The document discusses the benefits of sponsors complying with sustainable development principles from Proparco's perspective. It outlines that compliance helps (1) manage technical, natural, financial, legal, and reputational risks, and (2) improve project performance and quality. However, sponsors may see costs and time requirements with no apparent benefits. The document then notes risks of non-compliance, such as financial risks from poor project performance and legal risks from violating standards. It provides an example of a palm mill project in Ivory Coast to illustrate Proparco's approach in practice.

1. What are the benefits for sponsors in complying
with sustainable development principles
Mekong Forum, Cambodia December 2011

2. Proparco – Support Sustainable
Development 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 risks
2. Control financial, legal, and reputational risks: pollution, social
unrest, social acceptances of the projects
3. Improve performance and quality of project
operations : E & S management, natural resources
consumption, profitability
4. Identify the costs of E & S compliance : to
finance the projects properly!

6. From Sponsor’s Perspective – Costs
and Benefits of Complying with Sustainable
Development Principles

7. From sponsor’s point of view – E & S Compliance
1. Additional costs : pre and post financing,
2. Time consuming
3. 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, 2009
Court 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,
www.ifc.org/ifcext/enviro.n
sf/Content/EnvSocStandar
ds
• Fundamental conventions
of the ILO, www.ilolex.org

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 Principles
In 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
choophungartn@proparco.fr