bill of Rights cannot be
ruled out, there are certain rights that are of particular relevance to the conduct of business.7
7
UN Human Rights Council, Protect, Respect and Remedy: a Framework for Business and Human
Rights: Report of the Special Representative of the Secretary-General on the issue of human rights and
transnational corporations and other business enterprises, John Ruggie, April 2008, A/HRC/8/5; Human
Rights Translated: A Business Reference Guide, Castan Centre for Human Rights Law, International
Business Leaders Forum, Office of the United Nations High Commissioner for Human Rights, and United
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G50. The Performance Standards provide a framework for a business to address human rights
issues in its operations and helps the business meet its responsibility to respect human rights.8
The Performance Standards are also intended to support the framework for business and
human rights, established in the report of the Special Representative of the Secretary-General
on the issue of human rights and transnational corporations and other business enterprises (the
SRSG), known as the Protect, Respect and Remedy Framework. The "respect" and "remedy"
aspects are both emphasized in Performance Standard 1: the need for human rights due
diligence through risks and impacts identification, and management of risks and impacts
through a management system, of which ongoing stakeholder engagement is an important part.
Performance Standard 1 also calls for a company level grievance mechanism to provide redress
to stakeholder concerns and complaints.
G51. In many cases, the process of social and environmental assessment will help identify the
pertinent human rights issues in a project. In certain projects with high risks inherent in the
sector (for example, extractive projects or sector or projects with a potential to rely on child or
forced labor), or projects proposed in conflict zones or other high risk situations, a freestanding
human rights impact assessment, undertaken early in the project development stage, will be
appropriate. Financiers and supporter that provide financial services to these projects may
benefit from such human rights impact assessment in their decision making process.
G52. The human rights aspects of the risk and impact identification and management
processes are explained in greater detail in the Guide to Human Rights Impacts Assessment
and Management, a joint publication of the International Business Leaders Forum and IFC
[provide a link]. The human rights risks and impact identification process should also explicitly
address the risk that the company may be complicit in a third party's violation of human rights.
Complicity in this context refers to indirect involvement of companies in human rights abuses
(Ruggie, 2008 A/HRC/8/16), and may involve the state, state agents, or private actors (e.g., joint
venture partners, suppliers). A key component of complicity is knowingly supporting, endorsing
or deriving s benefit from a third party’s violation of human rights. The human rights impact
assessment process should specifically review the possibility that a business may be deriving
benefit from third parties in violation of human rights. If such benefit is identified, the business
should take appropriate management action to address the risk of being perceived to be
associated with such situation. In these situations, the fact that the business may have no
significant control or influence of any kind over the situation may not be an argument for not
taking any action. Even if the business decides not to take any action, IFC may for its own
reason decide not to finance the project.
Ecosystem Services
G53. Ecosystems provide businesses, people and communities with a wide range of goods
and services. For example, forests supply timber and wood fiber for production purposes,
regulate climate by absorbing carbon dioxide, provide material for shelter to local communities
Nations Global Compact Office, 2008; and the Human Rights Compliance Assessment tool of the Danish
Institute for Human Rights (v1 and v2).
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who depend on such resources and yield genetic resources for medicines. These and many
9
other benefits from nature are known as “ecosystem services” . In recent years, the
fundamental importance of ecosystem services is being realized, both in terms of the
dependence on such services by business and the impacts resulting from projects on local
communities whose livelihoods directly depend on such services.
10
G54. Ecosystem services are divided into four categories of service : “provisioning services”
(i.e., the products people and businesses obtain from ecosystems such as food, fiber,
freshwater and biomass), “regulating services” (i.e., the benefits people and businesses obtain
from the regulation of ecosystem processes, such as flood and erosion control, natural hazard
regulation, surface water purification and carbon storage and sequestration), “supporting
services” (the natural processes such as nutrient cycling that maintain the other services) and
cultural services (the nonmaterial benefits people obtain from ecosystems such as spiritual
fulfillment).
G55. In certain instances as defined in Performance Standard 6, the client would be expected
to identify “priority” ecosystem services as part of the overall identication of risks and impacts
process.
G56. Priority services are the provisioning, regulating and cultural services that are most likely
to be a source of opportunity for the project (i.e., dependence) and/or risk to the project (impact
on directly affected stakeholders). Tools and methodologies for conducting an ecosystem
services assessment are as follows11: i) World Resources Institute, World Business Council for
Sustainable Development and the Meridian Institute (2008). The Corporate Ecosystem Services
Review: Guidelines for Identifying Business Risks & Opportunities Arising from Ecosystem
Change, Version 1.0.; ii) Natural Capital Project, in association with the World Wildlife Fund
(WWF), The Integrated Valuation of Ecosystem Services and Tradeoff (InVEST) tool; iii) Fauna
& Flora International (FFI) and UNEP (2009). The Ecosystem Services Benchmark. A Guidance
Document; iv) Roundtable on Sustainable Biofuel (2009). Ecosystem and Conservation
Specialist Guidelines in the Annex to the Guidelines for environmental and social impact
assessment, stakeholder mapping and community consultation specific to the biofuels sector.
Disadvantaged or Vulnerable Groups
G57. There may be individuals or groups within the area of influence who are particularly
vulnerable or disadvantaged and who could experience adverse impacts from the proposed
business activities more severely than others. Large scale business activities with a large area
of influence and multiple Affected Stakeholders are more likely to expose these individuals and
groups to adverse impacts than smaller scale business activities with site specific issues.
Where it is anticipated that the business activities will impact one or more Affected
Stakeholders, the assessment process should use accepted sociological and health methods to
identify and locate vulnerable individuals or groups within the affected community, collecting
data on a disaggregated basis. Using this disaggregated information, the client should assess
9
Adapted from Guidelines for Identifying Business Risks and Opportunities Arising from Ecosystem Change (The Corporate Ecosystem Services
Review), Version 1.0, produced by the World Resources Institute, World Business Council for Sustainable Development and the Meridian
Institute.
10
As defined in the Millennium Ecosystem Assessment: www:millenniumecosystem.org
11
Performance Standard 6 (annex) also provides a ecosystem services review methodology.
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potential impacts, including differentiated impacts, on these individuals and groups and propose
specific (and if necessary separate) measures in consultation with them to ensure that potential
impacts and risks to them are appropriately avoided, mitigated or compensated. Vulnerable or
disadvantaged individuals and groups should be able to benefit from opportunities equally with
the rest of the Affected Stakeholder; this may require that differentiated benefit-sharing
processes and levels (such as ensuring that compensation for a house taken during
resettlement is provided equally to the woman and man of the household, providing training for
individuals or groups who might lack the necessary skills to find a job with the business
activities, ensuring access to medical treatments for medical conditions resulting from the
business activities, etc.) are available. Monitoring should track these individuals or groups on a
disaggregated basis. Specific considerations and measures for Indigenous Peoples are
described in Performance Standard 7 and the accompanying Guidance Note. Clients should
exercise discretion in gathering personal data and information and should treat such data or
information as confidential (except where disclosure is required by law). Where Performance
Standard 1 requires disclosure of plans based on personal info or data collected, (such as a
resettlement action plan) the client should ensure that any personal data or information cannot
be associated with particular individuals.
Disability
G58. There are country laws, regulations, and other guidance pertaining specifically to people
with disabilities, who are highly vulnerable to disproportionate impact from the business
activities to be financed. Where no adequate legal framework exists, the client should identify
appropriate alternatives to avoid, minimize, restore, or compensate for potential adverse
impacts and risks on people with disabilities. The alternatives should be focused on creating
access to the resources and services for the community (e.g., accessibility to education,
medical assistance, training, employment, tourism, and consumer goods; and physical
accessibility to transportation, schools, hospitals/clinics, work facilities, hotels, restaurants,
stores, and other commercial areas). See the References Section for A Design Manual for a
Barrier Free Environment, and The U.S. Access Board. Clients should also consider
incorporating the principles of universal design (defined as the design of products,
environments, programs and services to be usable by all people, to the greatest extent possible,
without the need for adaptation or specialized design12) into design, construction, and operation
(including emergency and evacuation plans), whether new construction or restructuring,
expansion, or modernization of facilities, to maximize use by all potential users, including people
with disabilities.
Gender
G59. The business activities to be financed may have different impacts on women and men,
due to their differentiated socioeconomic roles and their varying degrees of control over and
access to assets, productive resources, and employment opportunities. There may be norms,
societal practices, or legal barriers that impede the full participation of persons of one gender
(usually women, but potentially men) in consultation, decision-making, or sharing of benefits.
These legal and societal norms and practices may lead to gender discrimination or inequality.
12
“Universal design” shall not exclude assistive devices for particular groups of persons with disabilities where this is needed (Article
2 of the United Nation Convention on the Rights of Persons with Disabilities adopted December 13, 2006).
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Gender-differentiated impacts should be assessed and the assessment should propose

measures designed to ensure that one gender is not disadvantaged relative to the other in the
context of the business activities to be financed. This may include providing opportunities to
enhance full participation and influence in decision-making through separate mechanisms for
consultation and grievances, and developing measures that allow both women and men equal
access to benefits (such as land titles, compensation, and employment).
G60. Health performance indicators and gender are strongly associated with each other.
Demographic Health Surveys (DHS) have repeatedly demonstrated the profound connection
between gender (usually women) and a wide variety of key health performance indicators.
Proposed interventions should be sensitive to and aware of the unique role played by women in
health. The use of peer educators and community level women’s organizations should be
considered. In many developing country settings, there are marked differences in the literacy
and educational attainment levels of women. Typically, female literacy and educational
attainment levels are marked lower than men, even if the woman is the household head.
Household level education literacy/attainment is also strongly tied to many critical health
performance indicators. Therefore, proposed mitigation interventions and/or outreach efforts
must factor this “ducation gap” into the planning process.
Third Party Impacts including Supply Chain Considerations
G61. The client may have limited or no leverage on third parties, such as a government agency
in charge of controlling in-migration in the area, or an illegal logging operation taking advantage
of access roads through forests. Nonetheless, the description of the business activities in the
assessment report should encompass facilities and activities by third parties that are essential
for the successful operation of the business activities, and the assessment process for activities
with a large area of influence should identify the roles of third parties and the potential impacts
and risks from their actions or non-performance. Clients should collaborate with third parties
and take action to the extent of their influence or control over them. IFC will work with the client
on a case-by-case basis to have the client and, where feasible, third parties develop appropriate
mitigation strategies.
G62. Among these third parties are operators of associated facilities (see paragraph 7 of
Performance Standard 1) that may have a particularly close relationship with the business
activities. Because of this relationship, the client will normally have some commercial leverage
on the operators of such facilities. Where such leverage allows, undertakings can be secured
from these operators to operate their facilities consistent with the applicable Performance
Standards. In addition, the client should identify its own actions, if any, that will support or
supplement the actions of the associated facilities.
G63. As with the third party impacts and risks described above, projects’ relationships with
supply chains could pose a particular challenge in certain sectors. The assessment should
identify the roles, impacts and risks of primary suppliers in relation to labor issues (child and
forced labor and significant OHS risks) and ecologically sensitive resources, as described in
paragraph 8 of Performance Standard 1. Generally, where the client has commercial leverage
over its suppliers, IFC will expect the client to work with its suppliers to propose mitigation
measures proportionate to identified risks on a case-by-case basis, while recognizing that
assessing and addressing supply chain implications beyond the first or the second tier suppliers
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would not be practical or meaningful to the client or the supplier. Additional information on
addressing labor issues of the client’s key suppliers, particularly those related to child labor and
forced labor, can be found in Performance Standard 2 and the accompanying Guidance Note 2.
For biodiversity issues in the supply chain, see Performance Standard 6 and the accompanying
Guidance Note 6.
Regional, Sectoral or Strategic Assessments
G64. In exceptional circumstances, regional, sectoral, or strategic social and environmental

assessment may be required in addition to the social and environmental impact assessment.
Regional assessment is conducted when an activity or series of activities are expected to have
a significant regional impact or influence regional development (e.g., an urban area, a
watershed, or a coastal zone), and is also appropriate where the region of influence spans two
or more countries, or where impacts are likely to occur beyond the host country. Sectoral
assessment is useful where several activities are proposed in the same or related sector (e.g.,
power, transport, or agriculture) in the same country, either by the client alone or by the client
and others. Strategic assessment examines impacts and risks associated with a particular
strategy, policy, plan, or program, often involving both the public and private sectors. Regional,
sectoral, or strategic assessment may be necessary to evaluate and compare the impact of
alternative development options, assess legal and institutional aspects relevant to the impacts
and risks, and recommend broad measures for future social and environmental management.
Particular attention is paid to potential cumulative impacts of multiple activities. These
assessments are typically carried out by the public sector, though they may be called for in
some complex and high risks private sector projects.
G65.
Management System, Plans, and Agreements

13. Consistent with the client’s Policy Statement and the objectives and principles
described therein, the client, will establish a management system of mitigation and
performance improvement measures and actions that address the identified social and
environmental risks and impacts of the project. xxxxxxxxxxxxxxxxxxxxx
14. Depending on the nature of the project, management systems will consist of some
combination, duly documented, of operational procedures, practices, plans, and related
supporting documents that are managed in a systematic way. The management system may
apply broadly across the client’s organization, which includes contractors and primary
14
suppliers over which they have management control, or to specific sites, facilities, or
activities. In certain cases, some of the measures and actions will include those imposed by
financiers or investors as conditions of financing based on their independent evaluation of
15
the project’s ability to meet the requirements of Performance Standards 1 through 8. The
mitigation hierarchy to address identified risks and impacts will favor the avoidance of
16
impacts over reduction, restoration, or compensation/offset, wherever technically and
financially feasible.
15. Where risks and impacts cannot be avoided, mitigation measures and actions will be
identified so that the project operates in compliance with applicable laws and regulations,
and meets the requirements of Performance Standards 1 through 8. The level of detail and
complexity of this management system and the priority of the identified measures and
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_____________________
13
Primary suppliers are those first-tier suppliers who are providing goods or materials essential for the core
business function.
14
As a result of any independent due diligence of the project conducted by financiers, additional measures and
actions (supplemental action plans) may be identified beyond those previously identified in the client’s
management system, and will be included as part of the overall management system.
15
Technically feasible is based on whether the proposed measures and actions can be implemented with
commercially available skills, equipment, and materials, taking into consideration prevailing local factors such
as climate, geography, demography, infrastructure, security, governance, capacity, and operational reliability.
16
Financial feasibility is based upon the ability to apply sufficient financial resources to install the measures and
maintain them in operation in the long term.
documented actions and plans will be commensurate with the project’s risks and impacts
and will reflect the outcome of any relevant consultation with Affected Stakeholders.
16. The management system will define desired outcomes and actions to address the
17
issues raised in the risks and impacts identification process, as measurable events to the
extent possible, with elements such as performance indicators, targets, or acceptance
criteria that can be tracked over defined time periods, and with estimates of the resources
and responsibilities for implementation. As appropriate, the management system will
recognize and incorporate the role of relevant actions and events controlled by third parties
to address identified risks and impacts. Recognizing the dynamic nature of the project, the
management system will be responsive to changes in circumstances, unforeseen events,
and the results of monitoring and review.
_____________________
17
For example, the risks and impacts identification process may result in various plans such as Resettlement
Action Plans, Biodiversity Action Plans, Water Resource Management Plans, Community Safety Plans,
Community Development Plans or Indigenous Peoples Development Plans. The plans will likely contain actions
that then need to be implemented through the management system.
G66. If the assessment process confirms potential impacts and risks associated with the
activities to be financed, clients should develop a program of measures and actions to avoid,
minimize, mitigate, compensate for, or offset potential adverse impacts, or, in case of positive or
beneficial impacts, to enhance them. As a general principle for adverse social and
environmental impacts, the impact and risk identification process should focus on measures to
prevent these from occurring in the first place, as opposed to reduction, mitigation, or
compensation. At the same time, however, IFC recognizes this can pose challenges for
business activities. Where these impacts are within the client’s capacity to control or influence,
the client should capture the mitigation or corrective measures in a management program and
relevant management plans and agreements, and implement these through the Management
System.
G67. The level of detail and complexity of the management program should be commensurate
with the anticipated impacts and risks of the business activities to be financed. Where an ESIA
is required, the management program should include any plans and agreements resulting from
the ESIA process and documented in the ESIA report.
G68. For activities with limited potential impacts, the management program should address
those limited impacts, and is likely to be less elaborate. In the case of existing facilities, the
management system is likely to include corrective measures and plans to address areas of
improvement identified in the social and environmental audits as described above. Similarly,
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the management program should reflect the findings of, and include specific recommended
actions devolving from, specialized assessments and studies such as those described above in
this Guidance Note.
G69. As noted, certain types of business activities may result in, or contribute to, impacts that
occur outside the geographic or temporal boundaries of the activities themselves. Examples of
these include cumulative, transboundary, and global impacts. Where the incremental
contribution of the business activities under evaluation is believed to be significant, the
management system may include activities that support efforts to be carried out by relevant
authorities to manage and monitor these larger scale impacts.
G70. As discussed above, for some business activities, the risks and impacts associated with
supply chains may be significant. In such cases, these impacts should be assessed, and clients
should collaborate with third parties to take appropriate actions related to supply chain impacts,
to the extent of their influence or control over such parties. All such actions should be
incorporated into the client’s management system.
G71. As part of the management system, the client may wish to establish its own internal
performance measures so as to enhance positive impacts and the desired outcomes as
measurable events to the extent possible. These include measures such as performance
indicators, targets, or acceptance criteria that can be tracked over defined time periods, to
ensure continuous improvement of performance in these areas.
G72. The client should determine adequate allocation of financial resources and designate
responsible personnel within the client’s organization to implement the management system.
G73. For certain types of clients (financial institutions, funds) the client may integrate the
management system, plans and agreements either by revising existing credit and risk
management procedures or investment cycle procedures or through the development of stand-
alone documents.
G74. The recommendations of the ESDD conducted for financial institutions (FI) and
investment funds should include the necessary actions which must be implemented for the
proposed investment to proceed to financial closure. At a minimum, these shall consist of a set
of mitigation, management, monitoring, and institutional measures to be taken during project
implementation and operation to address any gaps with the FI’s or fund’s Social and
Environmental Policy. Any mitigating actions addressed in the ESDD report should clearly
indicate the (achievable) level of environmental compliance with the Policy, the existing
performance gaps, and the corrective actions that need to be taken to close these gaps along
with reasonable timelines (collectively, the action plan), and should be thoroughly discussed and
agreed with the business activities’ sponsor. The fund manager should remain engaged in the
due diligence process, and involve other investors or stakeholders in reviewing the due
diligence report and determining the soundness of the action plan. Additional reviews or due
diligence work may be triggered as a result of such stakeholder engagement. Finally, the
results of the ESDD should be presented to the fund’s investment committee in concert with the
results of the other due diligence conducted on the prospective investment.
Action Plan
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17. Where the client identifies specific mitigation measures and actions necessary for the
project to meet the requirements of Performance Standards, the client will prepare an Action
Plan. These measures and actions will reflect the outcomes of consultation on social and
environmental risks and impacts and the proposed measures and actions to address these,
consistent with the requirements under paragraph 22. The Action Plan may range from a
18
brief description of routine mitigation measures to a series of specific plans. The Action
Plan will (i) describe the actions necessary to implement the various sets of mitigation
measures or corrective actions to be undertaken; (ii) prioritize these actions; (iii) include the
time-line for their implementation; (iv) be disclosed to the Affected Stakeholders (see
paragraph 26 below); and (v) describe the schedule and mechanism for external reporting
on the client’s implementation of the Action Plan.
_____________________
18
For example, Resettlement Action Plans, Biodiversity Action Plans, Hazardous Materials Management Plans,
Emergency Preparedness and Response Plans, Community Health and Safety Plans, and Indigenous Peoples
Development Plans.
G75. IFC’s independent due diligence of specific business activities to be financed often results
in finding that the client will need to carry out additional actions or measures to ensure
compliance with the Performance Standards, host country law, or other obligations. Where such
findings are made, IFC will develop an Environmental and Social Action Plan, to be agreed with
the client prior to approving the investment. Such Action Plans will be incorporated into the
client’s management program, focusing on the specific additional measures and actions
necessary for the client to comply with these requirements, laws and obligations. The Action
Plans will include a description of action items identified to ensure compliance with IFC
requirements, responsible entity for implementation of the actions and measures, relevant
completion indicators and timeline. It can exclude information that is of an internal nature, such
as proprietary information, cost data, information that would compromise the security and safety
of the business activities, and detailed procedures, business processes, and instructions for
workers (which should be included in the management program). Such Action Plans are
disclosed by IFC on the disclosure portal of the IFC website, together with the IFC
Environmental and Social Review Summary (ESRS), along with relevant client environmental
and social documentation. The final investment agreements reflect the terms of such
supplemental Action Plans developed during the review process, including disbursement
conditions.
G76. As part of its ongoing engagement with Affected Stakeholders, the client is required to
disclose business activities’ environmental and social assessment information locally, including
Action Plans developed by and agreed with IFC), in advance of implementation of the business
activities to be financed to Affected Stakeholders, and provide updates throughout the life of the
activities as mitigation measures are adjusted and upgraded, reflecting the feedback from the
affected stakeholders.
Organizational Capacity and Competency

18. The client, in collaboration with appropriate and relevant third parties, will establish,
maintain, and strengthen as necessary an organizational structure that defines roles,
responsibilities, and authority to implement the management system. Specific personnel,
including management representative(s), with clear lines of responsibility and authority
should be designated. Key social and environmental responsibilities should be well defined
and communicated to the relevant personnel and to the rest of the client’s organization.
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Sufficient management sponsorship and human and financial resources will be provided on
an ongoing basis to achieve effective and continuous social and environmental
performance.
G77. The successful implementation of the management program calls for the commitment of
management and employees of the client’s organization. Accordingly, the client should
designate specific in-house personnel, including management representative(s), with clear lines
of responsibility and authority for social and environmental issues. The management
representative is a key function within the organization. They should act as a link between
senior decision makers and those working in functions/departments within the organization that
need to implement, maintain and perform accordingly with respect to social and environmental
risks and impacts. The management representative should be a part of the senior management
team themselves.
G78. As management systems have evolved, so has the recognition that their success
depends on efforts of those within departments that have perhaps traditionally been seen to be
beyond the reach of social and environmental issues. Departments or entities such as human
resources, production areas, procurement, maintenance or other specialist functions should
now be considered important contributors to management system success. Whereas it is
expected that the management of social and environmental issues will continue to be led by
social and environmental professionals, how an organization integrates this into the business as
a whole can greatly impact the success of dealing with social and environmental risks and
impacts. The role of individuals within the above departments should be relative to the identified
social and environmental risks and impacts. For example, managing training needs (human
resources), contracts and contractor performance (procurement), up-keep of equipment to boost
energy efficiency and avoid spills, leaks or other emergency situations (maintenance) and
material storage and handling and waste minimization (production areas) are but a few
examples where those not considered social and environmental professionals can be found to
play a role. Leveraging the focused contributions from many throughout an organization, under
the guidance of social and environmental professionals, is seen to be a cost-effective and
intelligent way to manage an organization’s social and environmental risks. Organizations must
carefully consider then how they will work to integrate requirements associated with risks and
impacts throughout all elements of the organization so as to best manage them according to
their policy. If functions are outsourced to third parties, the client’s agreement with these parties
should include actions and measures necessary for the parties to perform the agreement
consistent with the management system. In large or complex organizations multiple personnel
or operational units may be designated. In small or medium-sized enterprises, these
responsibilities may be undertaken by one individual. Key social and environmental
responsibilities must be well defined and communicated to relevant personnel within the
organization. Appropriate human and financial resources should be allocated to those
designated as responsible for the implementation of the management system and any additional
performance measures. Some questions that may be useful for clients to pose to assess
adequacy of its capacity and process are as follows:
How does the client’s organization identify and allocate the human, technical, and
financial resources, including external experts, necessary to manage social and
environmental performance?
How has social and environmental management been integrated into the overall
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business management process?

What is the process for balancing and resolving conflicts between social,
environmental and other business objectives and priorities?
What are the responsibilities and accountability of personnel who manage,
perform, and verify work effecting social and environmental issues, and are these
well defined and documented?
How has top management established, reinforced and communicated
organizational commitment?
Is there a process for periodic review of the management system in the event of
changed project circumstances?
G79. Clients may use in-house staff and/or external consultants or experts to carry out the
risks and impacts identification process, provided that the applicable requirements of the
Performance Standards are met. The in-house staff or external personnel conducting the risks
and impacts identification process must be in a position to do so adequately, accurately and
objectively, as well as have the requisite qualifications and experience. For projects with issues
that may pose significant adverse impacts and risks, clients should consider retaining external
experts to assist in the conduct of all or part of the assessment. These experts should have
relevant and recognized experience in similar projects and operate independently from those
responsible for design and construction. They should be engaged early in the project’s
development phase and, as necessary, in the various stages of design, construction, and
commissioning of the business activities. In some high-risk cases, IFC may require a panel of
external experts to advise the client and/or IFC. In addition, external experts are required in
certain defined circumstances, on issues concerning biodiversity (as provided in Performance
Standard 6), Indigenous Peoples (as provided in Performance Standard 7) and cultural heritage
(as provided in Performance Standard 8).
19. Personnel within the client’s organization with direct responsibility for the project’s
social and environmental performance will have the knowledge and skills necessary to
perform their work, including current knowledge of the host country’s regulatory
requirements and the applicable requirements of Performance Standards 1 through 8.
Personnel will also possess the knowledge and skills to implement the specific measures
and actions required under the management system and the methods required to perform
the actions in a competent and efficient manner.
G80. The organization should identify the knowledge and skills necessary for implementation
of the management system, including any requirements of the Action Plan resulting from
investment due diligence activities. Prior background, time in the job, and other past
experiences of personnel, training, skills development and on-going education can all play a
role in determining whether a person has sufficient knowledge and skills to carry out their part of
the management system. In summary, to determine whether they can be deemed competent to
do what is required of them. Organizations should consider all of the above contributions to a
person’s background and, if necessary, new recruitment to ensure they select appropriate
individuals.
G81. One common method of supplying additional skills and knowledge to individuals is that of
training. Training can be considered to be an effort to change a behavior or manner in which an
individual acts or carries out a task that is a part of their job. In short, that they will do in the
27
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May 19, 2010
future what is needed in order to carry out the task appropriately. In order to be successful
training needs to be thought out carefully and systematically. The list below is one example of
the elements that should be considered as part of training program:
Identification of training needs for employees. This can be triggered by past

events (emergency situations, spills, community suggestions or grievances),
shortcomings in performance as identified by audits, benchmarking with other
companies or organizations or direct suggestions or requests from employees
themselves. Do not forget about others that conduct work for the organization,
either directly or indirectly such as suppliers and contractors.
Development of a training plan to address defined needs. What is lacking in
skills, comprehension, experience that can be addressed by training; in short
what does someone need to be judged competent in how they do their job?
Verification of training programs to ensure consistency with organizational policy,
and other applicable requirements such as regulatory considerations,
Training of target employees. This can be formal, informal (on-the-job), one-time,
periodic, etc.
Documentation of training received. To prove it was done (to regulators or
government agencies, financial institutions, etc.) and to provide a record for the
employee as part of job or career development,
Evaluation of training received to determine its effectiveness. Ultimately this is
the arbiter of success of the training program; to ascertain whether the individual
is now competent to carry out the task at hand. This can be in the form of a test
(written or verbal), the demonstration of the new skill that was the subject of the
training (e.g., successfully conduct a stakeholder meeting) or the successful
operation of a new piece of equipment (if supervised and conducted under safe
conditions for both trainer and trainee). If it is determined through any of the
above assessments, or others that are appropriate, that the training is not
effective then the organization should review all aspects of the training, as
applicable (curriculum, delivery, competence of the trainer, etc.) to determine
what should be changed, if anything, so as to obtain a successful outcome next
time around.
Some questions a client may pose to help with planning and organizing training
programs:
How does the client’s organization identify social and environmental training needs?
How are training needs of specific job functions analyzed?
Is training needed for contractors?
Is training developed and reviewed and modified as needed?
How is the training documented and tracked?
G82. The client will ensure employees and third parties with direct responsibility for activities
relevant to the social and environmental performance of the business activities to be financed
are competent, that they have the knowledge and skills necessary to perform their work,
including current knowledge of the host country’s regulatory requirements and the applicable
requirements of Performance Standards 1 through 8. Methods to ensure this will address the
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specific measures and actions required under the management system and the actions required
to perform the management items in a competent and efficient manner.
G83. When the business activities to be financed are likely to impact vulnerable or
disadvantaged individuals or groups within Affected Stakeholders, employees who will interact
with such individuals or groups should be competent in their understanding of the specific
issues related to such individuals or groups.
G84. When specific aspects of the business activities to be financed or the implementation of
the management system are outsourced to contractors, the client should also ensure that these
contractors have the requisite knowledge, skills, and training to perform the work in a competent
manner in accordance with the management system and the requirements of Performance
Standards 2 through 8.
Emergency Preparedness and Response

20. An important element of the management system will be to establish an emergency
preparedness and response system so that the client, in collaboration with appropriate and
relevant third parties, will be prepared to respond to accidental and emergency situations
associated with the project in a manner appropriate to prevent and mitigate any harm to
people and/or the environment. This preparation will include the identification of areas
where accidents and emergency situations may occur, communities and individuals that
may be impacted, response procedures, provision of equipment and resources, designation
of responsibilities, communication, including that with potentially Affected Stakeholders
and periodic training to ensure effective response.
21. Where applicable, the client will also assist and collaborate with the potentially Affected
Stakeholders (refer to Performance Standard 4) and the local government agencies in their
preparations to respond effectively to emergency situations, especially when their
participation and collaboration are necessary to ensure effective response. If local
government agencies have little or no capacity to respond effectively, the client will play an
active role in preparing for and responding to emergencies associated with the project. The
client will document its emergency preparedness and response activities, resources, and
responsibilities, and will provide appropriate information to potentially Affected
Stakeholders and relevant government agencies.
G85. The emergency preparedness and response requirements of this Performance Standard
refer to (i) the contingencies that could affect personnel and facilities within the physical
boundaries of the business activities to be finance, (ii) the need to protect the health and safety
of business activities’ workers (as noted in Performance Standard 2) and (iii) the need to protect
the health and safety of the affected community (as noted in Performance Standard 4). The
client should address emergency preparedness and response in an integrated way. Whether
clients are developing new business activities or expanding an existing facility, they should
address contingencies associated with process upset and accidental circumstances through the
use of emergency response plans or other similar tools appropriate to the specific industry
sector, as part of their management system. Additional guidance is provided in the General EHS
Guidelines and Industry Sector EHS Guidelines.
G86. Effective emergency response plans help clients prepare for the best outcomes while
assuming the worst possible scenarios. They include clearly assigned responsibilities for the
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assessment of the degree of risk to life, property and environment with procedures on whom to
communicate different types of emergencies with and how. These plans should also include
specific procedures designed based on the emergency level classification (emergency tiers).
Procedures for shutting down equipment and production processes and for evacuations,
including a designated meeting place (i.e., muster point) outside the business activities’ site,
should be part of the emergency response plans. Additionally, effective emergency plans
should include specific training and practice schedules and equipment requirements for
employees who are responsible for rescue operations, medical duties, hazardous responses,
fire fighting and other responses specific to the business activities’ site. Other important
aspects of emergency preparedness and response include:
• Trained emergency response teams

• Emergency contacts and communication systems / protocols
• Procedures for interaction with local and regional emergency, health and
environmental authorities
• Permanently stationed emergency equipment and facilities (e.g. first aid stations,
firefighting equipment, spill response equipment, personal protection equipment for
the emergency response teams)
• Protocols for the use of the emergency equipment and facilities
• Clear identification of evacuation routes and muster points
• Emergency drills and their periodicity based on the level or tier of the emergency
• Decontamination procedures and procedures to proceed with urgent remedial
measures to contain, limit and reduce pollution within the physical boundaries of the
business activities’ property and assets
Further guidance on minimizing the occurrence and harmful effects of technological accidents
and environmental emergencies can be found in the References section.
Stakeholder Engagement
22. Stakeholder engagement is the basis for building strong, constructive, and responsive
relationships that are essential for the successful management of a project's social and
19
environmental impacts. Stakeholder engagement is an on-going process which may
involve information disclosure to, consultation with, and participation of stakeholders,
particularly those who may be directly affected by risks or adverse impacts from the project
(Affected Stakeholders). The nature, frequency and level of effort of stakeholder
engagement may vary considerably and will be commensurate with the project’s risks and
adverse impacts on the Affected Stakeholders and the project’s phase of development.
Stakeholder engagement will (i) start as early as possible in the project cycle; (ii) continue
throughout the life of the project; (iii) be free of external manipulation, interference,
coercion, or intimidation; (iv) enable community members to freely convene and express
their views, including objections to the project; (v) be conducted on the basis of timely,
relevant, understandable, and accessible information in a culturally appropriate format.
_____________________
19
Requirements regarding engagement of workers are found in Performance Standard 2.
G87. The purpose of stakeholder engagement is to establish and maintain a constructive

relationship with a variety of external stakeholders over the life of the project. In some industry
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sectors, this engagement is considered as an important process that enables the client to obtain
and maintain its “social license to operate” and an integral part of an effective and adaptive
environmental and social management system. An effective engagement process allows the
views, interests and concerns of stakeholders, particularly of those directly affected, to be
heard, understood, and taken into account in project decisions and creation of development
benefits. The stakeholder engagement process should be commensurate with the project risks
and impacts and development stage and tailored to the characteristics and interests of the
Affected Stakeholders and it should be described in a document with clear principles, objectives
and actions. Engagement should reflect the specific needs of the different segments. Depending
on the nature, risks and impacts of a project and the presence, or not, of directly Affected
Stakeholders the level of required stakeholder engagement can range from the implementation
of a basic channel to received communications from any stakeholder to a comprehensive
consultation process involving the active and informed participation of Affected Stakeholders.
The client should also create a community liaison function within its organization to manage
relations with its stakeholders; the resources required to fulfill this function will vary from project
to project. Maintaining consistency in the personnel who interact with members of the affected
communities improves the quality of interaction and can help build trust over time. See also the
Stakeholder Engagement: A Good Practice Handbook for Companies Doing Business in
Emerging Markets.
G88. It is widely accepted that engaging with those external to an organization is good
business practice. Stakeholders, customers, clients, or other interested parties can provide
valuable information to an organization. Such information can be in the form of suggestions on
product improvement, feedback on a customer interaction with an organization’s employees, or
a myriad of other opinions, comments or contributions regarding an organization’s performance,
real or perceived. When the business activity to be financed involves project development of
specific facilities that are likely to generate risks on directly Affected Stakeholders it will require
consultation with them. Many other situations, however, that do not require conducting
consultation, can still generate input that should be addressed appropriately. For example, when
an investment is in the form a corporate loan not allocated to a specific business activity the
organization must still be prepared to respond to communication originating outside of the
organization. Some projects may not have an affected community that can be identified but
could still have inherent environmental risks and therefore be the focus of intense scrutiny from
more disparate sources. Given the global interconnectedness of the world today, it is often very
hard to know who may have an interest in an organization and their activities and therefore to
predict from where communication may originate. Having in place a means to receive input, a
process to classify it based upon the real or perceived gravity of the input and resources to
provide the commensurate response and to track performance and outcomes are however
important considerations to make as an organization contemplates how to best manage the
system. Responses should be based upon an organization’s adjudged value of the input; some
instances may call for elevated levels of action including more involved follow-up, possibly with
tailored broadcast messages to those outside the organization. A good external communication
system can facilitate such a response if well planned and run. In the end only the organization
itself will know best what weight it assigns to a comment, suggestion or complaint and how it
should react in order to best manage the situation to create a business advantage for itself and
leverage its position accordingly.
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G89. For the purposes of Performance Standard 1, stakeholders are defined as persons,
groups or communities external to the core operations of a project who may be affected by the
project, interested in it and/or have ability to influence its outcomes. This may include
individuals, businesses, communities, local government authorities, and local non-governmental
and other institutions, and other interested or affected parties. Performance Standard 1
requirements are focused on engagement with directly Affected Stakeholders, who are defined
as any people or communities located in the project's near geographical proximity, particularly
those contiguous to the existing or proposed project facilities, who are subject to actual or
potential project-related risks and/or adverse impacts on their physical environment, health or
livelihoods. Directly Affected Stakeholders are usually grouped in communities, however there
is not exact definition of community and it could vary from project to project, but in general terms
it refers to a group of people or families who live in a particular locality, sometimes share a
common interest (water users associations, fishers, herders, grazers, and the like), often have
common cultural and historical heritage and have different degrees of cohesiveness. This is
particularly relevant in the case of applicability of requirements related to Broad Community
Support (BCS) and Indigenous Peoples. Engagement with internal stakeholders such as
workers is addressed in Performance Standard 2. Engagement with suppliers, contractors,
distributors, or customers, because interaction with these parties is a core business function for
most companies and subject to national regulations and/or established corporate policies and
procedures.
If the process to identify risks and impacts indicates that there may be potential impacts and
risks to the stakeholders within the project’s area of influence, companies should seek early
engagement with these Affected Stakeholders. Engagement should be based on the timely
dissemination of relevant project information, including the social and environmental impacts
and risks of the project identified in the assessment and proposed mitigation measures, in
languages and methods preferred by the Affected Stakeholders. In cases where the
assessment has been completed prior to IFC involvement in a project, IFC reviews the process
of stakeholders engagement carried out by the client. If necessary, IFC and the client will agree
on a supplemental stakeholders engagement program.
G90. When applicable, and throughout the life of the project, clients should build upon the
channels of communication and engagement with Affected Stakeholders established during the
risks and impacts identification process. In particular, clients should use the appropriate
stakeholders engagement practices described in this Performance Standard to disclose
information and receive feedback on the effectiveness of the implementation of the mitigation
measures in the clients management system as well as the affected stakeholders’ on-going
interests and concerns about the project. Guidance regarding different engagement strategies
and project scenarios can be found in Appendix 2 of Stakeholder Engagement: A Good Practice
Handbook for Companies Doing Business in Emerging Markets.
Stakeholder Analysis and Engagement Planning

23. As part of the process of identification of project’s risks and impacts, the client will
identify the project’s key stakeholders and will prioritize those who may be affected by
project risk and impacts. In projects with potentially significant adverse impacts, the client
may identify a broader set of relevant stakeholders who should be engaged, such as local
authorities or neighboring projects.
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24. Based on the stakeholder analysis, the client may or may not need to develop and
implement a Stakeholder Engagement Plan covering the requirements of this Performance
Standard. This engagement process will be commensurate with the project risks and
impacts, and development stage, and tailored to the characteristics and interests of the
Affected Stakeholders. Projects with no Affected Stakeholders do not need an engagement
plan; projects with a few stakeholders will need a limited engagement plan, and projects
with potentially significant impacts to Affected Stakeholders will need a comprehensive
engagement plan. This process should be part of the project’s management system and
results of this engagement should help inform the client’s senior management as well as its
board of directors or an equivalent body. The Stakeholder Engagement Plan will reflect
relevant stakeholder engagement-related requirements in other Performance Standards, as
appropriate. Where applicable, this Plan will also include differentiated measures to ensure
the effective participation of those identified as disadvantaged or vulnerable, to ensure their
active and effective participation in the engagement process. When the stakeholder
20
engagement process depends substantially on stakeholder representatives, the client will
make every reasonable effort to verify that such persons do in fact represent the views of
Affected Stakeholders and that they can be relied upon to faithfully communicate the results
of consultations to their constituents.
25. In cases where the exact location of the project is not known, but it is reasonably
expected to have significant impacts on stakeholders, the client will prepare a Stakeholder
Engagement Framework, as part of its management system, outlining general principles and
a strategy to identify Affected Stakeholders and plan for an engagement process compatible
with this Performance Standard that should be implemented once the physical location of
the project is known.
_____________________
20
For example, community and religious leaders, local government representatives, civil society
representatives, politicians, school teachers, and others representing one or more affected stakeholder groups.
G91. Stakeholder identification broadly involves the determination of the various individuals,
groups or communities who may have an interest in the project or who may affect or be affected
by the project. The process of stakeholder identification includes distinct steps, including:
(i) identifying individuals, groups, local communities and other stakeholders that may be affected
by the project, positively or negatively, and directly or indirectly, making special effort to identify
those who are directly affected, including those who are disadvantaged or vulnerable;
(ii) identifying broader stakeholders who may be able to influence the outcome of the project
because of their knowledge about the affected stakeholders or political influence over them;
(iii) identifying legitimate stakeholder representatives, including elected officials, non-elected
community leaders, leaders of informal or traditional community institutions, and elders within
the affected community; and (iv) mapping the impact zones by placing the Affected
Stakeholders within a geographic area, which will help the client define or refine the project’s
area of influence (see paragraph X of Performance Standard 1, and paragraph G83 below).
When the stakeholder engagement process depends substantially on stakeholder
representatives (e.g., community and religious leaders, local Government representatives, civil
society representatives, politicians, schoolteachers and others representing one or more
Affected Stakeholder groups., the client will make every reasonable effort to verify that such
persons do in fact represent the views of affected groups and that they can be relied upon to
faithfully communicate the results of consultations to their constituents.
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Impacts
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G92. There may be individuals or groups within the project area of influence who are
particularly vulnerable or disadvantaged and who could experience adverse impacts from the
proposed project more severely than others Large scale projects with a large project area of
influence and multiple Affected Stakeholders are more likely to expose these individuals and
groups to adverse impacts than smaller scale projects with site specific issues. Where it is
anticipated that the project will impact one or more Affected Stakeholders, the risks and impacts
identification process should use accepted sociological methods to identify and locate
vulnerable individuals or groups within the affected community population, collecting data on a
disaggregated basis (including gender-disaggregated data). Using this disaggregated
information, the client should assess potential impacts, including differentiated impacts, on
these individuals and groups and propose specific (and if necessary separate) measures in
consultation with them to ensure that potential impacts and risks to them are appropriately
avoided, mitigated or compensated. Vulnerable or disadvantaged individuals and groups
should be able to benefit from project opportunities equally with the rest of the Affected
Stakeholders; this may require that differentiated benefit-sharing processes and levels (such as
ensuring that compensation for a house taken during resettlement is provided equally to the
woman and man of the household, providing training for individuals or groups who might lack
the necessary skills to find a job with the project, etc.) are available. Project monitoring should
track these individuals or groups on a disaggregated basis. Specific considerations and
measures for Indigenous Peoples are described in Performance Standard 7 and the
accompanying Guidance Note. Clients should exercise discretion in gathering personal data
and information and should treat such data or information as confidential (except where
disclosure is required by law). Where Performance Standard 1 requires disclosure of plans
based on personal info or data collected, (such as a resettlement action plan) the client should
ensure that any personal data or information cannot be associated with particular individuals.
G93. A project may have different impacts on women and men, due to their differentiated
socioeconomic roles and their varying degrees of control over and access to assets, productive
resources, and employment opportunities. There may be norms, societal practices, or legal
barriers that impede the full participation of persons of one gender (usually women, but
potentially men) in consultation, decision-making, or sharing of project benefits. These legal
and societal norms and practices may lead to gender discrimination or inequality. Gender-
differentiated impacts should be assessed and the assessment should propose measures
designed to ensure that one gender is not disadvantaged relative to the other in the context of
the project. This may include providing opportunities to enhance full participation and influence
in decision-making through separate mechanisms for consultation and grievances, and
developing measures that allow both women and men equal access to project benefits (such as
land titles, compensation, and employment). Where deemed useful, it may include a separate
women’s consultative process.13 Gender considerations of engagement processes can be
found in the Stakeholder Engagement: A Good Practice Handbook for Companies Doing
Business in Emerging Markets.
G94. IFC encourages clients with high-risk projects to also identify and engage with other
stakeholders, beyond those who will be affected by the project, such as local government
officials, community leaders and civil society organizations, particularly those who work in or
13
While women and men are not homogenous groups, there may be norms, societal practices, or legal barriers that impede the full
participation of persons of one gender (usually women, but men can also be affected) in consultation, decision-making, or sharing of
project benefits.
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Impacts
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with the Affected Stakeholders. While these groups may not be directly affected by the project,
they may have the ability to influence or alter the relationship of the client with Affected
Stakeholders, and in addition may play a role in identifying risks, potential impacts and
opportunities for the clients to consider and address in the assessment process.
G95. If a full Stakeholder Engagement Plan is required, it may include: project description
(including maps if possible); description of risks and impacts; summary of any previous
engagement activities (including documentation of any documents (i.e., agreements, minutes of
meetings, etc); identification, characterization and priority of stakeholders, focusing on those
directly affected and identifying any vulnerable individuals or groups; engagement program
(including indication on how interactions should be formalized (i.e., agreements,
acknowledgment of receipt of information, etc); description of the grievance redress
mechanisms; timetable/periodicity; and resources and responsibilities. In some cases the
Engagement Plan may include a description of any local community development initiative
being, or to be, supported by the client. A Stakeholder Engagement Framework should:
describe the potential projects and likely impacts; requisites and regulations; potential area of
influence; possible stakeholders; engagement principles, objectives and criteria; strategy for the
engagement process and grievance mechanism (particularly if it will be linked with and
assessment process) and step by step process and responsibilities to prepare an Engagement
Plan once exact location is known. See Appendix 3 of Stakeholder Engagement: A Good
Practice Handbook for Companies Doing Business in Emerging Markets.
Access to Information
26. Access to information helps Affected Stakeholders understand the risks, impacts and
opportunities of the project. Where the client has conducted a social and environmental
assessment and/or developed a management system, the client will publicly disclose the
21
corresponding relevant document. If stakeholders may be affected by risks or adverse
impacts from the project, the client will provide such Affected Stakeholders with (i) access
to information on the purpose, nature, and scale of the project; (ii) the duration of proposed
project activities; (iii) any risks to and potential impacts on such stakeholders and relevant
elements of the management system; (iv) the envisaged stakeholder engagement; and (v)
the grievance redress mechanism. For projects with adverse social or environmental
impacts, disclosure should occur early in the process of identification of social and
environmental risks and impacts, and in any event before the project construction
commences, and on an ongoing basis. The information provided should be transparent,
objective, meaningful, easily accessible, in culturally appropriate local language(s) and
format, and understandable to Affected Stakeholders.
_____________________
21
Depending on the scale of the project and significance of the risks and impacts, relevant document(s) could
range from full Environmental and Social Assessments and Action Plans (i.e., Stakeholder Engagement Plan,
Resettlement Action Plans, Biodiversity Action Plans, Hazardous Materials Management Plans, Emergency
Preparedness and Response Plans, Community Health and Safety Plans, and Indigenous Peoples
Development Plans, etc.) to easy-to-understand summaries of key issues and commitments.
G96. Information disclosure involves delivering and ensuring access to information about the
project to the Affected Stakeholders and other interested parties. The information should be in
appropriate language(s). It should be made accessible and understandable to the various
segments of the affected communities, in ways appropriate to the directly Affected
Stakeholders. For example, information can be made available in city halls, public libraries, in
35
Impacts
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the local print media, over the radio, or in public meetings. The timing and the method of
disclosure will vary depending on national law requirements, the type of assessment involved,
and the stage of the project’s development or operation. As a minimum, the client should
disclose the relevant information related to the assessment process and the proposed
management system prior to the commencement of construction or other implementation
activities. In some cases, disclosure of information will occur earlier in the risks and impacts
identification process. For projects with potential adverse impacts to local stakeholders, timely
disclosure of information should occur after the initial screening, and should include information
on the purpose, nature and scale of the project, the duration of proposed project activities, and
any risks to and potential impacts on such stakeholders and relevant elements of the
management system, the envisaged stakeholder engagement, and the grievance redress
process. Depending on the scale of the project and its risks and impacts, such disclosure may
range from disclosing the draft Environmental and Social Assessments and Action Plans (i.e.,
Stakeholder Engagement Plan, Resettlement Action Plans, Biodiversity Action Plans,
Hazardous Materials Management Plans, Emergency Preparedness and Response Plans,
Stakeholders Health and Safety Plans, and Indigenous Peoples Development Plans) to easy-to-
understand summaries of key issues and commitment. In addition, it may also be appropriate
for the client to disclose relevant elements of the draft management system, including any
supplementary measures requested by financial institutions, so that the measures proposed by
the client to mitigate the identified risks and impacts can be explained. Disclosure of information
will be the basis of the client’s consultation process. Clients are encouraged to also disclose
information to Affected Stakeholders about the project’s potential benefits and developmental
impacts, if it is expected that it would not unnecessarily create unrealistic expectations.
Examples of different techniques to share information can be found at IAP2 Public Participation
Toolbox – Techniques to Share Information.
G97. In the extractive industries and infrastructure sectors in particular, where a project can
have potentially broader implications for the public at large, disclosure of information is an
important means to manage governance risks. Accordingly, clients should be aware that IFC
has sector-specific initiatives on disclosure of project-related information, as described in
paragraphs X through X of IFC's Sustainability Policy. Further guidance on the Extractive
Industries Transparency Initiative and how the private sector can support this initiative can be
found in the References section
Consultation
27. The extent and degree of engagement required by the consultation process should be
commensurate with the project’s risks and adverse impacts and with the concerns raised by
the Affected Stakeholders. Effective consultation is a two-way process that should begin
early in the process of identification of social and environmental risks and impacts, and will
(i) be documented; (ii) be based on the prior disclosure of relevant and adequate
information; (iii) prioritize those directly affected; and (iv) be carried out on an ongoing
basis as risks and impacts arise. The consultation process will be undertaken in a manner
22
that is inclusive of various segments of the Affected Stakeholders and culturally
appropriate. The client will tailor its consultation process to the language preferences of the
Affected Stakeholders, their decision-making process, and the needs of disadvantaged or
vulnerable groups.
_____________________
36
Impacts
May 19, 2010
22
Such as men, women, the elderly, youth, displaced persons, and vulnerable and disadvantaged persons or
groups.
28. For projects with limited risks and adverse impacts on Affected Stakeholders, the client
will undertake the process of consultation in a manner that provides the Affected
Stakeholders with opportunities to express their views on project risks, impacts, and
proposed management system, and allows the client to consider and respond to them.
29. For projects with significant adverse impacts on Affected Stakeholders, the
consultation process will ensure their free, prior, and informed consultation and facilitate
their informed participation. Informed participation involves a more in-depth exchange of
views and information, and an organized and iterative consultation, leading to the client’s
incorporating into their decision-making process the views of the Affected Stakeholders on
matters that affect them directly, such as the proposed mitigation measures, the sharing of
development benefits and opportunities, and implementation issues. The client will
document the process, in particular the measures taken to avoid or minimize risks to and
adverse impacts on the Affected Stakeholders. Free, prior, and informed consultation and
informed participation are also required for projects with potential adverse impacts to
Indigenous Peoples (see Performance Standard 7).
G98. Consultation involves two-way communication between the client and the affected
stakeholders. Effective consultation provides opportunities for the client to learn from the
experience, knowledge, and concerns of the Affected Stakeholders, as well as to manage their
expectations by clarifying the extent of its responsibilities and resources so that
misunderstandings and unrealistic demands can be avoided. For the consultation process to be
effective, project information needs to be disclosed and explained to the stakeholders, and
sufficient time should be allocated for them to consider the issues. Consultation should be
inclusive of various segments of the affected stakeholders, including both women and men, and
accessible to the disadvantaged and vulnerable groups within the community. Based on an
earlier preliminary stakeholder analysis, the client’s representatives should meet with the
Affected Stakeholders and explain the project information, answer questions and listen to
comments and suggestions. In addition to meetings with communities and other Affected
Stakeholders, the client should identify community leaders and any formal or informal existing
decision-making mechanisms so that their input can be sought. The client should inform in a
timely manner the Affected Stakeholders about the result of the consultation process and how
their suggestions and concerns have been considered.
G99. Consultation should be undertaken in most situations where the project presents a
specific but limited number of potential adverse impacts to affected communities. In these
cases, the client should consult with the affected communities during the process of assessment
after the risks and impacts have been identified and analyzed. In the case of projects with
significant adverse impacts on Affected Stakeholders, and projects with adverse impacts on
Indigenous Peoples, the process of free, prior, and informed consultation and informed
participation is required (see paragraph GX below). In addition to the requirements in
Performance Standard 1, requirements on consultation can be found in Performance Standards
4–8.
Free, Prior, and Informed Consultation
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Impacts
May 19, 2010
G100. For projects with significant potential adverse impacts to the Affected Stakeholders, the
client’s consultation process will include their free, prior and informed consultation and informed
participation. Such consultation should be “free” (free of intimidation or coercion), “prior” (timely
disclosure of information) and “informed” (relevant, understandable and accessible information),
and should continue through the entire life of the project and not only during the early stages of
the project. Consultation with Affected Stakeholders should be part of the early scoping process
that establishes the terms of reference for the assessment process, which includes an inventory
of risks and impacts to be assessed. Informed participation entails organized and iterative
consultation on issues concerning potential impacts to the affected communities, so that the
client can incorporate into their decision-making process their views on these issues. Free,
prior, and informed consultation and informed participation are also required for projects with
potential adverse impacts to Indigenous Peoples (see Performance Standard 7). The client
should document specific actions, measures or other instances of decision-making that have
been influenced by or resulted directly from the input of those who participated in the
consultation. Annex C describes the type of information IFC will seek from its client during its
social and environmental review to ascertain that the client’s process of stakeholders
engagement involves the free, prior, and informed consultation of the Affected Stakeholders.
Broad Community Support
G101. As outlined in paragraphs ? and ? of the IFC Sustainability Policy, IFC will review the
client’s stakeholders engagement process and, through its own investigation, assure itself that
there was free, prior, and informed consultation and informed participation, leading to broad
community support for the project by those affected. IFC will make this investigation when a
project may pose significant adverse impacts to local stakeholders, or in the case of
communities of Indigenous Peoples, adverse impacts on such communities. Broad community
support is a collection of expressions by the affected communities and other Affected
Stakeholders, through individuals and their recognized representatives, in support of the project.
There may be broad community support even if some individuals or groups object to the project.
IFC’s inquiry on the existence of free, prior and informed consultation and broad community
support is an inquiry on the overall engagement process of the client. This inquiry is not
intended to establish any consent or veto right for the Affected Stakeholders. IFC’s
Environmental and Social Review Procedure describes the type of information IFC will seek to
ascertain that the client’s process of free, prior, and informed consultation led to the broad
community support for the project within the Affected Stakeholders. After the Board approval of
the project, IFC will continue to monitor the client’s stakeholder engagement process as part of
its portfolio supervision.
Reporting to Affected Stakeholders

30. The client will provide periodic reports to the Affected Stakeholders that describe
progress with implementation of the project Action Plan on issues that involve ongoing risk
to or impacts on Affected Stakeholders and on issues that the consultation process or
grievance mechanisms has identified as of concern to those stakeholders. If the
management system results in material changes in, or additions to, the mitigation measures
or actions described in the Action Plan on issues of concern to the Affected Stakeholders,
the updated relevant mitigation measures or actions will be communicated to Affected
Stakeholders. These reports will be in a format accessible to the Affected Stakeholders. The
frequency of these reports will be proportionate to the concerns of Affected Stakeholders
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Impacts
May 19, 2010
but not less than annually. In addition, clients are encouraged to publish periodic reports
accessible to all stakeholders on their environmental and social performance.
G102. The client should provide periodic updates to the affected communities at least annually
on the implementation and progress on the specific items in the environmental and social
management system that involve ongoing risks to or impacts on affected communities. As
appropriate, where amendments and updates to the management system materially change
impacts to affected communities, the client will also disclose this to directly Affected
Stakeholders. In addition, information should be made available to Affected Stakeholders in
response to stakeholder feedback or grievance and as a means to further involve the Affected
Stakeholder in the social and environmental performance of the project.
G103. Clients may wish to consider using sustainability reports to report on the financial,
environmental and social aspects of its operations, including areas of success of its
performance measures and positive project impacts that are being enhanced, as well as any
unsuccessful outcomes and the lessons learned. Reporting initiatives, guidelines, including
sector-specific guidelines, and good practices are rapidly emerging in this area. The most
notable is the Global Reporting Initiative as included in the References section. IFC can work
with clients to develop appropriate sustainability report formats upon request.
Grievance Mechanism
31. The client will implement and maintain a procedure for handling, at a minimum, external
communications associated with the environmental and social performance of its project
with Affected Stakeholders and other interested parties. This procedure will include a
grievance redress mechanism scaled to the project’s identified risks and adverse impacts,
focusing on Affected Stakeholders. The mechanism should include methods to (i) receive
and register enquiries, concerns, grievances, and complaints from Affected Stakeholders;
(ii) screen and assess the issues raised by the enquiry or complaint and determine how to
address the issues raised; (iii) develop and implement procedures and timelines for
providing responses; and (iv) track and document response. In some cases, the design of
the grievance mechanism may be based on feedback and suggestions from Affected
Stakeholders.
32. The grievance mechanism should address concerns promptly, using an understandable
and transparent process that is culturally appropriate and readily accessible, and at no cost
and without retribution to the party that originated the issue or concern. The mechanism
should not impede access to judicial or administrative remedies. The client will inform the
Affected Stakeholders about the mechanism in the course of its stakeholder engagement
process. The implementation of the grievance mechanism should allow for the continual
improvement of the project’s management system. In some cases, due to project-specific
circumstances, the client may need to involve an independent third party as part of its
grievance redress process.
G104. Clients should establish a procedure for receiving, addressing, and

recording/documenting complaints and communications from external stakeholders. This
procedure should ensure that the confidentiality of the persons raising the complaint is
protected. In cases where there are directly Affected Stakeholders, the client shall ensure that it
is easily accessible, understandable and its availability communicated to them. The client may
39
Impacts
May 19, 2010
wish to seek solutions to complaints in a collaborative manner with the involvement of the
Affected Stakeholders. If the project is unable to solve a complaint, it may be appropriate to
enable complainants to have recourse to external experts or neutral parties. Clients should be
aware of judicial and administrative mechanisms available in the country for resolution of
disputes, and should not impede access to these mechanisms. Communications and
grievances received and responses provided should be documented (such as the name of the
individual or organization; the date and nature of the complaint; any follow up actions taken; the
final decision on the complaint; how and when relevant project decision was communicated to
the complainant; and whether management action has been taken to avoid recurrence of
stakeholders concerns in the future), and reported back to the affected communities
periodically. In addition to the requirements in this Performance Standard, specific requirements
for grievance mechanisms can be found in Performance Standards 2, 4, 5, and 7. For additional
guidance on grievance mechanisms, see IFC’s publications: Stakeholder Engagement: A Good
Practice Handbook for Companies Doing Business in Emerging Markets and Addressing
Grievances From Project-Affected Communities (IFC, 2009). Also see CAO’ publication: A
Guide to Designing and Implementing Grievance Mechanisms for Development Projects (CAO,
2008)
G105. In the case of large projects with potentially complex issues, a robust grievance
mechanism should be established and maintained from the beginning of the assessment
process onwards. This mechanism should be communicated to Affected Stakeholders and
designed in a way that is appropriate for them, easy to understand and adapted to the
communications challenge they may face (e.g., language, low level of literacy, no access to
technology.) Complaints should be investigated to determine appropriate response and course
of action. This function should be separate from the personnel in charge of management of the
business activities. The responsibility for receiving and responding to grievances should be
handled by experienced and qualified personnel within the client organization. In addition,
suggestion boxes and periodic community meetings and other communication methods to
receive feedback may be helpful.
Private Sector Responsibilities Under Government-Led Stakeholder Engagement

33. Where stakeholder engagement is the responsibility of the host government, the client
will collaborate with the responsible government agency, to the extent permitted by the
agency, to achieve outcomes that are consistent with the objectives of this Performance
Standard. In addition, where government capacity is limited, the client will play an active
role during the stakeholder engagement planning, implementation, and monitoring. If the
process conducted by the government does not meet the relevant requirements of this
Performance Standard, the client will conduct a complementary process and prepare a
supplemental Stakeholder Engagement Plan.
G106. Host governments may reserve the right to manage the stakeholder engagement process
directly associated with a project, particularly when it involves consultation. Nevertheless, the
outcome of this process should be consistent with the requirements of Performance Standard 1.
In such cases, clients should take an active role during the preparation, implementation and
monitoring of the process and should coordinate with the relevant government authorities those
aspects of the process that can be facilitated more efficiently by the client or other agents such
as consultants or civil society organizations. Whether the client will be permitted to play an
active role will depend in part on the applicable national law and the judicial and administrative
40
Impacts
May 19, 2010
processes and practices of the responsible government agency. IFC will assess at appraisal
the extent to which the client will be able to collaborate with the responsible government agency
and agree on the key achievable outcomes that need to be achieved to ensure consistency with
the Performance Standard 1. Where IFC ascertains that the outcome of the government-
managed stakeholder engagement is not likely to meet the requirements of Performance
Standard 1, IFC may choose to not proceed with the proposed financing of the project, or
proceed only if its Board of Directors agrees. In all cases, regardless of government
involvement, the client must have in place its own communications and grievance redress
procedure. It must be clear that the stakeholder engagement process covered under this
provision refers to any engagement process with stakeholders who are directly affected by the
project regarding issues directly linked to the development of the specific project, and not in
reference to broader policy decisions or other matters external to the project.
G107. Under certain circumstances, a government agency or other authority may have already
conducted the consultation process directly linked to the project, however the client should
make a determination as to whether the process conducted and its outcomes are consistent
with the requirements of Performance Standard 1 and, if not, any corrective action is feasible to
address the situation. If correction action is feasible, the client should undertake corrective
measures as soon as possible.
G108. Under government-managed stakeholder engagement, the client should collaborate with
the appropriate agencies to establish methods for developing and implementing the Stakeholder
Engagement Plan or Framework. Where gaps exist between national law or policy and the
requirements with respect to stakeholder engagement detailed in Performance Standard 1, the
client should apply alternative measures to achieve outcomes consistent with the objectives of
Performance Standard 1. Such measures could range from conducting additional engagement
activities to facilitating access and cultural appropriateness of relevant environmental and social
information.
G109. Where the responsible government agency will enable the client to participate in the
ongoing monitoring of the engagement process, the client should pay particular attention to
those who are poor and vulnerable so as to ensure that they are engaged effectively and in
accordance to their particularities. Where the client is prevented from adequately monitoring the
implementation of the Stakeholder Engagement Plan and there exists a risk that the Plan will
not be monitored according to Performance Standard 1, IFC may choose to not proceed with
the project financing.
Monitoring and Review

34. The client, in collaboration with appropriate and relevant third parties, will establish
procedures to monitor and measure the effectiveness of the management system, as well as
compliance with any related legal and/or contractual obligations and regulatory
requirements. Where appropriate, clients will consider involving representatives from
Affected Stakeholders to complement or verify monitoring activities. The client’s monitoring
23
program should be overseen by the appropriate level in the organization.
In addition to recording information to track performance and establishing relevant

operational controls, the client should use dynamic mechanisms, such as internal
inspections and audits, where relevant, to verify compliance and progress toward the
desired outcomes. The extent of monitoring should be commensurate with the project’s
41
Impacts
May 19, 2010
risks and impacts and with compliance requirements. Monitoring will normally include
recording information to track performance and comparing this against the previously
established benchmarks or requirements in the management system. Monitoring should be
adjusted according to performance experience, actions requested by relevant regulatory
authorities, and should reflect feedback from Affected Stakeholders and other stakeholders,
as appropriate. The client will document monitoring results and identify and reflect the
necessary corrective and preventive actions in the amended management system and
plans. The client, in collaboration with appropriate and relevant third parties, will implement
these corrective and preventive actions, and follow up on these actions in upcoming
monitoring cycles to ensure their effectiveness.
____________________
23
For example, participatory water monitoring.
35. Senior management in the client organization will receive periodic performance reviews
of the effectiveness of the management system, based on systematic data collection and
analysis. The scope and frequency of such reporting will depend upon the nature and scope
of the activities identified and undertaken in accordance with the client’s management
system and other applicable project requirements. Based on results within these
performance reviews, senior management will take the necessary and appropriate steps to
ensure the intent of the client’s Policy Statement is met, that procedures, practices, and
plans are being implemented, and are seen to be effective.
G110. Monitoring is the client’s primary means for tracking and evaluating progress towards the
implementation of the management system, including action items specified in the Investment
Action Plan. Clients should establish a system for measuring and monitoring consisting of:
(i) the key impacts of the business activities on employees, communities and the natural
environment as identified by the assessment; (ii) compliance with laws and regulations; and
(iii) monitoring progress with the implementation of the management system. The type, extent
and frequency of monitoring should be commensurate with the potential impacts and risks of the
business activities as identified by the risks and impacts identification process, and as specified
in the management system. In addition, depending on the natures of the business activities, it
may be appropriate for the client to establish, track and measure key indicators and other
performance measures over time to illustrate the improvement in a project’s performance or
highlight areas where more effort is required.
G111. Social monitoring programs may be established to enhance the effective follow-up of
social issues identified in the assessment and to respond to on-going issues from operations
identified through assessment of these issues. As part of the monitoring programs established
in the management system, it would be appropriate for the client to establish key social
development measurements and indicators, quantitative and qualitative measures of success,
or community engagement practices included in the Action Plan in order to improve
performance on social issues identified in the assessment process.
G112. The factors to be considered in establishing an environmental monitoring program include

engineering estimates, environmental modeling, pollutant source, noise, ambient water, and air
and workplace contaminant measurements. The focus and extent of the monitoring should be
commensurate with the risk of the pollutant releases as related to the sensitivity of the
42
Impacts
May 19, 2010
surrounding areas, taking into account the affected community’s perception of risks to their
health and environment resulting from the business activities. Appropriate processes should
also be in place to ensure the reliability of data, such as calibration of instruments, test
equipment, and software and hardware sampling. Specific environmental monitoring measures
comprise the parameters to be measured, methods to be used, sampling locations, frequency of
measurements, detection limits (where appropriate), and the definition of thresholds that signal
the need for corrective actions. Where external laboratories or other analytical services are
required to analyze samples, these should be certified under nationally recognized schemes to
ensure measurements and data provided to the business activity to be funded are accurate,
defensible and reliable.
G113. Monitoring results should be documented, and the necessary corrective and preventive
actions identified. Clients should also ensure that these corrective and preventive actions have
been implemented and that there is a systematic follow-up to ensure their effectiveness. The
client should normally carry out the monitoring using its internal resources, as part of its
management system. For projects with significant adverse impacts that are diverse,
irreversible, unprecedented, the client will retain qualified and experienced external experts to
verify its monitoring information. Participatory monitoring (i.e., involvement of affected
communities and other stakeholders) should be considered for large, high-risk projects. In
these cases, the client should evaluate the capacity of those participating in the monitoring and
provide periodic training and guidance as appropriate.
G114. The outcome of monitoring may indicate that the mitigation measures in the management
system should be adjusted or upgraded. As part of on-going maintenance of its Management
system, the client should update the management system from time to time, so that it can
adequately address the change in the social or environmental risks arising from any change in
the client’s business or circumstances.
G115. The results of social and environmental monitoring should be evaluated and documented.
Periodic reporting of progress and monitoring results should be made to the senior management
of the client’s organization, as a function of the client’s management system. Reports should
furnish the information and data needed to determine compliance with relevant host country
legal requirements and progress on implementing the management system. The format of
these reports can vary according to the nature of the organization, but should include summary
of findings and recommendations. This information should also be made available broadly
within the client’s organization and workers as appropriate.
G116. As part of IFC’s ongoing review of portfolio projects, IFC requires its clients to submit
Monitoring Reports on social and environmental performance pursuant to the project’s
management system, including the Action Plan and any other key social and environmental
criteria. The format and frequency of the Monitoring Reports to IFC will be initially agreed with
the client. Reporting formats can vary according to the circumstances of the business activities
in question, and can be based on the existing formats used by the client to prepare internal or
external reports. Monitoring reports will normally be on an annual basis unless IFC and the
client agree otherwise. The Monitoring Reports should contain sufficient data and descriptive
information to enable IFC to track the project’s progress on implementing the management
system and the Action Plan. IFC’s procedural requirements in relation to the Monitoring Reports
can be found in the ESRP. The client will also establish, in discussion with IFC, appropriate
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specific performance indicators to ascertain ongoing compliance of the business activities being
financed with the applicable Performance Standards and to improve its performance over time.
The suggested performance indicators can be found in the Environmental and Social Review
Procedure. The client should also report to IFC all amendments (subject to IFC’s consent) and
updates to the Investment Action Plan as part of its Monitoring Report.
G117. The client should provide periodic updates to the affected stakeholders at least annually
on the implementation and progress on the specific items in the management system that
involve ongoing risks to or impacts on affected communities. As appropriate, where
amendments and updates to the management system materially change impacts to affected
stakeholders, the client will also disclose this to communities. In addition, information should be
made available to affected stakeholders in response to community feedback or grievance and
as a means to further involve the affected community in the social and environmental
performance of the business activities to be financed.
G118. Clients may wish to consider using sustainability reports to report on the financial,
environmental and social aspects of its operations, including areas of success of its
performance measures and positive impacts that are being enhanced, as well as any
unsuccessful outcomes and the lessons learned. Reporting initiatives, guidelines, including
sector-specific guidelines and good practices are rapidly emerging in this area. The most
notable is the Global Reporting Initiative as included in the References section. IFC can work
with clients to develop appropriate sustainability report formats upon request. Some questions
that may be useful to pose as the type, extent, scope, frequency and management of a
monitoring program are considered:
How is social and environmental performance regularly monitored?

Have specific quantitative and/or qualitative performance indicators been
established that relate to the clients compliance requirements and management
system, and what are they?
What control processes are in place to regularly calibrate and sample environmental
measuring and monitoring equipment and systems?
What social monitoring methods are in place to track social impacts and assess
progress toward mitigation and development outcomes?
What is the process to periodically evaluate compliance with laws and regulations,
and to meet the applicable Performance Standards?
And some for reporting on the management system in general and consideration of who might
wish to see such information:
What social and environmental information is reported to client’s senior

management, IFC, and communities?
How is this information managed?
Is information made available to those who need it when they need it?
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Annex A
Background on Accepted International Practice in Conducting and Compiling

Environmental Audit Reports, References and Links to examples
An environmental audit is a tool to be used to determine the degree to which an activity,

process, operation, product or service is meeting stipulated requirements. Stipulated
requirements are considered audit criteria. They are the requirements to be audited against –
and can vary depending on the need/outcome for the audit. They can be focused on media
(e.g., water or air), the requirements of a specific piece of regulation, permit requirements or
element of a management system, only look at a limited geographic coverage (e.g., specific
plant or area of operation that may be a target of acquisition) or they can be used to assess
ongoing performance or other attributes or activities of a business as needed. Criteria and the
organization or entity to be audited form the scope of the audit. The scope defines what is to be
audited and (by definition) what is not. Scope must be carefully considered to ensure all that is
material to the audit is reviewed during the conduct of the audit.
Regardless of the scope of an audit, the audit must strictly follow an audit procedure to ensure it
is planned, staffed, and conducted in a manner that ultimately allows the results to be used with
confidence. Confidence means that when the audit presents the difference between what is
supposed to occur (the requirements) and what is actually occurring or has occurred (based on
observations, records reviewed or interviews with people to generate objective evidence) such
findings can be relied upon as truthful and accurate. Findings are detailed in an audit report and
summarized as audit conclusions. Often it is only the conclusions that are reviewed by those
who originally commissioned the audit and are used to inform decisions. It is therefore very
important to have conducted the audit in a manner that allows the recipients of the conclusions
to trust them implicitly.
A good specification on the conduct of all audits is contained within ISO 19011, available from
the International Organization for Standardization (ISO) at http://www.iso.org/iso/home.htm.
As mentioned above, the report, and often only the audit conclusions, is the key output of an
environmental audit. The content of the report will necessarily vary depending on the scope of
the audit. None-the-less, the following outline is a good example of what can be included in an
environmental audit report.
Executive Summary: A concise discussion of all environmental and occupational

health and safety areas of concern. Possible additional summary information
may include recommended mitigation measures and their priority, the cost of
mitigation, and a schedule for compliance. These are sometimes made by
auditors but are also sometimes left to the organization that “owns” the issues as
they may be better placed to provide more accurate data. The inclusion of such
information depends on the terms of reference that guide the conduct of the audit
and must be agreed upon prior to conducting the audit.
Scope of the audit: A description of what the audit focused upon (where the audit
was conducted, what was audited (processes, organization, operations, etc),
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when the period of performance began and ended – did the audit cover a month,
a year, or all operations since inception?).
Regulatory Setting: Tabular summary of host country, local and any other
applicable environmental and occupational health and safety laws, regulations,
guidelines, and policies as they may directly pertain to the scope of the audit.
Audit and Site Investigation Procedure: Brief overview of the approach used to
conduct the audit. A discussion of the records review, site reconnaissance, and
interview activities; a description of the site sampling plan and chemical testing
plan, field investigations, environmental sampling and chemical analyses and
methods, if applicable.
Findings and Areas of Concern: Detailed discussion of all environmental and
occupational health and safety areas of concern. The areas of concern should
be discussed in terms of both existing facilities and operations and contamination
or damages due to past activities, including the affected media and its quality and
recommendations for further investigation and remediation, if applicable. The
report may wish to consider prioritizing findings into categories: immediate
action; mid-term action; and long-term action.
Corrective Action Plan, Costs and Schedule (CAP): For each area of concern,
the audit report may include specifics on the appropriate corrective actions to
mitigate the areas of concern and why they are necessary. If so, they should
indicate priorities for action, provide estimates of the cost of implementing the
corrective actions and a schedule for their implementation if this has been agreed
to between the auditor and auditee. Schedules should be recommended within
the context of any planned capital expenditure for the facility. .
Annexes: These should include references, copies of interview forms, any details
regarding the audit protocol not already included, and data obtained during the
audit but not included directly above.
Annex B
Stakeholder Engagement Plan (Sample Contents)
A good Stakeholder Engagement Plan should:
describe regulatory, lender, company, and/or other requirements for consultation and
disclosure
identify and prioritize key stakeholder groups
provide a strategy and timetable for sharing information and consulting with each of
these groups
describe resources and responsibilities for implementing stakeholder engagement
activities
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describe how stakeholder engagement activities will be incorporated into a company’s

management system
The scope and level of detail of the plan should be scaled to fit the needs of the project (or
company operations).
1. Introduction
Briefly describe the project (or the company’s operations) including design elements and
potential social and environmental issues. Where possible, include maps of the project site
and surrounding area.
2. Regulations and Requirements
Summarize any legal, regulatory, lender, or company requirements pertaining to stakeholder

engagement applicable to the project or company operations. This may involve public
consultation and disclosure requirements related to the social and environmental assessment
process.
3. Summary of any Previous Stakeholder Engagement Activities If the company has undertaken
any activities to date, including information disclosure and/or consultation, provide the
following details:
Type of information disclosed, in what forms (e.g. oral, brochure, reports, posters,
radio, etc.), and how it was disseminated
The locations and dates of any meetings undertaken to date
Individuals, groups, and/or organizations that have been consulted
Key issues discussed and key concerns raised
Company response to issues raised, including any commitments or follow-up actions
Process undertaken for documenting these activities and reporting back to
stakeholders
4. Project Stakeholders
List the key stakeholder groups who will be informed and consulted about the project (or the
company’s operations). These should include persons or groups who:
are directly and/or indirectly affected by the project (or the company’s operations)
have “interests” in the project or parent company that determine them as stakeholders
have the potential to influence project outcomes or company operations (Examples of
potential stakeholders are affected communities, local organizations, NGOs, and
government authorities. Stakeholders can also include politicians, other companies,
labor unions, academics, religious groups, national social and environmental public
sector agencies, and the media.)
5. Stakeholder Engagement Program
Summarize the purpose and goals of the program (either projectspecific or corporate).
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Briefly describe what information will be disclosed, in what formats, and the types of
methods that will be used to communicate this information to each of the stakeholder
groups identified in section 4 above. Methods used may vary according to target
audience, for example:
Newspapers, posters, radio, television

Information centers and exhibitions or other visual displays
Brochures, leaflets, posters, non-technical summary documents and reports
Briefly describe the methods that will be used to consult with each of the stakeholder
groups identified in section 4. Methods used may vary according to target audience, for
example:
Interviews with stakeholder representatives and key informants
Surveys, polls, and questionnaires
Public meetings, workshops, and/or focus groups with specific groups
Participatory methods
Other traditional mechanisms for consultation and decision-making
Describe how the views of women and other relevant sub-groups (e.g. minorities,
elderly, youth etc.) will be taken into account during the process.
Describe any other engagement activities that will be undertaken, including participatory
processes, joint decision-making, and/or partnerships undertaken with local
communities, NGOs, or other project stakeholders. Examples include benefit-sharing
programs, stakeholders development initiatives, resettlement and development
programs, and/or training and micro-finance programs.
6. Timetable
Provide a schedule outlining dates and locations when various stakeholder engagement
activities, including consultation, disclosure, and partnerships will take place and the date by
which such activities will be incorporated into the company’s management system (at either
the project or corporate level).
7. Resources and Responsibilities
Indicate what staff and resources will be devoted to managing and implementing the
company’s Stakeholder Engagement Program.
Who within the company will be responsible for carrying out these activities? What budget
has been allocated toward these activities?
For projects (or multiple company operations) with significant or diverse impacts and multiple
stakeholder groups, it is good practice for a company to hire a qualified Stakeholders Liaison
Officer(s) to arrange and facilitate these activities at the project and/or corporate level.
Integration of the stakeholders liaison function with other core business functions is also
important, as is management involvement and oversight.
8. Grievance Mechanism
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Describe the process by which people affected by the project (or company’s operations) can
bring their grievances to the company for consideration and redress. Who will receive public
grievances, how and by whom will they be resolved, and how will the response be
communicated back to the complainant?
9. Monitoring and Reporting
Describe any plans to involve project stakeholders (including affected communities) or

third-party monitors in the monitoring of project impacts and mitigation programs.
Describe how and when the results of stakeholder engagement activities will be reported
back to affected stakeholders as well as broader stakeholder groups?
Examples include social and environmental assessment reports; company newsletters;
annual monitoring reports submitted to lenders; company annual report; company or
corporate sustainability report.
10. Management Functions
How will stakeholder engagement activities be integrated into the company’s environmental
and social management system and with other core business functions?
Who will have management oversight for the program?
What are the plans for hiring, training, and deploying staff to undertake stakeholder
engagement work?
What will be the reporting lines between stakeholders liaison staff and senior
management?
How will the company’s stakeholder engagement strategy be communicated internally?
What management tools will be used to document, track, and manage the process? (e.g.
stakeholder database, commitments register, etc.)
For projects or company operations involving contractors, how will the interaction
between contractors and local stakeholders be managed to ensure good relations?
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Annex C
An example of Indicators and Validation Methods for Ascertaining
the Process of Free, Prior and Informed Consultation
The determination (scores) for these considerations will be made against the scaling system
used by the Environment and Social Development Department for project supervision.
Material Consideration Examples of Validation Methods
1. Company Strategy, Policy, or Principles on

Engagement Client’s strategy, policy or principles or other supporting
Strategy, policy, or principles for on-going engagement documents.
with explicit mention of project-affected persons and/or
communities.
2. Stakeholder Identification and Analysis

As part of the Social and Environmental Assessment Stakeholder analysis document as part of SEIA or SEA.
process, identification of all project-affected
communities, their disaggregation (numbers, locations) Client’s planning documentation for stakeholders
in terms of different levels of vulnerability to adverse engagement, e.g. communications strategy,
project impacts and risks, and an analysis of the effect consultation plan, Public Consultation and Disclosure
of adverse project impacts and risks on each group. Plans, and stakeholder engagement plan.
Part of the Social and Environmental Assessment
process, this analysis should also look at communities
and individuals that will benefit from the project.
3. Stakeholders Engagement
A process of consultation that is ongoing during the
project planning process (including the process of Client’s schedule and record of stakeholders
Environmental and Social Assessment), such that: engagement.
(a) affected communities have been engaged in:
(i) identifying potential impacts and risks; (ii) assessing Client’s record of discussions with recognized
the consequences of these impacts and risks for their stakeholders representatives, respected key
lives; and (iii) providing input into the proposed informants, and legitimate representatives of sub-
mitigation measures, the sharing of development groups (e.g., women, minorities).
benefits and opportunities and implementation issues;
and that (b) new impacts and risks that have come to
light during the planning and assessment process have
also been consulted upon.
4. Information Disclosure Client’s materials prepared for disclosure and

Timely disclosure by the client of project information by consultation.
the client to all project-affected communities about the
purpose, nature and scale of the project; the duration of Client’s record of discussions with recognized
proposed project activities; and expected risks, impacts stakeholders representatives; respected key
and development benefits that directly affect them. informants; and legitimate representatives of sub-
Disclosure should be in a form that is understandable groups.
and meaningful.
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5. Consultation
Client’s record of discussions with recognized
a) Free stakeholders representatives, respected key
Evidence from the communities adversely affected by informants, and legitimate representatives of
the project that the client or its representatives have not subgroups.
coerced, intimidated or unduly incentivized the affected
population to be supportive of the project.
b) Prior
Consultation with affected communities must be
sufficiently early in the project planning process:(i) to
allow time for project information to be interpreted and Client’s record of discussions with recognized
comments and recommendations formulated and stakeholders representatives, respected key
discussed; (ii) for the consultation to have a meaningful informants, and legitimate representatives of
influence on the broad project design options (e.g., subgroups.
siting, location, routing, sequencing, and scheduling);
(iii) for the consultation to have a meaningful influence
on the choice and design of mitigation measures, the
sharing of development benefits and opportunities, and
project implementation.
c) Informed
Consultation with affected communities on project
operations and potential adverse impacts and risks,
based on adequate and relevant disclosure of project Client’s record of discussions with recognized
stakeholders representatives; respected key
information, and using methods of communication that
informants; and legitimate representatives of sub-
are inclusive (i.e., accommodating various levels of
vulnerability), culturally appropriate, and adapted to the groups.
communities’ language needs and decision-making,
such that members of these communities fully
understand how the project will affect their lives.
6. Informed Participation Client’s schedule and record of stakeholders

engagement.
Evidence of the client’s organized and iterative
consultation, leading to the client’s specific decisions to The client’s documentation of measures taken to avoid
incorporate the views of the affected communities on or minimize risks to and adverse impacts on affected
matters that affect them directly, such as the avoidance communities in response to stakeholders feedback
or minimization of project impacts, proposed mitigation received during consultation.
measures, the sharing of project benefits and
opportunities, and implementation issues. Drafts of Action Plan.
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Stakeholder analysis as part of SEIA or SEA or

7. Vulnerable Groups – Consultation and Mitigation
socio-economic baseline data.
Evidence that individuals or groups particularly
vulnerable to adverse project impacts and risks have Client’s record of stakeholders engagement, including
been party to effective prior, free and informed record of discussions with legitimate representatives of
consultation as well as informed participation, and vulnerable groups.
evidence that the potential impacts and specific or
exacerbated risks to them will be mitigated to the Client’s documentation of measures taken to avoid or
satisfaction of these parties. minimize risks to and adverse impacts on vulnerable
groups in response to feedback received during
consultation.
Drafts of Action Plan.
8. Grievance Mechanism – Structure, Procedure, Client’s organizational structure and responsibilities,

and Application and procedures for managing grievances.
An effective grievance mechanism procedure that is
fully functioning: (i) throughout the process of Client’s record of grievances received about the project
environmental and social assessment; and (ii) that is and addressed, including expressions in support or
suitable for the operational phase of the project to dissent.
receive and address the affected communities’
concerns about the client’s social and environmental
performance. The mechanism should be culturally Client’s record of discussions with recognized
appropriate, readily accessible to all segments of the stakeholders representatives, respected key
affected communities, and available to affected informants, and legitimate representatives of
communities at no cost and without retribution. subgroups.
Client’s record of stakeholders engagement.

9. Feedback to affected communities
Client’s documentation of measures taken to avoid or
Documentation that the client provided the results of
minimize risks to and adverse impacts on affected
consultation to the project-affected communities, and
communities.
either: (i) demonstrated how the comments and
recommendations made by the project-affected
Discussions with recognized stakeholders
communities have been accommodated in the project
representatives, respected key informants, and
design, mitigation measures, and/or sharing of
legitimate representatives of subgroups.
development benefits and opportunities; or (ii) provided
a rationale why these comments and recommendations
Client’s ongoing reporting on implementation of Action
have not been accommodated.
Plan.
Revised management program or Action Plan.
The client may also use perception surveys to pose questions to affected stakeholders and solicit their responses
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References
Several of the requirements set out in the Performance Standard are based on principles
expressed in the following international agreements and the related guidelines:
Espoo Convention – Convention on Environment Impact Assessment in a
Transboundary Context (UNECE, 1991), lays down the general obligation of states
to notify and consult each other on all major projects under consideration that are
likely to have a significant adverse environmental impact across boundaries.
http://www.unece.org/env/eia/eia.htm
Guidelines on Environmental Impact Assessment in a Transboundary Context in the

Caspian Sea Region (UNEP & Caspian Environment Programme, 2003) – provides
a regional based framework for implementation of EIA in a transboundary context in
the Caspian region. http://www.caspianenvironment.org/report_technical.htm
In addition to the international human rights conventions referenced in GN2, the UN Convention
on the Rights of Persons with Disabilities elaborates in detail the rights of persons with
disabilities and sets out a code of implementation.
http://www.un.org/disabilities/convention/conventionfull.shtml
UN “Optional Protocol to the Convention on the Rights of Persons with Disabilities”
http://www.un.org/disabilities/convention/optprotocol.shtml
Additional international agreements are referred to at the end of other Guidance Notes.
IFC and the World Bank have published a number of resource materials:
Addressing Grievances From Project-Affected Communities (IFC, 2009)
http://www.ifc.org/ifcext/sustainability.nsf/AttachmentsByTitle/p_GrievanceMechanis
ms/$FILE/IFC+Grievance+Mechanisms.pdf
A Guide to Designing and Implementing Grievance Mechanisms for Development

Projects (CAO, 2008)
http://www.cao-ombudsman.org/howwework/advisor/documents/implemgrieveng.pdf
Participatory Water Monitoring: A Guide for Preventing and Managing Conflict (CAO,
2008)
http://www.cao-ombudsman.org/howwework/advisor/documents/watermoneng.pdf
IFC’s Environmental and Social Review Procedure (IFC, 2006), gives direction to
IFC officers in implementing the Sustainability Policy and reviewing compliance and
implementation by private sector projects.
http://ifcln1.ifc.org/ifcext/enviro.nsf/Content/ESRP
IFC’s Policy on Disclosure of Information (IFC, 2006) defines IFC’s obligations to

disclose information about itself as an institution and its activities
http://ifcln1.ifc.org/ifcext/enviro.nsf/Content/Disclosure
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Good Practice Note: Addressing the Social Dimensions of Private Sector Projects
(IFC, 2003) – A practitioner’s guide to undertaking social impact assessment at the project
level for IFC-financed projects.
http://ifcln1.ifc.org/ifcext/enviro.nsf/Content/Publications
Stakeholder Engagement: A Good Practice Handbook for Companies Doing

Business in Emerging Markets (IFC, 2007) explains new approaches and forms of
engagement with affected local communities, including guidance on grievance
mechanisms.
http://ifchq14.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_StakeholderEngagement_Full/$F
ILE/IFC_StakeholderEngagement.pdf
The World Bank’s Environmental Assessment Sourcebook and Updates (World

Bank, 2001) provides assistance for advisory tasks, through discussions of
fundamental environmental considerations; summaries of relevant Bank policies; and
analyses of other topics that affect project implementation http://www.worldbank.org/
World Bank’s Operational Policy 7.50 International Waterways (World Bank, 2001)
World Bank’s policy for projects that may involve the use or pollution of international
waterways.
http://lnweb18.worldbank.org/ESSD/sdvext.nsf/52ByDocName/InternationalWaterways
The following are examples of accepted international standards for formal environmental, health
and safety and social management systems:
ISO 14001 - Environmental Management systems (International Organization of
Standardization, 2004) details the requirements for an environmental
management system, to enable an organization to develop a policy and
objectives taking into account legislative requirements and information about
significant environmental impacts. ISO 14004:2004 gives general EMS
guidelines
http://www.iso.org/iso/iso_catalogue/management_standards/iso_9000_iso_1400
0/iso_14000_essentials.htm
Technical Committee on Environmental Management - Technical Committee 207

(ISO 14001) Committee under which ISO 14000 series on Environmental
Management standards are being developed. Provides useful information on the
standardization of Environmental Management. http://www.tc207.org/faq.asp
EMAS - Eco-Management and Audit Scheme (European Commission, 1995) - EU

voluntary instrument which acknowledges organizations that improve their
environmental performance on a continuous basis.
http://ec.europa.eu/environment/emas/index_en.htm
OHSAS 18001 - Occupational Health and Safety Zone - an international

occupational health and safety resource that specifies policies and procedures to
minimize risks to employees and improve OH&S management systems.
http://www.ohsas-18001-occupational-health-and-safety.com/
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SA8000 - Social Accountability International – a standard and verification system that

assures humane workplaces and provides standards and guidance on protecting the
basic human rights of workers.
http://www.sa-intl.org/index.cfm?fuseaction=Page.viewPage&pageId=473
Guidance and certification support can be obtained from several certification bodies and from
national accreditation bodies.
• International Accreditation Forum (IAF), details of national certification body

accreditation and certification bodies worldwide
http://www.iaf.nu/
Example of support toolkit, especially designed to support SMEs in implementing an EMS, can
be found at the following addresses:
• IFC Corporate Advisory Department developed a toolkit for SMEs, which include
modules on environmental responsibilities and a specific module on creating an EMS
http://www.smetoolkit.org/smetoolkit/en/content/en/279/Creating-an-Environmental-
Management-System-EMS-
• An EMAS toolkit for small organization is available at the European Commission
website: http://ec.europa.eu/environment/emas/toolkit/
• European Environment Agency published a handbook, “Environmental Management
Tools for SMEs - A Handbook” which is available at
http://www.eea.europa.eu/publications/GH-14-98-065-EN-C
• IEMA and the Acorn Scheme, a UK model for the staged approach to the
implementation to an environmental management system for SMEs,
www.iema.net/ems/acorn_scheme
• The Project ACORN workbook developed by the IEMA is a toolkit for SMEs,
www.iema.net/ems/acorn_scheme/acorndownloads
• EMASeasy, a European framework for the implementation of EMAS within SMEs,
www.emas-easy.eu
• INEM has developed several online tools to assist organisations in implementing EMS,
www.inem.org/default.asp?menue=94
A training kit in EMS, prepared by the United Nations Environment Programme (UNEP), the
International Chamber of Commerce (ICC) and the International Federation of Consulting
Engineers (FIDIC), is available from the following addresses:
• http://www.uneptie.org/scp/business/emp/
• http://www1.fidic.org/resources/globalcompact/
Guidance on best international practice for the development of environmental and social impact
assessments and studies is provided by the following organizations:
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International Association for Impact Assessment (IAIA): forum for advancing

innovation, development, and communication of best practice in impact assessment.
http://www.iaia.org/publications/
Institute of Environmental Management and Assessment (IEMA): a not-for-profit
membership organization established to promote best practice standards in
environmental management, auditing and assessment
http://www.iema.net/
European Commission, Directorate-General for the Environment
http://ec.europa.eu/environment/eia/eia-support.htm
U.S. Environmental Protection Agency, National Environmental Policy Act (NEPA)
Policies & Guidance
http://www.epa.gov/compliance/resources/policies/nepa/index.html
European Commission, Joint Research Centre, IA TOOLS: an online platform with a
repository of guidance, information and best practices for the impact assessment of
new policies and legislative measures
http://iatools.jrc.ec.europa.eu/bin/view/IQTool/WebHome.html
Netherlands Commission on Environmental Assessment : an organization assisting
environment and sector ministries, environmental assessment professionals and
non-governmental organizations to achieve better environmental assessment
practice
http://www.eia.nl/
World Bank, Environmental Assessment Sourcebook and Updates
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/ENVIRONMENT/EXTENVA
SS/0,,contentMDK:20282864~pagePK:148956~piPK:216618~theSitePK:407988,00.
html
Guidance on hazard/risk assessments is provided by the following organizations:
U.S. Environmental Protection Agency risk portal: This site provides basic
information about environmental risk assessments for the public. Additionally, the
site offers a comprehensive set of links to key EPA tools, guidance and guidelines
http://www.epa.gov/risk/
European Environment Agency (EEA), Environmental Risk Assessment -
Approaches, Experiences and Information Sources
http://www.eea.europa.eu/publications/GH-07-97-595-EN-C2
UK Health and Safety Executive, providing useful guidance on risk assessment for
occupational health and safety,
http://www.hse.gov.uk/risk/expert.htm
International Organization for Standardization (ISO) has several standards
associated with risk/hazard assessment (including safety assessment) and risk
management, such ISO 31000:2009 on Risk Management – Principles and
Guidelines, and several sectoral standards
http://www.iso.org/iso/home.htm
World Bank, Environmental Assessment Sourcebook Update on Environmental
Hazard and Risk Assessment
http://siteresources.worldbank.org/INTSAFEPOL/1142947-
1116493361427/20507357/Update21EnvironmentalHazardAndRiskAssessmentDec
ember1997.pdf
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May 19, 2010
Additional guidance published by the following organizations provides useful information:

IFC Sustainability Resources (IFC) – examples and benefits of improving
sustainability performance. http://www.ifc.org/sustainability
GRI Guidelines and Sector Supplements – (Global Reporting Initiative) provides a

framework for reporting and organization’s sustainability performance.
http://www.globalreporting.org/
DIHR Human Rights Quick Check (Danish Institute for Human Rights) - a diagnostic
self-assessment tool designed to detect human rights risks in business operations.
https://hrca.humanrightsbusiness.org/
The Auditing Roundtable - a professional organization dedicated to the development

and professional practice of environmental, health, and safety (EHS) auditing.
http://www.auditing-roundtable.org/fw/main/Home-1.html
Guide to Human Rights Impact Assessment and Management is a road-testing

version of the assessment tool to be used alongside the social assessment process.
http://www.ifc.org/ifcext/enviro.nsf/Content/OurStories_SocialResponsibility_HumanRigh
ts
EITI Source book (Extractives Industries Transparency Initiative – 2005) - the initiative
supports improved governance in resource-rich countries through the full publication and
verification of aggregated company payments and government revenues from oil, gas
and mining.
http://www.eitransparency.org/UserFiles/File/keydocuments/sourcebookmarch05.pdf
Demographic Surveillance Site (DSS) (The INDEPTH Network) – DDS is an

extremely cost-effective and well established program that can transparently and
longitudinally collect and evaluated a wide range of social, health and economic
survey data.
http://www.indepth-network.org/
A Design Manual for a Barrier Free Environment (United Nations Division for Social
Policy and Development) – This Manual is a design guidebook made for the purpose
of providing architects and designers with the basic information and data necessary
for a barrier- free environment
http://www.un.org/esa/socdev/enable/designm
The U.S. Access Board – This website provides additional accessibility guidelines
and standards, technical assistance, and training downloadable publications.
http://www.access-board.gov/
IAP2 (International Association for Public Participation) Public Participation Toolbox

– Techniques to Share Information (2006).
http://www.iap2.org/associations/4748/files/06Dec_Toolbox.pdf
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Assessment and Management of Social and Environmental Risks and

Guidance Note 1 corresponds to Performance Standard 1. Please also refer to Performance

1. Performance Standard 1 underscores the importance of managing the social and

Social and Environmental Assessment and Management System

• Definition of a set of policies and objectives for social and environmental

Risks and Impacts Identification

Areas potentially affected by impacts from unplanned but predictable developments

Risks and Impacts Identification Methods

compliance situations and liabilities). Environmental and social improvement opportunities

Impacts and Risks

Global Impacts - Climate Change

G39. Specific requirements and guidance on greenhouse gases and ozone-depleting

G42. As outlined in paragraph 7 of Performance Standard 1, a good environmental and social

G45. According to paragraph 7 of Performance Standard 1, the assessment of a business

Furthermore, the assessment must determine if the business activity to be financed is

Disadvantaged or Vulnerable Groups

Gender-differentiated impacts should be assessed and the assessment should propose

Third Party Impacts including Supply Chain Considerations

Regional, Sectoral or Strategic Assessments

G64. In exceptional circumstances, regional, sectoral, or strategic social and environmental

Management System, Plans, and Agreements

Organizational Capacity and Competency

business management process?

Identification of training needs for employees. This can be triggered by past

Emergency Preparedness and Response

• Trained emergency response teams

G87. The purpose of stakeholder engagement is to establish and maintain a constructive

Stakeholder Analysis and Engagement Planning

Free, Prior, and Informed Consultation

Broad Community Support

Reporting to Affected Stakeholders

G104. Clients should establish a procedure for receiving, addressing, and

Private Sector Responsibilities Under Government-Led Stakeholder Engagement

Monitoring and Review

In addition to recording information to track performance and establishing relevant

G112. The factors to be considered in establishing an environmental monitoring program include

How is social and environmental performance regularly monitored?

What social and environmental information is reported to client’s senior

Background on Accepted International Practice in Conducting and Compiling

An environmental audit is a tool to be used to determine the degree to which an activity,

Executive Summary: A concise discussion of all environmental and occupational

Stakeholder Engagement Plan (Sample Contents)

A good Stakeholder Engagement Plan should:

describe how stakeholder engagement activities will be incorporated into a company’s

2. Regulations and Requirements

Summarize any legal, regulatory, lender, or company requirements pertaining to stakeholder

5. Stakeholder Engagement Program

Newspapers, posters, radio, television

7. Resources and Responsibilities

9. Monitoring and Reporting

Describe any plans to involve project stakeholders (including affected communities) or

10. Management Functions

Material Consideration Examples of Validation Methods

1. Company Strategy, Policy, or Principles on

2. Stakeholder Identification and Analysis

4. Information Disclosure Client’s materials prepared for disclosure and

Material Consideration Examples of Validation Methods

6. Informed Participation Client’s schedule and record of stakeholders

Material Consideration Examples of Validation Methods

Stakeholder analysis as part of SEIA or SEA or

Drafts of Action Plan.