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IFC, MIGA and the Environment

Summary of Evaluation Conclusions - IFC
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    Chapter 6: Conclusions and Recommendations

    Also see: The World Bank and the Environment

    IFC's project support has been moderately satisfactory in meeting its due diligence requirements and standards at the project level. But gaps were found in investment projects in Africa and in some industry sectors, and in achieving expected impacts with some environment-oriented Advisory Services.
  • The quality of IFC's environmental work at project appraisal has been good overall, but the quality of environment-related supervision of financial intermediary (FI) projects is a concern.
  • Despite recent progress, IFC faces substantial environment-related challenges.
  • In order to consider the performance of IFC and MIGA as part of the World Bank Group's contributions, there needs to be a shift in the focus to issues beyond that of individual projects to include the aggregation of impacts in the affected sector or region of a country. 

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Summary of Evaluation Conclusions - MIGA

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  • For more information

    Chapter 6: Conclusions and Recommendations

    Also see: The World Bank and the Environment

    In a sample of MIGA projects, performance in meeting requirements and standards differed between Category A and B projects.
  • Although MIGA does not have an explicit business line to support environmentally beneficial projects, it can contribute to improved environmental quality by helping private sector clients demonstrate best practice and working with investors committed to "doing good."
  • MIGA needs to continue to make progress in several areas: fully implementing the harmonization of assessment and monitoring requirements of Category B projects with those of IFC; including environmental health and safety reporting requirements in Contracts of Guarantee; requiring investors to set up environmental management systems on a timely basis, as appropriate to a project cycle, and moving beyond safeguard compliance to promote sustainability.  blue_arrow.gif

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Additional Information

IFC Engagement
IFC's engagement with the private sector overall (that is, not referring specifically to the environment) has grown rapidly in recent years, with annual commitments more than doubling from $3.9 billion to $8.2 billion between 2003 and 2007. From FY90 through FY07, IFC committed about $56 billion. IFC's environmental support includes GEF projects for about $1 billion and $185 million in Dutch-funded carbon facilities. It also includes Advisory Services for Environment and Social Sustainability business line projects totaling $208 million by end 2007, representing a quarter of IFC Advisory Services funding.

MIGA Guarentees
MIGA issued guarantees between FY90 and FY07 for a total exposure of $16.7 billion in 510 projects (again an overall figure, not referring to the environment per se). The largest share of MIGA operations in the non-financial sectors has been in infrastructure, manufacturing, and the extractive industries. As with IFC, there seem to be few MIGA operations specifically intended to avoid damage to the environment. In both cases, however, financing modern technologies in the private sector, while intended primarily to improve productivity and product quality, generally also reduces harmful environmental impacts given the older technologies they replace.

IFC and MIGA Efforts
IFC and MIGA have increased their efforts to engage their clients on environmental issues in recent years. In April 2006 IFC established its Policy and Performance Standards on Social and Environmental Sustainability, which were adopted (and adapted) by MIGA effective October 1, 2007. The impact of these new standards cannot yet be assessed. However, environmental compliance and performance gaps in IFC projects over the past 15 years have been most notable in Africa, due in part to weaker sponsor capacity and sometimes wavering sponsor commitment to the sustainability agenda, and in some industry sectors. MIGA has likewise given increasing attention to environmental issues in its underwriting and has used its contracts to identify applicable safeguard policies, guidelines, and requirements for remedial action. But improvements are needed, particularly in less environmentally sensitive projects whose potential impacts typically receive less attention.

Also see: The World Bank and the Environment

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