Ecosystems, Infrastructure and the Environment: Emerging Markets Considerations

June 9, 2006

Motoko Aizawa

International Bank for Reconstruction and Development, 1945

International Finance Corporation, 1956

International Development Association, 1960

Multilateral Investment Guarantee Agency, 1988

IFC: Part of theWorld Bank GroupIFC: Part of theWorld Bank Group

IFC is owned by its 178 member countries, which collectively determine policies.

International Centre for Settlement of Investment

Disputes, 1966

World Bank Group Institutional RolesWorld Bank Group Institutional Roles

IBRD lends to governments of middle-income developing countries.

IDA provides concessional loans to governments of the poorest developing countries.

ICSID facilitates the settlement of investment disputes between governments and foreign investors.

MIGA provides guarantees to foreign investors against noncommercial risk.

IFC’s Mission IFC’s Mission

To promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives

IFC Sustainability Policy Framework

Sustainability Policy

• 8 Guidance Notes • Environmental, Health &

Safety Guidelines• Good Practice Materials

Disclosure Policy

IMPLEMENTATION

Environmental and Social Review

Procedure

IFC

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REQUIREMENTS

8 Performance Standards

Overview Performance Standards

PS 1: Social & Environmental Assessment and Management System

PS 2: Labor and Working Conditions PS 3: Pollution Prevention and Abatement PS 4: Community Health, Safety & Security PS 5: Land Acquisition and Involuntary Resettlement PS 6: Biodiversity Conservation and Sustainable Natural

Resource Management PS 7: Indigenous Peoples PS 8: Cultural Heritage

Key Features of Performance Standards

Principles based, not rules based Outcomes oriented, not procedure based PSs / GNs refer to relevant international agreements Human rights relevant to private sector operations are

embedded in the standards Most comprehensive set of social standards for the

private sector New climate, ecosystems and natural resources

features

Climate, Ecosystems and Natural Resources under the Performance Standards

PS 1 requires project sponsors to assess all potential adverse risks to the environment and people

PS 6 requires particular attention to threats to biodiversity, including ecosystems services

PS 3 requires:― Incorporation of resource conservation and energy efficiency

measures―GHG quantification and monitoring for projects with potential GHG

emission over 100,000t annually PS 4 requires projects to have emergency preparedness and

response plans PS 1 requires assessed risks to be managed through an

appropriate social and environmental management system IFC reviews project proposals for compliance; also provides

technical and financial assistance

Expected Impacts on the Market

Easier for lenders to communicate & for business people to apply requirements

Modular structure is adaptable to various business models―Adoption of the Performance Standards via the Equator

Principles Levels the playing field for lenders Helps developers prepare projects for financing Multiplier effect beyond projects financed by IFC – 80% of

global project financing arranged

World Bank Group’s Clean Energy & Development Investment Framework

Following the Gleneagles Communiqué:Three-prong structure of an Investment Framework:

1. Meeting the challenge of clean energy needs with no carbon constraints for developing countries

2. Investments to realize low carbon economy and reduce GHGs

3. Actions needed to adapt to climate change

Clean Energy for Development

IEA estimates: from 2003 to 2030, $8 trillion capital investments (average of $300 billion annually) needed for developing / transition country energy needs

Much needed are energy sector reform & mobilization of energy demand and supply technologies

Climate change presents an urgent and additional challenge―Poorest countries and people are the most vulnerable

Financing Options for Clean Energy

Clean Energy Financing Vehicle―A mechanism to transfer high efficiency technology for

mitigation Power Rehabilitation Facility for rehab of inefficient

power plants Project development fund for public and private sector

participation Venture capital funds for technology adoption

―For financing and clean energy technologies for market penetration

Adaptation to Climate Change

Priority areas = countries with highest % of population affected by climate change―Zimbabwe, Malawi, Samoa, China, Cambodia and

Swaziland Transfer of existing and new technologies; revision of

planning standards & systems Development of information and tools Disaster preparedness R&D Private sector considerations