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Evaluating Environmental and Social Effects in

International Finance Corporation projects

10th European Evaluation Society Biennial ConferenceOctober 3 – 5, 2012, Helsinki, Finland

Jouni EerikainenSenior Environmental Specialist

Independent Evaluation Group Private Sector Evaluationjeerikainen@ifc.org

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Setting the stage- Environmental & Social (E&S) performance

evaluation at IFC E&S sustainability is a strategic pillar at International

Finance Corporation (IFC), EBRD and several other private sector multilateral development banks (MDB)

IFC’s 2006/2012 Performance Standards (PSs) for E&S Sustainability have been adopted by Equator Principle Financial Institutions and EBRD

IEG has evaluated E&S Effects in IFC projects since 1996 and prepared E&S review reports with performance indicators since 2004, and MIGA evaluations since 2010

Annually 88 100 IFC & MIGA evaluations, 5-10 site visits IEG’s evaluation approach follows ISO 14031 standard

“Environmental Performance Evaluation” Introduction of PS framework enables evaluation of E&S

impacts as the change of performance indicators during the project course

Public Sector Evaluation

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Director-General, Evaluation (DGE)

Independent Evaluation Group (IEG) Private Sector Evaluation (IFC and MIGA)

PresidentWorld Bank

Group

Board

Multilateral Inv. Guarantee

AgencyWorld Bank

Private SectorEvaluation

Strategy,Learning &

communication

Country, Corporate &

Global Evaluation

Independent Evaluation Group

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Environmental and Social (E&S) risks and opportunities in IFC projects

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2. IFC’s Investment Outcome Loan Equity

IFC’s self-evaluation system Expanded Project Supervision Report (XPSR)

50% sample of mature projects (5years since approval)

IFC’s self-evaluation system Expanded Project Supervision Report (XPSR)

50% sample of mature projects (5years since approval)

3. IFC’s Work Quality: Screening, appraisal, structuring Supervision Role and contribution

Highly unsuccessful

Unsuccessful Mostly unsuccessful

Mostly successful

Successful Highly successful

1. Development Outcome1. Development Outcome

Satisfactory ExcellentUnsatisfactory UnsatisfactoryPartlyProject’s impacts on:

Business success Economic sustainability

Private sector development

E&S Effects

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IEG evaluation instructions: rating Environmental and Social Effects (ESE) of real sector projects

RATING

Material compliance with S&E Manag. System(SEMS)

Beyond compliance Role model

Current Environmental & Social (E&S) standards (= IFC Performance Standards)

At-appraisal requirements (ERS, EIAs) based on WBG Safeguard Policies

Excellent (E) YES and YES Excellent Yes

Satisfactory (S) YES or YES

Partly Unsatisfactory(PU)

NO and NObut deficiencies are addressed

Unsatisfactory(U)

NO and NOmitigation is unlikely or non-compliance resulted in environmental damage

No Opinion Possible (NOP)

Relevant information for rating is not obtainable, e.g. missing AMRs – last resort, consider a site visit

Not Applicable (N/A)

Category C projects with no E&S reporting requirements and no adverse impacts through the lifetime; if factual impacts are known then actual rating should be applied (infrequent)

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Example of E&S Evaluation SummaryA chemical plant in the East Europe and Central Asia region

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Example of Environmental and Social Effects Evaluation – detailed analysis on air emissions

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ESE evaluation results on projects committed 1999-2006 and evaluated 2004-2011

Environmental and Social Effects

40%

50%

60%

70%

80%

90%

100%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

ESE success rate

ESE succ. rate high (CL=95%)

ESE succ. rate low (CL=95%)

`

1996-2011 XPSR average ESE success rate

40%

50%

60%

70%

80%

90%

100%

96-98 97-99 98-00 99-01 00-02 01-03 02-04 03-05 04-06 05-07 06-08 07-09 08-10 09-11

ESE success rate

ESE succ. rate high (CL=95%)

ESE succ. rate low (CL=95%)

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1996-2011 XPSR rolling 3 year average ESE success rate

Success rate % = (S+E) / (U+PU+S+E)

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Evaluation of E&S Effects of Performance Standards (PS) projects

Environmental and Social Effects

Environmental and Social Performance

• Assessing performance against IFC requirements and PS criteria

• Indicators rated at appraisal and supervision

Environmental and Social Impacts

• Changes in performance• Wider impacts, sector & region

The new evaluation system recognizes the E&S impacts and changes between appraisal and evaluation

PSs implemented since 2006 and evaluated from 2011

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E&S Effects Evaluation for Performance Standards projects (Case: Petrochemical Plant in Africa)

4Rate E&S Effects and

Impacts based on rating matrix and

demonstration effect

3Rate overall E&S Performance at Appraisal and

Evaluation

2Rate PS 1-8 at Appraisal

and Evaluation

1Rate sub-indicators at

Appraisal and Evaluation

Building a pyramid

from indicators….

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E&S evaluation of Performance Standards projects

…to measure

E&S footprint

Project: Petrochemical Plant Upgrade ProjectCountry: Africa

ID: 12345

E&S Category: B

E&S Effects: S

E&S Impact: S

E&S Performance at evaluation: S

E&S Performance at appraisal: PU

E&S Manag. Systems PS1: S

Labor and H&S PS2: S

Pollution Prevention PS3: S

Community H&S PS4: S

Land Acq.& Invol. Resettl. PS5: NOP

Biodiversity & Res. mgt. PS6: NA

Indigenous Peoples PS7: NA

Cultural Heritage PS8: NA

ESAP Implementation: S

EHS Guidelines: S

Host Country EHS laws: S

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

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Challenge to present E&S performance and impact concisely in complex projects

E&S Footprint is presented in a Performance Standards Diamond – key aspects at one glance

The goal is to show how IFC’s intervention has reduced the E&S Footprint area

Project: Vicat-SOCOCIMCountry: Senegal

ID: 25363E&S Category: B

E&S Effects: SE&S Impact: S

E&S Performance at evaluation: SE&S Performance at appraisal: PU

E&S Manag. Systems PS1: SLabor and H&S PS2: S

Pollution Prevention PS3: SCommunity H&S PS4: S

Land Acq.& Invol. Resettl. PS5: NABiodiversity & Res. mgt. PS6: E

Indigenous Peoples PS7: NACultural Heritage PS8: NA

ESAP Implementation: SEHS Guidelines: S

Host Country EHS laws: S

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

NOP

IEG RATINGS

Project: OVERALL SCORE 2011Country: ALL COUNTRIES

Number of projects 10E&S Category: A & B

E&S Effects: SE&S Impact: S

E&S Performance at evaluation: SE&S Performance at appraisal: PU

E&S Manag. Systems PS1: SLabor and H&S PS2: S

Pollution Prevention PS3: SCommunity H&S PS4: S

Land Acq.& Invol. Resettl. PS5: SBiodiversity & Res. mgt. PS6: S

Indigenous Peoples PS7: ECultural Heritage PS8: S

ESAP Implementation: SEHS Guidelines: S

Host Country EHS laws: S

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

Project: Petrochemical Plant Upgrade ProjectCountry: Africa

ID: 12345

E&S Category: B

E&S Effects: S

E&S Impact: S

E&S Performance at evaluation: S

E&S Performance at appraisal: PU

E&S Manag. Systems PS1: S

Labor and H&S PS2: S

Pollution Prevention PS3: S

Community H&S PS4: S

Land Acq.& Invol. Resettl. PS5: NOP

Biodiversity & Res. mgt. PS6: NA

Indigenous Peoples PS7: NA

Cultural Heritage PS8: NA

ESAP Implementation: S

EHS Guidelines: S

Host Country EHS laws: S

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

0

1

2

3

4

PS1

PS2

PS3

PS4

PS5

PS6

PS7

PS8

Appraisal Evaluation

U PU S E NA

NOP

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Opportunities and challengesThe PS framework provides an opportunity

to evaluate E&S impactsCalculating of ratings is underway and

weighing of indicators will be pilotedChallenges:

lack of baseline and monitoring datacorporate investments to several facilities large number of performance indicatorsevaluation of wider impacts in the region and

industry sectorpresenting evaluation results concisely and

coherently in complex projects Integrating E&S evaluation to IFC’s project cycle

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Thank you very much on your attention

Jouni Eerikainenjeerikainen@ifc.org

Independent Evaluation Group700 19th Street, NW, M9B-919Washington DC, 20431 USA

Tel: +1 202 458 2690http://ieg.worldbankgroup.org/