IFC PERFORMANCE STANDARD 2 LABOR & WORKING CONDITONS PRESENTION TO UNIONS, ISTANBUL APRIL 5, 2013

2 P ERFORMANCE S TANDARDS O VERVIEW PS1: Assessment and Management of E&S Risks and Impacts PS2: Labor and Working Conditions PS3: Resource Efficiency and Pollution Prevention PS4: Community Health, Safety and Security PS5: Land Acquisition and Involuntary Resettlement PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources PS7: Indigenous Peoples PS8: Cultural Heritage

PS2: L ABOR AND W ORKING C ONDITIONS

ILO Conventions  Child Labour  Forced Labour  Non-Discrimination  Freedom of Association & Collective Bargaining SCOPE Objectives Fair treatment, non-discrimination, equal opportunity Good worker – management relationship Comply with national employment and labor laws Protect workers, in particular vulnerable categories Promote safety and health Avoid use of forced labor or child labor

SUMMARY OF REQUIREMENTS 1.Human Resources Policy 2.Document and Communicate Working Conditions and Terms of Employment 3.Respect Collective Agreements 4.Workers’ Right to Organize and Bargain Collectively 5.Non-discrimination and Equal Opportunity 6.Retrenchment Plan 7.Grievance Mechanism 8.No use of Child Labor 9.No use of Forced Labor 10.Safe and healthy work environment

PS2: 2012 C LARIFICATIONS & U PDATES Comparable conditions for migrant workers Requirements for workers’ accommodation Monitoring of conditions for workers younger <18 Alternatives analysis prior to retrenchment Third-party worker access to grievance mechanism Safety requirements for primary supply chain (NB many of these changes were proposed by unions during consultations and adopted, in full or in part)

S UPPLY CHAINS Triggers: Where there is: High risk of child labor and forced labor High risk of significant safety issues (life threatening) in the primary supply chain Requirement: Client required to introduce procedures and develop mitigation measures Implementation: Any projects with high E&S risk supply chains will be categorized ‘A’, e.g. commodity / country combinations with Biodiversity, Deforestation, Child Labor risks Examples: palm oil in Indonesia, cocoa in West Africa, cotton in Central Asia, soy/beef from Brazil (Amazon - Cerrado) Tools: GMAP, Maplecroft Aim: To protect workers, including vulnerable categories of workers such as children, migrant workers, workers engaged by third parties, and workers in the supply chain

C ONVERGENCE OF STANDARDS 78 financial institutions have adopted the Equator Principles to date, incorporating application of PS 2 EBRD’s PR 2 based on PS 2 and near identical MIGA and IBRD adopted IFC PSs for private sector projects, ensuring World Bank Group coherence (as lobbied for by global unions) OECD Export Credit Agencies benchmark against PS 2 European Development Finance Institutions apply PSs when more than one EDFI is involved in a financing

D UE DILIGENCE PROCESS Scope of application  All FIs excluding PE funds and global trade finance projects  All direct investments excluding companies with very low E&S and labor risks (e.g. small IT or Telecoms company) Due-diligence  Send and review a questionnaire covering PS 2 aspects  Request & review key HR policies, as required  Meet with / Seek clarifications from HR department  Seek documentary evidence (e.g. sample employment letter)  Visual observation during appraisal visit (e.g. use of PPE)  May meet with staff and/or union members  May request or undertake a labor audit Addressing gaps & following up to ensure implementation of mitigation  Corrective Action Plan – close all gaps in reasonable time  Tie implementation to investment agreement (enforceable)  Follow-up: a) disbursement, sign-off, b) site visits and/or c) review of annual E&S / Labor monitoring reports  May request labor audit in high-risk situations

I MPLEMENTATION TOOLS Internal Resources Internal resources: Labor Toolkit, PS 2 training for Specialists, Labor working group (virtual) Templates: grievance mechanism, disciplinary practices, non- discrimination etc to assist Clients PS 2 ‘champions’ Various sources of PS 2 info, e.g. US Dept Labor List of Goods Produced by Child Labor or Forced Labor External Resources – Good Practice Publications Addressing Child Labor in the Workplace & Supply Chain (2002) Managing Retrenchment (2005) Non-discrimination & Equal Opportunity (2006) Workers’ Accommodation – Processes & Standards (2009) Measure & Improve Your Labor Standards Performance: PS 2 Handbook for Labor and Working Conditions (2010)

G LOBAL I FC - UNION INTERACTION Unions substantially involved in formulation of PS 2 in and again in the PS 2012 update (+ ILO) Global union review point for new E&S disclosure documents exists – union concerns over timing Dedicated website for raising union concerns on proposed new investments: ~ 30 projects highlighted to date Some union complaints directed via the Compliance Advisor Ombudsman (CAO) mechanism ESG Department representative meets 2-4 times a year, as informal contact in between on PS 2 matters Differences of opinion generally concern implementation of PS 2 requirements, not content

W EBSITE

R EGIONAL ISSUES & CHALLENGES 2 CAO complaints in Turkey (Assan Aluminium and Standard Profil), both about Freedom of Association (not respecting workers’ rights to join and form unions) Dealing with the aftermath of the Arab Spring (multiple and ongoing strikes, union issues) Worker Health & Safety in many jurisdictions, e.g. in Turkey in construction Privatizations / retrenchment (e.g. Albania, Lebanon…) Least developed (IDA) countries: lack of Govt capacity, enforcement on labor, low incentives, union issues