STRICTLYCONFIDENTIAL

PUBLIC CONSULTATIONFEBRUARY 21 – APRIL 13, 2023
INFORMATIONAL MATERIALSPUBLIC CONSULTATION PROCESS• February 21, 2023 – April 13, 2023
• Access website for informational materials,
feedback form, and consultation schedule• February 28, 2023: 9am EST: Informational
Session• Provide feedback by email, through the online
feedback form, or through attending consultation
sessions

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PUBLIC CONSULTATION SESSIONS
Consultation MeetingsoThe following meetings are open to all stakeholders.
• March 3, 9:00am EST, Hybrid, Location: IFC, Washington, DC (English)• March 16, 2:00pm UTC, Virtual (French)• March 23, 2:00pm UTC, Virtual (English)• March 29, 8:30am IST / 10:00am ICT, Virtual (English)• March 30, 11:00am UTC+2, Virtual (Arabic)• April 4, 10:00am EDT, Virtual (Spanish, with Portuguese Interpretation)oo3

Invite-only meetings will also take place for the following stakeholder groups:❖IFC/MIGA clients;❖Independent Accountability Mechanisms (IAMs); and❖Development Finance Institutions.

❖Members of these groups will receive an invitation by email and can also email questions
to accountabilityconsultation@worldbankgroup.org.

Additional sessions may be added depending on interest.

STRICTLYCONFIDENTIAL

IFC/MIGA APPROACH TO REMEDIAL ACTION
DRAFT FOR PUBLIC CONSULTATIONThis IFC/MIGA Approach to Remedial Action (Approach) was prepared for public consultation purposes only. The Approach is a
proposal by IFC/MIGA that has not been endorsed by and remains subject in all respects to further review and comment by the IFC andMIGA Boards of Directors, including the Committee on Development Effectiveness (CODE). Accordingly, the Approach remains subjectto change following these consultations and further review and comments from CODE and the IFC/MIGA Boards of Directors.

BACKGROUND
Motivation• IFC/MIGA are committed to strengthening implementation of their Sustainability Frameworks• IFC/MIGA also committed to explore the recommendations of the “External Review of IFC/MIGA’s
E&S Accountability, including the CAO’s Role and Effectiveness”
Process to Date
• Reviewed relevant theory, guidance, and practice• Presented key considerations for the approach and received feedback from internal stakeholders
and the Committee on Development Effectiveness (CODE) of the IFC/MIGA Board of Directors• Engaged with the Compliance Advisor Ombudsman (CAO) and World Bank
• Developed proposed IFC/MIGA Approach to Remedial Action paper

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APPROACH

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ScopeRelevant Frameworks

Roles and Responsibilities•

Addressing adverse E&S
impacts in projects
supported by IFC/MIGA
requires a holistic
approach, with actions
throughout the project
cycle•••

This includes attempting toresolve emerging
environmental and social(E&S) issues early,
proactively, quickly, andeffectively

In line with theSustainability
Frameworks, IFC/MIGAembrace the concept of a
remedy ecosystem inwhich various actors havedifferentiated but
complementary roles toplay•

IFC/MIGA clients have theprimary responsibility for
managing E&S risks;
IFC/MIGA have a role tofacilitate and support
remedial actions•The existing Sustainability
Frameworks have many
relevant aspects, including
the application of themitigation hierarchy,
E&S Action Plans, corrective
actions plans as needed,
project-level grievancemechanisms, and access tothe CAO

The CAO Policy willfurther strengthen accessto remedial actions

FEATURES
Preparing for Remedial Action
Consider revised/additionalcontractual provisions

Strengthen the assessment process•

Assess potential sources and extent of IFC’s and MIGA's influence overclients and other parties with respect to remedial action•

Assess client preparedness (understanding and commitment) for
implementing E&S action plans (ESAPs) and for remedial actions if needed•

Communicate expectations for clients to provide remedial action if
necessary, during initial client engagement process•

E.g., client commitments toremediate/develop remedialplans for certain potential
adverse impacts

Conduct additional
capacity-building activities
Consider financial resources

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Review client financial resources to implement ESAPs and provide remedialaction if necessary•

Explore suitable financial instruments for select projects, where relevant•

Based on assessment ofclient E&S capacity andfocused on low-capacity
clients

FEATURES
Access to Remedial Action

8•

Develop new guidance materials and training for clients and IFC/MIGA staff on how to make project-levelgrievance mechanisms more effective in addressing stakeholder concerns and complaints•Strengthen IFC Stakeholder Grievance Response Function•Continue developing similar MIGA grievance response function, modified for MIGA’s size, portfolio, andbusiness model•Continue implementation of new CAO Policy

FEATURESResponse•

Pursue a continuum of possible responses to facilitate and support remedial actions, to be deployed inaccordance with the unique circumstances of each individual case:➢ Exercise influence: Seek to improve the effectiveness of IFC/MIGA’s existing influence, increase influence
through proposed preparedness steps, and exercise influence after harm has occurred➢ Enabling activities: Support client and/or relevant third parties through activities such as technicalassistance, capacity building, fact-finding, dialogue facilitation, or community development

9•Built into existing processes, including CAO dispute resolution, following CAO compliance investigation, ordoing a non-CAO complaint process•

Financed through existing sources, with possibility of requesting budget increase and/or considering otheravailable options including using donor funds

NEXT STEPSFEBRUARY-APRIL 2023

Public Consultation

JUNE 2023

Feedback from public consultation (reported to CODE) will inform development of aManagement Directive to govern a 4-year pilot period

JULY-DECEMBER 2023

During pre-pilot preparation period, IFC/MIGA will build necessary capacity; finalize
systems, procedures, guidance, reporting requirements, and tools; and conduct training

JANUARY 2024DECEMBER 2027

10IFC will pilot approach for all new direct investment projects (in the case of financial
intermediaries, only relevant aspects of the approach would be piloted); MIGA will pilot for
all new political risk insurance guarantee operations
Approach will be finalized at the end of the 4-year period, coinciding with review of theCAO Policy

IFC RESPONSIBLE EXIT PRINCIPLESDRAFT FOR PUBLIC CONSULTATIONBACKGROUNDMotivation•

Part of ongoing efforts to further and more systematically integrate how IFC analyzes and addresses environmental andsocial (E&S) issues throughout the project cycle•

Takes forward the Operating Principles for Impact Management•

Responds to IFC’s Management Response to the Compliance Advisor Ombudsman (CAO) Compliance Investigation
Report for Corporación Interamericana para el Financiamiento de Infraestructura (CIFI) (2020)

Process to Date12•

Reviewed IFC’s existing policies and practices, relevant theory and guidance, and policies and practices of peer
institutions•

Analyzed potential consequences of exiting or not exiting for different relevant stakeholders and additional constraints•

Presented the principles and received feedback from internal stakeholders and the Committee on Development
Effectiveness (CODE) of the IFC/MIGA Board of Directors•

Engaged with CAO•

Developed IFC Draft Principles to Responsible Exit presentation

OVERVIEW
Preparing for Exit•

Actions taken early in the project cycle to reduce the likelihood of E&S issues being present at exit and to strengthen theability of IFC and its clients, respectively, to act to address them if they are

Responsible Exit Principles•

Intended to inform decision-making on whether and how to exit, in a broad range of factual circumstances•

Current Scope: When contemplating an active exit* from all projects in which (i) there is an associated open CAO case pasteligibility and/or (ii) the project’s E&S performance is unsatisfactory, and in additional projects to be identified on an ad hocbasis by project teams or management*IFC proactively decides to exit from an investment or agrees to amend the terms of the transaction documents to enable
the client to exit in circumstances where such exit, at that time, would not have otherwise occurred without action by IFC.

•

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Process:•

For each exit, consider each responsible exit principle in turn.

•Analyze whether the proposed exit is aligned with the principle, including exploring any additional actions that can betaken to strengthen alignment.

•Document analysis, including additional actions taken.

RESPONSIBLE EXIT PRINCIPLES (1/2).

PRINCIPLE 1. SUPPORT THE ACHIEVEMENT AND SUSTAINABILITY OF TARGETED DEVELOPMENT IMPACT.
IFC’s exit should support the achievement and sustainability of the contemplated development impact of the project. IFCshould consider the project outcomes that have been achieved and whether remaining invested would or would notenhance the likelihood of achieving or sustaining that impact or mitigating significant adverse results, within a timeframethat is substantially consistent with the contemplated timeline for such investment.

PRINCIPLE 2. ADDRESS E&S ISSUES. IFC’s exit should, to the extent practicable:(a) be consistent with the ESAP and other action plans or structured in a way that enables the issues identified in suchplans to be addressed prior to exit;(b) not increase or exacerbate existing E&S issues; and(c) consider whether, and if so, how to address and/or mitigate any other E&S risks identified during the life of theinvestment (i) that could materialize post exit and cause imminent and serious harm to public health, safety or security,
and/or imminent and significant adverse impacts on the environment, and (ii) which IFC has the means to address and/ormitigate, including through support to its client.

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RESPONSIBLE EXIT PRINCIPLES (2/2).
PRINCIPLE 3. USE LEVERAGE PRE-EXIT. IFC should use the practicable leverage at its disposal to implement theESAP and other action plans and to address and/or mitigate any other adverse E&S risks and impacts that are both likely
and severe, including considering any remedial actions.
PRINCIPLE 4. CONSIDER INSTITUTIONAL CONSTRAINTS. IFC’s exit should be consistent with IFC’s private sector
development mandate (Article I); operational principles (Article III, Section 3), and risk considerations (including
significant reputational damage and legal liability).
PRINCIPLE 5. CONSIDER PRECEDENTIAL IMPLICATIONS. IFC’s exit should not be counter to the appropriate
standard for IFC to follow in similar cases.
ADDITIONAL GUIDANCE: Take into account the risk of reprisals against civil society organizations (CSOs) and projectaffected communities following exit. Analyze possibilities for, and, where feasible given the circumstances of the exit,
define a stakeholder engagement approach with, individuals and communities that may be impacted by the proposed exit
and any related actions.

15NEXT STEPS16FEBRUARY-APRIL 2023

Public Consultation

MAY-DECEMBER 2023

Feedback from public consultation and lessons learned from piloting (reported to CODE)
will inform finalization of the principles in the form of a Management Directive andchanges to operational procedures

JANUARY 2024 ON

Ongoing implementation, supported by additional guidance and training as needed