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What are the benefits for sponsors in complying with sustainable development principles


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By Nancy Choophungart, Proparco, Southeast Asia Regional Office …

By Nancy Choophungart, Proparco, Southeast Asia Regional Office

Presented at the Mekong Forum on Water, Food and Energy Phnom Penh, Cambodia December 7-9, 2011 Session 7: Financing and Revenue Management in water and energy resources development

Published in: Technology, Business

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  • 1. What are the benefits for sponsors in complying with sustainable development principles Mekong Forum, Cambodia December 2011
  • 2. Proparco – Support SustainableDevelopment Principles
  • 3. PROPARCO – At a glance Private sector arm of the French Development Proparco’s Shareholding Structure Agency (AFD), rated AAA International Ethical Funds & Financial Founded in Paris in 1977 Foundations 1% Institutions 11% Investors 4% Combines long-term developmental objectives and private sector returns French AFD 59% Financial Covers developing and emerging countries Institutions 26% (Africa, Middle-East, Asia, Latin America and Caribbean) Present in South-East Asia since 2004 Offers a wide range of long term financial instruments (debt / mezzanine / equity) Not tied to French Interests Aga Khan Fund For Economic Development
  • 4. Commitments – Proparco• Proparco adopted the Environmental and Social Policies of the AFD Group in June 2008.• Proparco, also in 2008, committed to apply for co- financing, the E & S procedures common toEDFI as defined in the "Rome Consensus"• Proparco signed, in May 2009, «Principles of Responsible Financing », common to EDFI – E&S Risk management for projects financed, – Contribution to the improvement of project quality and E & S performance of client companies, – Measurement of project’s development positive impacts Promote responsible financing E & S integrated throughout project life cycle – Pre and Post financing
  • 5. Why Do We Have to Manage Project’s E & S Risks?1. Manage technical and natural risks : natural hazards, risks related to human activities, public health risks2. Control financial, legal, and reputational risks: pollution, social unrest, social acceptances of the projects3. Improve performance and quality of project operations : E & S management, natural resources consumption, profitability4. Identify the costs of E & S compliance : to finance the projects properly!
  • 6. From Sponsor’s Perspective – Costsand Benefits of Complying with SustainableDevelopment Principles
  • 7. From sponsor’s point of view – E & S Compliance1. Additional costs : pre and post financing,2. Time consuming3. No apparent benefits : local laws vs international standards Is it worth it ?
  • 8. From sponsor’s point of view – Risk from E & S Non-Compliance• Financial risks : project performance, profitability• Reputation risks : immediate / long-term impact on the sponsors’ reputation• Legal risks : local laws vs international standards There is often a correlation between E & S Management and operational performance !
  • 9. In Public’s Eyes – What we see in the news?
  • 10. In the News MAE MOH POWER PLANT Power Plant loses Lampang pollution case By Ekkapong Praditpong The Nation Published on March 5, 2009Court awarded THB 3.0 billion (US$100 million) to the villagers for pollution caused by the plant
  • 11. In the News Coal-fired power plant suspended Bo Nok coal power plant project was suspended due to communities’ concerns over health and environmental impacts
  • 12. In the News Workers from the Philippines and Thailand staged protest at an international garment manufacturer’s Headquarters in Hong Kong. The workers submitted a joint appeal denouncing and resisting the anti-worker and unjust retrenchment of workers Mon, 17/08/2009 - 19:45 | by prachatai
  • 13. Sustainable Development Principles– Proparco’s Approach
  • 14. Based on international good practices• Declaration of human rights (United Nations)• IFC Performance Standards and associated EHS guidelines, sf/Content/EnvSocStandar ds• Fundamental conventions of the ILO,
  • 15. IFC “Performances Standards”• PS1 : Social and Environmental Assessment and Management Systems• PS2 : Labor and Working Conditions• PS3 : Pollution Prevention and Abatement• PS4 : Community Health, Safety, and Security• PS5 : Land Acquisition and Involuntary Settlement• PS6 : Biodiversity Conservation and Sustainable Natural Resource Management• PS7 : Indigenous Peoples• PS8 : Cultural Heritage New version applicable in January 2012 : => Supply Chain, Energy Efficiency, Biodiversity, Carbon Footprint, Consent of Indigenous People (FPIC)
  • 16. Sustainable Development PrinciplesIn Practice – A Case Study
  • 17. Case Study : A Palm Mill – Ivory Coast • Oil palm mills and plantation • Project Category A : High environmental risks (pollutions, biodiversity…) and social (safety risks, employment conditions…) • E&S Audit per IFC standards for E & S project monitoring and a potential new loan - Visits to mills, plantations and villages, - Meeting with the managers, employees, communities around the site
  • 18. Case Study : A Palm Mill – Ivory Coast • Safety problems : frequent and serious accidents => lack of workers protection and training, machinery’s maintenance and protection
  • 19. Case Study : A Palm Mill – Ivory Coast • Environmental Issues - Waste management - Emissions to air - Waste water from palm mills - Biodiversity
  • 20. Case Study : A Palm Mill – Ivory Coast Implementation of E & S Action Plan : • Improvement of E & S management at HQ and site levels (définition of responsabilities, training…) • Development of Environmental and Social Management Plan (ESMP) to ensure compliance with applicable local regulations and IFC E & S standards • Appointment of an experienced Safety Manager • Identification of risk areas and development of an action plan for risk reduction with immediate actions for key risks • Development of E & S Policy and Procedures • Monitoring : Annual Audit (3 years) by an independent E&S expert on the progress of the E&S Action Plan
  • 21. Case Study : A Palm Mill – Ivory Coast • Accidents record of client in 2009 :
  • 22. Thank you Nancy CHOOPHUNGART Proparco South East Asia