IFC’s Performance Standards define clients’ responsibilities for managing their environmental and social risks.
The IFC Performance Standards in a nutshell
Together, the eight Performance Standards establish standards that the client is to meet throughout the life of an investment:
- IFC Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts
- IFC Performance Standard 2: Labor and Working Conditions
- IFC Performance Standard 3: Resource Efficiency and Pollution Prevention
- IFC Performance Standard 4: Community Health, Safety, and Security
- IFC Performance Standard 5: Land Acquisition and Involuntary Resettlement
- IFC Performance Standard 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
- IFC Performance Standard 7: Indigenous Peoples
- IFC Performance Standard 8: Cultural Heritage
IFC Performance Standards (PS): Situation Today
- IFC standards are THE benchmark standards for FI’s E&S risks management.
- An estimated 80% of total project finance debt in emerging market economies is based on IFC PS .
- Adherence to IFC PS and framework is international good banking practice and significantly reduces risks.
- In many emerging countries an estimated 20% of FIs have an ESMS in place.
- In many emerging countries an estimated 50% are on the way.
- Central banks are starting to require E&S management from their FIs.
IFC PS – no need to be afraid of them
- >70% of worlds project finance is already based on PS
- Developed in cooperation with developing countries
- Generally far lower than EU standards, sometimes even lower than local African standards, very often identical
- Represents „good industrial practice“ but not „best industrial practice“
- Full of „common sense“
- Gives valuable benchmark information and tips to clients
- Leaves room for manoeuvring: „the client should…“
- Overcome weaknesses of local legislation (e.g.. insufficient EIAs)
- Adherence to IFC PS is international best banking practice and significantly reduces banks risks
Information related to IFC Performance Standards and their application in financial institutions in developing countries: Knowledge base