INTRODUCTION: World Bank Environmental and Social Safeguard Policies Training Workshop for Financial Intermediaries and Implementing Agencies May-June, 2012 Agi Kiss Regional Safeguards Coordinator Europe and Central Asia

3 Environmental and Social “safeguards” are intended to: Protect people and environment from adverse impacts (“Do No Harm”) Enhance environmental sustainability and social equity (“Do Some Good”) Integrate environmental and social aspects into decisions on project selection, design and implementation (quality and risk management) Provide a mechanism for information disclosure, stakeholder consultation and participation, accountability Respond to local and global constituencies Sustainable Finance objectives Build borrower capacity for environmental and social management

Increasingly enterprises (and those who finance them) seek to be good “corporate citizens” and apply “Triple Bottom Line” (Economic, Environmental, Social) Sustainable Finance a voluntary set of standards for determining, assessing and managing social and environmental risk in project financing based on the International Finance Corporation (IFC) Performance Standards and World Bank Group’s Environmental Health and Safety Guidelines currently 71 adopting institutions (mostly commercial banks Principles: Risk review & categorization (A,B,C) Do Environmental & Social assessment Apply relevant Env & Social standards Management System/Action Plan based on assessments/standards Consultation and disclosure Grievance mechanism Independent review of assessment, Action Plan and consultation Covenants for compliance Independent monitoring & reporting of loan Financial Institution annual public reporting

Almost every development or business activity has the potential to cause damage to people, property, environment. If financers don’t identify and manage these risks, they can suffer: –Costly financial and legal liabilities –Damage to reputation and reduced public and political support –Reduced access to capital –Loss of access to markets and value chains For Financing Institutions, E & S risk management involves: –Assessing the potential environmental and social risks of projects and the extent to which they can be avoided, reduced or mitigated –Assessing the borrower’s capacity to manage these risks –Building realistic measures to avoid/control/mitigate risks into the financing transaction – incorporating into loan documents –Monitoring compliance with loan documents and national requirements Environmental and Social Risk Management