Training Workshop for Financial Intermediaries and Implementing Agencies Kiev, May 2011 Ruxandra Floroiu Senior Environmental Engineer, ECA Region, World Bank

OP 4.01 – allows use of ESMF as EA safeguard instrument when: a project consists of a program and/or series of sub-projects, and the impacts can not be determined until the program or sub-project details have been identified = before project appraisal EA Category FI – subprojects (most identified after project appraisal) are financed through a Financial Intermediary (FI) – requirements and procedures set-out in an ESMF manage potential adverse impacts through a guide consisting of a set of methodologies, procedures and measures to facilitate adequate environmental management (risk management and impacts) related to the works financed under the project and whose specific location is unknown or may change during project implementation social aspects are briefly addressed (not as in RPF) - ESMF

Provides guidance to sub-borrowers (sub-project sponsors) and FIs to ensure the EA process is carried out in compliance with national legislation and OP 4.01 Provides an environmental and social screening process to allow for identification, assessment and mitigation of potential impacts by proposed works at the time the detailed aspects are known Used as a reference document for assessing the potential environmental and social impacts of investment alternatives Serves as guidelines for the development of sub-project/site-specific Environmental Management Plans (EMPs), Environmental Assessments (EAs), due diligence reports, environmental audits, etc Is an integral part of the project Operational Manual and applicable to all FIs investments, regardless of its funding source or implementing agency MAIN OBJECTIVES: Establish procedures for screening all proposed sub-projects for their potential adverse environmental and social impacts Specify measures for managing, mitigating and monitoring environmental impacts during project operation Outline training and capacity-building arrangements needed to implement the EMF provisions

1. Brief description of project components including description of type of activities eligible for financing 2. Operating requirements (diagnosis of legal and institutional framework, applicable safeguards) 3. Environmental/social baseline at national/state level 4. EMF screening procedures (criteria, process, environmental due diligence process, EA/EMP documentation) 5. Implementation arrangements 6. Public consultation and disclosure process/procedures 7. Environmental mitigation measures 8. Monitoring and reporting arrangements 9. Training and capacity building recommendations 10. Various annexes

PROJECT (FI) Sub-project ( ) (Development of mineral resources open pit mines in Kamyanets-Podilsky in SW Ukraine, cat. A) EMF (project level) Prepared by primary Borrower (FI) Sets out requirements & responsibilities for sub-project-specific EA Acceptable to WB Disclosure and one National level consultation on EMF Preparation, consultation and disclosure prior to Project Appraisal Sub-project-specific EA or EMP (sub-project level) Prepared by sub-borrower/grant recipient (sub-project implementer), during project implementation EA/EMP disclosure and local level consultation prior to finalizing document FI responsible for quality/clearance and for monitoring implementation WB prior review of some Category B Sub-project (Modernization of cement production plant in Odessa region, cat. B) Sub-project () (Poultry waste utilization system, cat. B)

Screening form to be filled out by sub-project proponent Sub-project name, location (map), type of activity, physical data, environmental information, likely environmental impacts, environmental screening category (A, B or C), mitigation of pollution, environmental studies required (EIA/EMP), public consultation/disclosure required. Screening Criteria – site-specific environmental risks and impacts; land zoning requirements, environmental license/permit; negative list of investments not allowed for financing under the project Reviewer decides the level of impact to be assessed through EIA (category A or B) or EMP/EMP Checklist (category B) Subproject approved on the basis of environmental and social review findings (or denied/approved with some changes) Disclosure/public meeting – function of subproject EA category

Sub-project proponentFinancial Intermediary Identification of sub-project Identification of sub-project Application preparation and its submission to FI Application preparation and its submission to FI EA/EMP financing and preparation EA/EMP financing and preparation Collection of necessary permits/licenses Collection of necessary permits/licenses Obtain clearances from local/regional environmental authorities Obtain clearances from local/regional environmental authorities Implement the sub-project in line with EMP Implement the sub-project in line with EMP Reports to FI on any EMP non- compliance Reports to FI on any EMP non- compliance EA screening for World Bank requirements EA screening for World Bank requirements Review of sub-project application Review of sub-project application Appraisal of sub-project Appraisal of sub-project Monitor environmental compliance based on EMP Monitor environmental compliance based on EMP Training of sub-project staff Training of sub-project staff Reports to the Bank on any EMF non-compliance Reports to the Bank on any EMF non-compliance Maintains records of safeguard documents for all sub-projects Maintains records of safeguard documents for all sub-projects

8 World Bank Project Team and SafeguardSpecialists Key Safeguard Actors in EMF Ministry of Ecology and Natural Resources of Ukraine / Ministry of Natural Resources of the Russian Federation Review and clear sub-projects according to national and local regulatory requirements Issue environmental permits Conduct supervision Provide safeguard assistance and training Ensure policies are followed Conduct reviews World Bank Safeguard Compliance

WB Appraisal evaluates: adequacy of relevant national EA requirements; gap-filling adequacy of proposed EA procedures for sub-projects capacity of FI and others responsible measures in project to strengthen EA arrangements/capacity as needed WB Supervision: Prior review/NOB of Category A (sometimes also Category B) sub-project EIAs (unless FI assessment indicates this is unnecessary) Spot-checking of EPF implementation, including site visits EMF FI assessment

FI has main responsibility for preparing and monitoring the application and use of EMF. During sub-project supervision the FI: Responsible for assessing the capacity of sub-borrowers to comply with EMP and more generally to do proper environmental and social management Performs sub-project site supervision visits to confirm EMP implementation Consults local environmental authorities for EMP requirements including current permits Ensures the sub-borrower carries out required public consultations and does it in proper way including reviewing minutes of those consultations Verifies with sub-borrower the overall environmental performance of the investment including any critical mitigation measure taken and significant environmental incident Prepares quarterly/annually reports on results of EMP actions

sub-project cycle IDENTIFICATION PRE-FEASIBILITY (Assisted) preparation of applications Submission of priority proposals Eligibility Screening Evaluation/selection of proposals Sub-Project approval Agreement on work plan, contract signing Start of works EMP implementation OPERATION SUPERVISION FEASIBILITY/DESIGN Pre-FS Form Environmental Permit Construction Permit Monitoring of works Progress reports EIA/EMP Preparation Incorporating EMF into Sub-Project Cycle

sub-project cycle Program Advertisement Training Workshops for Applicants (Assisted) preparation of applications Submission of proposals Eligibility Screening of proposals Evaluation/selection of eligible proposals Sub-Project approval Agreement on work plan, contract signing First tranche disbursement Progress report, Accounting, verification Second tranche disbursement Final report & accounting Advice to prospective applicants on eligible/ineligible activities, potential environmental issues e; potential impacts and mitigation measures for different types of sub-projects identify potential environmental issues and proposed mitigation measures review of eligibility of proposal, excluding any with high environmental risk EA screening, evaluation of env. issues and proposed mitigations; scope of EA/EMP, if required Environmental mitigation measures included in Sub-project contract; includes specific provisions for environmentally sound procurement, contracting Procurement: include environmental provisions in bidding documents, specifications, contracts (including penalties for non-compliance ) environmental measures may be triggers for disbursement Sub-borrower monitors according to Env. Monitoring Plan, reports to PIU; PIU verifies, reports to Borrower & WB Final reports, ISR report on EMP compliance and env./social impacts

World BankFinancial Intermediary EMF not recognized in national legislation (no national mechanism to approve it) Enhancing the capacity of FIs Good quality EA/EMPs Differences between national and WB EA screening criteria, environmental standards Meaningful public consultation and timely public disclosure Improving environmental screening Intensifying monitoring Incorporating estimated costs of EMP mitigation measures in sub-project cost/budget Timely Progress Reporting on EMP implementation aspects