D’Appolonia’s experience as “External Compliance Monitoring Group” to “Lenders’ Independent Environmental and Social Consultant” in the private sector Challenges and Opportunities IAIA 15 – April 21 st 2015

2000 – 2012 External Compliance Monitoring Group - Chad Cameroon pipeline ECMG at the beginning - Chad Cameroon

Growth 2004 – ongoing ECMG BTC Pipeline, Georgia, Azebijan, Turkey Cat A projects

ECMG Newmont Ahafo Mine, Ghana Sectors

Complexity APPLICABLE STANDARDS From a single applicable standard (“WB Pollution and prevention & abatement handbook” and “IFC Environmental Assessment Guidelines”) to multiple and tailored standards (IFC PS, EP, OECD Common Approaches, Specific IFIs, and ECAs Standards…) to comply with for a specific project BATTERY LIMITS & RISKS The actual definition of the project area of influence, associated facilities and the leverage, control and influence over third party’s actions 2008 – 2013 ECMG CAIRN pipeline system, India

A former ECMG team Project Manager Environmental Expert Social Expert Health & Safety Expert SPECIALIZED TEAM  Today, a different and more complex expertise is required  Increasing geographical specialization and technically specialized experts in those fields as required by the projects 2009 – ongoing IESC PNG LNG, Papua New Guinea

A current IESC team 2010 – ongoing IESC Tullow Oil, Ghana Sector specific process experts (hydro, petrochemical, heavy industry, …) ESMS specialist Biodiversity specialist Marine specialist Air Emissions specialist SEP specialist Human resource specialist Cultural heritage specialist Indigenous peoples specialist Emergency preparedness and response specialist OHS specialist QRA specialist

Evolving Trends From environmentally viable projects to social, economical, environmental sustainable projects Management of social impacts, gender equality, labor risks, implementation of safety management systems are now key aspects of the IESC evaluation Stakeholder engagement, Compliance of the compensation process with EMS/RAP commitments, Resettlement and Livelihood Restoration measures, Communication aspects importance is increasing 2009 – 2014 IESC Nord Stream pipeline, Russia, Finland, Germany

2011 – ongoing IESC Ichthys LNG, Australia Players

Commercial banks and Export Credit Agencies involvement add value and bring additional challenges: Increasing awareness of the banking systems towards EHSS issues - IESC to provide early warnings on issues/risks adapting to their decision making process and to internal procedures to respond to the OECD Common Approaches, to the Equator Principles’ standards, to Lenders’ specific standards 2011 – ongoing IESC Socar Turcas Aegean Refinery STAR, Turkey Commercial Banks /Export Credit Agencies involvement

Proactive interaction with key players Quickly response and timely advice to Lenders Integrity and Independence Ability to manage potential conflicts of interest perceived by Sponsors/Lenders Capability to understand and manage the prevailing standards Training to support Sponsors on EHSS issues, as needed Adaptive response to changes 2012 – ongoing OHS Advisor Enerjisa Power Plant, Turkey

2012-ongoing IESC Etileno XXI, Mexico Streamlined Due Diligence process IESC involved at early stage of the process ESHS Company policies and procedures already in line with international requirements (this was not the case in the past) Awareness of the project sponsors towards the IESC role Think positive (Lessons Learned)

Growth of internal resources to cover the most specialized role(s) (Team Leader, Project Manager) Outsourcing to address specific requirements through a selected roster of freelances and local partners Due Diligence schedules might be unrealistic: IESC needs to be flexible and to guarantee long lasting commitment IESC is the “Eyes and Ears” throughout the project lifecycle IESC adaptation process ongoing IESC Nacala Corridor project, Mozambique

Going forward Current evolutions need to be based on stakeholder awareness and their sensibilities As the market grows, this requires new areas of focus and attention The response to the growing complexity requires three ingredients suppleness and flexibility, skilled team resources and experience profiles, and focus and attention towards sustainability of the project

If this is not done, future ages will certainly look back upon us as a people so immersed in the pursuit of wealth as to be blind to higher considerations Alfred Russel Wallace

Thank you IAIA 15 – April 21 st 2015 D’Appolonia S.p.A. Via San Nazaro, Genova – Italy Giovanni De Franchi Tel Fax