International Finance Corporation’s
Guidance Notes:
Performance Standards on Social &Environmental Sustainability

July 31, 2007

Introduction to Guidance Notes
July 31, 2007

TABLE OF CONTENTS
Introduction to the Guidance Notes
Guidance Notes 2007 Updates – Change Matrix
Gudance Note 1: Social and Environmental Assessment and Management Systems
Gudance Note 2: Labor and Working Conditions
Gudance Note 3: Pollution Prevention and Abatement
Gudance Note 4: Community Health, Safety and Security
Gudance Note 5: Land Acquisition and Involuntary Resettlement
Gudance Note 6: Biodiversity Conservation and Sustainable Natural Resource Management
Gudance Note 7: Indigenous Peoples
Gudance Note 8: Cultural Heritage

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Introduction to Guidance Notes
July 31, 2007

1.
IFC has prepared a set of Guidance Notes, corresponding to the PerformanceStandards on Social and Environmental Sustainability. These Guidance Notes offer helpful
guidance on the requirements contained in the Performance Standards, including referencematerials, and on good sustainability practices to improve project performance.
These
Guidance Notes are not intended to establish policy by themselves; instead, they explain therequirements in the Performance Standards.
2.
IFC expects that each client will employ methods best suited to its business to meet therequirements of the Performance Standards. In assisting the client to meet the PerformanceStandards, IFC will take into account variables such as host country context, the scale andcomplexity of project impacts, and the associated cost-benefit considerations, as well as thoseof project performance beyond the level required in the Performance Standards. The GuidanceNotes provide context, rather than substitute for the sound judgment and discretion used byclients and IFC staff to make project decisions consistent with the Performance Standards.
3.
The Guidance Note text in bold italics indicates the text of the corresponding
Performance Standard. All references contained in the text of the Guidance Notes are
reproduced in full in the References section at the end of the Guidance Notes.
4.
IFC will update the Guidance Notes periodically to reflect IFC’s lessons of experience
with the implementation of the Performance Standards, as well as emerging private sector goodpractices and updates in the referenced materials.

iIntroduction to Guidance Notes
July 31, 2007

Guidance Notes 2007 Updates as of July 31, 2007
Change Matrix
The following table summarizes the 2007 updates made to the Guidance Notes that accompany the IFC Performance Standards.
In general, the updates focused on: (i) reflecting relevant developments (e.g., explanation of the operational implications of the new
UN Convention on the Rights of Persons with Disabilities), updating references, and incorporating new IFC guidance materials
published since April 2006; (ii) responding to external stakeholders’ comments and requests for clarification on specific areas(reflected mostly in Guidance Note 5); and (iii) enhancing guidance in areas identified by internal discussion, particularly areas
related to health impacts to communities from project activities (reflected mainly in Guidance Notes 1 and 4).
IFC welcomes ongoing comments from stakeholders on the Guidance Notes. Comments can be submitted to:
http://www.ifc.org/ifcext/CES/Comments.Nsf/Input2?OpenForm

Guidance Notes Paragraphs(new paragraph numbers)

Summary of Changes
Guidance Note 1

Paragraph G9

Explains conceptual differences between Assessment under Performance Standard 1
and Assessments specified under other Performance Standards, particularly
Performance Standard 5

Paragraph G21

Provides a fuller description of transboundary impacts, including transboundary
epidemic disease transmission

Paragraph G22

Provides a fuller description of cumulative impacts, and ensures consistency between
Performance Standard 1, paragraph 5 and paragraph G22

Paragraph G23

Refers to the road testing version of the draft Human Rights Impact Assessment

Paragraph G25

Describes how to address project impacts on people with disability and explains
benefits of universal design

Paragraph G27

Provides a fuller explanation of the connection between gender and healthParagraphs G57 and 58

Provides additional guidance on grievance mechanisms, consistent with guidance inthe new Good Practice Handbook on Stakeholder Engagement

Guidance Note 2
Paragraph G5

Emphasizes the importance of good implementation of labor related management
action items through a good management system

Paragraph G29

Provides guidance on disability in the work place

Paragraph G44

Provides guidance on human trafficking issues in the context of child labor

Paragraph G52

Provides guidance on human trafficking issues in the context of forced laboriiIntroduction to Guidance Notes
July 31, 2007

Guidance Notes Paragraphs(new paragraph numbers)

Summary of Changes
Guidance Note 3

Annex A

Provides additional guidance on GHG emissions in relation to gas flaring

Guidance Note 4
Paragraph G3

Introduces new guidance and resources for conducting health impact assessments

Paragraph G7

Provides guidance on monitoring of health impacts at household or community levels,
and underscores the need to interact with the host government

Paragraph G13

Stresses the importance of addressing hazardous materials considerations at the endof the project life-cycle, such as PCBs and asbestos at the time of project
decommissioning

Paragraph G15

Stresses the importance of assessing cumulative increases in project-related
emissions and releases to air, water and soil

Paragraph G18-20

Provides expanded explanations of environmental health, nutrition and food security,and infectious diseases considerations in the affected communities

Paragraph G22-23

Provides guidance on worker and community health issues when projects introduce
imported workers and contractors

Paragraph G35

Provides additional guidance on situations where the project is providing equipment topublic security personnel

Annexes A, B, C and F

Annex A lists the material Environmental Health considerations; Annex B provides
specific instances of environmental health issues connected to distinct project
activities; Annex C provides a summary of a health impact assessment process; andAnnex F lists different types of health impact assessments

Guidance Note 5
Paragraph G10

Lists examples of scenarios that do not come under Performance Standard 5
because impacts are not due to project related land acquisition, and provides
guidance on how such impacts may be addressed through Performance Standard 1

Paragraph G12Clarifies the general principle to be applied when affected livelihoods are land-based(whether in the context of physical or economic displacement, and whether involving
Type I or II transactions)Paragraph G40

Clarifies requirements under Performance Standard 5 when project-affected people
who are without legal title or claim are economically displacediii

Introduction to Guidance Notes
July 31, 2007

Guidance Notes Paragraphs(new paragraph numbers)

Summary of Changes
Guidance Note 6

Paragraph G26

Provides guidance on the need for assessment when a project introduces geneticallymodified organisms (GMOs) - also known as living modified organisms - in a manner
similar to invasive alien species

Paragraph G28

Explains a number of ongoing international multistakeholder standard setting
initiatives in large commodity sectors, such as palm oil, soy and sugar

Guidance Note 7
Paragraph G1

References the new IFC guide for clients who operating in countries that have ratified
Convention 169

Guidance Note 8 : No changesivGuidance Note 1

Social and Environmental Assessment and Management Systems
July 31, 2007

This Guidance Note 1 corresponds to Performance Standard 1. Please also refer to the
Performance Standards 2-8 as well as the corresponding Guidance Notes for additional
information. Bibliographical information on all reference materials appearing in the text of this
Guidance Note can be found in the References Section at the end.

Introduction
1. Performance Standard 1 underscores the importance of managing social andenvironmental performance throughout the life of a project (any business activity that is
subject to assessment and management).
An effective social and environmental
management system is a dynamic, continuous process initiated by management andinvolving communication between the client, its workers, and the local communities directly
affected by the project (the affected communities). Drawing on the elements of theestablished business management process of “plan, implement, check, and act,” thesystem entails the thorough assessment of potential social and environmental impacts andrisks from the early stages of project development, and provides order and consistency for
mitigating and managing these on an ongoing basis. A good management systemappropriate to the size and nature of a project promotes sound and sustainable social andenvironmental performance, and can lead to improved financial, social and environmental
project outcomes.

Objectives
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To identify and assess social and environment impacts, both adverse andbeneficial, in the project’s area of influence
To avoid, or where avoidance is not possible, minimize, mitigate, orcompensate for adverse impacts on workers, affected communities, and theenvironment
To ensure that affected communities are appropriately engaged on issues that
could potentially affect them
To promote improved social and environment performance of companies
through the effective use of management systems

G1.
A Social and Environmental Management System is part of the client’s overallmanagement system for the project. It includes the organizational structure, responsibilities,
policies, procedures and practices, and resources, and is essential for successfully
implementing the project-specific management program developed through the social andenvironmental assessment of a project. Performance Standard 1 underscores the importanceof managing a project’s social and environmental (including labor, health, safety, and security)
performance throughout the life of the project. A good management system enables continuous
improvement of the project’s social and environmental performance, and can lead to improved
economic, financial, social and environmental project outcomes.
G2.
Before IFC proceeds with an investment, IFC reviews the client’s social andenvironmental management system. For details on IFC’s process of social and environmental
review, see the Environmental and Social Review Procedure, and for further information on
examples and benefits of improving sustainability performance, see IFC’s sustainability
resources (listed in the References section below).
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Scope of Application
2. This Performance Standard applies to projects with social or environmental risks andimpacts that should be managed, in the early stages of project development, and on an
ongoing basis.

Requirements
Social and Environmental Management System
3. The client will establish and maintain a Social and Environmental Management Systemappropriate to the nature and scale of the project and commensurate with the level of socialand environmental risks and impacts. The Management System will incorporate thefollowing elements: (i) Social and Environmental Assessment; (ii) management program; (iii)organizational capacity; (iv) training; (v) community engagement; (vi) monitoring; and (vii)reporting.

G3.
The level of detail and complexity of the social and environment management systemand the resources devoted to it will depend on the level of impacts and risks identified in thesocial and environmental assessment and the size and nature of the client’s organization. A
satisfactory Management System appropriate to the nature and scale of the project andcommensurate with the level of social and environmental risks and impacts is a condition of
IFC’s investment. If the client does not have a satisfactory Management System at the time of
IFC’s appraisal of the project, one should be developed and implemented over a reasonable
period of time agreed with IFC, and be in effect in time to manage project activities financed by
IFC.
G4.
At a minimum, a management system that meets the requirements of PerformanceStandard 1 should be in place at the level of the client’s organization in which the funds from
IFC’s investment will be utilized (i.e., at the corporate or at the activity-specific level). In thecase of project financing of specific operating units or activities, whether greenfield or existing,the system structure should address the social and environmental issues arising from the
project being financed. In the case of corporate investments without specific project activities tobe financed, this will often mean establishing, building on or maintaining a corporate level
management framework.
G5.
The Social and Environmental Management System requirements of PerformanceStandard 1 draw on the established dynamic business management process of “plan,
implement, check, and act”. In the context of accepted international frameworks for quality andenvironmental management systems (for examples, see the References section), thismanagement process can be summarized as follows:

Identification and review of the social and environmental impacts and risks of theoperations
Definition of a set of policies and objectives for social and environmental
performance
Establishment of a management program to achieve these objectives
Monitoring performance against these policies and objectives
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Reporting of the results appropriately
Review of the system and outcomes, striving for continuous improvement

G6.
The effort needed to establish a Management System depends on the client’s existing
management practices. Production- and quality-based management systems operating within
the client’s organization can be used as a foundation on which to build the elements of a system
consistent with Performance Standard 1 in the absence of an existing environmental, health andsafety, human resource or social management system. Where a client has an existing
environmental, health and safety, human resource and/or social management system, its
elements may meet or can be appropriately modified or expanded to meet the requirements of
Performance Standard 1.
Where a client has developed and implemented a formal
environmental, labor, health and safety, and/or social management system consistent with aninternationally accepted standard, the explicit incorporation of the applicable PerformanceStandards in the policy and objectives elements of such system(s) (in addition to the relevantlaws and regulations applicable to their activities, and other corporate priorities and objectives)and implementation of an appropriate management program may be sufficient to meet therequirements of Performance Standard 1. Formal management systems certified underinternational standards are not required by Performance Standard 1. While certified systems
are likely to meet IFC’s requirements, they do not eliminate the need for IFC’s due diligence ofthe elements of the system required by Performance Standard 1.
G7.
Even though many formal management systems do not explicitly address it, community
engagement is an important process element in managing social and environmental impacts
and risks, and is specifically included in paragraphs 19 through 23 of Performance Standard 1.
Community engagement normally involves the disclosure of information, consultation withaffected communities (see guidance under paragraph G15 on Stakeholder Identification), andthe establishment of a grievance mechanism. Community engagement should occur as anintegral part of the Assessment and, in the case of projects that have significant impacts oncommunities, will normally continue on an ongoing basis during the life of a project. Community
engagement is the responsibility of the client. IFC undertakes its own disclosure of informationin accordance with IFC’s Policy on Disclosure of Information.
Social and Environmental Assessment
4. The client will conduct a process of Social and Environmental Assessment that willconsider in an integrated manner the potential social and environmental (including labor,
health, and safety) risks and impacts of the project. The Assessment process will be basedon current information, including an accurate project description, and appropriate socialand environmental baseline data. The Assessment will consider all relevant social andenvironmental risks and impacts of the project, including the issues identified in
Performance Standards 2 through 8, and those who will be affected by such risks andimpacts. Applicable laws and regulations of the jurisdictions in which the project operates
that pertain to social and environmental matters, including those laws implementing hostcountry obligations under international law, will also be taken into account.
5. Risks and impacts will be analyzed in the context of the project’s area of influence. This
area of influence encompasses, as appropriate: (i) the primary project site(s) and related
facilities that the client (including its contractors) develops or controls, such as powertransmission corridors, pipelines, canals, tunnels, relocation and access roads, borrow and3

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disposal areas, construction camps; (ii) associated facilities that are not funded as part ofthe project (funding may be provided separately by the client or by third parties including
the government), and whose viability and existence depend exclusively on the project andwhose goods or services are essential for the successful operation of the project; (iii) areas
potentially impacted by cumulative impacts from further planned development of the
project, any existing project or condition, and other project-related developments that are
realistically defined at the time the Social and Environmental Assessment is undertaken;
and (iv) areas potentially affected by impacts from unplanned but predictable developments
caused by the project that may occur later or at a different location. The area of influence
does not include potential impacts that would occur without the project or independently of
the project.
6. Risks and impacts will also be analyzed for the key stages of the project cycle,
including pre-construction, construction, operations, and decommissioning or closure.
Where relevant, the Assessment will also consider the role and capacity of third parties(such as local and national governments, contractors and suppliers), to the extent that theypose a risk to the project, recognizing that the client should address these risks andimpacts commensurate to the client’s control and influence over the third party actions.
The impacts associated with supply chains will be considered where the resource utilized
by the project is ecologically sensitive, or in cases where low labor cost is a factor in thecompetitiveness of the item supplied. The Assessment will also consider potential
transboundary effects, such as pollution of air, or use or pollution of international
waterways, as well as global impacts, such as the emission of greenhouse gasses.
7. The Assessment will be an adequate, accurate, and objective evaluation andpresentation of the issues, prepared by qualified and experienced persons. In projects withsignificant adverse impacts or where technically complex issues are involved, clients may
be required to retain external experts to assist in the Assessment process.
8. Depending on the type of project and the nature and magnitude of its risks and impacts,
the Assessment may comprise a full-scale social and environmental impact assessment, alimited or focused environmental or social assessment, or straightforward application ofenvironmental siting, pollution standards, design criteria, or construction standards. Whenthe project involves existing business activities, social and/or environmental audits mayneed to be performed to determine any areas of concern. The types of issues, risks andimpacts to be assessed, and the scope of the community engagement (see paragraphs 19
through 23 below) can also vary considerably, depending on the nature of the project, andits size, location, and stage of development.
9. Projects with potential significant adverse impacts that are diverse, irreversible, or
unprecedented will have comprehensive social and environmental impact assessments.
This assessment will include an examination of technically and financially feasible1
alternatives to the source of such impacts, and documentation of the rationale for selecting
the particular course of action proposed. In exceptional circumstances, a regional, sectoralor strategic assessment may be required.
10. Narrower scopes of Assessments may be conducted for projects with limited impacts
that are few in number, generally site-specific, largely reversible, and readily addressed
through mitigation measures.

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11. Projects with minimal or no adverse impacts will not be subject to further assessment
beyond their identification as such.
12. As part of the Assessment, the client will identify individuals and groups that may bedifferentially or disproportionately affected by the project because of their disadvantaged orvulnerable status.2 Where groups are identified as disadvantaged or vulnerable, the client
will propose and implement differentiated measures so that adverse impacts do not fall
disproportionately on them and they are not disadvantaged in sharing development benefits
and opportunities.
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1“Technical feasibility” is based on whether the proposed measures and actions can be implemented withcommercially available skills, equipment and materials, taking into consideration prevailing local factors such as
climate, geography, demography, infrastructure, security, governance, capacity and operational reliability.
“Financial feasibility” is based on commercial considerations, including the relative magnitude of the incremental
cost of adopting such measures and actions compared to the project’s investment, operating and maintenancecosts and whether this incremental cost could make the project nonviable to the client.
2This status may stem from an individual’s or group’s race, color, sex, language, religion, political or other

opinion, national or social origin, property, birth or other status. The client should also consider factors such as
gender, ethnicity, culture, sickness, physical or mental disability, poverty or economic disadvantage, anddependence on unique natural resources.

Social and Environmental Assessment Process
General issues
G8.
The process of Social and Environmental Assessment (the Assessment) addresses thesocial and environmental impacts and risks (including labor, health, safety, and security) of a
proposed project. It is an important first step in managing and improving project social andenvironmental performance, as it helps the client to assess all relevant potential impacts andrisks associated with the project (whether addressed through the Performance Standards ornot), and identify any mitigation or corrective measures that will enable the project to meet theapplicable requirements in Performances Standards 2 through 8, any applicable local laws andregulations, as well as any additional priorities and objectives for social or environmental
performance identified by the client. For guidance on hard to address labor issues in theprocess of, or in addition to, the client’s process of Assessment, see paragraph G4 of GuidanceNote 2. An example of health impact assessment process and critical elements in a healthassessment can be found in Annex C of Guidance Note 4 and its Reference Section. Guidanceon risk assessment related to security issues can also be found in Guidance Note 4.
G9.
Even if impacts and risks are not specifically identified in Performance Standards 2
through 8, they should be assessed under Performance Standard 1 as part of the project’s
approach to risk management. For example, all relevant adverse impacts on the livelihoods andincome of the affected communities within the project area of influence should be assessed. Of
such impacts, those that result from project-related land acquisition should be addressed
through Performance Standard 5 on Land Acquisition and Involuntary Resettlement, while otheradverse impacts on livelihoods that result from other project activities should be addressed
under Performance Standard 1. Examples of adverse impacts that should be addressed under5

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Performance Standard 1 include loss of access to state-owned sub-surface mineral rights 1 byartisanal miners; loss of access to marine fishing grounds due to project activities; restriction ofaccess to resources located within state-determined exclusion zones not acquired by the client;and demonstrated decreases in agricultural, livestock, forest, hunting and fishing yields resulting
from project-related disturbance and/or pollution. For related guidance, see paragraph G10 of
Guidance Note 5. Depending on the circumstance, it may be appropriate to model mitigation
measures for adverse impacts on livelihoods assessed under Performance Standard 1 after
livelihood restoration measures specified under Performance Standard 5 for economic
displacement resulting from land acquisition. Integrating social and environmental
considerations in the context of an overall assessment of the project will enable clients toarticulate the overall project risks and benefits and inform the clients’ decisions.
G10. The Assessment’s key process elements generally consist of (i) project definition;(ii) (initial) screening of the project and the scoping of the Assessment process; (iii) stakeholder
identification and gathering of social and environmental baseline data, where relevant;(iv) impact identification and analysis; and; (v) generation of mitigation or management
measures and actions. The breadth, depth and type of analysis should be proportionate to thenature and scale of the proposed project’s potential impacts as identified during the course of
the Assessment process. The Assessment must conform to the requirements of the hostcountry’s environmental assessment laws and regulations, including the relevant disclosure of
information and public consultation requirements.
G11. Clients can use in-house staff and/or external consultants or experts to carry out theAssessment work, provided that the applicable requirements of the Performance Standards are
met. The in-house staff or external personnel conducting the Assessment must be in a position
to do so adequately, accurately and objectively, as well as have the requisite qualifications andexperience. For projects with issues that may pose significant adverse impacts and risks,clients should consider retaining external experts to assist in the conduct of all or part of theAssessment. These experts should have relevant and recognized experience in similar projects
and operate independently from those responsible for design and construction. They should beengaged early in the project’s development phase and, as necessary, in the various stages ofproject design, construction, and commissioning. In some high-risk cases, IFC may require apanel of external experts to advise the client and/or IFC. In addition, external experts are
required in certain defined circumstances, on issues concerning biodiversity (as provided inparagraph 4 of Performance Standard 6), Indigenous Peoples (as provided in paragraph 11 of
Performance Standard 7) and cultural heritage (as provided in paragraph 4 of PerformanceStandard 8).
G12. Early in IFC’s engagement with the client on a prospective project, IFC will review thestage of development of the project and status of the client’s social and environmental
assessment process and documentation. In many cases, clients will have undertaken somelevel of such assessment to satisfy host country requirements or as part of their own corporate
due diligence processes. For specific issues, such as labor and working conditions or the useof security personnel, the client may have conducted a separate labor assessment or risk
assessment, respectively. These existing documents can be considered as part of the client’s
Assessment consistent with the requirements of Performance Standard 1, as long as key
1

In most countries, surface land rights are legally distinct from sub-surface mineral rights.

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baseline data and assumptions have not materially changed by the time of IFC’s review. Basedon this review, IFC will identify and agree with the client on any additional assessment work that
may be necessary to meet the requirements of Performance Standard 1, the parties responsible
for such assessment, and the timeline for its completion.
Project Definition
G13. The project definition should include a concise description of the proposed project andits contexts to be assessed. The project description will normally address new facilities orbusiness activities to be financed by IFC. These facilities are expected to meet the applicablerequirements in Performance Standards 1 through 8 at the outset or, as agreed with IFC, over areasonable period of time. If a proposed business activity to be financed by IFC relates toexisting facilities (e.g., restructuring projects, expansions, modernizations, privatizations of such
facilities), IFC will work with the client to develop a management program, including an Action
Plan, that is technically and financially feasible and cost-effective for these facilities to meet theapplicable Performance Standards within a reasonable time frame. Further guidance on projectdescriptions can be found in Annex A.
Initial Screening
G14. The initial screening of the project against the applicable local laws and regulations andthe Performance Standards will indicate whether the project may pose social or environmental
risks that should be further analyzed through additional Assessment process steps. It should
identify the extent and complexity of potential impacts and risks in the project’s area ofinfluence, which is the total area likely to be affected by both on-site and off-site impacts fromproject activities (see also paragraph 5 of Performance Standard 1, and paragraphs G18 and 22
below). If the initial screening indicates potential adverse impacts, the scope of the Assessment
should be determined and further impact identification and analysis (based on relevant baseline
data, if any, and considering identified stakeholders) will be necessary to ascertain the natureand scale of impacts, the affected communities, and possible mitigation measures. Where theinitial screening process concludes that a project will have no or minimal potential adverse
impacts, the client should document this screening process and its conclusions. No further
Assessment or establishment of a Management System will be required.
Stakeholder Identification and Information Gathering
G15. Stakeholder identification broadly involves the determination of the various individuals orgroups who may have an interest in the project or who may affect or be affected by the project.
The process of stakeholder identification includes distinct steps, including: (i) identifying
individuals, groups or local communities that may be affected by the project, positively or
negatively, and directly or indirectly, making special effort to identify those who are directly
affected, including those who are disadvantaged or vulnerable; (ii) identifying broader
stakeholders who may be able to influence the outcome of the project because of theirknowledge about the affected communities or political influence over them; (iii) identifying
legitimate stakeholder representatives, including elected officials, non-elected community
leaders, leaders of informal or traditional community institutions, and elders within the affected
community; and (iv) mapping the impact zones by placing the affected groups and communities

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within a geographic area, which will help the client define or refine the project’s area of influence(see paragraph 5 of Performance Standard 1, and paragraphs G18 and 22 below).
G16. The baseline information gathering phase is an important and often a necessary step in
the Assessment process to enable the determination of the potential impacts and risks of a
project. Baseline information gathering should describe the relevant existing conditions, suchas physical, biological, medical and socio-economic. Analysis of project- and site-specificimpacts should be based on current and verifiable primary information. Reference to secondary
information on the project’s area of influence is acceptable, but it may still be necessary togather primary information from field surveys to establish baselines appropriate to the proposed
project’s potential impacts and risks. Relevant data may be available from various hostgovernmental, NGO and academic studies. However, clients should carefully evaluate data
sources and potential data gaps. Accurate and up-to-date baseline information is essential, as
rapidly changing situations, such as in-migration of people in anticipation of a project ordevelopment 2, or lack of data on disadvantaged or vulnerable individuals and groups within an
affected community, can seriously affect the efficacy of social mitigation measures. Limitations
on data, such as the extent and quality of available data, assumptions and key data gaps, anduncertainties associated with predictions, should be clearly identified.
Impacts and Risks
G17. Potential impacts and risks should be assessed and documented for each key stage ofthe project cycle including design and planning, construction, operations, and decommissioning
or closure and for their short-term, long-term, and cumulative contexts (see paragraph G22
below), keeping in mind the dynamic and shifting nature of these impacts and risks.
G18. The size of a project’s area of influence and the social and environmental impacts andrisks within the area can vary considerably. Some of these impacts and risks, particularly thosedescribed in the Performance Standards, may be attributable to third parties within the area ofinfluence. The larger the area of influence, the more likely that third party action or nonperformance could pose risks to projects. Where relevant, the Assessment includes these third
party risks, particularly risks over which the client may have a degree of control or influence.
G19. In addition to adverse impacts and risks, the Assessment can assess potential positiveor beneficial impacts of a project and propose measures to enhance them. These measures
can be implemented through the client’s social and environmental management program. If
requested by clients, IFC can assist clients to enhance the positive outcomes of the projectthrough various technical and financial assistance and programs.
Global Impacts
G20. While individual project impacts on climate change, ozone layer, biodiversity or similar
environmental issues may not be significant, when taken together with impacts created by otherhuman activities, they can become nationally, regionally or globally significant. When a project2

In–migration can pose significant impacts on host communities. Demographic surveillance systems that canaccurately track community level influx have been established in many settings and there are establishedmethodologies that can be readily consulted (for examples, see the References Section).

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has the potential for large scale impacts that can contribute toward adverse global
environmental impacts, the Assessment should consider these impacts. Specific requirements
and guidance on greenhouse gases and ozone-depleting substances can be found in
Performance Standard 3 and its accompanying Guidance Note, and on biodiversity, in
Performance Standard 6 and its accompanying Guidance Note.
Transboundary Impacts
G21. Transboundary impacts are impacts that extend to multiple countries, beyond the hostcountry of the project, but are not global in nature. Examples include air pollution extending tomultiple countries, use or pollution of international waterways 3, and transboundary epidemic
disease transmission 4. If the Assessment determines that: (i) the project entails activities that
may cause adverse effects through air pollution or abstraction of water from or pollution ofinternational waterways; (ii) the affected countries and the host country have entered into any
agreements or arrangements or have established any institutional framework regarding thepotentially affected airshed, waterway, subsurface water, or other resources; or (iii) there areunresolved differences between the affected and host countries regarding the potentiallyaffected resource, and the likelihood of a resolution is not imminent, the client may be required
to provide notice of the proposed project to the affected country or countries. When requestedby the client, IFC will assist the client with notifying competent authorities of the affected
countries. IFC’s role in this regard is outlined in paragraph 40 of the IFC Policy on Social andEnvironmental Sustainability (Sustainability Policy).
IFC’s procedure for notification ofcompetent authorities can be found in the Environmental and Social Review Procedure.
Examples of regional systems of assessment and notification of transboundary impacts can befound in the References section.
Cumulative Impacts
G22. The combination of multiple impacts from existing projects, the proposed project, and/or
anticipated future projects may result in significant adverse and/or beneficial impacts that would
not be expected in case of a stand-alone project. The Assessment should evaluate thesecumulative impacts commensurate with the source, extent, and severity of cumulative impacts
anticipated. As a result, the geographic and temporal boundaries of the cumulative impact
assessment would depend on the potential cumulative impacts that are attributable to theproject and those that affect the project as a result of reasonably foreseeable activities by third
3

IFC defines an international waterway as: (a) any river, canal, lake, or similar body of water that forms a boundary
between, or any river or body of surface water that flows through, two or more states, whether IFC members or not;(b) any tributary or other body of surface water that is a component of any waterway described in (a) above; and (c)any bay, gulf, strait, or channel bounded by two or more states or, if within one state, recognized as a necessary
channel of communication between the open sea and other states--and any river flowing into such waters.
4
Transboundary epidemic disease transmission is well known and has been observed in many settings. Many
infectious diseases, such as cholera, influenza and meningitis, can be rapidly and easily spread across national
borders, particularly when a project attracts a large influx of potential job seekers during a construction phase.
Similarly, a project may bring in large numbers of overseas workers for short-term specialty construction work. In
some situations, the disease spectrum of the imported workers may be quite different than the host country, e.g.,multi-drug resistant tuberculosis, vivax versus falciparum forms of malaria. In some cases, it may be appropriate forvery large scale transboundary projects to consider the potential for global or regional level disease epidemictransmission, e.g., avian influenza and SARS.

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parties, and will influence the final definition of the project area of influence. Examples ofcumulative impacts include ambient conditions in an airshed (see paragraph 9 of PerformanceStandard 3), conditions in a watershed, or secondary or induced social impacts, such as inmigration or substantially increased transport activity in a project area of influence (seeparagraphs G5, G22, and G23 of Guidance Note 4). The client’s baseline study should identify
any relevant existing project or condition. In terms of anticipated future projects, priority should
be given to assessing cumulative impacts stemming from the proposed project, such as further
planned development of the project and other project-related future developments that are
realistically defined at the time of the Assessment (for example, an anticipated future
development for which licenses or permits have been issued should be included, even if it is not
yet in implementation). IFC will work with the client to identify existing data and studies, and if
necessary will consider available technical and financial assistance mechanisms on a case-bycase basis. In situations where cumulative impacts are likely to occur from activities by third
parties in the project region, a regional or sectoral assessment may be appropriate. It may not
be feasible for the client to undertake such a study, for example, in situations where the impacts
from the client’s own operations are expected to be a relatively small amount of the cumulative
total. For further guidance on such assessments, see paragraph G31 and 32 below. While theclient is responsible for gathering information on cumulative impacts under paragraph 5 of
Performance Standard 1, paragraph 6 of the Performance Standard also indicates that the clientis expected to address risks and impacts commensurate to the client’s control and influence
over third party actions.
Human Rights
G23. A number of international agreements and conventions have established basic humanrights (a list of these international instruments can be found in the References section of
Guidance Note 2; other useful guidance supporting human rights can be found in the
References section of Guidance Notes 3, 4, 5, and 7). While states are responsible forprotecting these human rights, it is increasingly expected that private sector companies conduct
their affairs in a way that would uphold these rights and not interfere with states’ obligations
under these instruments. In addition, business conduct that is inconsistent with these basic
human rights can pose risks to business, and as a result, the Assessment process is a useful
tool to analyze these risks and to consider management measures. Descriptions of some ofthese risks can be found in Performance Standards 2, 3, 4, 5 and 7. IFC recently released a
draft of the Guide to Human Rights Impact Assessment and Management (Guide to HRIA)
jointly developed by IFC and the International Business Leaders Forum. The draft Guide to
HRIA was released to enable voluntary road-testing of the HRIA by a number of companies. If
human rights are likely to be a significant and specific risk for the project, companies canconsider carrying out an HRIA along with the Social and Environmental Assessment.
Disadvantaged or Vulnerable Groups
G24. There may be individuals or groups within the project area of influence who areparticularly vulnerable or disadvantaged and who could experience adverse impacts from the
proposed project more severely than others, as described in footnote 2 of PerformanceStandard 1. Large scale projects with a large project area of influence and multiple affected
communities are more likely to expose these individuals and groups to adverse impacts thansmaller scale projects with site specific issues. Where it is anticipated that the project will
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impact one or more affected communities, the Assessment process should use acceptedsociological and health methods to identify and locate vulnerable individuals or groups within theaffected community population, collecting data on a disaggregated basis.
Using thisdisaggregated information, the client should assess potential impacts, including differentiatedimpacts, on these individuals and groups and propose specific (and if necessary separate)measures in consultation with them to ensure that potential impacts and risks to them areappropriately avoided, mitigated or compensated. Vulnerable or disadvantaged individuals andgroups should be able to benefit from project opportunities equally with the rest of the affected
community; this may require that differentiated benefit-sharing processes and levels (such as
ensuring that compensation for a house taken during resettlement is provided equally to thewoman and man of the household, providing training for individuals or groups who might lackthe necessary skills to find a job with the project, ensuring access to medical treatments formedial conditions resulting from the project, etc.) are available. Project monitoring should trackthese individuals or groups on a disaggregated basis. Specific considerations and measures for
Indigenous Peoples are described in Performance Standard 7 and the accompanying GuidanceNote. Clients should exercise discretion in gathering personal data and information and should
treat such data or information as confidential (except where disclosure is required by law).
Where Performance Standard 1 requires disclosure of plans based on personal info or datacollected, (such as a resettlement action plan) the client should ensure that any personal data or
information cannot be associated with particular individuals.
Disability
G25. There are country laws, regulations, and other guidance pertaining specifically to people
with disabilities, who are highly vulnerable to disproportionate impact from projects. Where noadequate legal framework exists, the client should identify appropriate alternatives to avoid,
minimize, mitigate, or compensate for potential adverse impacts and risks on people withdisabilities. The alternatives should be focused on creating access to the resources andservices for the community (e.g., accessibility to education, medical assistance, training,
employment, tourism, and consumer goods; and physical accessibility to transportation,schools, hospitals/clinics, work facilities, hotels, restaurants, stores, and other commercial
areas). See the References Section for A Design Manual for a Barrier Free Environment, andThe U.S. Access Board. Clients should also consider incorporating the principles of universal
design (defined as the design of products, environments, programmes and services to beusable by all people, to the greatest extent possible, without the need for adaptation or
specialized design 5) into project design, construction, and operation (including emergency andevacuation plans), whether new construction or restructuring, expansion, or modernization offacilities, to maximize use by all potential users, including people with disabilities.
Gender
G26. A project may have different impacts on women and men, due to their differentiatedsocioeconomic roles and their varying degrees of control over and access to assets, productive
5“Universal design” shall not exclude assistive devices for particular groups of persons with disabilities where this isneeded (Article 2 of the United Nation Convention on the Rights of Persons with Disabilities adopted December 13,
2006)

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resources, and employment opportunities. There may be norms, societal practices, or legal
barriers that impede the full participation of persons of one gender (usually women, but
potentially men) in consultation, decision-making, or sharing of project benefits. These legal
and societal norms and practices may lead to gender discrimination or inequality. Genderdifferentiated impacts should be assessed and the Assessment should propose measuresdesigned to ensure that one gender is not disadvantaged relative to the other in the context ofthe project. This may include providing opportunities to enhance full participation and influencein decision-making through separate mechanisms for consultation and grievances, anddeveloping measures that allow both women and men equal access to project benefits (such as
land titles, compensation, and employment).
G27. Health performance indicators and gender are strongly associated with each other.
Demographic Health Surveys (DHS) have repeatedly demonstrated the profound connection
between gender (usually women) and a wide variety of key health performance indicators.
Proposed interventions should be sensitive to and aware of the unique role played by women inhealth. The use of peer educators and community level women’s organizations should beconsidered. In many developing country settings, there are marked differences in the literacy
and educational attainment levels of women. Typically, female literacy and educational
attainment levels are marked lower than men, even if the woman is the household head.
Household level education literacy/attainment is also strongly tied to many critical healthperformance indicators. Therefore, proposed mitigation interventions and/or outreach efforts
must factor this “education gap” into the planning process.
Third Party Impacts including Supply Chain Considerations
G28. The client may have limited or no leverage on third parties, such as a government
agency in charge of controlling in-migration in the project area, or an illegal logging operation
taking advantage of project access roads through forests. Nonetheless, the project description
in the Assessment report should encompass facilities and activities by third parties that are
essential for the successful operation of the project, and the Assessment process for a projectwith a large area of influence should identify the roles of third parties and the potential impacts
and risks from their actions or non-performance. Clients should collaborate with third parties
and take action to the extent of their influence or control over them. IFC will work with the client
on a case-by-case basis to have the client and, where feasible, third parties develop appropriate
mitigation strategies.
G29. Among these third parties are operators of associated facilities (see item (ii) in
paragraph 5 of Performance Standard 1) that may have a particularly close relationship with the
project. Because of this relationship, the client will normally have some commercial leverage on
the operators of such facilities. Where such leverage allows, undertakings can be secured fromthese operators to operate their facilities consistent with the applicable Performance Standards.
In addition, the client should identify its own actions, if any, that will support or supplement theactions of the associated facilities.
G30. As with the third party impacts and risks described above, projects’ relationships with
supply chains could pose a particular challenge in certain sectors. The Assessment should
identify the roles, impacts and risks of key suppliers in relation to labor issues and ecologicallysensitive resources, as described in paragraph 6 of Performance Standard 1. Generally, where
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the client has commercial leverage over its suppliers, IFC will expect the client to work with its
suppliers to propose mitigation measures proportionate to identified risks on a case-by-casebasis, while recognizing that assessing and addressing supply chain implications beyond thefirst or the second tier suppliers would not be practical or meaningful to the client or the supplier.
Additional information on addressing labor issues of the client’s key suppliers, particularly thoserelated to child labor and forced labor, can be found in paragraph 18 of Performance Standard 2
and the accompanying guidance. For biodiversity issues in the supply chain, see PerformanceStandard 6 and the accompanying Guidance Note.
Regional, Sectoral or Strategic Assessments
G31. In exceptional circumstances, regional, sectoral, or strategic social and environmental
assessment may be required in addition to the social and environmental impact assessment.
Regional assessment is conducted when a project or series of projects are expected to have asignificant regional impact or influence regional development (e.g., an urban area, a watershed,or a coastal zone), and is also appropriate where the region of influence spans two or morecountries, or where impacts are likely to occur beyond the host country. Sectoral assessment isuseful where several projects are proposed in the same or related sector (e.g., power, transport,
or agriculture) in the same country, either by the client alone or by the client and others.
Strategic assessment examines impacts and risks associated with a particular strategy, policy,
plan, or program, often involving both the public and private sectors. Regional, sectoral, or
strategic assessment may be necessary to evaluate and compare the impact of alternative
development options, assess legal and institutional aspects relevant to the impacts and risks,and recommend broad measures for future social and environmental management. Particularattention is paid to potential cumulative impacts of multiple activities. These assessments are
typically carried out by the public sector, though they may be called for in some complex andhigh risks private sector projects.
G32. When the need for such assessments is indicated, IFC will work with the client to identify
existing data and studies already carried out by other institutions, such as the World Bank, othermultilateral financial institutions and/or national agencies. In the absence of such data or
studies, IFC will assist the client to identify the appropriate terms of reference for suchassessments, and will consider available technical and financial assistance mechanisms.
Mitigation Measures
G33. If the impact analysis confirms potential impacts and risks, clients should develop
measures and actions to avoid, minimize, mitigate, compensate for, or offset potential adverse
social and environmental impacts, or, in case of positive or beneficial impacts, to enhance them.
As a general principle for adverse social and environmental impacts, the Assessment should
focus on measures to prevent these from occurring in the first place, as opposed tominimization, mitigation, or compensation. At the same time, however, IFC recognizes this canpose challenges for projects, and that measures should be drawn from options that aretechnically and financially feasible (as defined in footnote 1 of Performance Standard 1) andcost effective (as defined in footnote 2 of Performance Standard 3). Where trade-offs between
avoidance and mitigation/compensation are considered, these should be documented. The
Assessment should consider economic, financial, environmental and social costs and benefits
and identify to which parties these accrue. The costs and benefits may be expressed in
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qualitative or quantitative terms, and the analysis of the balance between costs and benefits
should be explained. Where these impacts are within the client’s capacity to control or
influence, the client should capture the mitigation or corrective measures in a management
program or the Action Plan (see paragraphs 13 through 16 of Performance Standard 1 and theaccompanying Guidance Notes) and implement these through the Management System.
Documentation of Assessment Process
G34. The outcome of the Assessment process should be documented. The assessment
process may result in one or more documents with separate analysis, particularly when theclient engages various experts to address multiple Performance Standards.
G35. Projects with limited adverse impacts and risks, both new projects and those involving
existing facilities (the type of projects likely to be considered as Category B projects by IFC),
need documentation on the screening process, impacts analysis, proposed mitigation
measures, and the process of disclosure of information, and community engagement (if there
are affected communities). At a minimum, clients should have one or more documents oranalysis that describe:
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The project and its social and environmental aspects
Maps and drawings of the project and a delineation or description of its area ofinfluence
Compliance with the legal and regulatory framework, the applicable PerformanceStandards and the environmental and health and safety performance levels
established for the project
Key potential impacts and risks, including the identification of the affected
communities
Planned mitigation and any areas of concern that need to be further addressed
The process of community engagement

G36. If early analysis for the Assessment identifies potentially significant adverse social andenvironmental impacts and risks that are diverse, irreversible, or unprecedented (the type of
projects likely to be considered as Category A projects by IFC), a formal social andenvironmental impact assessment report will be prepared in accordance with acceptedinternational practice, and consistent with Annex A. For these projects, summaries of analyses
should explain findings clearly and objectively, and be understandable to laypersons. For thoseprojects with potentially significant adverse impacts predominantly in the social area (e.g.,
involuntary resettlement), the Assessment process should largely focus on generating
appropriate social baseline data, impacts analysis, and mitigation measures (e.g., Resettlement
Action Plan).
G37. These projects will normally need to conduct an alternatives analysis as part of thesocial and environmental assessment. The purpose of alternative analysis is to improve project
design, construction, and operation decisions based on feasible project alternatives. This
analysis may facilitate the consideration of social and environmental criteria at the early stagesof project development and make decisions based on the differences between real choices.
The alternatives analysis should be conducted as early as possible in the Assessment process
and examine feasible alternatives such as alternative project locations, designs or operational
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processes, or alternative ways of dealing with social and environmental impacts. The analysis issubject to the disclosure and consultation requirements of the Assessment. Additional
information regarding the analysis of alternatives is provided in Annex A.
G38. When projects involve existing facilities, environmental and social audit reports andhazard/risk assessment reports should be prepared in accordance with accepted international
practice and follow the table of contents provided in Annex B.
Management Program
13. Taking into account the relevant findings of the Social and Environmental Assessment
and the result of consultation with affected communities, the client will establish andmanage a program of mitigation and performance improvement measures and actions that
address the identified social and environmental risks and impacts (the management
program).
14. Management programs consist of a combination of operational policies, proceduresand practices. The program may apply broadly across the client’s organization, or to
specific sites, facilities, or activities. The measures and actions to address identified
impacts and risks will favor the avoidance and prevention of impacts over minimization,
mitigation, or compensation, wherever technically and financially feasible. Where risks andimpacts cannot be avoided or prevented, mitigation measures and actions will be identified
so that the project operates in compliance with applicable laws and regulations, and meetsthe requirements of Performance Standards 1 through 8 (see paragraph 16 below). The
level of detail and complexity of this program and the priority of the identified measures andactions will be commensurate with the project’s risks and impacts.
15. The program will define desired outcomes as measurable events to the extent possible,
with elements such as performance indicators, targets, or acceptance criteria that can betracked over defined time periods, and with estimates of the resources and responsibilities
for implementation. Recognizing the dynamic nature of the project development andimplementation process, the program will be responsive to changes in project
circumstances, unforeseen events, and the results of monitoring (see paragraph 24 below).

G39. The level of detail and complexity of the management program should be commensuratewith the project’s anticipated impacts and risks. Where a Social and Environmental Impact
Assessment format is required as described in paragraph 9 of Performance Standard 1, themanagement program should include an Action Plan as described in paragraph 16 of
Performance Standard, and contain the measures listed under the heading “Management
Program” in Annex A. For projects with limited potential impacts, the management program
should address those limited impacts, and are likely to be less elaborate. In the case of existing
facilities, the management program is likely to include corrective measures and an Action Plan
to address areas of improvement identified in the social and environmental audit. As part of the
management program, the client may wish to establish its own internal performance measures
so as to enhance positive project impacts and the desired outcomes as measurable events tothe extent possible. These include measures such as performance indicators, targets, or
acceptance criteria that can be tracked over defined time periods, to ensure continuous
improvement of performance in these areas.

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G40. The management program should be implemented through the client’s Social andEnvironmental Management System (see paragraph 3 of Performance Standard 1 and theaccompanying guidance), so that it will enable the client to determine adequate allocation offinancial resources and designation of responsible personnel within the client’s organization,and to implement as part of overall site, project or corporate management.
Action Plan
16. Where the client identifies specific mitigation measures and actions necessary for the
project to comply with applicable laws and regulations and to meet the requirements of
Performance Standards 1 through 8, the client will prepare an Action Plan. These measuresand actions will reflect the outcomes of consultation on social and environmental risks andadverse impacts and the proposed measures and actions to address these, consistent withthe requirements under paragraph 21. The Action Plan may range from a brief descriptionof routine mitigation measures to a series of specific plans.3 The Action Plan will: (i)describe the actions necessary to implement the various sets of mitigation measures orcorrective actions to be undertaken; (ii) prioritize these actions; (iii) include the time-line for
their implementation; (iv) be disclosed to the affected communities (see paragraph 26); and(v) describe the schedule and mechanism for external reporting on the client’s
implementation of the Action Plan.
_____________________
3For example, Resettlement Action Plans, Biodiversity Action Plans, Hazardous Materials Management Plans,

Emergency Preparedness and Response Plans, Community Health and Safety Plans, and Indigenous Peoples
Development Plans.

G41. Taking the result of the Social and Environmental Assessment process, including theresult of consultation during this process (see paragraphs 19 through 23 of PerformanceStandard 1 and the accompanying Guidance Notes), the client should prepare its Action Plan,
which is a part of the management program focusing on the measures and actions necessary
for the client to comply with applicable national laws and regulations and to meet therequirements of the applicable Performance Standards. It can exclude information that is of aninternal nature, such as proprietary information, cost data, information that would compromise
project site security and safety, and detailed procedures, business processes, and instructions
for workers (which should be included in the management program). As part of its ongoingengagement with affected communities, the client is required to disclose its Action Plan inadvance of project implementation to affected communities and stakeholders, and provide
updates throughout the life of the project as mitigation measures are adjusted and upgraded,reflecting the feedback from the affected communities.
Organizational Capacity
17. The client will establish, maintain, and strengthen as necessary an organizational
structure that defines roles, responsibilities, and authority to implement the management
program, including the Action Plan.
Specific personnel, including management
representative(s), with clear lines of responsibility and authority should be designated. Keysocial and environmental responsibilities should be well defined and communicated to therelevant personnel and to the rest of the organization. Sufficient management sponsorshipand human and financial resources will be provided on an ongoing basis to achieveeffective and continuous social and environmental performance.

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G42. The successful implementation of the management program, including the Action Plan,
calls for the commitment of management and workers of the client’s organization. Accordingly,
the client should designate specific in-house personnel, including management
representative(s), with clear lines of responsibility and authority for social and environmental
issues. If functions are outsourced to contractors, the client’s agreement with the contractors
should include actions and measures necessary for the parties to perform the agreement
consistent with the management program. In large or complex organizations multiple personnel
or operational units may be designated. In small or medium-sized enterprises, these
responsibilities may be undertaken by one individual. It is also important that the key social andenvironmental responsibilities are well defined and communicated to the relevant personnel andthe rest of the organization. Appropriate human and financial resources should be allocated tothose designated as responsible for the implementation of the management program and any
additional performance measures. Annex C contains a series of questions that may be usefulfor clients to pose to assess adequacy of its capacity and process.
Training
18. The client will train employees and contractors with direct responsibility for activities
relevant to the project’s social and environmental performance so that they have theknowledge and skills necessary to perform their work, including current knowledge of thehost country’s regulatory requirements and the applicable requirements of PerformanceStandards 1 through 8. Training will also address the specific measures and actions
required under the management program, including the Action Plan, and the methods
required to perform the action items in a competent and efficient manner.

G43. The management program should identify the knowledge and skills necessary for its
implementation, including implementation of the Action Plan. These should be considered inpersonnel selection, training, skills development, on-going education, and new recruitment if
necessary. Training programs typically have the following elements:
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Identification of training needs for employees
Development of a training plan to address defined needs
Verification of training programs to ensure consistency with organizational
requirements
Training of target employees
Documentation of training received
Evaluation of training received

G44. Training relevant to implementing specific action items in the management program may
be necessary. Training designed to help the employees gain appropriate knowledge base andskills to perform their work may include current knowledge of host country regulatory
requirements, the applicable requirements of Performance Standards 2 through 8, the material
impacts predicted through the Assessment process, the content of the management program,including the Action Plan, and the methods required to perform the action items in a competentand efficient manner. When a project is likely to impact vulnerable or disadvantaged individuals
or groups within affected communities, employees who will interact with such individuals orgroups should be trained so that they understand the specific issues related to such individuals
or groups.

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G45. When specific aspects of the project or the implementation of the management program
are outsourced to contractors, the client should also ensure that these contractors have therequisite knowledge, skills, and training to perform the work in accordance with the
management program and the requirements of Performance Standards 2 through 8, consistent
with the guidance in paragraph G44 above.
Community Engagement
19. Community engagement is an on-going process involving the client’s disclosure of
information. When local communities may be affected by risks or adverse impacts from a
project, the engagement process will include consultation with them. The purpose ofcommunity engagement is to build and maintain over time a constructive relationship withthese communities. The nature and frequency of community engagement will reflect the
project’s risks to and adverse impacts on the affected communities.
Community
engagement will be free of external manipulation, interference, or coercion, andintimidation, and conducted on the basis of timely, relevant, understandable and accessible
information.

Disclosure
20. Disclosure of relevant project information helps affected communities understand therisks, impacts and opportunities of the project. Where the client has undertaken a processof Social and Environmental Assessment, the client will publicly disclose the Assessment
document. If communities may be affected by risks or adverse impacts from the project, theclient will provide such communities with access to information on the purpose, nature andscale of the project, the duration of proposed project activities, and any risks to andpotential impacts on such communities. For projects with adverse social or environmental
impacts, disclosure should occur early in the Social and Environmental Assessment
process and in any event before the project construction commences, and on an ongoingbasis (see paragraph 26 below).

Consultation
21. If affected communities may be subject to risks or adverse impacts from a project, theclient will undertake a process of consultation in a manner that provides the affected
communities with opportunities to express their views on project risks, impacts, andmitigation measures, and allows the client to consider and respond to them. Effective
consultation: (i) should be based on the prior disclosure of relevant and adequate
information, including draft documents and plans; (ii) should begin early in the Social andEnvironmental Assessment process; (iii) will focus on the social and environmental risks
and adverse impacts, and the proposed measures and actions to address these; and (iv) will
be carried out on an ongoing basis as risks and impacts arise. The consultation process
will be undertaken in a manner that is inclusive and culturally appropriate. The client will
tailor its consultation process to the language preferences of the affected communities,
their decision-making process, and the needs of disadvantaged or vulnerable groups.
22. For projects with significant adverse impacts on affected communities, the consultation
process will ensure their free, prior and informed consultation and facilitate their informed
participation. Informed participation involves organized and iterative consultation, leading
to the client’s incorporating into their decision-making process the views of the affected
communities on matters that affect them directly, such as proposed mitigation measures,the sharing of development benefits and opportunities, and implementation issues. The

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client will document the process, in particular the measures taken to avoid or minimize risks
to and adverse impacts on the affected communities.

Grievance Mechanism
23. The client will respond to communities’ concerns related to the project. If the client
anticipates ongoing risks to or adverse impacts on affected communities, the client will
establish a grievance mechanism to receive and facilitate resolution of the affected
communities’ concerns and grievances about the client’s environmental and social
performance. The grievance mechanism should be scaled to the risks and adverse impactsof the project. It should address concerns promptly, using an understandable andtransparent process that is culturally appropriate and readily accessible to all segments of
the affected communities, and at no cost and without retribution. The mechanism should
not impede access to judicial or administrative remedies. The client will inform the affected
communities about the mechanism in the course of its community engagement process.

G46. The purpose of community engagement is to establish and maintain a constructive
relationship with affected communities over the life of the project. In some industry sectors, thisengagement is considered as an important process that enables the client to obtain andmaintain its “social license to operate.” An effective engagement process allows thecommunity’s views, interests and concerns to be heard, understood, and taken into account inproject decisions and creation of development benefits. Depending on the nature of the project,
its risks and potential impacts, the size and characteristics of the affected communities, and thestage of the project cycle, engagement may entail varying degrees of interaction between thecompany and affected communities. Engagement should reflect the specific needs of theindividuals and groups within the community, including those who are disadvantaged orvulnerable (see paragraph 12 and footnote 2 of Performance Standard 1 and the accompanying
guidance). See also the Stakeholder Engagement: A Good Practice Handbook for Companies
Doing Business in Emerging Markets.
G47. If the Assessment process indicates that there may be potential impacts and risks to thecommunities within the project’s area of influence, companies should seek early engagementwith these affected communities. Engagement should be based on the timely dissemination of
relevant project information, including the social and environmental impacts and risks of the
project identified in the Assessment and proposed mitigation measures, in languages andmethods preferred by the affected communities. In cases where the Assessment has been
completed prior to IFC involvement in a project, IFC reviews the process of community
engagement carried out by the client. If necessary, IFC and the client will agree on a
supplemental community engagement program.
Disclosure of Information
G48. Information disclosure involves delivering information about the project to the affected
communities and other stakeholders. The information should be in appropriate language(s). It
should be made accessible and understandable to the various segments of the affected
communities, in ways appropriate to the community. For example, information can be madeavailable in city halls, public libraries, in the local print media, over the radio, or in public
meetings. The timing and the method of disclosure will vary depending on national law
requirements, the type of Assessment involved, and the stage of the project’s development or19

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operation. As a minimum, the client should disclose the final Assessment document and theAction Plan prior to the commencement of construction or other implementation activities. In
some cases, disclosure of information will occur earlier in the Assessment process. For projects
with potential adverse impacts to communities, timely disclosure of information should occur
after the initial screening, and should include information on the purpose, nature and scale ofthe project, the duration of proposed project activities, and any risks to and potential impacts onsuch communities. Such disclosure may be achieved by disclosing a draft Assessment
document. In addition, it may also be appropriate for the client to disclose a draft Action Plan sothat the measures proposed by the client to mitigate the identified risks and impacts can be
explained. Disclosure of information will be the basis of the client’s consultation process (seeparagraphs 21 and 22 of Performance Standard 1 and the accompanying guidance).
G49. Disclosure of information is normally expected as part of the Assessment process, but if
the project is expected to create ongoing impacts and risks to the affected communities, theclient should continue to provide information about the project during the life of the project. The
client’s reporting requirements to the affected community are addressed in paragraph 26 of
Performance Standard 1 and the accompanying guidance. The client may disclose information
on non-financial issues or opportunities for enhancing social and environmental impacts throughsustainability reports, as described in paragraph G67 below.
G50. In the extractive industries and infrastructure sectors in particular, where a project canhave potentially broader implications for the public at large, disclosure of information is an
important means to manage governance risks. Accordingly, clients should be aware that IFC
has sector-specific initiatives on disclosure of project-related information, as described inparagraphs 21 through 23 of IFC's Sustainability Policy. Further guidance on the Extractive
Industries Transparency Initiative and how the private sector can support this initiative can befound in the References section.
Consultation
G51. Consultation involves two-way communication between the client and the affected
communities. Effective consultation provides opportunities for the client to learn from theexperience, knowledge, and concerns of the affected communities, as well as to manage
community expectations by clarifying the extent of its responsibilities and resources so thatmisunderstandings and unrealistic demands can be avoided. For the consultation process to beeffective, project information needs to be disclosed and explained to the communities, andsufficient time should be allocated for them to consider the issues. Consultation should be
inclusive of various segments of the affected community, including both women and men, andaccessible to the disadvantaged and vulnerable groups within the community. Based on an
earlier preliminary stakeholder analysis, the client’s representatives should meet with theaffected communities and explain the project information, answer questions and listen tocomments and suggestions. In addition to community meetings open to members of theaffected communities, the client should identify community leaders and any formal or informal
existing decision-making mechanisms so that their input can be sought.
G52. Some projects may not require a process of consultation, unless community members
seek to engage with the client on disclosed project information or raise grievances.
Consultation should be undertaken in most situations where the project presents a specific but
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limited number of potential adverse impacts to affected communities. In these cases, the client
should consult with the affected communities during the process of Assessment after the risks
and impacts have been identified and analyzed. In the case of projects with significant adverse
impacts on affected communities, and projects with adverse impacts on Indigenous Peoples,the process of free, prior, and informed consultation and informed participation is required (seeparagraph G53 below).
In addition to the requirements in Performance Standard 1,
requirements on consultation can be found in Performance Standards 4, 5, 6, 7, and 8.
Free, Prior, and Informed Consultation
G53. For projects with significant potential adverse impacts to the affected communities, theclient’s consultation process will include their free, prior and informed consultation and informed
participation. Such consultation should be “free” (free of intimidation or coercion), “prior” (timely
disclosure of information) and “informed” (relevant, understandable and accessible information),and should continue through the entire life of the project and not only during the early stages ofthe project. Consultation with affected communities should be part of the early scoping processthat establishes the terms of reference for the Assessment process, which includes an inventoryof risks and impacts to be assessed. Informed participation entails organized and iterative
consultation on issues concerning potential impacts to the affected communities, so that theclient can incorporate into their decision-making process their views on these issues. Free,
prior, and informed consultation and informed participation are also required for projects withpotential adverse impacts to Indigenous Peoples (see Performance Standard 7). The client
should document specific actions, measures or other instances of decision-making that havebeen influenced by or resulted directly from the input of those who participated in the
consultation. Annex D describes the type of information IFC will seek from its client during its
social and environmental review to ascertain that the client’s process of community engagement
involves the free, prior, and informed consultation of the affected communities.
Broad Community Support
G54. As outlined in paragraphs 19 and 20 of the IFC Sustainability Policy, IFC will review theclient’s community engagement process and, through its own investigation, assure itself that
there was free, prior, and informed consultation and informed participation, leading to broad
community support for the project by the affected communities. IFC will make this investigation
when a project may pose significant adverse impacts to local communities, or in the case ofcommunities of Indigenous Peoples, adverse impacts on such communities. Broad community
support is a collection of expressions by the affected communities, through individuals and theirrecognized representatives, in support of the project. There may be broad community support
even if some individuals or groups object to the project. IFC’s inquiry on the existence of free,prior and informed consultation and broad community support is an inquiry on the overall
engagement process of the client. This inquiry is not intended to establish any consent or vetoright for the affected communities. IFC’s Environmental and Social Review Proceduredescribes the type of information IFC will seek to ascertain that the client’s process of free, prior,and informed consultation led to the broad community support for the project within the affected
communities. After the Board approval of the project, IFC will continue to monitor the client’s
community engagement process as part of its portfolio supervision.

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Broader Stakeholder Engagement
G55. IFC encourages clients with high-risk projects to also identify and engage with otherstakeholders, beyond those who will be affected by the project, such as local government
officials, community leaders and civil society organizations, particularly those who work in orwith the affected communities. While these groups may not be directly affected by the project,they may have the ability to influence or alter the relationship of the client with affected
communities, and in addition may play a role in identifying risks, potential impacts andopportunities for the clients to consider and address in the Assessment process.
Ongoing Engagement
G56. Throughout the life of the project, clients should build upon the channels ofcommunication and engagement with affected communities established during the Assessment
process. In particular, clients should use the appropriate community engagement practices
described in Performance Standard 1 to disclose information and receive feedback on theeffectiveness of the implementation of the mitigation measures in the Action Plan as well as theaffected communities’ ongoing interests and concerns about the project.
Grievance Mechanism
G57. Grievance mechanisms should be appropriate to respond to community concerns
around risks and potential adverse impacts of the project. In the case of large projects withpotentially complex issues, grievance mechanism should be established from the beginning of
the Assessment process and be in place during construction and operations to the end of the
project. The client should establish and maintain an organizational structure with authority andresponsibilities for the community liaison function. To the extent practicable, the function of
investigating the complaint and determining the appropriate response should be separate fromthe personnel in charge of project management. In smaller projects with relatively
straightforward issues, the client should consider designating a point of contact, such as acommunity liaison officer, to whom project-related views and concerns of the affected
community can be addressed. The responsibility for receiving and responding to grievances
should be handled by experienced and qualified personnel within the client organization. In
addition, suggestion boxes and periodic community meetings and other communication
methods to receive feedback may be helpful. Maintaining consistency in the personnel who
interact with members of the affected communities improves the quality of interaction and canhelp build trust over time.
G58. Except in the simplest cases, the client should establish a procedure for receiving,
addressing, and recording/documenting complaints. This procedure should clearly define who
can raise complaints, and ensure that the confidentiality of the persons raising the complaint is
protected. It should also be easily accessible and understandable to the members of theaffected community and should be communicated to the affected community. The client may
wish to seek solutions to complaints in a collaborative manner with the involvement of theaffected communities. If the project is unable to solve a complaint, it may be appropriate toenable complainants to have recourse to external experts or neutral parties. Clients should beaware of judicial and administrative mechanisms available in the country for resolution of22

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disputes, and should not impede access to these mechanisms. Grievances received andresponses provided should be documented (such as the name of the individual or organization;
the date and nature of the complaint; any follow up actions taken; the final decision on thecomplaint; how and when relevant project decision was communicated to the complainant; andwhether management action has been taken to avoid recurrence of community concerns in the
future), and reported back to the affected communities periodically. In addition to therequirements in Performance Standard 1, specific requirements for grievance mechanisms canbe found in Performance Standards 2, 4, 5, and 7. For additional guidance on grievancemechanisms, see IFC’s publication Stakeholder Engagement: A Good Practice Handbook for
Companies Doing Business in Emerging Markets.
Monitoring
24. As an element of its Management System, the client will establish procedures tomonitor and measure the effectiveness of the management program. In addition torecording information to track performance and establishing relevant operational controls,
the client should use dynamic mechanisms, such as inspections and audits, where relevant,to verify compliance and progress toward the desired outcomes. For projects withsignificant impacts that are diverse, irreversible, or unprecedented, the client will retain
qualified and experienced external experts to verify its monitoring information. The extent
of monitoring should be commensurate with the project’s risks and impacts and with the
project’s compliance requirements.
Monitoring should be adjusted according toperformance experience and feedback. The client will document monitoring results, andidentify and reflect the necessary corrective and preventive actions in the amended
management program. The client will implement these corrective and preventive actions,and follow up on these actions to ensure their effectiveness.

G59. Monitoring is the client’s primary means for tracking and evaluating progress towards theimplementation of action items specified in the Action Plan and other aspects of the
management program. Clients should establish a system for measuring and monitoring
consisting of: (i) the key impacts of the project on workers, communities and the naturalenvironment as identified by the Assessment; (ii) compliance with laws and regulations; and (iii)monitoring progress with the implementation of the management program. The extent ofmonitoring should be commensurate with the potential impacts and risks of the project as
identified by the Assessment, and as specified in the management program. In addition,
depending on the project, it may be appropriate for the client to establish, track and measure
key indicators and other performance measures over time to improve the project’s performance.
G60. Social monitoring programs may be established to enhance the effective follow-up ofsocial issues identified in the Assessment and to respond to on-going issues from operations
identified through assessment of these issues. As part of the monitoring programs establishedin the management program, it would be appropriate for the client to establish key social
development measurements and indicators, quantitative and qualitative measures of success,or community engagement practices included in the Action Plan in order to improve
performance on social issues identified in the Assessment process.
G61. The factors to be considered in establishing an environmental monitoring program
include engineering estimates, environmental modeling, pollutant source, noise, ambient water,
and air and workplace contaminant measurements. The focus and extent of the monitoring

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should be commensurate with the risk of the pollutant releases as related to the sensitivity of thesurrounding areas, taking into account the affected community’s perception of project risks totheir health and environment. Appropriate processes should also be in place to ensure thereliability of data, such as calibration of instruments, test equipment, and software and hardware
sampling. Specific environmental monitoring measures comprise the parameters to bemeasured, methods to be used, sampling locations, frequency of measurements, detection
limits (where appropriate), and the definition of thresholds that signal the need for corrective
actions.
G62. Monitoring results should be documented, and the necessary corrective and preventive
actions identified. Clients should also ensure that these corrective and preventive actions havebeen implemented and that there is a systematic follow-up to ensure their effectiveness. The
client should normally carry out the monitoring using its internal resources, as part of its
management program. For projects with significant adverse impacts that are diverse,
irreversible, unprecedented, the client will retain qualified and experienced external experts toverify its monitoring information.
Participatory monitoring (i.e. involvement of affected
communities and other stakeholders) should be considered for large, high-risk projects. In
these cases, the client should evaluate the capacity of those participating in the monitoring andprovide periodic training and guidance as appropriate.
G63. The outcome of monitoring may indicate that the mitigation measures in the
management program should be adjusted or upgraded. As part of on-going maintenance of its
Management System, the client should update the management program from time to time, sothat it can adequately address the change in the social or environmental risks arising from any
change in the client’s business or circumstances.
ReportingInternal Reporting
25. Senior management in the client organization will receive periodic assessments of theeffectiveness of the management program, based on systematic data collection andanalysis. The scope and frequency of such reporting will depend upon the nature andscope of the activities identified and undertaken in accordance with the client’s
management program and other applicable project requirements.

External Reporting on Action Plans
26. The client will disclose the Action Plan to the affected communities. In addition, theclient will provide periodic reports that describe progress with implementation of the Action
Plan on issues that involve ongoing risk to or impacts on affected communities, and on
issues that the consultation process or grievance mechanism has identified as of concern
to those communities. If the management program results in material changes in, or
additions to, the mitigation measures or actions described in the Action Plan on issues ofconcern to the affected communities, the updated mitigation measures or actions will also
be disclosed. These reports will be in a format accessible to the affected communities. The
frequency of these reports will be proportionate to the concerns of affected communities
but not less than annually.

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G64. The results of social and environmental monitoring should be evaluated anddocumented. Periodic reporting of progress and monitoring results should be made to thesenior management of the client’s organization, as a function of the client’s management
system. Reports should furnish the information and data needed to determine compliance with
relevant host country legal requirements and progress on implementing the management
program. The format of these reports can vary according to the nature of the organization, butshould include summary of findings and recommendations. This information should also bemade available broadly within the client’s organization and the relevant workers as appropriate.
G65. As part of IFC’s ongoing review of portfolio projects, IFC requires its clients to submit
Monitoring Reports on social and environmental performance pursuant to the project’s
management program, including the Action Plan and any other key social and environmental
criteria. The format and frequency of the Monitoring Reports to IFC will be initially agreed withthe client. Reporting formats can vary according to project circumstances, and can be based on
the existing formats used by the client to prepare internal or external reports. Monitoring reports
will normally be on an annual basis unless IFC and the client agree otherwise. The Monitoring
Reports should contain sufficient data and descriptive information to enable IFC to track the
project’s progress on implementing the management program and the Action Plan. IFC’s
procedural requirements in relation to the Monitoring Reports can be found in the ESRP. The
client will also establish in discussion with IFC appropriate project specific performanceindicators to ascertain ongoing compliance of the project with the applicable PerformanceStandards and to improve its performance over time. The suggested performance indicators
can be found in the Environmental and Social Review Procedure. The client should also report
to IFC all amendments (subject to IFC’s consent) and updates to the Action Plan as part of its
Monitoring Report.
G66. The client should provide periodic updates to the affected communities at least annuallyon the implementation and progress on the specific items in the Action Plan that involve ongoingrisks to or impacts on affected communities. As appropriate, where amendments and updates
to the Action Plan materially change impacts to affected communities, the client will also
disclose this to communities. In addition, information should be made available to affected
communities in response to community feedback or grievance and as a means to further involve
the affected community in the social and environmental performance of the project.
G67. Clients may wish to consider using sustainability reports to report on the financial,environmental and social aspects of its operations, including areas of success of its
performance measures and positive project impacts that are being enhanced, as well as any
unsuccessful outcomes and the lessons learned. Reporting initiatives, guidelines, including
sector-specific guidelines, and good practices are rapidly emerging in this area. The mostnotable is the Global Reporting Initiative as included in the References section. IFC can workwith clients to develop appropriate sustainability report formats upon request.

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Annex A
Content of a Social and Environmental Impact Assessment (SEIA) Report
A social and environmental impact assessment (SEIA) report focuses on the significant issuesof a project. The report's scope and level of detail should be commensurate with the project's
potential impacts and risks. The SEIA report typically includes the following items (notnecessarily in the order shown):

Non-technical executive summary. Concisely discusses significant findings andrecommended actions in lay language.



Policy, legal, and administrative framework. Discusses the policy, legal, andadministrative framework within which the Assessment is carried out, including
host country regulations, including obligations implementing relevant internationalsocial and environmental treaties, agreements, and conventions, IFC PerformanceStandards, as well as any additional priorities and objectives for social orenvironmental performance identified by the client. Explains the environmental
requirements of any co-financiers.

Project description. Concisely describes the proposed project and its geographic,
ecological, social, health and temporal context, including any related facilities that
may be required (e.g., dedicated pipelines, access roads, power plants, watersupply, housing, and raw material and product storage facilities). Encompasses
facilities and activities by third parties that are essential for the successful
operation of the project. Normally includes maps showing the project site and the
project's area of influence.



Baseline data. Assesses the dimensions of the study area and describes relevant
physical, biological, socioeconomic, health and labor conditions, including any
changes anticipated before the project commences. Also takes into accountcurrent and proposed development activities within the project area but not directly
connected to the project. Data should be relevant to decisions about project
location, design, operation, or mitigation measures. The section indicates theaccuracy, reliability, and sources of the data.

Social and Environmental impacts. Predicts and assesses the project's likely
positive and negative impacts, in quantitative terms to the extent possible.
Identifies mitigation measures and any residual negative impacts that cannot be
mitigated. Explores opportunities for enhancement. Identifies and estimates theextent and quality of available data, key data gaps, and uncertainties associatedwith predictions, and specifies topics that do not require further attention.
Evaluates impacts and risks from associated facilities and other third party
activities.
Examines global, transboundary, and cumulative impacts asappropriate.

Analysis of Alternatives. Compares reasonable alternatives to the proposed
project site, technology, design, and operation in terms of their potential
environmental impacts; the feasibility of mitigating these impacts; their capital
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and recurrent costs; their suitability under local conditions; and their institutional,
training, and monitoring requirements. States the basis for selecting theparticular project design proposed and justifies recommended emission levels
and approaches to pollution prevention and abatement.
Management Program. Consists of the set of mitigation and management
measures to be taken during implementation of the project to avoid, reduce,
mitigate, or compensate for adverse social and environmental impacts, in the orderof priority, and their timelines. May include multiple policies, procedures, practices,and management plans and actions. Describes the desired outcomes asmeasurable events to the extent possible, such as performance indicators, targets
or acceptance criteria that can be tracked over defined time periods, and indicatesthe resources, including budget, and responsibilities required for implementation.
Where the client identifies measures and actions necessary for the project tocomply with applicable laws and regulations and to meet the PerformanceStandards, the management program will include an Action Plan, which is subject
to disclosure to the affected communities and ongoing reporting and updating.



Appendixes:- List of SEIA report preparers – individuals and organizations.
- References – written materials, both published and unpublished, used instudy preparation.
- Record of interagency and consultation meetings, including consultations
for obtaining the informed views of the affected communities and otherstakeholders. The record specifies any means other than consultations(e.g., surveys) that were used to obtain the views of affected groups.
- Tables presenting the relevant data referred to or summarized in the maintext.
- Associated reports, audits, and plans (e.g., Resettlement Action Plan orIndigenous Peoples/ Natural Resource Dependent Community plan,community health plan).
- Action Plan that (i) describes the actions necessary to implement thevarious sets of mitigation measures or corrective actions to beundertaken, (ii) prioritizes these actions, (iii) includes the time-line for theirimplementation, and (iv) describes the schedule for communicating withaffected communities when on-going disclosure or consultation is
expected.

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Annex B
Content of an Environmental Audit Report
An environmental audit report focuses on: (i) compliance of existing facilities and operations
with relevant laws and regulations, and applicable IFC Performance Standards; and (ii) thenature and extent of significant adverse environmental impacts, including contamination of soils,
surface and ground water, and structures as a result of historical activities. The environmental
audit report typically includes the following items (not necessarily in the order shown):


Executive Summary: A concise discussion of all environmental and occupational
health and safety areas of concern, recommended mitigation measures and theirpriority, the cost of mitigation, and a schedule for compliance.



Facilities Description: A concise description of the project facilities, including
both past and current operations. The description should focus on aspects orcomponents with potential environmental and occupational health and safety
impacts.

Regulatory Setting: Tabular summary of host country, local and any otherapplicable environmental and occupational health and safety laws, regulations,guidelines, and policies as they may directly pertain to the facilities.



Audit and Site Investigation Procedure: Brief overview of the approach used to
conduct the audit. A discussion of the records review, site reconnaissance, andinterview activities; a description of the site sampling plan and chemical testing
plan; a description of field investigations, environmental sampling and chemical
analyses and methods.



Findings and Areas of Concern: Detailed discussion of all environmental andoccupational health and safety areas of concern. The areas of concern should
be discussed in terms of both existing facilities and operations and contamination
or damages due to past activities, including the affected media and its quality andrecommendations for further investigation and remediation. Areas of concern
should be prioritized into one of three categories: immediate action; mid-term
action; and long-term action.



Corrective Action Plan, Costs and Schedule (CAP): For each area of concern,
provide specifics on the appropriate corrective actions to mitigate the areas ofconcern and why they are necessary. Indicate priorities for action. Provide
estimates of the cost of implementing the corrective actions and a schedule for
their implementation. Schedules should be recommended within the context ofany planned capital expenditure for the facility. Each site CAP should beformatted as a table with columns for area of concern, corrective action,priorities, schedule, and cost estimates.

Annexes: These should include references, copies of interview forms, any details
regarding the audit protocol not already included, and data obtained during theaudit but not included directly above.

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Annex C
Useful questions to assess Management Capacity and Process:
Client’s social and environmental management organization and capacity:
 How does the client’s organization identify and allocate the human, technical, andfinancial resources, including external experts, necessary to manage social andenvironmental performance?
 How has social and environmental management been integrated into the overallbusiness management process?
 What is the process for balancing and resolving conflicts between social,environmental and other business objectives and priorities?
 What are the responsibilities and accountability of personnel who manage,
perform, and verify work effecting social and environmental issues, and are thesewell defined and documented?
 How has top management established, reinforced and communicatedorganizational commitment?
 Is there a process for periodic review of the management program in the event ofchanged project circumstances?
Training:
 How does the client’s organization identify social and environmental training needs?
 How are training needs of specific job functions analyzed?
 Is training needed for contractors?
 Is training developed and reviewed and modified as needed?
 How is the training documented and tracked?
Monitoring: How is social and environmental performance regularly monitored?
 Have specific quantitative and/or qualitative performance indicators been
established that relate to the clients compliance requirements and management
program, and what are they?
 What control processes are in place to regularly calibrate and sample environmental
measuring and monitoring equipment and systems?
 What social monitoring methods are in place to track social impacts and assess
progress toward mitigation and development outcomes?
 What is the process to periodically evaluate compliance with laws and regulations,and to meet the applicable Performance Standards?
Reporting: What social and environmental information is reported to client’s senior
management, IFC, and communities?
 How is this information managed?
 Is information made available to those who need it when they need it?

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Annex D
An example of Indicators and Validation Methods for Ascertaining
the Process of Free, Prior and Informed Consultation
The determination (scores) for these considerations will be made against the scaling systemused by the Environment and Social Development Department for project supervision.
Material Consideration

1. Company Strategy, Policy, or Principles on
Engagement
Strategy, policy, or principles for on-going engagementwith explicit mention of project-affected persons and/or
communities.
2. Stakeholder Identification and Analysis
As part of the Social and Environmental Assessment
process, identification of all project-affected
communities, their disaggregation (numbers, locations)in terms of different levels of vulnerability to adverse
project impacts and risks, and an analysis of the effectof adverse project impacts and risks on each group.
Part of the Social and Environmental Assessment
process, this analysis should also look at communities
and individuals that will benefit from the project.
3. Community Engagement
A process of consultation that is ongoing during the
project planning process (including the process ofEnvironmental and Social Assessment), such that:(a) affected communities have been engaged in:(i) identifying potential impacts and risks; (ii) assessing
the consequences of these impacts and risks for theirlives; and (iii) providing input into the proposed
mitigation measures, the sharing of development
benefits and opportunities and implementation issues;and that (b) new impacts and risks that have come tolight during the planning and assessment process havealso been consulted upon.

4. Information Disclosure
Timely disclosure by the client of project information by
the client to all project-affected communities about the
purpose, nature and scale of the project; the duration of
proposed project activities; and expected risks, impacts
and development benefits that directly affect them.
Disclosure should be in a form that is understandable
and meaningful.

Examples of Validation Methods

Client’s strategy, policy or principles or other supporting
documents.

Stakeholder analysis document as part of SEIA or SEA.
Client’s planning documentation for community
engagement, e.g. communications strategy,
consultation plan, Public Consultation and Disclosure
Plans, and stakeholder engagement plan.

Client’s schedule and record of community
engagement.
Client’s record of discussions with recognizedcommunity representatives, respected key informants,
and legitimate representatives of sub-groups (e.g.,
women, minorities).

Client’s materials prepared for disclosure andconsultation.
Client’s record of discussions with recognizedcommunity representatives; respected key informants;
and legitimate representatives of sub-groups.

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Material Consideration

Examples of Validation Methods

5. Consultationa) Free
Evidence from the communities adversely affected by
the project that the client or its representatives have notcoerced, intimidated or unduly incentivized the affected
population to be supportive of the project.
b) Prior
Consultation with affected communities must be
sufficiently early in the project planning process:(i) toallow time for project information to be interpreted andcomments and recommendations formulated anddiscussed; (ii) for the consultation to have a meaningful
influence on the broad project design options (e.g.,siting, location, routing, sequencing, and scheduling);(iii) for the consultation to have a meaningful influenceon the choice and design of mitigation measures, thesharing of development benefits and opportunities, andproject implementation.
c) Informed
Consultation with affected communities on project
operations and potential adverse impacts and risks,
based on adequate and relevant disclosure of project
information, and using methods of communication thatare inclusive (i.e., accommodating various levels ofvulnerability), culturally appropriate, and adapted to thecommunities’ language needs and decision-making,such that members of these communities fully
understand how the project will affect their lives.

6. Informed Participation
Evidence of the client’s organized and iterative
consultation, leading to the client’s specific decisions toincorporate the views of the affected communities onmatters that affect them directly, such as the avoidanceor minimization of project impacts, proposed mitigation
measures, the sharing of project benefits andopportunities, and implementation issues.

Client’s record of discussions with recognizedcommunity representatives, respected key informants,
and legitimate representatives of subgroups.

Client’s record of discussions with recognizedcommunity representatives, respected key informants,
and legitimate representatives of subgroups.

Client’s record of discussions with recognizedcommunity representatives; respected key informants;
and legitimate representatives of sub-groups.

Client’s schedule and record of community
engagement.
The client’s documentation of measures taken to avoid
or minimize risks to and adverse impacts on affected
communities in response to community feedback
received during consultation.
Drafts of Action Plan.

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Material Consideration
7. Vulnerable Groups – Consultation and Mitigation
Evidence that individuals or groups particularly
vulnerable to adverse project impacts and risks havebeen party to effective prior, free and informed
consultation as well as informed participation, andevidence that the potential impacts and specific or
exacerbated risks to them will be mitigated to thesatisfaction of these parties.

Examples of Validation Methods
Stakeholder analysis as part of SEIA or SEA or
socio-economic baseline data.
Client’s record of community engagement, including
record of discussions with legitimate representatives ofvulnerable groups.
Client’s documentation of measures taken to avoid or
minimize risks to and adverse impacts on vulnerable
groups in response to feedback received duringconsultation.
Drafts of Action Plan.

8. Grievance Mechanism – Structure, Procedure,and Application
An effective grievance mechanism procedure that isfully functioning: (i) throughout the process ofenvironmental and social assessment; and (ii) that issuitable for the operational phase of the project toreceive and address the affected communities’
concerns about the client’s social and environmental
performance. The mechanism should be culturally
appropriate, readily accessible to all segments of theaffected communities, and available to affected
communities at no cost and without retribution.

Client’s organizational structure and responsibilities,
and procedures for managing grievances.
Client’s record of grievances received about the project
and addressed, including expressions in support ordissent.

Client’s record of discussions with recognizedcommunity representatives, respected key informants,
and legitimate representatives of subgroups.

Client’s record of community engagement.
9. Feedback to affected communities
Documentation that the client provided the results ofconsultation to the project-affected communities, andeither: (i) demonstrated how the comments andrecommendations made by the project-affected
communities have been accommodated in the project
design, mitigation measures, and/or sharing ofdevelopment benefits and opportunities; or (ii) provided
a rationale why these comments and recommendations
have not been accommodated.

Client’s documentation of measures taken to avoid or
minimize risks to and adverse impacts on affected
communities.
Discussions with recognized community
representatives, respected key informants, andlegitimate representatives of subgroups.
Client’s ongoing reporting on implementation of Action
Plan.
Revised management program or Action Plan.

The client may also use perception surveys to pose questions to affected communities and solicit their responses

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References
Several of the requirements set out in the Performance Standard are based on principles
expressed in the following international agreements and the related guidelines:Espoo Convention – Convention on Environment Impact Assessment in a
Transboundary Context (UNECE, 1991), lays down the general obligation of states
to notify and consult each other on all major projects under consideration that arelikely to have a significant adverse environmental impact across boundaries.
http://www.unece.org/env/eia/eia.htm

Guidelines on Environmental Impact Assessment in a Transboundary Context in the
Caspian Sea Region (UNEP & Caspian Environment Programme, 2003) – provides
a regional based framework for implementation of EIA in a transboundary context in
the Caspian region. http://www.caspianenvironment.org/report_technical.htm

In addition to the international human rights conventions referenced in GN2, the UN Convention
on the Rights of Persons with Disabilities elaborates in detail the rights of persons withdisabilities and sets out a code of implementation.
http://www.un.org/disabilities/convention/conventionfull.shtml
UN “Optional Protocol to the Convention on the Rights of Persons with Disabilities”
http://www.un.org/disabilities/convention/optprotocol.shtml
Additional international agreements are referred to at the end of other Guidance Notes.
IFC and the World Bank have published a number of resource materials:
IFC’s Environmental and Social Review Procedure (IFC, 2006), gives direction to
IFC officers in implementing the Sustainability Policy and reviewing compliance andimplementation by private sector projects.
http://ifcln1.ifc.org/ifcext/enviro.nsf/Content/ESRP

IFC’s Policy on Disclosure of Information (IFC, 2006) defines IFC’s obligations todisclose information about itself as an institution and its activities
http://ifcln1.ifc.org/ifcext/enviro.nsf/Content/DisclosureGood Practice Note: Addressing the Social Dimensions of Private Sector Projects(IFC, 2003) – A practitioner’s guide to undertaking social impact assessment at the projectlevel for IFC-financed projects.
http://ifcln1.ifc.org/ifcext/enviro.nsf/Content/Publications



Stakeholder Engagement: A Good Practice Handbook for Companies Doing
Business in Emerging Markets (IFC, 2007) explains new approaches and forms ofengagement with affected local communities, including guidance on grievancemechanisms.
http://ifchq14.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_StakeholderEngagement_Full/$F
ILE/IFC_StakeholderEngagement.pdf

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The World Bank’s Environmental Assessment Sourcebook and Updates (World
Bank, 2001) provides assistance for advisory tasks, through discussions offundamental environmental considerations; summaries of relevant Bank policies; andanalyses of other topics that affect project implementation http://www.worldbank.org/

World Bank’s Operational Policy 7.50 International Waterways (World Bank, 2001)
World Bank’s policy for projects that may involve the use or pollution of international
waterways.
http://lnweb18.worldbank.org/ESSD/sdvext.nsf/52ByDocName/InternationalWaterways

The following are examples of accepted international standards for formal environmental, healthand safety and social management systems:ISO 14001 - Environmental Management Systems (International Organization ofStandardization, 2004) details the requirements for an environmental management
system, to enable an organization to develop a policy and objectives taking into
account legislative requirements and information about significant environmental
impacts. http://www.iso.org/iso/en/iso9000-14000/index.html

Technical Committee on Environmental Management - Technical Committee 207(ISO 14001) Committee under which ISO 14000 series on Environmental
Management standards are being developed. Provides useful information on thestandardization of Environmental Management. http://www.tc207.org/faq.asp



EMAS - Eco-Management and Audit Scheme (European Commission, 1995) - EUvoluntary instrument which acknowledges organizations that improve theirenvironmental performance on a continuous basis.
http://europa.eu.int/comm/environment/emas/index_en.htm



OHSAS 18001 - Occupational Health and Safety Zone - an international
occupational health and safety resource that specifies policies and procedures tominimize risks to employees and improve OH&S management systems.
http://www.ohsas-18001-occupational-health-and-safety.com/

SA8000 - Social Accountability International – a standard and verification system thatassures humane workplaces and provides standards and guidance on protecting thebasic human rights of workers.
http://www.sa-intl.org/index.cfm?fuseaction=Page.viewPage&pageId=473

Additional guidance published by the following organizations provides useful information:
IFC Sustainability Resources (IFC) – examples and benefits of improving
sustainability performance. http://www.ifc.org/sustainability



GRI Guidelines and Sector Supplements – (Global Reporting Initiative) provides aframework for reporting and organization’s sustainability performance.
http://www.globalreporting.org/

34

Guidance Note 1

Social and Environmental Assessment and Management Systems
July 31, 2007



DIHR Human Rights Quick Check (Danish Institute for Human Rights) - a diagnostic
self-assessment tool designed to detect human rights risks in business operations.
https://hrca.humanrightsbusiness.org/

Guide to Human Rights Impact Assessment and Management is a road-testingversion of the assessment tool to be used alongside the social assessment process.
http://www.ifc.org/ifcext/enviro.nsf/Content/OurStories_SocialResponsibility_HumanRights



EITI Source book (Extractives Industries Transparency Initiative – 2005) - the initiative
supports improved governance in resource-rich countries through the full publication andverification of aggregated company payments and government revenues from oil, gas
and mining.
http://www.eitransparency.org/UserFiles/File/keydocuments/sourcebookmarch05.pdf



Demographic Surveillance Site (DSS) (The INDEPTH Network) – DDS is anextremely cost-effective and well established program that can transparently andlongitudinally collect and evaluated a wide range of social, health and economic
survey data.
http://www.indepth-network.org/

A Design Manual for a Barrier Free Environment (United Nations Division for Social
Policy and Development) – This Manual is a design guidebook made for the purposeof providing architects and designers with the basic information and data necessary
for a barrier- free environment
http://www.un.org/esa/socdev/enable/designm

The U.S. Access Board – This website provides additional accessibility guidelines
and standards, technical assistance, and training downloadable publications.
http://www.access-board.gov/

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Guidance Note 2Labor and Working Conditions
July 31, 2007

This Guidance Note 2 corresponds to Performance Standard 2. Please also refer to the
Performance Standards 1 and 3-8 as well as the corresponding Guidance Notes for additional
information. Bibliographical information on all reference materials appearing in the text of this
Guidance Note can be found in the References Section at the end.

Introduction
1. Performance Standard 2 recognizes that the pursuit of economic growth throughemployment creation and income generation should be balanced with protection for basic
rights of workers. For any business, the workforce is a valuable asset, and a sound workermanagement relationship is a key ingredient to the sustainability of the enterprise. Failure
to establish and foster a sound worker-management relationship can undermine worker
commitment and retention, and can jeopardize a project.
Conversely, through aconstructive worker-management relationship, and by treating the workers fairly andproviding them with safe and healthy working conditions, clients may create tangible
benefits, such as enhancement of the efficiency and productivity of their operations.
2. The requirements set out in this Performance Standard have been in part guided by anumber of international conventions negotiated through the International Labour
Organization (ILO) and the United Nations (UN) .1_________________________
1

These conventions are:
ILO Convention 87 on Freedom of Association and Protection of the Right to Organize
ILO Convention 98 on the Right to Organize and Collective Bargaining
ILO Convention 29 on Forced LaborILO Convention 105 on the Abolition of Forced LaborILO Convention 138 on Minimum Age (of Employment)
ILO Convention 182 on the Worst Forms of Child LaborILO Convention 100 on Equal Remuneration
ILO Convention 111 on Discrimination (Employment and Occupation)
United Nations Convention on the Rights of the Child, Article 32.1

Objectives
To establish, maintain and improve the worker-management relationshipTo promote the fair treatment, non-discrimination and equal opportunity ofworkers, and compliance with national labor and employment laws
To protect the workforce by addressing child labor and forced labor
To promote safe and healthy working conditions, and to protect and promote
the health of workers

G1.
The nature of the relationship between management and workers affects costs, quality,
efficiency, productivity, and customer service, in addition to shaping a client’s reputation.
Performance Standard 2 recognizes that a good relationship between management andworkers is an important ingredient in determining the overall success of the client and the
project.
G2.
Performance Standard 2 is in part guided by a number of ILO and UN Conventions. By
applying Performance Standard 2, the client will be able to operate its business in a mannerconsistent with the four core labor standards (child labor, forced labor, non-discrimination, and36

Guidance Note 2Labor and Working Conditions
July 31, 2007

freedom of association and collective bargaining). In addition, Performance Standard 2 also
addresses other areas such as working conditions and terms of employment, retrenchment, andoccupational health and safety issues. Some of these requirements refer the client to theapplicable national law. Where national law establishes standards that are less stringent thanthose in Performance Standard 2, or are silent, clients are expected to meet the requirements of
Performance Standard 2.
G3.
In addition to the ILO Conventions referred to in Performance Standard 2 and throughout
this Guidance Note, ILO has established numerous conventions on labor and working
conditions. These are available through the ILO website. ILO has a considerable presence inmany of its member countries and some of the local offices have programs with expertise to
guide the private sector in good labor practices.
G4.
It is the client’s responsibility to assess its labor practices in accordance with
Performance Standard 2. A traditional process of environmental and social assessment would
not usually include a review of labor issues other than occupational health and safety
considerations. As a result, the client should provide IFC with an assessment that integrates
labor issues consistent with the requirements of Performance Standard 2 or provide IFC withother evidence of meeting these requirements. IFC will assist its clients in the application of
Performance Standards 2 during the various stages of a project. As part of IFC due diligence,
IFC reviews the overall performance of the client, including its labor and employment practices,in order to ascertain whether there are any risks to the project and to IFC from such practices.
IFC’s initial review will be based on the client’s information, such as records of prior labor audits
or self-assessment or information provided in response to a set of questions on labor practices.
In some cases, IFC may gather information about the client’s labor practices when making a site
visit. In countries, sectors or firms where there have been issues with one or more of therequirements of Performance Standard 2, IFC may require a labor assessment as part of its due
diligence. 1 Annex A provides a list of labor issues that may be included in a labor assessment.
G5.
In the preparation of the labor assessment, clients should engage with workers and withrepresentatives of workers’ organizations where they exist. Actions identified through the laborassessment that the client should take to achieve compliance with national law or to meet therequirements under Performance Standard 2 will become part of the Action Plan, which isoutlined in Performance Standard 1 and its accompanying Guidance Note. This process willallow the client to design or update its employment policies in ways that enhance the long-term
viability and success of the business while safeguarding the rights of workers. If requested, IFC
will assist clients in identifying opportunities and meeting challenges identified in theassessment. A management system consistent with the requirements of Performance Standard
1 will help clients implement a systematic approach to labor and working conditions in theiroperations (see paragraphs G1 and G3 through G6 of Guidance Note 1).

1

There are numerous reliable sources of public information that identify problems and risks at the country as well as the company
and industry sector levels. See the “Reference Materials” section of this document for links to International Labor Organization andWorld Bank websites that provide extensive and detailed information.

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Guidance Note 2Labor and Working Conditions
July 31, 2007

Scope of Application
3. The applicability of this Performance Standard is established during the Social andEnvironmental Assessment process, while implementation of the actions necessary to meetthe requirements of this Performance Standard is managed through the client’s Social andEnvironmental Management System.
The assessment and management system
requirements are outlined in Performance Standard 1.
4. Throughout this Performance Standard, the term “workers” is used to refer to
employees of the client, as well as to certain types of non-employee workers described inparagraph 17. The application of this Performance Standard will vary depending on the typeof workers, as follows:Employees: All the requirements of this Performance Standard, except for therequirements under paragraphs 17 and 18, apply
Non-Employee Workers: The requirements of paragraph 17 apply

5. Supply chain2 issues are addressed in paragraph 18.
_________________________
2

Supply chain refers to both labor and material inputs for the life-cycle of a good or service.

G6.
Clients have differing degrees of influence and control over the working conditions andtreatment of different types of workers associated with the project, and the requirements of
Performance Standard 2 reflect this reality.
G7.
Workers: This term includes the employees of the client and certain types of nonemployee workers as defined in paragraph 17 of Performance Standard 2. See also paragraphG9 below.
G8.
Employees: The client has complete control over the working conditions and treatmentof its employees, and therefore all requirements of Performance Standard 2 apply to this groupof workers, with the exception of the requirements under paragraphs 17 and 18 of PerformanceStandard 2.
G9.
Non-employee workers: Non-employee workers covered by Performance Standard 2
are those performing work directly related to core functions essential to the client’s products orservices for a substantial duration. These workers are directly contracted by the client or
through contractors or other intermediaries. Even though they are outsourced by the client,these workers tend to perform important functions of the client’s business for a substantial
period as if they are substitute employees of the client. For these non-employee workers,
specific paragraphs, as stated in paragraph 17 of Performance Standard 2, apply.

Requirements
Working Conditions and Management of Worker Relationship
Human Resources Policy
6. The client will adopt a human resources policy appropriate to its size and workforce
that sets out its approach to managing employees consistent with the requirements of this38

Guidance Note 2Labor and Working Conditions
July 31, 2007

Performance Standard. Under the policy, the client will provide employees with information
regarding their rights under national labor and employment law, including their rights
related to wages and benefits. This policy will be clear and understandable to employees
and will be explained or made accessible to each employee upon taking employment.

G10. The human resources policy is a statement of the client’s practices regarding
management of its employees. The scope and complexity of the policy can be tailored to thesize and nature of the client’s workforce. At a minimum, the policy will be consistent with therequirements of Performance Standard 2 and contain information on the employees’ rights
under national labor and employment law. Annex B provides a list of topics typically included ina policy. The policy should be written in a manner that is easy to understand, and made readily
available to the employees or explained in a language understandable to them. The employee
should be informed if he or she is covered by a collective bargaining agreement.
Working Relationship
7. The client will document and communicate to all employees and workers directly
contracted by the client their working conditions and terms of employment, including theirentitlement to wages and any benefits.

G11. Clients should keep a written record of the working relationship at the time of hire ofeach employee and directly contracted non-employee worker, and communicate the working
conditions and terms of employment to them. The record should cover wages and any benefits,terms and duration of the employment relationship, and working conditions. The working
conditions and terms of employment should be communicated to the workers orally or in writing.
Oral communication may be appropriate for simple tasks or where workers are illiterate. In
other cases, clients should provide documentation of the working conditions and terms of
employment.
G12. In general, documentation should be clear, easily understandable, and accurate, and in
the language of the employee or directly contracted worker. The extent of documentation canbe appropriate to the length and nature of the relationship. For example, a simple public noticeof the job to be done, the number of hours, pay and other key terms and working conditions may
be adequate for seasonal workers (with copies available on request), while for longer term
employment, material terms of the employment relationship should be documented. In somecountries individual contracts are a legal requirement. The documentation provided to
employees need not include all matters maintained by the client in its internal records, although
access to such records should be provided to employees and directly contracted workers inaccordance with applicable law.
Working Conditions and Terms of Employment
8. Where the client is a party to a collective bargaining agreement with a workers’organization, such agreement will be respected. Where such agreements do not exist, or do
not address working conditions and terms of employment (such as wages and benefits,
hours of work, overtime arrangements and overtime compensation, and leave for illness,maternity, vacation or holiday) the client will provide reasonable working conditions andterms of employment that, at a minimum, comply with national law.

G13. Working conditions, as used in Performance Standard 2, refers to conditions in theworkplace and treatment of workers. Conditions in the workplace include the physical39

Guidance Note 2Labor and Working Conditions
July 31, 2007

environment, health and safety precautions and access to sanitary facilities. Treatment ofworkers includes disciplinary practices, reasons and process for termination of workers andrespect for the worker’s personal dignity (such as avoiding physical punishment or abusive
language).
G14. Terms of employment include wages and benefits, hours of work, overtime
arrangements and overtime compensation, and leave for illness, vacation, maternity or holiday.
G15. Performance Standard 2 identifies two distinct circumstances that define the clients’obligations with regard to working conditions and terms of employment. One circumstance iswhere the client is party to a collective bargaining agreement with a workers’ organization thatwas chosen by the workers without employer interference. The other is where such agreements
do not exist, do not cover all workers employed or contracted by the client, or do not address
working conditions.
G16. Where collective bargaining agreements are in force, IFC will defer to the choices madeby the client and the workers’ organization, provided they meet national legal requirements andthose of Performance Standard 2, whichever is higher.
G17. Where collective bargaining agreements do not exist, or do not address working
conditions and terms of employment, clients should provide reasonable working conditions andterms of employment that, at a minimum, comply with national law. Most countries haveextensive legal frameworks covering many working conditions and terms of employment, suchas minimum wage, maximum hours, payments for overtime work, minimum leave times forvacation, holiday, illness, injury and maternity and health and safety protections.
Workers’ Organizations
9. In countries where national law recognizes workers’ rights to form and to join workers’organizations of their choosing without interference and to bargain collectively, the client
will comply with national law. Where national law substantially restricts workers’organizations, the client will enable alternative means for workers to express theirgrievances and protect their rights regarding working conditions and terms of employment.
10. In either case described in paragraph 9, and where national law is silent, the client will
not discourage workers from forming or joining workers’ organizations of their choosing orfrom bargaining collectively, and will not discriminate or retaliate against workers who
participate, or seek to participate, in such organizations and bargain collectively. Clients
will engage with such worker representatives. Worker organizations are expected to fairly
represent the workers in the workforce.

G18. A workers’ organization is any organization of workers for the purpose of furthering anddefending the interests of workers with regard to working conditions and terms of employment. 2
Workers’ organizations are typically called trade unions or labor unions. Professional andadministrative workers’ organizations are often called employee associations.
Under
Performance Standard 2, the term excludes organizations that have not been freely chosen by
the workers involved.
2

Based on ILO Convention 87 on Freedom of Association and Protection of the Right to Organize

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Guidance Note 2Labor and Working Conditions
July 31, 2007

G19. Collective bargaining consists of discussions and negotiations between employers andrepresentatives of workers’ organizations for the purpose of determining working conditions andterms of employment by joint agreement. 3
It also includes the implementation andadministration of any agreements that may result from collective bargaining and the resolutionof other issues that arise in the employment relationship with respect to workers represented by
the workers’ organization.
G20. In the large majority of IFC member countries, workers have the legal right to form
unions or other workers’ organizations of their own choosing and to bargain collectively with
their employers. National laws typically reflect a number of international agreements thatrecognize and protect these rights. 4
G21. Clients should not interfere with workers’ rights to form or join a workers’ organization,for example, by favoring one workers’ organization over another or unreasonably restricting
access to workers by representatives of such organizations. Workers’ organizations should be
representative of the work force and act pursuant to the principles of fair representation ofworkers. Examples of high risk practices regarding workers organizations by clients or byunions are provided in Annex C.
G22. Clients should not discourage workers from forming or joining a workers’ organization or
discriminate or retaliate against workers who attempt to form or join workers’ organizations.
Refusing to hire workers who have been members or leaders of workers’ organizations at otherfirms (for reasons unrelated to qualifications or job performance) would constitute discrimination.
Other forms of discrimination or retaliation would include demoting or re-assigning workers, aswell as outsourcing or shifting work among facilities in response to union activities.
G23. Clients should also provide reasonable access for representatives of workers’organizations to the workers they represent. Workers should be free to meet and discuss
workplace issues on the premise during scheduled breaks and before and after work. Further,
workers should be allowed to choose representatives to speak with management, inspect
working conditions in an appropriate manner and in a way that does not disrupt productivity andcarry out other organizing activities. This can build trust and good will with the workforce anddemonstrate the client’s commitment to enable and facilitate workers to organize and bargain
collectively.
G24. In a limited number of countries, workers’ freedom of association and/or collective
bargaining is substantially restricted by law. This occurs in two ways. In several countries
unions are prohibited, while in others workers’ organizations may exist but must be approved by
official labor bodies. In any of these circumstances, the client should engage with workers toaddress issues relating to their working conditions and terms of employment. Methods toenable alternative means include but are not limited to recognizing worker committees andallowing workers to choose their own representatives for dialogue with the employer in a

3

Based on ILO Convention 98 on the Right to Organize and Collective Bargaining
International agreements include the UN International Covenant on Economic, Social and Cultural Rights; UN
International Covenant on Civil and Political Rights; ILO Convention 87 on Freedom of Association and Protection of
the Right to Organize; and Convention 98 on the Right to Organize and Collective Bargaining.
4

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Guidance Note 2Labor and Working Conditions
July 31, 2007

manner that does not contravene national law. If requested by a client, IFC will work with theclient to address these issues in such restrictive legal environments.
G25. In a smaller number of countries, the law is silent on workers’ freedom of association
and/or collective bargaining rights but does not prohibit workers’ organizations or collective
bargaining. In these countries, clients should engage with workers to address issues relating totheir working conditions and terms of employment. In the absence of legal constraints, clients inthese countries are encouraged to recognize workers’ organizations if the workers have chosen
to form or join such organizations and engage in collective bargaining.
Non-Discrimination and Equal Opportunity
11. The client will not make employment decisions on the basis of personal characteristics
unrelated to inherent job requirements. The client will base the employment relationship on
the principle of equal opportunity and fair treatment, and will not discriminate with respect
to aspects of the employment relationship, including recruitment and hiring, compensation(including wages and benefits), working conditions and terms of employment, access totraining, promotion, termination of employment or retirement, and discipline. In countries
where national law provides for non-discrimination in employment, the client will comply
with national law. When national laws are silent on non-discrimination in employment, theclient will meet this Performance Standard. Special measures of protection or assistance toremedy past discrimination or selection for a particular job based on the inherent
requirements of the job will not be deemed discrimination.

G26. Discrimination in employment is defined as any distinction, exclusion or preference withrespect to recruitment, hiring, working conditions or terms of employment made on the basis of
personal characteristics unrelated to inherent job requirements that nullifies or impairs equalityof opportunity or treatment in employment or occupation. 5 Inherent job requirements refer tobona fide occupational qualifications that are necessary to perform the job in question. For
example, requiring that a worker possess strength sufficient for lifting that is a frequent andessential part of a job would be considered a bona fide occupational qualification.
G27. Equal opportunity is the principle of basing all employment decisions, such as hiring andpromotion, on the ability of a person to perform the job in question, without regard to personal
characteristics that are unrelated to the inherent job requirements. For further guidance on nondiscrimination and equal opportunity see Annex D, and IFC’s Good Practice Note on NonDiscrimination and Equal Opportunity. A client can apply the principles of equal opportunity andnon-discrimination using methods that are effective and acceptable within the country’s legal
framework and cultural context as long as the methods used do not compromise the principles.

5

Based on ILO Conventions 100 and 111. ILO Convention 111 and a number of other international instruments haveenumerated types of personal characteristics that are unrelated to the requirements of the job. ILO Convention 111
defines as discrimination any distinction, exclusion or preference made on the basis of race, color, sex, religion,
political opinion, national extraction or social origin, which has the effect of nullifying or impairing equality ofopportunity or treatment in employment or occupation. The UN Universal Declaration of Human Rights covers all of
the personal characteristics listed in the ILO Convention and also includes language, political or other opinion,
property, birth or other status; the UN Convention on the Elimination of All Forms of Racial Discrimination also
prohibits discrimination based on descent or ethnic origin; the UN Convention on the Rights of the Child also prohibits
discrimination based on disability.

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G28. Laws in most IFC member countries forbid discrimination based on a range of factors.
These laws typically reflect a number of international agreements that recognize and protect therights established in those agreements. 6 When the law is silent, clients are expected to baserecruitment, hiring, working conditions and terms of employment on equal opportunity and nondiscrimination in accordance with these principles. In circumstances where national law
contravenes these principles, if requested by a client, IFC will work with the client to address theissue in such restrictive legal environments.
G29. Clients should also address protection of disabled people’s human rights under all of its
labor policies and procedures. Labor policies and procedures should be available for disabled
employees to view, which may mean providing them in alternative formats such as large print,
Braille, audio tape, etc. 7
G30. Special measures of protection or assistance to remedy past discrimination refer topolicies designed to increase employment of underrepresented groups in the workforce or inparticular occupations in order to remedy past discrimination, such as affirmative action, with aview to achieving effective equality of opportunity and treatment in the workplace. These will
not be deemed discrimination and may be used where permitted by law.
Retrenchment
12. The client will develop a plan to mitigate the adverse impacts of retrenchment on
employees, if it anticipates the elimination of a significant number of jobs or a layoff of asignificant number of employees. The plan will be based on the principle of nondiscrimination and will reflect the client’s consultation with employees, their organizations
and, where appropriate, the government.

G31. Retrenchment means the elimination of a significant number of employee positions or
the dismissal or layoff of a significant number of employees by an employer, generally byreason of plant closing or for cost savings. Retrenchment does not cover isolated cases oftermination of employment for cause or voluntary departure.
G32. In many countries, national law requires advance notice to affected workers,
communities and/or governments of plant closings or layoffs above specified numericalthresholds. Some national laws require that retrenchments must be negotiated with workers’organizations through collective bargaining. Severance payments to affected workers may berequired by national law or existing collective bargaining agreements. 8

6

Many laws are based on international conventions that have been widely ratified, including ILO Convention 100 on
Equal Remuneration; Convention 111 on Employment and Occupation Discrimination; UN Convention on the
Elimination of All Forms of Racial Discrimination (CERD); UN Convention on the Elimination of All Forms ofDiscrimination against Women (CEDAW).
7 Additional references can be found in the ILO C159 Vocational Rehabilitation and Employment (Disabled Persons)
Convention and the UN Convention on Disability.
8
Useful guidance on retrenchment is included in the Guidelines for Multinational Enterprises of the Organization for
Economic Co-operation and Development (OECD) available at:and the Tripartite Declaration of
http://www.oecd.org/topic/0,2686,en_2649_34889_1_1_1_1_37439,00.html
Principles concerning Multinational Enterprises and Social Policy of the ILO, available at:
http://www.ilo.org/public/english/employment/multi/index.htm.

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July 31, 2007

G33. When significant layoffs cannot be avoided, a plan should be developed to address theadverse impacts on workers and their community. The retrenchment plan should address issues
such as the schedule of cutbacks, retrenchment methods and procedures, selection criteria,
severance payments, offers of alternative employment or assistance in retraining efforts and job
placement.
G34. Selection criteria for those to be laid off should be objective, fair and transparent. The
retrenchment should not be based on personal characteristics unrelated to inherent job
requirements.
G35. Clients should also consult with employees and their organizations in developing theretrenchment plan. Consultations are essential for the development of plans that reflect
workers’ concerns as well as their ideas about ways to avoid or minimize layoffs, criteria for
selection and compensation payments. Where national law or an existing collective bargaining
agreement stipulates that retrenchment is a subject for collective bargaining, the client should
allow time for good faith bargaining as well as to implement the terms of applicable collective
bargaining agreements. Any legal requirements specifying a period of advance notice must be
followed. It is good practice to establish a grievance mechanism to deal with claims that any
provisions in the retrenchment plan were not followed.
G36. Consultation with governments may be required by law, and, in addition, clients areencouraged to consult governments where the scale of layoffs can have a significant effect oncommunities, and where government assistance may be available to help address the impacts.
For further guidance on good practices in retrenchment, see IFC’s Good Practice Note on
Retrenchment.
Grievance Mechanism
13. The client will provide a grievance mechanism for workers (and their organizations,where they exist) to raise reasonable workplace concerns. The client will inform the workersof the grievance mechanism at the time of hire, and make it easily accessible to them. The
mechanism should involve an appropriate level of management and address concerns
promptly, using an understandable and transparent process that provides feedback to thoseconcerned, without any retribution. The mechanism should not impede access to otherjudicial or administrative remedies that might be available under law or through existing
arbitration procedures, or substitute for grievance mechanisms provided through collective
agreements.

G37. In providing a grievance mechanism through which workers may raise workplaceconcerns, the client should ensure that matters are brought to management’s attention andaddressed expeditiously. It should also provide feedback to those involved and should bar
retribution for filing complaints. Grievance mechanisms may be designed to direct complaints
through an appropriate process in order to protect the confidentiality of the worker, and should
ensure that workers can raise concerns other than to immediate supervisors. Where countries
have judicial or administrative processes to address labor complaints (most countries have suchprocesses), the client’s mechanism should not delay or hinder access to other judicial oradministrative remedies that are available under law.

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G38. Where a grievance mechanism is provided through a collective bargaining agreement,
and meets the requirements of Performance Standard 2, the client should utilize it for thoseworkers covered by the agreement. If there are other workers who are not covered by anagreement, the client should establish a separate mechanism for them.
Protecting the Work ForceChild Labor
14. The client will not employ children in a manner that is economically exploitative, or is
likely to be hazardous or to interfere with the child’s education, or to be harmful to thechild’s health or physical, mental, spiritual, moral, or social development. Where nationallaws have provisions for the employment of minors, the client will follow those laws
applicable to the client. Children below the age of 18 years will not be employed indangerous work.

G39. For purposes of Performance Standard 2, child labor consists of work by children that is
economically exploitative or likely to be hazardous or to interfere with the child’s education, or tobe harmful to the child’s health or physical, mental, spiritual, moral or social development. 9
Obligations on child labor are extended to the client’s supply chain as has been outlined inparagraph 18 of Performance Standard 2.
G40. Almost all IFC member countries impose legal restrictions on the use of child labor,
although terms vary. 10
G41. If IFC is approached by a potential client employing, using or knowingly benefiting fromchild labor, or if child labor is discovered in the course of IFC due diligence, IFC will not proceed
to process the project, unless the client is able to demonstrate that it will eliminate child labor
prior to IFC’s financing, consistent with the paragraph below.
G42. The presence of child labor may not be immediately evident at the time of due diligenceor financing. Handling the discovery of children working in a business presents significant
challenges for a client to manage. Removing children from their jobs will likely worsen theirfinancial condition. IFC does not intend for its clients to cause further harm to children in need.
Rather, clients should immediately remove children from tasks that are dangerous, harmful orinappropriate given their age. Children who are under the national school-leaving age may only
be allowed to work outside of school hours. Those children who are over the school-leaving
age but are performing hazardous tasks must be moved to non-harmful tasks. Clients should
review workplace conditions (i.e., occupational health and safety conditions including exposure
9

Based on the United Nations Convention on the Rights of the Child, Article 32.1.
The definition of what constitutes unacceptable employment of children under Performance Standard 2 is based on
the 1990 UN Convention on the Rights of the Child, which has been ratified by almost all IFC member countries.
Additional guidance is provided by ILO Conventions 138 and 182. ILO Convention 138 requires ratifying member
states to set a minimum age that is not less than the completion age for compulsory schooling, or not less than 15
years (14 for less developed countries). Light work that is not likely to be harmful to the health or development of thechild and does not interfere with schooling may be permitted for children aged 12 to 14 in less developed countries.
ILO Convention 182 defines and prohibits the “worst forms” of child labor including: (i) all forms of slavery, debt
bondage, and forced or compulsory labor; (ii) prostitution or the production of pornography; (iii) illicit activities,
production and trafficking in drugs; (iv) work which by its nature of the circumstances in which it is carried out is likely
to harm the health, safety or morals of children. With respect to the client’s project, this is a continuation of the 1998
IFC Policy on Harmful Child Labor.
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to machinery, toxic substances, dust, noise and ventilation, work hours and nature of the tasks)
to be certain that legally employed children are not exposed to conditions likely to be harmful tothem. To do this effectively, clients need to examine the specific types of tasks that arehazardous to children, and whether employment interferes with access to education.
G43. Clients should set a corporate minimum work age that at a minimum complies withnational law and Performance Standard 2 and develop a corporate policy against employing,using or benefiting from child labor. In countries or sectors where there is a risk of child labor,clients should review and retain copies of verifiable documentation, in addition to those required
through paragraph 7 of Performance Standard 2, concerning the age and employment profile ofall people under 18 working in the business, paying particular attention to those under school
leaving age. As a matter of good practice, clients should maintain on-site legal documentationof all workers below the age of 18.
G44. Human trafficking, the forced movement of people across international borders, ofchildren for labor exploitation has been identified as an international problem. Clients shouldinquire about and address these issues with contractors who supply labor and products so thatthey do not benefit from these coercive practices. More information can be found in the ILO’s
International Programme for the Elimination of Child Labor (IPEC) and the International
Organization for Migration (IOM) (see the References Section).
G45. For further guidance, see IFC’s Good Practice Note, Addressing Child Labor in the
Workplace and Supply Chain.
Forced Labor
15. The client will not employ forced labor, which consists of any work or service notvoluntarily performed that is exacted from an individual under threat of force or penalty.
This covers any kind of involuntary or compulsory labor, such as indentured labor, bonded
labor or similar labor-contracting arrangements.

G46. Forced labor consists of any work or service not voluntarily performed that is exacted or
coerced from a person under threat of force or penalty. 11 Forced labor includes any kind of
involuntary or compulsory labor, such as indentured labor, bonded labor or similar laborarrangements. A common form of indentured labor is the practice that forced labor is extracted
by granting compensation in other forms than money, such as food or housing, as a result of
which the worker’s exit from the work is effectively prevented. Bonded labor is the practice thatextract forced labor by creating debt or other obligations (such as deductions from pay as adisciplinary measure) not based on a valid and mutually beneficial economic purpose that must
be worked off on terms that effectively prevent the worker’s exit from the work. Examples ofsimilar labor contract arrangements are requirements of monetary deposits, limitations on
freedom of movement, excessive notice periods or substantial or inappropriate fines or loss ofpreviously earned wages that serve to prevent workers from voluntarily ending employment
within their legal rights, or contractual clauses that limit or prohibit resignation within a certain
timeframe. Migrant workers are most vulnerable to these types of arrangements. Obligations
on forced labor are extended to the client’s supply chain as has been outlined in paragraph 18
of Performance Standard 2.
11

Based on ILO Convention 29 on Forced Labor.

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Guidance Note 2Labor and Working Conditions
July 31, 2007

G47. The vast majority of IFC member countries’ laws prohibit most forced labor practices.
ILO Convention 29 on Forced and Compulsory Labor, which provides the basis for the definition
above, has been ratified by a large majority of IFC member countries. 12
G48. The employment relationship should be freely chosen and free from threats. Forced
extraction of labor violates the fundamental rights of the worker, and retards economic
development by keeping capital in sectors that would not survive without such practices. IFC
will not finance projects that employ, use or knowingly benefit from forced labor as defined
above. 13 If IFC is approached by a potential client employing, using or knowingly benefitingfrom forced labor, or if forced labor is discovered in the course of IFC due diligence, IFC will notproceed to process the project unless the client is able to demonstrate that it will eliminate
forced labor prior to IFC’s financing, consistent with the paragraph below.
G49. Forced labor practices may not be immediately apparent. If forced labor is discovered in
the client’s workforce or supply chain, immediate steps should be taken to address the practicethat has coerced the worker and instead offer terms of employment that can be freely chosen
and do not recreate conditions of coercion.
G50. Clients need to avoid any type of physical coercion of workers, such as restrictions on
movement or physical punishment that have the effect of forced labor. Examples of suchpractices include locking workers in their workplace or worker housing. Clients may not retain
worker’s identity documents and passports in a manner that by intent or effect restricts their
movement.
G51. Obligations from indentured labor, bonded labor or similar labor contract agreements are
sometimes passed from one generation to the next. Clients should avoid practices that havethe effect of creating improper or effectively unpayable debt obligations, such as inappropriate
charges for housing and meals as part of the employment relationship. Clients should also
exercise diligence with regard to key contractors and subcontractors so that they do notknowingly benefit from practices that lead to bonded or indentured status of workers.
G52. Trafficked persons and migrant workers who lack legal status in a country may beparticularly vulnerable to being caught in a forced labor situation, for example through debt
bondage to “jobs brokers” who charge exorbitant fees to place workers in foreign factories or
farms. Human trafficking, the forced movement of people across international borders, for labor
exploitation has been identified as an international problem. Clients should inquire about andaddress these issues with contractors who supply labor so that they do not benefit from these
coercive practices. Exercising diligence should also be exercised when the client’s project issituated in an export processing zone since export processing zones are often exempt fromnational labor laws or have weak enforcement of such laws. Migrant workers are one of thegroups that have been identified as more vulnerable to human trafficking and forced labor.
Several institutions are addressing the problem including the ILO and the International
Organization for Migration (IOM).
1213Additional guidance is provided by ILO Convention 105 on the Abolition of Forced Labor.
Also see http://www.ifc.org/ifcext/enviro.nsf/Content/IFCExclusionList

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July 31, 2007

G53. Prison labor should normally be considered forced labor. In some circumstances, prison
inmates volunteer for work assignments in sectors such agricultural production and lightmanufacturing. If such labor comprised an important and irreplaceable part of the client’s
supply chain, the client should provide a detailed review on the status of the proposed prison
labor.
Occupational Health and Safety
16. The client will provide the workers with a safe and healthy work environment, taking
into account inherent risks in its particular sector and specific classes of hazards in theclient’s work areas, including physical, chemical, biological, and radiological hazards. The
client will take steps to prevent accidents, injury, and disease arising from, associated with,or occurring in the course of work by minimizing, so far as reasonably practicable, thecauses of hazards. In a manner consistent with good international industry practice,3 theclient will address areas, including: the identification of potential hazards to workers,
particularly those that may be life-threatening; provision of preventive and protective
measures, including modification, substitution, or elimination of hazardous conditions or
substances; training of workers; documentation and reporting of occupational accidents,
diseases, and incidents; and emergency prevention, preparedness and response
arrangements.
_________________________
3

Defined as the exercise of professional skill, diligence, prudence and foresight that would reasonably be

expected from skilled and experienced professionals engaged in the same type of undertaking under the sameor similar circumstances globally.

G54. Occupational health and safety refers to the range of endeavors aimed at protecting
workers from injury or illness associated with exposure to hazards encountered in the workplaceor while working. Hazards may arise from materials (including chemical, physical and biologicalsubstances and agents), environmental or working conditions (such as oxygen deficientenvironments, excessive temperatures, improper ventilation, poor lighting, faulty electricalsystems or unshored trenches), or work processes (including tools, machinery and equipment).
Occupational health and safety practices include the identification of potential hazards andresponses including design, testing, choice, substitution, installation, arrangement, organization,
use and maintenance of workplaces, working environment and work processes to eliminate orminimize any risks to workers.
G55. Most countries have laws regulating occupational health and safety (OHS) andworkplace conditions 14 and the client is expected to comply with such laws. Additional guidanceon the management of occupational health and safety issues according to Good International
Industry Practice (GIIP) is provided in the World Bank Group’s General EHS Guidelines andIndustry Sector Guidelines.
G56. Sources of hazard to workers’ health and safety should be eliminated rather thanallowing the hazards to continue and providing personal protective equipment. However when
14

Parties to the ILO have also negotiated numerous conventions that address these matters, both at the general level
and with regard to specific industries. Examples include ILO Convention 155 on Occupational Safety and Health andProtocol 155 of 2002 to Convention 155; Convention 162 on Asbestos; Convention 174 on Prevention of Major
Industrial Accidents.

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July 31, 2007

the hazard is inherent to the project activity or it is otherwise not feasible to completely eliminate
the hazard, the client should take appropriate protective measures and provide adequate
personal protective equipment at no cost to the worker. Protective measures and equipment
may, for example, be necessary to prevent occupational exposure to hazardous materials suchas asbestos, which has been classified as a Group 1 carcinogen by many national andinternational organizations.
G57. Training should be provided to all workers on relevant aspects of occupational healthand safety associated with their work, including emergency arrangements. Workers should notface any disciplinary measures or negative consequences for reporting or raising concerns
about occupational health and safety conditions.
G58. The client should document and report occupational injuries and illnesses, including
injuries to the public. Worker monitoring data (such as exposure levels and health testing)should be retained.
G59. Clients will extend a safe and healthy work environment to contracted workers and toany other workers who provide project-related services on the client’s premises or work sites.
Contract specifications for contractors providing workers on the client’s premises or work sites
should include provisions that they meet the OHS requirements of the client, both to satisfy therequirements of Performance Standard 2 and to minimize risk and liability to the client. As away to lessen risk and liability, and to improve performance, IFC encourages clients to requirecomparable practices of key off-site contractors, subcontractors and suppliers.
G60. The client’s Action Plan should deal with hazards identified through assessment thathave not already been addressed by the client. The overall social and environmental
management system required by Performance Standard 1 should be designed with adequate
capacity for oversight of occupational health and safety matters. The management systemshould include regular monitoring and review of safety matters, ambient working environments
and other OHS indicators. It is good practice to apply information compiled and any corrective
measures in a continuous process to improve OHS conditions and management. .
G61. Emergency preparedness and response plans should be tailored to the risks faced by
the organization and should include an integrated approach to address emergency needs andprotect the health and safety of workers, the public and the environment - inside and outside thephysical project boundary. Facilities that face fire risk should have evacuation plans that are
well understood and have been rehearsed by all workers. Emergency plans should encompass
all persons normally working on or visiting the client’s site, including workers (regular orcontracted), approved visitors, and customers. The arrangements should be prepared incooperation with external emergency services and agencies, such as local fire departments andemergency response teams, and include adequate communication with workers and outside
authorities as needed. Further guidance on this subject, including some of the basic elementsof emergency preparedness and response plans, is provided in the Guidance Notes to
Performance Standard 3 on Pollution Prevention and Abatement and Performance Standard 4
on Community Health and Safety.

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July 31, 2007

Non-Employee Workers
17. For purpose of this Performance Standard, “non-employee workers” refers to workers
who are: (i) directly contracted by the client, or contracted through contractors or otherintermediaries; and (ii) performing work directly related to core functions essential to theclient’s products or services for a substantial duration. When the client contracts nonemployee workers directly, the client will use commercially reasonable efforts to apply therequirements of this Performance Standard, except for paragraphs 6, 12, and 18. With
respect to contractors or other intermediaries procuring non-employee workers, the client
will use commercially reasonable efforts to: (i) ascertain that these contractors orintermediaries are reputable and legitimate enterprises; and (ii) require that thesecontractors or intermediaries apply the requirements of this Performance Standard, except
for paragraphs 6, 12, and 13.

G62. Non-employee workers are directly contracted by the client or through contractors orother intermediaries. Even though they are outsourced by the client, these workers tend to
perform important functions of the client’s business for a substantial period as if they aresubstitute employees of the client.
G63. Determination of which group of non-employee workers falls into the scope of
Performance Standard 2 will require an analysis of the client’s business and judgment. The
following table of examples illustrates work that would constitute a core function as defined in
Performance Standard 2, followed by work that would not constitute a core function:









Core-functions (covered by
Non-core functions (not covered by
Performance Standard 2)
Performance Standard 2)
Workers performing functions under a  Day laborers hired for a short duration
turn-keyoranengineering,for limited construction activities.
procurement and construction (EPC)
contract(in case of a client that provides retail  (in case of a client that provides retailbanking
services)
individualsbanking
services)
non-employee
contracted on a one-time basis toworkers providing ongoing security
install surveillance equipment
services(in the case of a client engaged in  (in the case of a client engaged in
manufacturing) non-employee workers
manufacturing)individuals
who
who regularly transport finished goods
provide food services for the client’s
to distributors
workers, unless the client operates
the food service function directly.
(in the case of a client engaged in  (in the case of a client engaged inagricultural production) individuals
agricultural production) workers who
contracted to clear new land for
repeatedly perform seasonal tasks thatcultivation on a one-time basis
are essential to harvesting the product

Provision of professional services (e.g., accounting, legal service) by outside firms will not be covered by PerformanceStandard 2.

G64. Most national laws address contract labor, though the terms vary widely among
countries and types of contract labor. The client should comply with legal requirements
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Guidance Note 2Labor and Working Conditions
July 31, 2007

covering such matters as minimum wage, hours of work, overtime payments, health and safety
conditions, contributions to health insurance and pension schedules and other legally mandated
employment terms with regard to all directly contracted non-employee workers.
G65. Clients should use commercially reasonable efforts so that they do not benefit from
unfair labor practices of contractors and intermediaries. This includes establishing contractual
obligations on contractors or intermediaries who supply the non-employee workers to the client;unannounced visits and visual inspections at the worksite; and exercise of due diligence insupervising contractors and intermediaries who supply workers.
The client will use
commercially reasonable efforts to inquire about the track record or standing of contractors andintermediaries that will procure non-employee workers. The client should also exercise due
diligence to ensure that contractors or intermediaries procuring non-employee workers for theclient satisfy all legal requirements.
G66. It is good practice for clients to exercise visual inspections over all those working at theclient’s work site even if some types of workers may not be covered by PerformanceStandard 2.
Supply Chain
18. The adverse impacts associated with supply chains will be considered where low labor
cost is a factor in the competitiveness of the item supplied. The client will inquire about andaddress child labor and forced labor in its supply chain, consistent with paragraphs 14 and
15 above.

G67. Supply chain refers to both labor and material inputs of a good or service. A supply
chain of goods may include suppliers of raw material and suppliers of pieces or components for
assembly and production. The supply chain of multinational corporations can be extensive andmay be global in nature, whereas the supply chain of national or smaller enterprises will besmaller in scale and may be local in nature, involving local contractors, subcontractors, andhomeworkers.
G68. When the pricing of the client’s goods or services depends on the competitiveness of
key materials and items essential for the goods or services, and low labor cost is a factor in thecompetitiveness of such materials and items, the client should review its supply chain forpotential adverse impacts and identify any risks to the client and the project, as part of theAssessment process. It is good practice for the client to address labor issues, particularly thoseissues specified in Performance Standard 2, in its supply chain by exercising control andinfluence over the supplier of materials and items, commensurate with the level of risks andimpacts. In addition to risk mitigation, effective supplier management on labor issues can leadto competitive or strategic advantage, such as quality improvement, cost reduction and securityof supply. Good practice materials and tools for supply chain management are under rapid
development by various sectoral organizations’ corporate social responsibility initiatives 15.

15

E.g. The International Federation of Purchasing and Supply Management (IFPSM)
The Chartered Institute of Purchasing and Supply

Institute for Supply Management
The Triple Innova “How to Manage Yours Supply Chain Sustainability”

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July 31, 2007

G69. The effectiveness in addressing the supply chain will depend on the leverage that theclient will likely be able to exercise. In situations where there is an integrated chain of suppliers
that depend on the client for their business viability, this leverage and client risk from suppliernonperformance will be high. As the supply chain extends into commodity market where theclient’s operation has little significance, the client’s supply chain review will simply reflect
sectoral issues, rather than opportunities for project-specific mitigation. Where the client hascomplex operations with multiple tiers of suppliers, its leverage will diminish toward the moredistant tiers of suppliers. As a result, the client should focus on the primary tier of suppliers, andpossibly the secondary ones to have any meaningful impact.
G70. With regard to child labor and forced labor as defined in Performance Standard 2, theclient should exercise due diligence in its supply chain to avoid benefit or financial gain fromthese practices. Clients should make particular effort and engage in additional diligence whensuch practices are prevalent or known to exist within certain stages of the supply chain, in
specific industries or in geographic areas. Financial gain from child labor is a specific risk when
the cost of labor is a factor in the competitiveness of the client’s goods or services. Clientsshould utilize their influence to the fullest extent to eradicate child labor and forced labor in their
supply chain.

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July 31, 2007

Annex A
Content of the Labor Assessment Component of a Social and Environmental
Assessment
A labor assessment may be carried out at different levels, depending on IFC’s initialassessment of the project risk posed by labor practices. The labor assessment should include a
review of the potential client’s employment policies, the adequacy of existing policies, andmanagement’s capacity to implement.
The assessment may include the following:Description of the workforce – This includes numbers of employees, types of jobs
and skills, and composition of the workforce (gender, age, minority status, etc.).

Description of working conditions and terms of employment – A copy of the client’s
human resources policy should be provided. The client should indicate whether theworkers are organized and to which workers’ organization(s) they belong. All
collective bargaining agreements that apply to the project should be included.

Description of types of employment relationships – A description of the structure of
the client’s supply chain will be included.

Description of the working environment and identification of any work place healthand safety issues – This includes mitigative measures to protect the welfare of theworkforce or address identified risks. Both risks that arise from normal functions andoperations as well as less common circumstances and accidents that are known to
be a risk within the industry or locality should be covered. The assessment should
identify work areas, equipment and processes that may require redesign, risk
reduction or hazard control measures.

Compliance with national employment and labor laws – The nature of any violationsof applicable labor law and remediation steps taken should be described.



Description of conditions in the client’s project, the sector or the country that mightpose risk of violation of employment and labor laws or the requirements of
Performance Standard 2 in the client’s project or by key contractors and suppliers

Aspects of the client’s employment policy where improvements may be needed inlight of the requirements of Performance Standard 2 or national law – The client
should take this opportunity to identify weaknesses in its human resources policy or
employment practices and changes that could improve the firm’s performance.

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July 31, 2007

Annex B
Contents of a Human Resources Policy
A human resources policy ordinarily would cover the following matters:












Entitlement to and payment of wages; permissible wage deductions;
Overtime payments; hours of work and any legal maximums;
Entitlement to leave for holidays, vacation, illness, injury, and maternity and otherreasons;
Entitlement to benefits;
The employees’ right to form and join workers’ organizations of their choosing
without any interference or employment consequences and to bargain collectively
with the employer;
Disciplinary and termination procedures and rights;
Conditions of work;
Occupational safety, hygiene and emergency preparedness;
Promotion requirements and procedures;
Vocational training opportunities;
Other matters covered by law and Performance Standard 2.

A human resources policy is an appropriate place for the client to include statements ofcorporate policy on matters such as child labor and equal opportunity.

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Annex C
Workers’ Organizations - High Risk Practices
There may be circumstances in which workers’ organizations or employers’ dealings with suchgroups have been tainted by corruption. For example, where laws allow only one organization
to hold a collective bargaining agreement with an employer, corrupt organizations designed topreclude autonomous workers’ organizations have sometimes been employed for theenrichment of individuals associated with these schemes, the benefit of an employer or both. In
some situations employers make payments to workers’ organizations with the object of placing
the organization under the control of the employer. Whether the corruption arises from theworkers’ organization itself or from the employer, these arrangements are contrary to theobjectives and requirements of Performance Standard 2. If a client believes it is confronted witha corrupt organization, it may need to seek external help. This may include, for example,
assistance from public authorities or creating a means for the workers to choose theirrepresentative organization in a way that allows them to avoid corrupt intermediaries.
In some countries where laws protect workers’ freedom of association and right to bargain
collectively, other laws or practice also allow for employer-dominated organizations in theworkplace. In those cases, Performance Standard 2 requires that clients allow workers tochoose their organizations without interference and then bargain collectively with the workers’
chosen representative.
Questions may arise about whether a group claiming to represent workers is a workers’organization or a political party. In most countries, laws specify the requirements for a group toestablish itself as a workers’ organization, union or collective bargaining agent. It should be
noted that under ILO Convention 87 and most national laws, both workers’ and employers’organizations have the right to organize their activities and determine their affiliations without
interference by other parties or public authorities. This would include political and legislative
activities by workers‘ and employers’ organizations.

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Annex DManaging Discrimination
IFC recognizes the diversity of cultures in the countries where it provides financing. It further
recognizes that addressing issues of discrimination that arise from cultural norms or local
practice (and that are sometimes even incorporated into formal legislation) is a difficult
challenge. However, given the closely intertwined business, economic and social benefits ofequal opportunity to employment, as well as the damage done by discrimination, IFC looks toclients to take a positive view of equal opportunity and a diverse workforce. Companies thatembrace diversity have identified a range of business advantages, such as improving employee
morale and retention and decreasing complaints and litigation. This shift in company attitudes isalso mirrored in regulatory changes around the world, shifting from laws that simply prohibit
discrimination to laws that provide for a positive duty to prevent discrimination and promoteequality.
Clients can take proactive steps to create a workplace environment that makes equal access toemployment and equal treatment on the job a reality throughout the employment relationship,from recruiting through retirement and pension. These steps may include, for example,
recruitment drives that focus on attracting workers from groups that are under-represented in
the workforce; awareness raising and training programs for managers and workers; antiharassment policies that communicate the client’s determination to eliminate such practices in
the workplace; and skills training programs for workers to improve their chances of promotion.
Where training is provided it should be accessible to all workers for whom the training isrelevant, on a non-discriminatory basis.
Gender discrimination can arise in ways that differ from other forms of discrimination and clientsshould review policies and practices to ensure that they do not negatively affect either women or
men. For example, clients should ensure that women have access to the same careeradvancement possibilities as men and are not excluded from consideration on the basis ofstereotyping or a failure to complete training that has not been made available to female
workers. Establishing sound policies on maternity leave that enable women to balance their
responsibilities as workers and as mothers will help clients to avoid discriminatory outcomes
and retain experienced workers. In some countries it is common for employers to requirepregnancy tests and then dismiss (or refuse to hire) women who are pregnant. Even where thisis not a violation of national law, the practice is not consistent with Performance Standard 2.
Clients should consider involving workers and workers’ organizations in identifying andaddressing discrimination in the workplace. In some cases the policies or practices of workers’organizations can contribute to or inadvertently support discriminatory practices. It is goodpractice for clients to invite workers’ organizations to participate in the development of equal
opportunity policies. They may be aware of discriminatory effects of policies that the employer
has not identified. Workers’ organizations are often able to educate workers about why
discrimination is unacceptable, and they can help to establish a positive and inclusive workplaceenvironment.

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References
Several of the requirements set out in Performance Standard 2 are partly guided by standards
set by the following international agreements negotiated through the International Labor
Organization (ILO) (http://www.ilo.org/iloex) and the United Nations (UN), noted in each case:










ILO Convention 87 on Freedom of Association and Protection of the Right to Organize
ILO Convention 98 on the Right to Organize and Collective Bargaining
ILO Convention 29 on Forced LaborILO Convention 105 on the Abolition of Forced LaborILO Convention 138 on Minimum Age (of Employment)
ILO Convention 182 on the Worst Forms of Child LaborILO Convention 100 on Equal Remuneration
ILO Convention 111 on Discrimination (Employment and Occupation)
United Nations Convention on the Rights of the Child, Article 32.1

A list of the eight ILO conventions and the countries that have ratified each of them is available
at: http://www.ilo.org/ilolex/english/index.htm. The text of the ILO conventions and list of ratifying
countries are available at: http://www.ilo.org/ilolex/english/convdisp2.htm
In 1998, the members of the ILO agreed on a “Declaration on Fundamental Principles andRights at Work” (http://www.ilo.org/dyn/declaris/DECLARATIONWEB.INDEXPAGE) which
declares that “all Members, even if they have not ratified the eight Conventions in question (asincluded above), have an obligation arising from the very fact of membership in the Organization
to respect, to promote and to realize, in good faith and in accordance with the Constitution, theprinciples concerning the fundamental rights which are the subject of those Conventions.” Themembership of the ILO is almost identical with the membership of the IFC. A large majority of
IFC member countries have ratified at least some of the eight ILO conventions that together
comprise of the four core labor standards In addition, most IFC member countries have laborlaws in place that reflect the eight core standards, whether or not they have ratified theconventions. Where these standards have not been expressly incorporated into national law,
IFC will work with clients to identify and implement the relevant standards as described in the
Performance Standard 2 and its accompanying Guidance Note.
Other references to ILO documents in Guidance Note 2:ILO Convention 155 on Occupational Safety and HealthILO Protocol 155 of 2002 to the Occupational Safety and Health Convention
ILO Convention 162 on Asbestos
ILO Convention 174 on Prevention of Major Industrial Accidents

Several of the topics covered by Performance Standard 2 (noted in relevant sections) are also
within the scope of the following international agreements negotiated through the UN:UN Universal Declaration of Human Rights
UN International Covenant on Economic, Social and Cultural Rights
UN International Covenant on Civil and Political Rights
UN Convention on the Rights of the Child57

Guidance Note 2Labor and Working Conditions
July 31, 2007


UN Convention on the Elimination of All Forms of Racial Discrimination
UN Convention on the Elimination of All Forms of Discrimination against Women.

A list of the six UN Conventions and the countries that have ratified each of them is available at:
http://www.ohchr.org/english/law/index.htm. The ratification status of each convention bycountry is available at: http://www.unhchr.ch/pdf/report.pdf
Also see UN “Convention on the Rights of Persons with Disabilities” elaborates in detail therights of persons with disabilities and sets out a code of implementation.
http://www.un.org/disabilities/convention/conventionfull.shtml
UN “Optional Protocol to the Convention on the Rights of Persons with Disabilities”
http://www.un.org/disabilities/convention/optprotocol.shtml
In addition, the guidance, recommendations and adjudications issued by the following
organizations provide useful additional guidance:

The ILO’s Committee of Experts on the Application of Conventions andRecommendations – reviews member countries’ implementation of ratified labor
conventions on a periodic basis.
A searchable database can access theCommittee’s findings on country and issue violations. Available at:
http://webfusion.ilo.org/public/db/standards/normes/appl/index.cfm?lang=EN



The ILO’s Committee on Freedom of Association – investigates claimed violations of
the right to organize or bargain collectively. This 9 member tripartite (government,
employer and trade union) body reviews complaints on country compliance with theprinciples of freedom of association and collective bargaining, whether or not acountry has ratified ILO Conventions 87 and 98. To review cases, go to:
http://www.ilo.org/ilolex/english/index.htm and click on “Cases of the Committee on
Freedom of Association”. Cases are sorted by country and by case

The ILO’s Tripartite Declaration of Principles concerning Multinational Enterprises
and Social Policy – for guidance on retrenchment. Available at:
http://www.ilo.org/public/english/employment/multi/index.htm

Organization for Economic Co-operation and Development (OECD) - Guidelines forMultinational Enterprises – for guidance on retrenchment. Available at:
http://www.oecd.org/topic/0,2686,en_2649_34889_1_1_1_1_37439,00.html

The International organization of Migration (IOM) is an intergovernmentalorganization established in 1951, IOM is committed to the principle that humane andorderly migration benefits migrants and society. http://www.iom.int/jahia/jsp/index.jsp

IFC and the World Bank have published a number of resource materials:
Good Practice Note: Addressing Child Labor in the Workplace and Supply Chain(IFC, 2002) – provides good practice approaches that business have successfully

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applied in managing risks associated with child labor in their own workplaces andthose of their vendors and suppliers
http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_childlabor/$FILE/ChildLabor.pdf
Good Practice Note: Managing Retrenchment (IFC, 2005) provides guidance on how
to plan and manage the process of retrenchment where significant job losses are
anticipated.
http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_Retrenchment/$FILE/Retrenchment.pdf

Good Practice Note: Non-Discrimination and Equal Opportunity (IFC, 2005) provides
guidance to IFC clients and other employers in emerging markets on promoting both
equality and diversity, and overcoming discriminatory practices, while acknowledging
that this can often be a controversial and difficult topic.
http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_NonDiscrimination/$FILE/N
onDiscrimination.pdf

Environmental Guidelines: Occupational Health and Safety (IFC, 2003) – applies toplaces of work associated with IFC projects and provides guidelines for general
aspects for occupational health and safety
http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/gui_OHS/$FILE/OHSguideline.pdf



The World Bank’s “Toolkit” on Core Labor Standards (World Bank) – General
information on the ILO's four fundamental principles and rights at work. The Toolkit
also provides links to other useful information sources.
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALPROTECTION/
EXTLM/0,,contentMDK:20224298~menuPK:584854~pagePK:148956~piPK:216618~theSitePK:390615,00.html

World Bank - Information on Active Labor Market Programs (World Bank) – useful
information for clients confronting large-scale retrenchments.
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALPROTECTION/
EXTLM/0,,contentMDK:20223809~menuPK:584846~pagePK:148956~piPK:216618~theSitePK:390615,00.html



The General Environmental, Health and Safety Guidelines as well as the sector specific
IFC Environmental Health and Safety Guidelines apply to all places of work associatedwith IFC projects and provide guidance for general and specific aspects for OHS.
http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/pol_GuidanceNote_2/$FILE/Guid
anceNote2.pdf.

Examples of sources of information concerning country reports on labor practices:

US Department of State - annual Country Reports on Human Rights – issued on
almost all countries. Section 6 of these reports covers many of the labor issues
included in Performance Standard 2.
http://www.state.gov/g/drl/rls/hrrpt/2003
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Guidance Note 2Labor and Working Conditions
July 31, 2007

International Confederation of Free Trade Unions (ICFTU) – country reports on laborrights performance.
http://www.icftu.org/list.asp?Language=EN&Order=Date&Type=WTOReports&Subje
ct=ILS

Examples of sources of information concerning supply chain management:


The International Federation of Purchasing and Supply Management (IFPSM) is theunion of 43 National and Regional Purchasing Associations worldwide. Within this circle,
about 200,000 Purchasing Professionals can be reached.
http://www.ifpmm.org/

The Chartered Institute of Purchasing and Supply (CIPS) exists to promote and develop
high standards of professional skill, ability and integrity among all those engaged inpurchasing and supply chain management.
http://www.cips.org/

Institute for Supply Management
http://www.ism.ws/



The Triple Innova “How to Manage Yours Supply Chain Sustainability”
http://www.triple-innova.com

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Pollution Prevention and Abatement
July 31, 2007

This Guidance Note 3 corresponds to Performance Standard 3. Please also refer to the
Performance Standards 1, 2 and 4-8 as well as the corresponding Guidance Notes for
additional information. Bibliographical information on all reference materials appearing in the
text of this Guidance Note can be found in the References Section at the end.

Introduction
1. Performance Standard 3 recognizes that increased industrial activity and urbanization
often generate increased levels of pollution to air, water, and land that may threaten people
and the environment at the local, regional, and global level.1 On the other hand, along withinternational trade, pollution prevention and control technologies and practices havebecome more accessible and achievable in virtually all parts of the world. This PerformanceStandard outlines a project approach to pollution prevention and abatement in line withthese internationally disseminated technologies and practices.
In addition, thisPerformance Standard promotes the private sector’s ability to integrate such technologies
and practices as far as their use is technically and financially feasible and cost-effective inthe context of a project that relies on commercially available skills and resources.

Objectives

To avoid or minimize adverse impacts on human health and the environment by
avoiding or minimizing pollution from project activities
To promote the reduction of emissions that contribute to climate change_________________________
1

For the purposes of this performance standard, the term “pollution” is used to refer to both hazardous and non-hazardous pollutants in the solid, liquid, or gaseous forms, and is intended to include other forms such as
nuisance odors, noise, vibration, radiation, electromagnetic energy, and the creation of potential visual impacts
including light.

G1.
To achieve these objectives, clients should take into account the potential impact of theiremissions on the ambient conditions (such as ambient air quality) and seek to avoid or minimize
these impacts within the context of the nature and significance of pollutants emitted. For small
and medium–sized projects with limited potential emissions, this may be achieved throughcompliance with emissions and effluent standards and the application of other pollution
prevention and control approaches. Large projects with potentially significant emissions and /orhigh impacts, however, may require impacts on the surrounding environment (i.e., changes inambient levels) to be monitored, in addition to the implementation of control measures. Further
information on how to address ambient conditions is provided in paragraph 9 of PerformanceStandard 3 and its accompanying Guidance Note.
G2.
The potential environmental impacts associated with the emissions of greenhouse gases(GHGs) are considered to be among the most complex to predict and mitigate due to theirglobal nature. Clients are therefore encouraged to consider their potential contribution toclimate change when developing and implementing projects and develop a strategy to help
reduce it.

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Scope of Application
2. The applicability of this Performance Standard is established during the Social andEnvironmental Assessment process, while implementation of the actions necessary to meetthe requirements of this Performance Standard is managed through the client’s Social andEnvironmental Management System.
The assessment and management system
requirements are outlined in Performance Standard 1.

G3.
Impacts and risks associated with the generation, use, storage, release, and/or disposal
of pollutants are identified during the Social and Environmental Assessment process, planned
as part of the client’s Social and Environmental Management, and implemented as part of theclient’s Action Plan. Since not all potential impacts can possibly be identified at the outset of a
project, the client should uphold the requirements of pollution prevention and abatement
provided in Performance Standard 3 as part of its Management System so that those
unforeseen circumstances that are identified during the course of the project can be evaluatedand addressed.

Requirements
General Requirements
3. During the design, construction, operation and decommissioning of the project (theproject life-cycle) the client will consider ambient conditions and apply pollution prevention
and control technologies and practices (techniques) that are best suited to avoid or, where
avoidance is not feasible, minimize or reduce adverse impacts on human health and theenvironment while remaining technically and financially feasible and cost-effective.2 The
project-specific pollution prevention and control techniques applied during the project lifecycle will be tailored to the hazards and risks associated with project emissions andconsistent with good international industry practice,3 as reflected in various internationallyrecognized sources, including IFC’s Environmental, Health and Safety Guidelines (the EHS
Guidelines).
_________________________
2“Technical feasibility” and “financial feasibility” are defined in Performance Standard 1. “Cost-effectiveness” isbased on the effectiveness of reducing emissions relative to the additional cost required to do so.
3

Defined as the exercise of professional skill, diligence, prudence and foresight that would reasonably be

expected from skilled and experienced professionals engaged in the same type of undertaking under the sameor similar circumstances globally. The circumstances that skilled and experienced professionals may find whenevaluating the range of pollution prevention and control techniques available to a project may include, but are
not limited to, varying levels of environmental degradation and environmental assimilative capacity as well asvarying levels of financial and technical feasibility.

(i) Development of a new project (including major expansion of an existing operation)
G4.
Clients developing new projects or major expansions should incorporate environmental
aspects of the project during the design phase (including project design and site selection).
Considerations should include background ambient conditions (that may occur due to natural
and/or anthropogenic causes not related to the project), the presence of local communities,
environmentally sensitive receptors (such as potable water supplies or ecologically protected

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areas), the expected project demand for water, and the availability of waste disposal
infrastructure.
G5.
Key environmental impacts can occur at any phase of a project and depend on anumber of factors including industry sector and site location. Therefore, the design approachshould encompass all physical phases of a project, from site investigation and construction
through operation to decommissioning. Potential future expansions should be accounted for in
the initial design, where possible.
G6.
Environmental aspects of the decommissioning stage should be also considered, bothduring initial design and during periodic reviews undertaken as part of the management system.
(ii) Privatizations, modernizations, and retrofits of existing facilities:
G7.
If clients do not have the opportunity to incorporate these environmental aspects into thedesign phase because a project involves or consists of existing facilities, they are expected toevaluate the feasibility of meeting the requirements of Performance Standard 3, and seek toimprove performance through mutually agreed milestones included in the Action Plan.
G8.
Clients with existing operations should assess possibilities for investing in environmental
and risk management improvements by performing relevant studies including industrial risk
assessment or hazard and operability studies, taking into account facility operations at full load
under routine circumstances including intermittent exceedances during startups, shutdowns,
and warm-up periods.
Pollution Prevention, Resource Conservation and Energy Efficiency
4. The client will avoid the release of pollutants or, when avoidance is not feasible,
minimize or control the intensity or load of their release. This applies to the release ofpollutants due to routine, non-routine or accidental circumstances with the potential for
local, regional, and transboundary impacts.4 In addition, the client should examine andincorporate in its operations resource conservation and energy efficiency measures,consistent with the principles of cleaner production.
_________________________
4

In reference to transboundary pollutants, including those covered under the Convention on Long-range

Transboundary Air Pollution.

G9.
Where control techniques are necessary to minimize emissions or achieve a preestablished performance level, the client should monitor their performance to ensure that therequirements of Performance Standard 3 are being met. The frequency with which pollutant
emissions are monitored should be appropriate to the nature and scale of potential impacts.
This may range from continuous to daily, monthly, annually, or less frequently. Clients canobtain guidance on recommended monitoring approaches and frequencies appropriate to thenature of their operations from various internationally recognized sources including the EHS
Guidelines (as included in the References section). Monitoring emissions can benefit clients by:
1) demonstrating their compliance with environmental permits or other legal obligations;2) providing information to evaluate project performance and determine if corrective actions arenecessary; 3) helping to identify opportunities for further improvement; and 4) by making data

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available for analysis of actual incremental impacts on the ambient levels (especially for projects
with potentially significant emissions impacts).
G10. Monitoring is particularly important for large projects with impacts that may be uncertain
and potentially irreversible and consequently in need of more frequent evaluation of emissions
levels or ambient quality. In addition, clients should include monitoring processes within their
management system to alert them to significant increases in pollutant emissions or impacts onambient conditions that may be an indicator of problems with manufacturing processes or
pollution control equipment that could require corrective action (see Performance Standard 1
and its accompanying Guidance Note).
G11. The management systems approach may also include an element of continual
improvement which, in the application of Performance Standard 3, should encourage
performance levels that go beyond compliance with emissions and effluent standards or
guidelines. Improvements may include efficiency gains in production processes that result in
improved operational, environmental, or financial performance through, for example,
improvements in energy/water consumption per unit of industrial output and solid/liquid waste
production per unit of industrial output.
G12. Pollutant release and transfer registers that collect and disseminate data on
environmental releases and transfers of pollutants from industrial facilities have been found tobe effective for promoting pollution reduction in some industrial sectors – particularly where allor most industrial facilities operating within a geographic region participate and where theinformation is made accessible to local communities. Where such registries are not alreadyrequired by law, and in addition to meeting the disclosure requirements of PerformanceStandard 1 for disclosure of significant potential environmental impacts, clients are encouraged
to participate in voluntary initiatives that seek to establish formal pollutant release and transfer
registers at the national or regional levels. A reference for additional information on pollutant
release and transfer registers is included in the References section.
G13. Cleaner production refers to the concept of integrating pollution reduction into the
production process and the design of a product. This involves continuous application of an
integrated preventive environmental strategy to processes, products, and services in order toincrease overall efficiency and reduce risks to humans and the environment through theconservation of raw materials, water and energy, and through the reduction or elimination of theuse of toxic and hazardous raw materials. 1 Cleaner production can also mean taking advantageof renewable energy sources such as solar energy and geothermal resources. Cleaner
production and energy efficiency are often cost-effective, especially when assessed over the
project life-cycle. The client is encouraged to keep abreast of cleaner production examples
applicable to its project sector and apply them to the design of the project when technically andfinancially feasible and cost-effective. References to various examples of cleaner production
are included in the References section. Additional guidance is provided in the General EHS
Guidelines and Industry Sector EHS Guidelines.
G14. Examples of energy efficiency measures include more energy efficient electricity
generation, cogeneration to achieve overall energy utilization efficiency, and the installation of1

United Nations Environmental Program (UNEP)

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more energy efficient demand-side equipment (e.g. electric motors, heaters, lighting fixtures,etc.). Opportunities for demand-side energy savings with financial benefits are common toalmost all industry sectors. Examples of renewable energy sources include solar power, hydro,
wind, certain types of geothermal, and biomass. Renewable energy sources are particularly
beneficial when they can be used in project operations that include an energy generation
component that would otherwise produce potentially significant emissions.
Wastes
5. The client will avoid or minimize the generation of hazardous and non-hazardous wastematerials as far as practicable. Where waste generation cannot be avoided but has beenminimized, the client will recover and reuse waste; where waste can not be recovered orreused, the client will treat, destroy, and dispose of it in an environmentally sound manner.
If the generated waste is considered hazardous,5 the client will explore commerciallyreasonable alternatives for its environmentally sound disposal considering the limitations
applicable to its transboundary movement.6 When waste disposal is conducted by third
parties, the client will use contractors that are reputable and legitimate enterprises licensed
by the relevant regulatory agencies.
_________________________
5

As defined by local legislation or international conventions.

6

Consistent with the objectives of the Basel Convention on the Control of Transboundary Movements ofHazardous Wastes.

G15. Because of the risks to the environment and the ever-increasing costs and liabilities
associated with the management and disposal of waste material, Performance Standard 3
requires clients to investigate options for waste avoidance, waste recovery and waste disposal
during the operational stage of the project. The level of effort in addressing this requirement
depends on the risks associated with the waste materials generated by a project. Clientsshould reasonably inquire about the location of the final disposal of their waste, even if thedisposal is conducted by a third party, and especially if the waste is considered to be hazardous
to human health and the environment. If no suitable disposal method is available throughcommercial or other means, the client should develop their own recovery or disposal facilities orwork through their local business association or other similar entity to identify viable alternatives
or approaches. Additional guidance is provided in the General EHS Guidelines and Industry
Sector EHS Guidelines.
G16. In cases where the waste treatment, storage, or disposal alternative selected has thepotential to generate polluting emissions, the client should apply adequate control techniques toavoid, minimize or reduce these emissions according to the requirements of paragraphs 4, 10
and 11 of Performance Standard 3. Further information on the environmentally sound handlingand disposal of wastes can be found in the EHS Guidelines as referred to in paragraph 8 of
Performance Standard 3 and its accompanying Guidance Note, as well as numerous
publications in support of the Basel Convention on the Control of Transboundary Movements ofHazardous Wastes and in support of the Stockholm Convention on Persistent Organic
Pollutants (see the References Section).
Hazardous Materials
6. The client will avoid or, when avoidance is not feasible, minimize or control the releaseof hazardous materials resulting from their production, transportation, handling, storage
and use for project activities. The client will avoid the manufacture, trade, and use of65

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chemicals and hazardous materials subject to international bans or phase-outs due to theirhigh toxicity to living organisms, environmental persistence, potential for bioaccumulation,or potential for depletion of the ozone layer,7 and consider the use of less hazardous
substitutes for such chemicals and materials.
_________________________
7 Consistent with the objectives of the Stockholm Convention on Persistent Organic Pollutants and the Montreal

Protocol on Substances that Deplete the Ozone Layer. Similar considerations will apply to certain World HealthOrganization (WHO) classes of pesticides.

G17. Because the best way to prevent the release of hazardous materials is to avoid using
them in the first place, clients should explore opportunities throughout the project life-cycle touse non-hazardous materials in place of hazardous materials, especially where the hazards ofthe materials cannot easily be prevented under normal use and disposal at the end of their life
cycle. Substitutions have been found, for example, for the use of asbestos in building materials,
PCBs in electrical equipment, persistent organic pollutants in pesticides formulations, and ozone
depleting substances in refrigeration systems. A reference to guidelines on ozone depletion
substances is included in the References section.
G18. Where a project has the potential to release toxic, hazardous, flammable or explosive
material, or where project operations could result in injury to plant personnel or the public as
identified in the Social and Environmental Assessment, the client should conduct a hazard
analysis of their operations. Hazard analysis is often conducted in conjunction with Hazard andOperability studies (HAZOP) and allows clients to systematically identify systems andprocedures that could result in accidental pollutant release and also helps to prioritize theallocation of resources for emergency response equipment and training programs.
G19. Clients should review the list of active ingredients included in Annex A and B of theStockholm Convention and ensure that no chemical formulations are manufactured, sold or
used in the project that include these ingredients unless it is under the highly exceptional
circumstances noted in Annexes A and B of the Stockholm Convention. Persistent Organic
Pollutants are chemicals that have five characteristics of environmental and public healthconcern: they are toxic, long-lived, mobile, accumulate in fatty tissue and magnify in the foodchain. Their high mobility makes them a global issue, while their other properties mean that they
are hazardous to animal and human health even at low levels of exposure. Where projects
have pre-existing involvement with such ingredients, including the presence of existing
stockpiles of obsolete chemicals, the Action Plan should include a phase-out plan for the client
to meet Performance Standard 3 in a reasonable amount of time. Clients should manage andultimately dispose of PCBs identified on the project site, in an environmentally sound manner,
according to the terms of the Stockholm Convention. Further guidance on the management anddisposal of PCBs can be found in the EHS Guidelines.
G20. The client should also minimize the unintentional generation and release such as byincineration, of chemicals listed in Annex C of the Stockholm Convention, as outlined in that
Annex. Guidance on how to identify, quantify and reduce emissions of Annex C chemicals frompotentially significant sources is included in the publications in support of the Stockholm
Convention as included in the References section. Due to its association with the unintentional
release of persistent organic pollutants, primarily through the incineration of mixed waste
streams containing PVC products, when developing projects that manufacture PVC products,
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clients should weigh the overall benefits of the project against costs, including those to theenvironment and the communities.
G21. The client should also review the list of chemicals included in Annex III of the Rotterdam
Convention of Prior Informed Consent for Certain Hazardous Chemicals and Pesticides inInternational Trade (See the References Section) and seek to prevent their manufacture, tradeand use. These chemicals are listed in this international convention because their use has beenbanned or severely restricted in one or more national jurisdictions in order to protect humanhealth and the environment. The list also includes some pesticide formulations consideredseverely hazardous due to their severe health or environmental effects.
Emergency Preparedness and Response
7. The client will be prepared to respond to process upset, accidental, and emergency
situations in a manner appropriate to the operational risks and the need to prevent theirpotential negative consequences. This preparation will include a plan that addresses thetraining, resources, responsibilities, communication, procedures, and other aspects
required to effectively respond to emergencies associated with project hazards. Additional
requirements on emergency preparedness and response are found in paragraph 12 of
Performance Standard 4.

G22. While the emergency preparedness and response requirements of PerformanceStandard 3 refer to the contingencies that could affect personnel and facilities within thephysical project boundaries, clients should also take into account the need to protect the healthand safety of project workers (as noted in paragraph 16 of Performance Standard 2) and theaffected community (as noted in Performance Standard 4) and address emergency
preparedness and response in an integrated way. Whether clients are developing a new projector expanding an existing facility, they should address contingencies associated with process
upset and accidental circumstances through the use of emergency response plans or othersimilar tools appropriate to the specific industry sector, as part of the Action Plan. Additional
guidance is provided in the General EHS Guidelines and Industry Sector EHS Guidelines.
G23. Effective emergency response plans help clients prepare for the best outcomes whileassuming the worst possible scenarios. They include clearly assigned responsibilities for theassessment of the degree of risk to life and property with procedures on whom to communicate
different types of emergencies with and how. These plans should also include procedures for
shutting down equipment and production processes and for evacuations, including a designatedmeeting place outside the project site. Additionally, effective emergency plans should include
specific training and practice schedules and equipment requirements for employees who areresponsible for rescue operations, medical duties, hazardous responses, fire fighting and other
responses specific to project site. Further guidance on minimizing the occurrence and harmful
effects of technological accidents and environmental emergencies can be found in the
References section.
Technical Guidance
8. The client will refer to the current version of the EHS Guidelines when evaluating andselecting pollution prevention and control techniques for the project. These Guidelines
contain the performance levels and measures that are normally acceptable and applicable toprojects. When host country regulations differ from the levels and measures presented in67

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the EHS Guidelines, clients will achieve whichever is more stringent. If less stringent levels
or measures are appropriate in view of specific project circumstances, the client will provide
full and detailed justification for any proposed alternatives.
This justification will
demonstrate that the choice for any alternate performance levels is consistent with theoverall requirements of this Performance Standard.

G24. The client should refer to the current versions of the EHS Guidelines when evaluating
and selecting pollution prevention and control techniques for the project. These documents
contain the performance levels and measures that are normally acceptable to IFC and are
generally considered to be achievable at reasonable costs by existing technology. The
discharge effluent, air emissions, and other numerical guidelines and performance indicators aswell as other prevention and control approaches included in the EHS Guidelines are considered
to be default values applicable to new projects, though the application of alternate performancelevels and measures may be considered. As described in Performance Standard 3, clients thatrequest application of alternate performance levels of measures (typically for projects involving
existing facilities with older equipment and pollution control technologies) must provide
justification and explanation for any levels or measures that are less stringent than those
identified in the EHS Guidelines and demonstrate consideration of impacts to ambient quality,
human health, and the environment. The EHS Guidelines also provide general or industryspecific information relevant to the Occupational Health and Safety aspects of PerformanceStandard 2, Community Health and Safety aspects of Performance Standard 4, and Biodiversity
Conservation and Natural Resource Management under Performance Standard 6.
G25. Clients with projects having significant emissions or whose operations are in alreadydegraded environments should also strive to improve their performance beyond theperformance levels and measures articulated in the EHS Guidelines.
Ambient Considerations
9. To address adverse project impacts on existing ambient conditions,8 the client will:(i) consider a number of factors, including the finite assimilative capacity9 of theenvironment, existing and future land use, existing ambient conditions, the project’s
proximity to ecologically sensitive or protected areas, and the potential for cumulative
impacts with uncertain and irreversible consequences; and (ii) promote strategies that avoid
or, where avoidance is not feasible, minimize or reduce the release of pollutants, including
strategies that contribute to the improvement of ambient conditions when the project has
the potential to constitute a significant source of emissions in an already degraded area.
These strategies include, but are not limited to, evaluation of project location alternatives
and emissions offsets.
_________________________
8

Such as air, surface and groundwater, and soils.

9

The capacity of the environment for absorbing an incremental load of pollutants while remaining below a

threshold of unacceptable risk to human health and the environment.

(i) Development of a new project (including major expansion of an existing operation):G26. When developing a new project that is expected to produce potentially significant
emissions of pollutants, clients should evaluate whether the existing background ambient levels
are in compliance with the relevant ambient quality guidelines and/or standards. Ambient

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quality standards are ambient quality levels established and published through national
legislative and regulatory processes, and ambient quality guidelines refer to ambient quality
levels primarily developed through clinical, toxicological, and epidemiological evidence (such as
those published by the World Health Organization).
G27. If the ambient levels exceed the relevant ambient quality guidelines or standards (i.e.,ambient conditions are already deteriorated), clients are expected to demonstrate that they have
explored and, if necessary, adopted a higher level of performance than would be otherwise
required under less deteriorated ambient conditions as well as further mitigation measures (e.g.
offsetting emissions, modifying site selection) in order to minimize further deterioration of theenvironment or preferably to achieve improvement. If ambient levels are in compliance with
relevant ambient quality guidelines and/or standards, projects with potentially significant
emissions of pollutants should be designed so as to reduce the potential for significant
deterioration and to ensure continuing compliance. References to internationally-recognized
ambient quality guidelines and standards (including those published by the World HealthOrganization) are included in the References section.
(ii) Privatizations, modernizations, and retrofits of existing facilities:
G28. Where a project that is expected to produce potentially significant emissions of pollutants
involves the privatization, modernization, or retrofit of an existing facility, clients are encouraged
to evaluate whether the current ambient conditions are in compliance with the ambient quality
guidelines and/or standards. If the levels exceed the ambient quality guidelines and/or
standards, and if the existing facility is one of the major sources of emissions affecting suchexceedances, clients are encouraged to evaluate feasibility of options to reduce emissions andimplement selected options (e.g. rehabilitation of existing operations, arranging emissions
offsets outside project boundary) so that the already deteriorated ambient conditions will be
improved targeting the relevant ambient quality guidelines and/or standards.
(iii) Projects located in or near ecologically sensitive areas:
G29. Clients with projects whose area of influence includes ecologically sensitive areas suchas national parks should implement measures to avoid or minimize their incremental impacts onthese areas to the extent technically and financially feasible and cost effective.
Greenhouse Gas Emissions
10. The client will promote the reduction of project-related greenhouse gas (GHG)
emissions in a manner appropriate to the nature and scale of project operations andimpacts.
11. During the development or operation of projects that are expected to or currently
produce significant quantities of GHGs,10 the client will quantify direct emissions from thefacilities owned or controlled within the physical project boundary and indirect emissions
associated with the off-site production of power used by the project. Quantification andmonitoring of GHG emissions will be conducted annually in accordance with internationallyrecognized methodologies.11 In addition, the client will evaluate technically and financially
feasible and cost-effective options to reduce or offset project-related GHG emissions during
the design and operation of the project. These options may include, but are not limited to,69

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carbon financing, energy efficiency improvement, the use of renewable energy sources,
alterations of project design, emissions offsets, and the adoption of other mitigation
measures such as the reduction of fugitive emissions and the reduction of gas flaring.
_________________________
10

The significance of a project’s contribution to GHG emissions varies between industry sectors. The thresholdfor this Performance Standard is 100,000 metric tons CO2 equivalent per year for the aggregate emissions of
direct sources and indirect sources associated with purchased electricity for own consumption. This or similar
thresholds will apply to such industry sectors or activities as energy, transport, heavy industry, agriculture,
forestry, and waste management in order to help promote awareness and reduction of emissions.
11 Estimation methodologies are provided by the Intergovernmental Panel on Climate Change (IPCC), various

international organizations, and relevant host country agencies.

G30. In order to determine the applicability of this requirement to a project, the client should
determine if the project falls into sectors that have the potential for emitting one or more of thefollowing six greenhouse gases that form part of the Kyoto Protocol to the United Nations
Framework Convention on Climate Change:
(i)
(ii)
(iii)
(iv)
(v)
(vi)

Carbon dioxide (CO2)Methane (CH4)
Nitrous oxide (N2O)
Hydrofluorocarbons (HFCs)
Perfluorocarbons (PFCs)
Sulphur hexafluoride (SF6)

G31. Examples of sectors that have potentially significant emissions of greenhouse gases
include: energy, transport, heavy industry, agriculture, forestry and waste management.
Reduction and control options considered by clients in these and other sectors include:(i) enhancement of energy efficiency, (ii) protection and enhancement of sinks and reservoirs ofgreenhouse gases, (iii) promotion of sustainable forms of agriculture and forestry, (iv)promotion, development and increased use of renewable forms of energy, (v) carbon captureand storage technologies, and (vi) limitation and/or reduction of methane emissions throughrecovery and use in waste management, as well as in the production, transport and distributionof energy (coal, oil, and gas). Carbon finance may create additional funding sources forpursuing these reduction and control options. Illustrative examples of project activities that may
result in potentially significant emissions of GHGs can be found in Annex A
G32. Indirect emissions associated with the off-site production of power used by the project
can be estimated by using a national average GHG emissions performance for electricity
generation (e.g., national average of carbon dioxide emissions per unit of electricity generated
for the country). More project specific GHG emissions performance for electricity generation
should be used if available (e.g., utility average of carbon dioxide emissions per unit ofelectricity generated for the utility from which the project purchases electricity). Several sources
providing statistics on national average GHG emissions are included in the References section.
G33. When developing a project that is expected to produce a significant emission of GHGs
the client should consider options to reduce or offset the GHGs, as described above. The useof carbon financing as a carbon emissions reduction strategy may include the host governmentendorsed Clean Development Mechanism or Joint Implementation of the United Nations

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Framework Convention on Climate Change. For the oil and gas sector, the client should seek
to reduce flaring and venting of gas associated with the extraction of crude oil. Examples ofgas flaring reduction approaches taken by governments and the petroleum industry include the
Global Gas Flaring Reduction Public-Private Partnership sponsored by the World Bank Group.
G34. Clients are encouraged to disclose their GHG emissions annually through corporate
reports, or through other voluntary disclosure mechanisms currently being used by private
sector companies internationally of which an example has been included in the References
section.
G35.

Suggested GHG quantifying and monitoring practices are provided in Annex A.
Pesticide Use and Management
12. The client will formulate and implement an integrated pest management (IPM) and/or
integrated vector management (IVM) approach for pest management activities. The client’s
IPM and IVM program will entail coordinated use of pest and environmental information
along with available pest control methods, including cultural practices, biological, genetic
and, as a last resort, chemical means to prevent unacceptable levels of pest damage.
13. When pest management activities include the use of pesticides, the client will selectpesticides that are low in human toxicity, known to be effective against the target species,
and have minimal effects on non-target species and the environment. When the client
selects pesticides, the selection will be based on whether the pesticides are packaged insafe containers, are clearly labeled for safe and proper use, and have been manufactured byan entity currently licensed by relevant regulatory agencies.
14. The client will design its pesticide application regime to minimize damage to natural
enemies and prevent the development of resistance in pests. In addition, pesticides will behandled, stored, applied, and disposed of in accordance with the Food and Agriculture
Organization’s International Code of Conduct on the Distribution and Use of Pesticides orother good international industry practice.
15. The client will not use products that fall in World Health Organization Recommended
Classification of Pesticides by Hazard Classes Ia (extremely hazardous) and Ib (highly
hazardous); or Class II (moderately hazardous), if the project host country lacks restrictions
on distribution and use of these chemicals, or if they are likely to be accessible to personnel
without proper training, equipment, and facilities to handle, store, apply, and dispose of
these products properly.

G36. Performance Standard 3 requires that the client use pesticides only to the extent
necessary to achieve the project objectives under an integrated pest management andintegrated vector management approach and only after other pest management practices havefailed or proven inefficient. In the event that the use of pesticides beyond isolated or incidental
use is proposed as an integral aspect of the client’s activities, the client should present evidence
in the Social and Environmental Assessment of the need to use pesticides that describes the
proposed use and intended users, and the nature and degree of associated risks. Under thesecircumstances, clients should also take into consideration the potential impacts to the healthand resources of nearby communities as described in Performance Standard 4 and its

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accompanying Guidance Note. Relevant international guidelines on hazardous chemicals areincluded in the References section.
G37. Clients who finance agricultural activities that require the use of pesticides by third
parties should promote the use of integrated pest management and integrated vector
management approaches through all feasible means of dissemination of information about
these agricultural approaches.
G38. The client is expected to exercise a high degree of diligence in the selection ofpesticides so that the pesticides selected are designed to meet the project’s technical andscientific specifications. When selecting pesticides for use, the client should consider the needfor appropriate precautions to prevent the improper use of the pesticides and to protect thehealth and safety of the project workers and the affected community in accordance with theprinciples and requirements of paragraph 16 of Performance Standard 2 and PerformanceStandard 4.
G39. The packaging requirements for pesticides of Performance Standard 3 are intended toprotect the health and safety of persons involved in the transportation, storage and handling of
the pesticides, and to reduce the need for transfer between containers or repackaging into
improvised containers. The labeling requirements should clearly identify the contents of the
packaging and include instructions for intended use as well as safety information. Packaging
and labeling of pesticides should be done in a form that is appropriate for each specific market,
but should follow the guidelines for the proper packaging and labeling of pesticides which havebeen published by the Food and Agriculture Organization, as included in the References
section.
G40. Purchasing pesticides manufactured under license will increase the likelihood that thepesticides meet minimum quality and purity conditions consistent with the use and safety
documentation provided. The client should refer to and follow the recommendations andminimum standards described in the guidelines published by the Food and Agriculture
Organization, as included in the References section
G41. The storage, handling, application, and disposal of pesticides according to goodinternational industry practice should include a program to discontinue the use of pesticides
listed in Annex A of the Stockholm Convention, and to store and dispose of them in anenvironmentally sound manner, especially when these pesticides are considered obsolete.
G42. The client should seek to promote the responsible management and use of pesticides
within the context of integrated pest management and integrated vector management byinteracting with the agricultural extension services or similar organizations that may be available
locally. Additional guidance is provided in the General EHS Guidelines and Industry Sector EHS
Guidelines.

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Annex A
Suggested GHG Quantifying and Monitoring Practice
Suggested GHG emissions estimation methodologies:
There are many greenhouse gas emission estimation methodologies available for use by private
sector projects. The most authoritative and updated methodologies can be found in the 2006
IPCC Guidelines for National Greenhouse Gas Inventories. The 2006 IPCC Guidelines thatconsist of Volume 1 (General Guidance and Reporting), Volume 2 (Energy), Volume 3(Industrial Processes and Product Use), Volume 4 (Agriculture, Forestry and Other Land Use)and Volume 5 (Waste) provide suggested estimation methodologies for a number of activities
and sectors.
These 2006 IPCC Guidelines build on the previous Revised 1996 IPCC Guidelines and thesubsequent Good Practice reports, and cover new sources and gases as well as updates topreviously published methods where technical and scientific knowledge have improved. Clientswith projects producing significant GHG emissions who were using the Revised 1996 IPCC
Guidelines are recommended to review these new 2006 IPCC Guidelines and to continue tomonitor the development of newer guidelines and supplemental documents by IPCC.
In addition to the IPCC Guidelines, clients with projects of significant GHG emissions may
depending on the type and sector of the project to best meet the objective of estimating andreporting GHG emissions, refer to the several internationally-recognized greenhouse gas
emissions methodologies which can be found in the Reference section.
Illustrative examples of project activities that may result in potentially significant GHG emissions(100,000 metric ton CO2 equivalent per year or more) have been included in the following table:
Sector / Project

Projects with 100,000
metric ton CO2
equivalent per year

A: Direct Emissions
A-(i) Energy (Fossil Fuel Combustion)
Coal-fired combustion facility
Coal consumption 45,000 ton/yr (or 1,100
TJ/yr)
Oil-fired combustion facility
Oil consumption - 32,000
ton/yr (or 1,300 TJ/yr)
Gas-fired combustion facility

Gas consumption - 36,000
ton/yr (or 1,800 TJ/yr)

A-(ii) Energy (Electricity Generation)
Coal-fired power generation
Generating Capacity 18MW
Oil-fired power generation
Generating Capacity 25MW
Gas-fired power generation
Generating Capacity 41MW
A-(iii) Energy (Coal Mining)
Underground coal mining
Coal production - 370,000

73

Assumptions

Emission factor – 25.8 tC/TJ, Fraction of carbon
oxidized – 0.98, Net calorific value – 24.05
TJ/1,000ton
Emission factor – 21.1 tC/TJ, Fraction of carbon
oxidized – 0.99, Net calorific value – 40.19
TJ/1,000ton
Emission factor – 15.3 tC/TJ, Fraction of carbon
oxidized – 0.995, Net calorific value – 50.03
TJ/1,000ton
World average emission factor in 2001-2003 –893 gCO2/kWh, Annual capacity factor – 70%
World average emission factor in 2001-2003 –659 gCO2/kWh, Annual capacity factor – 70%
World average emission factor in 2001-2003 –395 gCO2/kWh, Annual capacity factor – 70%
Emission factor – 17.5m3 CH4/ton of coal, 0.67

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Surface coal mining
A-(iv) Heavy Industry
Cement production
Iron and steel production
A-(v) Agriculture
Domestic livestock (dairy
cattle, Latin America)
Domestic livestock (dairy
cattle, Africa)
A-(vi) Forestry / Land Use Change
Conversion of fast growing
hardwoods tropical forest
Conversion of Douglas fir
temperate forest

ton coal/yr
Coal production 2,600,000 ton coal/yr

GgCH4/million m3
Emission factor – 2.45m3 CH4/ton of coal, 0.67
GgCH4/million m3

Cement production 201,000 ton cement/yr
Iron / steel production 63,000 ton iron or steel/yr

Emission factor – 0.4985 tCO2/t cement

Livestock - 74,000 cattle

Emission factor – 59 kgCH4/head/yr

Livestock- 118,000 cattle

Emission factor – 37 kgCH4/head/yr

Conversion area: 4,400
haAnnual average accumulation of dry matter asbiomass – 12.5 ton dm/ha/yr, carbon fraction ofdry matter – 0.5
Annual average accumulation of dry matter asbiomass – 6.0 ton dm/ha/yr, carbon fraction ofdry matter – 0.5

Conversion area: 9,100haA-(vii) Oil and Gas Production (Flaring only)
Natural Gas Production
83,000 million m3/yr

Oil Production

2.4 million m3/yr

Associated Gas Flaring

1,400 million standard
cubic feet (SCF) gas
flaring/yr
B: Indirect Emissions (from Purchased Electricity)
Average Generation Mixture
Electricity consumption 200 GWh/yr
Coal-fired generation
Electricity consumption 110 GWh/yr
Oil-fired generation
Electricity consumption 150 GWh/yr
Gas-fired generation
Electricity consumption 250 GWh/yr

Emission factor – 1.6 tCO2/t iron or steel

CO2 emission factor of 1.2E-03 Gg per million
m3 gas production. Source: IPCC Guidelines
for National Greenhouse Gas Inventories,
Table 4.2.5 (2006)
CO2 emission factor of 4.1E-02 Gg per
3
thousand m oil production. Source: IPCC
Guidelines for National Greenhouse Gas
Inventories, Table 4.2.5 (2006)
American Petroleum Institute (API)
Combustions Emissions Estimation Methods,
Exhibit 4.8 (2004)
World average emission factor in 2001-2003 –494 gCO2/kWh
World average emission factor in 2001-2003 –893 gCO2/kWh
World average emission factor in 2001-2003 –659 gCO2/kWh
World average emission factor in 2001-2003 –395 gCO2/kWh

Note: Assumptions are from (i) Revised 1996 and 2006 IPCC Guidelines for National Greenhouse Gas Inventories, (ii) IEA
Statistics – CO2 Emissions from Fuel combustion 1971-2003, and (iii) IEA Energy Statistics Manual, 2004. These levels are forillustrative purpose only and not to be used as threshold to determine whether projects exceed 100,000 metric ton CO2 equivalent
per year.

Evaluation of greenhouse gas emissions performance:
Clients with projects having significant GHG emissions are recommended to annually evaluate
the following where necessary statistics are available for the operating country:
1. The project’s greenhouse gas emissions relative to the host country total nationalemissions to understand the magnitude of its own emissions

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2. The project’s greenhouse gas emissions performance relative to the goodinternational practice performance / host country national average performance
3. The annual trend of the project’s greenhouse gas emissions performance over time
to monitor deterioration from the originally designed performance
4. Opportunities to further improve the project’s greenhouse gas emissions
performance
Greenhouse gas emission performance indicators commonly used for evaluating items 2 and 3
above include intensity ratio indicators such as:Electricity generation: kg-CO2 equivalent per kWh electricity generated
Steel production: tons of CO2 equivalent per ton of crude steel produced
Cement production: tons of CO2 equivalent per ton of clinker produced; etc

Clients with projects producing significant GHG emissions are also recommended to evaluate(i) direct emissions from the facilities that they own or control within the physical projectboundary and, if feasible and relevant, and (ii) major indirect emissions occurring outside theproject boundary (e.g. GHG emissions from purchased electricity). This will help the client toformulate a comprehensive strategy to reduce greenhouse emissions. Emissions associatedwith projects that have an impact on land use and forests should be evaluated as part of thedirect emissions. The client should also compare the gross emissions from the project and thegross emissions from an alternative project to determine the net emissions impact by the
project. This comparison will help to identify the feasibility of additional carbon financing.
Detailed guidance for carbon financing is available from the Clean Development Mechanism
Executive Board.

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References

IFC’s Environmental, Health and Safety Guidelines (IFC) – technical guidance
informing those parts of the new policy structure related to environmental, health andsafety issues. http://www.ifc.org/ifcext/enviro.nsf/Content/EnvironmentalGuidelines

Several of the requirements set out in the Performance Standard relate to the followinginternational agreements and guidelines:
Guidance on Pollutant Release and Transfer Registers can be found in:International Register of Potentially Toxic Chemicals of the United Nations
Environment Programme (Instituted by UNEP Chemicals) – data on
environmental releases and transfers of toxic chemicals from industrial facilities.
http://www.chem.unep.ch/prtr/Default.htm

Guidance on Long-range Transboundary Air Pollution can be found in:Convention on Long-range Transboundary Air Pollution (UNECE, 1979) provides
a framework for controlling and reducing the damage to human health and theenvironment caused by transboundary air pollution.
http://www.unece.org/env/lrtap

Various examples of cleaner production are being compiled by international organizations
such as:

United Nations Environmental Program (UNEP)
United Nations Industrial Development Organization (UNIDO)
Asian Productivity Organization (APO)

Guidance on waste and hazardous materials can be found in:Basel Convention on the Control of Transboundary Movements of Hazardous
Wastes and their Disposal (UNEP, 1989) provides assistance and guidelines onlegal and technical issues, gathers statistical data, and conducts training on theproper management of hazardous waste http://www.basel.int/index.html


Supporting information to the Basel Convention are available at:
http://www.basel.int/meetings/sbc/workdoc/techdocs.html

Stockholm Convention on Persistent Organic Pollutants (UNEP, 2001) promotes
the reduction or elimination of releases of POPs through intentional and/or
unintentional production and use of chemicals, and from stockpiles and wastes.
http://www.pops.int/
Draft Guidelines on Best Available Techniques and Provisional Guidance on
Best Environmental Practices relevant to Article 5 and Annex C of theStockholm Convention on Persistent Organic Pollutants
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Standardized Toolkit for the Identification and Quantification of Dioxin andFuran Releases (UNEP Chemicals, 2005) provides methodology to aid
countries in developing their inventories to estimate releases of PCDD/PCDF
and reviewing these inventories. http://www.pops.int/documents/guidance/Montreal Protocol on Substances that Deplete the Ozone Layer (UNEP, 2000)
sets targets for reducing the production and consumption of ozone depleting
substances.
http://hq.unep.org/ozone/Montreal-Protocol/Montreal-Protocol2000.shtml



Rotterdam Convention on the Prior Informed Consent for Certain Hazardous
Chemicals and Pesticides in International Trade (UNEP, revised 2005) procedure for certain hazardous chemicals and pesticides in international trade(Annex III).
http://www.pic.int/home.php?type=t&id=49



Marpol 73/78 - International Convention for the Prevention of Pollution from
Ships, 1973, as modified by the Protocol of 1978 relating thereto (International
Maritime Organization, 1973/1978) - prevention of pollution of the marine
environment by ships from operational or accidental causes.
http://www.imo.org/Conventions/contents.asp?doc_id=678&topic_id=258

For guidance on minimizing the occurrence and harmful effects of technological accidents
and environmental emergencies:

APELL - Awareness and Preparedness for Emergencies on a Local Level(UNEP) – provides technical reports and other materials to assist disasterprevention and response planning in vulnerable areas.
http://www.uneptie.org/pc/apell/In addition, the requirements set out in the Performance Standard on Ambient Conditions relate
to the following Internationally Recognized Ambient Quality Guidelines and Standards:


Air Quality Guidelines – Global Update 2005 (World Health Organization, 2006)
http://www.euro.who.int/Document/E90038.pdf

Guidelines for Safe Recreational Water Environments - Volume 1. Coastal and Fresh
Waters (World Health Organization, 2003) describes the present state of knowledge
regarding the impact of recreational use of coastal and freshwater environments
upon the health of users.
http://www.who.int/water_sanitation_health/bathing/srwe1/en/



Guidelines for Drinking-Water Quality - Third Edition (World Health Organization,2004) sets worldwide basis for regulation and standard setting to ensure the safety ofdrinking-water. http://www.who.int/water_sanitation_health/dwq/gdwq3/en/

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

Guidelines for Community Noise (World Health Organization, 1999) provide
guidance to environmental health authorities and professional trying to protect
people from the harmful effects of noise in non-industrial environments.
http://www.who.int/docstore/peh/noise/guidelines2.html

Recommendations of the International Commission on Radiological Protection ICRP Publication 60. (International Commission on Radiological Protection, 1991)
intended to help regulatory and advisory agencies deal with ionizing radiation andwith the protection of man. http://www.icrp.org

International Basic safety Standards for Protection against Ionizing Radiation and for
the Safety of Radiation Sources - Safety Series No. 115 (International Atomic Energy
Agency, 1996) provides basic requirements for protection against the risks
associated with exposure to ionizing radiation and for the safety of radiation sourcesthat may deliver such exposure.
http://www-pub.iaea.org/MTCD/publications/PDF/SS-115-Web/Pub996_web-1a.pdf

Guidelines for Limiting Exposure to Time-Varying Electric, Magnetic, andElectromagnetic Fields (Up To 300 GHz) (International Commission on Non-Ionizing
Radiation Protection, 1998) establishes guidelines for limiting electromagnetic field
exposure to protect against known adverse health affects
http://www.icnirp.de/documents/emfgdl.pdf

Additional reference to protection against radiation:
IAEA Safety Standards for protecting people and the environment published 2006 provides
safety fundamentals/principals.
http://www-pub.iaea.org/MTCD/publications/PDF/Pub1273_web.pdf
In addition, the requirements set out in the Performance Standard on Greenhouse Gas
Emissions relate to the following Internationally Recognized Guidelines and Standards:


United Nations Framework Convention on Climate Change (UN, 1994) sets anoverall framework for intergovernmental efforts to tackle the challenge posed byclimate change. http://www.unfccc.int
Kyoto Protocol (UN, 1997) sets individual, legally-binding targets to limit or reducegreenhouse gas emissions in order to pursue the objectives of the UNFCCC.
http://unfccc.int/essential_background/kyoto_protocol/items/2830.php
Clean Development Mechanism (UN) to assist Parties not included in Annex I
in achieving sustainable development and in contributing to the ultimate
objective of the UNFCCC, and to assist Parties included in Annex I in
achieving compliance with their quantified emission limitation and reduction
commitments. http://unfccc.int/kyoto_mechanisms/cdm/items/2718.php

Joint Implementation (UN) - an Annex I Party may implement an emissionreducing project or a project that enhances removals by sinks in the territory78

Guidance Note 3

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July 31, 2007of another Annex I Party and count the resulting emission reduction units
towards meeting its own Kyoto target.
http://unfccc.int/kyoto_mechanisms/ji/items/1674.php


Revised 2006 IPCC Guidelines for National Greenhouse Gas Inventories(Intergovernmental Panel on Climate Change,2006) - methodologies for estimating
anthropogenic emissions by sources and removals by sinks of greenhouse gases" incalculation of legally-binding targets during the first commitment period.
http://www.ipcc-nggip.iges.or.jp/public/2006gl/index.htm

Internationally-recognized greenhouse gas emissions methodologies:
World Business Council for Sustainable Development (WBCSD) / World Resources
Institute (WRI). Greenhouse Gas (GHG) Protocol Initiative:

A Corporate Accounting and Reporting Standard, Revised Edition (WBCSD and
WRI 2004) includes additional guidance, case studies, appendices, and a newchapter on setting a GHG target.
http://www.wbcsd.org/includes/getTarget.asp?type=d&id=OTA4Mg



The GHG Protocol for Project Accounting (WBCSD and WRI, 2005) aims to be a
guidance manual as well as a tool for quantifying and reporting reductions from
GHG projects. The uniqueness of the protocol lies in its ability to distinguishbetween policy decisions and technical accounting aspects.
http://www.wbcsd.org/includes/getTarget.asp?type=d&id=MTc1MDk

Climate Leaders GHG Inventory Protocol (US Environmental Protection Agency) guidance on how to inventory and report GHG emissions.
http://www.epa.gov/climateleaders/resources/guidance.html



ISO 14064 Part 2 - ISO Greenhouse Gas Project Accounting Standard (ISO, 2006)
Specification with guidance at the project level for quantification, monitoring andreporting of greenhouse gas emission reductions or removal enhancements
http://www.iso.org/iso/en/CatalogueDetailPage.CatalogueDetail?CSNUMBER=3838
2&ICS1=13&ICS2=20&ICS3=40



Guidelines for the Measurement and Reporting of Emissions (UK Department ofEnvironment and International Affairs, 2003) a set of reporting guidelines andprotocols for direct participants in the UK emissions trading scheme.
http://www.defra.gov.uk/environment/climatechange/trading/uk/pdf/tradingreporting.pdf

Emission Inventory Improvement Program, Volume VIII – Estimating Greenhouse
Gas Emissions (US Environmental Protection Agency, 1999) currently under revision.
http://www.epa.gov/ttn/chief/eiip/techreport/



The Aluminum Sector Greenhouse Gas Protocol (International Aluminum Institute,2006) enhances and expands for the aluminum sector the World Business Council
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for Sustainable Development/World Resources Institute greenhouse gas corporate
accounting and reporting protocol.
http://www.world-aluminium.org/environment/climate/ghg_protocol.pdf
Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Gas
Industry (American Petroleum Institute, 2004) provides tools for companies
measuring and reporting their greenhouse gas emissions in the oil and gas industry.
http://api-ec.api.org/policy/index.cfm?bitmask=001001004002000000#



Petroleum Industry Guidelines for Reporting GHG Emissions (International
Petroleum Industry Environmental Conservation Association, 2003) guidance
focused specifically on the accounting and reporting of GHG emissions at the facility
through the corporate level.
http://www.ipieca.org/activities/climate_change/climate_publications.php

An example on private sector disclosure of GHG Emissions:

Carbon Disclosure Project - institutional investors collectively sign a single global
request for disclosure of information on Greenhouse Gas Emissions.
http://www.cdproject.net/

Various sources providing national greenhouse gas emission statistics are:


CO2 Emissions from Fuel Combustion (International Energy Agency, 2006 edition)
provides data to assist in understanding the evolution of the emissions of CO2 formore than 140 countries and regions by sector and by fuel.
http://www.iea.org/Textbase/publications/free_new_Desc.asp?PUBS_ID=1825



Carbon Dioxide Emission from Fossil Fuel Combustion (A Compendium of Data on
Global Change, 2005) provides synopses of frequently used time series of globalchange data. http://cdiac.ornl.gov/trends/emis/em_cont.htm

Energy Information Administration (The US Department of Energy) provides US
emission data and other useful tools. http://www.eia.doe.gov/environment.html

In addition, the requirements set out in the Performance Standard on Pesticides relate to thefollowing <Internationally Recognized Pesticides Guidelines and Standards>:

The International Code of Conduct on the Distribution and Use of Pesticides (Foodand Agriculture Organization of the United Nations (FAO), 2003) establishes andencourages implementation of voluntary standards of conduct associated with the
distribution and use of pesticides.
http://www.fao.org/WAICENT/FAOINFO/AGRICULT/AGP/AGPP/Pesticid/80

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

Pesticide Storage and Stock Control Manual (Food and Agriculture Organization of
the United Nations, 1996) useful in many countries particularly in the management
and stock control of stored pesticides.
http://www.fao.org/documents/show_cdr.asp?url_file=/docrep/V8966E/V8966E00.htm



Revised Guidelines on Good Labeling Practice (Food and Agriculture Organization of
the United Nations, 1995) guidance on the preparation of a label and specific advice
on content and layout.
http://www.fao.org/WAICENT/FAOINFO/AGRICULT/AGP/AGPP/Pesticid/Code/Dow
nload/label.doc

Guidelines for Retail Distribution of Pesticides with Particular Reference to Storageand Handling at the Point of Supply to Users in Developing Countries (Food andAgriculture Organization of the United Nations, 1988) guidance on how to store andhandle pesticides at the point of supply to users.
http://www.fao.org/WAICENT/FAOINFO/AGRICULT/AGP/AGPP/Pesticid/Code/Dow
nload/retail.doc

Guidelines for the Management of Small Quantities of Unwanted and Obsolete
Pesticides - FAO Pesticide Disposal Series 7 (Food and Agriculture Organization of
the United Nations, 1999) guidance on the disposal of small quantities of unusablepesticide stocks, pesticide-related waste and contaminated containers.
http://www.fao.org/documents/show_cdr.asp?url_file=/docrep/X1531E/X1531E00.htm

Guidelines for Personal Protection when Working with Pesticides in Tropical
Climates (Food and Agriculture Organization of the United Nations, 1990) guidanceon protecting pesticide users while ensuring they are able to work comfortably andefficiently in tropical climates.
http://www.fao.org/WAICENT/FAOINFO/AGRICULT/AGP/AGPP/Pesticid/Code/Guide.htm

Rotterdam Convention on the Prior Informed Consent for Certain Hazardous
Chemicals and Pesticides in International Trade (UNEP, revised 2005) - procedure
for certain hazardous chemicals and pesticides in international trade (Annex III).
http://www.pic.int/home.php?type=t&id=36&sid=34



The WHO Recommended Classification of Pesticides by Hazard and Guidelines toClassification (International Programme on Chemical Safety (IPCS), 2002) Provides
classification system to distinguish between the more and the less hazardous forms
of selected pesticides based on acute risk to human health.
http://www.who.int/ipcs/publications/pesticides_hazard/en/

81Guidance Note 4

Community Health, Safety and Security
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This Guidance Note 4 corresponds to Performance Standard 4. Please also refer to the
Performance Standards 1-3 and 5-8 as well as the corresponding Guidance Notes for additional
information. Bibliographical information on all reference materials appearing in the text of this
Guidance Note can be found in the References Section at the end.

Introduction
1. Performance Standard 4 recognizes that project activities, equipment, andinfrastructure often bring benefits to communities including employment, services, andopportunities for economic development. However, projects can also increase the potential
for community exposure to risks and impacts arising from equipment accidents, structural
failures, and releases of hazardous materials. Communities may also be affected by
impacts on their natural resources, exposure to diseases, and the use of security personnel.
While acknowledging the public authorities’ role in promoting the health, safety and securityof the public, this Performance Standard addresses the client’s responsibility to avoid or
minimize the risks and impacts to community health, safety and security that may arise fromproject activities. The level of risks and impacts described in this Performance Standard
may be greater in projects located in conflict and post-conflict areas.

Objectives

To avoid or minimize risks to and impacts on the health and safety of the local
community during the project life cycle from both routine and non-routine
circumstances
To ensure that the safeguarding of personnel and property is carried out in alegitimate manner that avoids or minimizes risks to the community’s safety andsecurity

G1.
The client’s Social and Environmental Assessment presents an opportunity to the client
to identify, evaluate and address potential impacts and risks of the project to the local
community, and to decrease the incidence of accidents, injuries, illnesses, and deaths fromproject related activities in the community within the project’s area of influence (the local
community). Local community is considered as an affected community if it is likely to be directly
affected by the project. The breadth, depth and type of analysis should be proportionate to thenature and scale of the proposed project’s risks to and potential impacts on the health andsafety of the local community.
G2.
Performance Standard 4 also recognizes that clients have a legitimate obligation andinterest in safeguarding company personnel and property. If the client determines that theymust use security personnel to do so, security should be provided in a manner that does notjeopardize the community’s safety and security or the client’s relationship with the community
and that is consistent with national requirements, including national laws implementing hostcountry obligations under international law, and the requirements of Performance Standard 4.

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Scope of Application
2. The applicability of this Performance Standard is established during the Social andEnvironmental Assessment process, while implementation of the actions necessary to meetthe requirements of this Performance Standard is managed through the client’s Social andEnvironmental Management System.
The assessment and management system
requirements are outlined in Performance Standard 1.
3. This Performance Standard addresses potential risks and impacts to the affected
community from project activities. Occupational health and safety standards are found inparagraph 16 of Performance Standard 2, and environmental standards to prevent impacts
on human health and the environment due to pollution are found in PerformanceStandard 3.

Requirements
Community Health and Safety Requirements
General Requirements
4. The client will evaluate the risks and impacts to the health and safety of the affected
community during the design, construction, operation, and decommissioning of the project
and will establish preventive measures to address them in a manner commensurate with theidentified risks and impacts. These measures will favor the prevention or avoidance of risks
and impacts over minimization and reduction.
5. Where the project poses risks to or adverse impacts on the health and safety of affected
communities, the client will disclose the Action Plan and any other relevant project-related
information to enable the affected communities and relevant government agencies tounderstand these risks and impacts, and will engage the affected communities andagencies on an ongoing basis consistent with the requirements of Performance Standard 1.

G3.
Community health and safety considerations should be addressed through a process ofSocial and Environmental Assessment, resulting in an Action Plan for disclosure to thecommunity. When complex health or safety issues are involved, it may be appropriate for theclient to engage experts for free-standing assessment, separate from the Assessment required
under Performance Standard 1. Details of Health Impact Assessment process and example ofcritical elements can be found in Annex C of this Guidance Note, as well as in Health Impact
Assessment: Main concepts and suggested approach (ECHP/WHO 1999), and A Guide to
Health Impact Assessment in the oil and gas industry (IPIECA/OGP 2005) (see the Reference
Section of this Guidance Note). Where mitigation measures require action by third parties, suchas national or local governments, the client should, if permitted by the relevant governmental
agency, be prepared to work with them in order to find a solution that helps meet therequirements of Performance Standard 4.
G4.
The community engagement requirements of Performance Standard 4 can be met
through implementation of the community engagement process described in paragraph 19
through 23 of Performance Standard 1, including the process of free, prior, and informed
consultation and informed participation of the affected communities, in the case of projects withpotential significant adverse impacts to them. The client should design its community

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engagement process that reflects communities’ capacities to understand and act on health andsafety information. For example, since women generally make most health decisions at thehousehold level, their role in future health education and intervention programs should beconsidered.
G5.
Community health and safety management is more than a technical issue. It also
requires a sound understanding of the social and cultural processes through which communities
experience, perceive and respond to risks and impacts. Community perceptions are often
conditioned less by technical or quantitative assessments, and more by the ways in which
community members experience change in their environments. They are, for example, likely tohave greater perception of risk where it is involuntary, complex, beyond their personal control,or where the distribution of risks and benefits is considered inequitable. The community might
be impacted by various psychosocial effects associated with a project. Impacts include
changes in sense of cohesion and security among members of the community, and perceived
distribution of the project benefits and negative impacts, e.g., equity, particularly for women.
Another psychosocial concerns are changes in alcohol, drugs, or tobacco usage, genderviolence and influx of sex workers associated with increased incomes or migration of “outside”
workers into established communities surrounding a project. 1 These issues should therefore be
taken into account during the engagement process. The client’s grievance mechanism as
outlined in paragraph 23 of Performance Standard 1 should help the client understand thecommunity’s perceptions of project risks and impacts and to adjust its measures and actions toaddress the community concerns.
G6.
For small projects, community engagement to address the health and safety ofcommunities entail brief consultation with community representatives, including women’s groups
or women only sessions, local authorities and providers of health and safety services to address
their concerns about any critical aspects of a project that may be encountered during theconstruction phase (e.g. increased traffic, noise, dust, movement of heavy machinery). For
large or complex projects with risks and potentially significant impacts to public health, heathcare systems and demand for health services, this process may involve reviewing existing
health and safety conditions, wide dissemination of information through public forums, andconsultation with communities in the project area of influence about their health and safetyconcerns in order to address potential impacts from activities such as the influx of workers
during the construction phase and more lasting environmental changes during the operational
phase. In these large or complex projects, further consultation may be needed with regulatory
agencies, local government, and community representatives in order to determine appropriate
measures and actions and delineate responsibilities with respect to community health andsafety issues.
G7.
Generally, community health monitoring is considered as a government function that is
not within the technical obligation or expertise of a project. However, some projects may belocated in environments that have extremely weak health and demographic surveillancesystems. In these cases, a higher level of interaction with the host government may be needed
1

Survey questionnaires, e.g., the World Bank Core Welfare Indicators Questionnaire (CWIQ) or separate modules
developed by the In-Depth Network of Demographic Surveillance Sites (see the References Section) can be useful in
identifying such concerns.

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in order for the project to accurately track health performance. While from a public healthperspective, monitoring is typically performed at a community rather than at an individual
household level, in some situations, household level monitoring may be appropriate. For
example, where large numbers of vulnerable and disadvantaged individuals may be created byproject related resettlement or relocation activities, individual household level health monitoring
may be appropriate as part of a monitoring plan under the relevant resettlement action plan.
Monitoring and reporting activities that are linked to government health and demographic information systems
may provide opportunities to highlight and track positive health outcomes linked to the project, which otherwise may
be overlooked.
Infrastructure and Equipment Safety
6. The client will design, construct, and operate and decommission the structuralelements or components of the project in accordance with good international industry
practice,1 and will give particular consideration to potential exposure to natural hazards,
especially where the structural elements are accessible to members of the affected
community or where their failure could result in injury to the community. Structuralelements will be designed and constructed by qualified and experienced professionals, andcertified or approved by competent authorities or professionals. When structural elements
or components, such as dams, tailings dams, or ash ponds, are situated in high-risk
locations, and their failure or malfunction may threaten the safety of communities, the client
will engage one or more qualified experts with relevant and recognized experience in similar
projects, separate from those responsible for the design and construction, to conduct a
review as early as possible in project development and throughout the stages of project
design, construction, and commissioning. For projects that operate moving equipment on
public roads and other forms of infrastructure, the client will seek to prevent the occurrenceof incidents and accidents associated with the operation of such equipment.
_________________________
1

Defined as the exercise of that degree of skill, diligence, prudence and foresight that would reasonably andordinarily be expected from skilled and experienced professionals engaged in the same type of undertaking
under the same or similar circumstances globally.

G8.
Qualified and experienced professionals are those with proven experience designingand constructing projects of a similar complexity. Qualifications may be demonstrated through a
combination of formal technical training and practical experience or through more formal
professional registration or certification systems at the national or international levels.
G9.
The need for certification and approval of structural elements to meet the requirementsof Performance Standard 4 will entail consideration of engineering safety competencies
including geotechnical, structural, electrical, mechanical, and fire specialties. Clients will be
expected to base this determination on the potential risk of adverse consequences posed by thenature and use of these structural elements and by local regulatory requirements. Additional
guidance is provided in the General EHS Guidelines and Industry Sector EHS Guidelines.
G10. Projects involving structures and buildings accessible to workers and the public may
entail certification of structural and fire safety issues by engineering and fire safety professionals
registered with national or international professional organizations to perform these duties
and/or local regulatory agencies with oversight on these matters. Certification is generally best
conducted at the design stage of the project, after construction, and during operation to identify
flaws that may be due to the construction phase or to structural movements during operation.
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For projects with risks to workers and the public, the client should also build its internal capacity
to monitor engineering and fire safety of its operations, including daily monitoring and internal
audits. The risk will be higher in hotels, medical facilities, and residential institutions, where
members of the public are involved, since they may not have access to safety information aboutbuildings.
G11. High risk structural elements are most commonly encountered in larger projects andinclude those that could threaten human life in the event of failure, such as dams locatedupstream of communities. In these cases, a risk assessment should be performed byrecognized and qualified experts in addition to the local engineering certification requirements.
Representative types of dams which may require risk assessments and/or review by experts
include hydroelectric power dams, mine tailings dams, dams for ash ponds, fluid overburden
and spoils, water and other liquid storage, and dams for wastewater and storm water
management. Examples of risk-based criteria that can be used to evaluate dams are includedin Annex D.
Hazardous Materials Safety
7. The client will prevent or minimize the potential for community exposure to hazardous
materials that may be released by the project. Where there is a potential for the community(including workers and their families) to be exposed to hazards, particularly those that may
be life-threatening, the client will exercise special care to avoid or minimize their exposure
by modifying, substituting or eliminating the condition or substance causing the hazards.
Where hazardous materials are part of existing project infrastructure or components, theclient will exercise special care when conducting decommissioning activities in order toprevent exposure to the community. In addition, the client will exercise commerciallyreasonable efforts to control the safety of deliveries of raw materials and of transportationand disposal of wastes, and will implement measures to avoid or control community
exposure to pesticides in accordance with the requirements outlined in paragraphs 6 and 12
through 15 of Performance Standard 3.

G12. In addition to addressing the release of hazardous materials consistent with
Performance Standard 3, clients should also evaluate, as part of the l Assessment, the risks
posed by the management of hazardous materials that may extend beyond the project’s
property boundary and into areas inhabited or used by the community. Clients should takesteps to avoid or minimize community exposure to hazards associated with the project. One of
the ways to accomplish this is by using less hazardous substitutes where they are found to betechnically and financially feasible and cost-effective.
G13. Because some hazardous materials may pose a significant risk to the community at theend of their life-cycle, as may be the case with the use of asbestos in building materials or PCBs
in electrical equipment, Performance Standard 4 requires that clients make reasonable efforts toavoid their use, unless there are no feasible alternatives or the client can ensure their safe
management.
The safe management of hazardous materials should extend into thedecommissioning phase of the project where remaining wastes, including demolition wastes,
must be safely managed according to the waste management requirements of PerformanceStandard 3. Additional guidance is provided in the General EHS Guidelines and Industry
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G14. Even if the client cannot exert direct control over the actions of its contractors andsubcontractors, clients should use commercially reasonable means to investigate their capacity
to address safety issues, communicate its expectations of safety performance, and otherwise
influence the safety behavior of contractors, especially those involved in the transportation of
hazardous materials to and from the project site.
G15. Incremental or cumulative project related increases in emissions or releases to air, waterand soil may be critical, particularly in periurban and urban locations. While the absolutemagnitude of the proposed new project may be relatively low, the impacts are incremental towhat may already be a tenuous health setting. In this situation, careful documentation of preproject baseline conditions is critical 2.
Environmental and Natural Resource Issues
8. The client will avoid or minimize the exacerbation of impacts caused by natural hazards,
such as landslides or floods that could arise from land use changes due to project
activities.
9. The client will also avoid or minimize adverse impacts due to project activities on soil,
water, and other natural resources in use by the affected communities.

G16. These requirements primarily apply to projects that may result in significant changes tothe physical environment, such as natural vegetation cover, existing topography, and hydrologic
regimes including projects such as mining, industrial parks, roads, airports, pipelines, and new
agricultural development. In these cases, special precautions should be followed to prevent
geological instability, safely manage storm water flow, prevent a reduction in the availability ofsurface water and groundwater for human and agricultural use (depending on the sources ofwater that the community has traditionally relied on), and prevent the degradation in the qualityof these resources. These requirements also apply to soil resources used by the community for
agricultural or other purposes.
G17. Consistent with the requirements of Performance Standard 3, the quality of soil andwater as well as other natural resources such as fauna and flora, woodlands, forest products
and marine resources, should be protected so as not to pose an unacceptable risk to humanhealth, safety, and the environment due to the presence of pollutants. These requirements also
apply to the project’s decommissioning phase where the client should ensure that the ambientquality of the project site is compatible with its intended future use. General information on the
management and use of renewable natural resources can be found in paragraphs 14 through17 of Performance Standard 6 and its accompanying Guidance Note.

2
Quantitative human health risk assessment techniques that characterize the attributable, facility-specific incremental
burden are well described and are focused on risks from impacts to air, soil and water. These risk assessment
techniques which use non-cancer and cancer disease endpoints as performance indicators. In a developing country
setting, there are other summary measures of population health that may be considered, e.g., disability-adjusted life
years (DALY), disability-adjusted life expectancy (DALE), and are discussed at the WHO Statistics and Health
Information Systems (See the References section).

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Community Exposure to Disease
10. The client will prevent or minimize the potential for community exposure to water-borne,water-based, water-related, vector-borne disease, and other communicable diseases that
could result from project activities. Where specific diseases are endemic in communities in
the project area of influence, the client is encouraged to explore opportunities during the
project life cycle to improve environmental conditions that could help reduce theirincidence.
11. The client will prevent or minimize transmission of communicable diseases that may be
associated with the influx of temporary or permanent project labor.

G18. Health impacts to potentially affected communities should be broadly considered and notjust restricted to infectious diseases 3. In many settings, changes in natural vegetation andhabitat have pronounced impacts on vector-borne diseases. Poorly designed surface waterdrainage and creation of construction pits and depressions can have potentially adverse
impacts on adjacent local communities. Primary prevention through appropriate design andconstruction techniques is likely to be an extremely cost-effective strategy if applied early during
the front-end engineering design cycle. In contrast, retrofitting facilities and physical structures is
expensive and difficult. Significant health improvements can be captured by design andconstruction improvements in four critical sectors: (i) housing; (ii) water and sanitation; (iii)transportation; and (iv) information and communication facilities. The public health implications,both positive and negative, of physical structures are often overlooked. Building andconstruction activity invariably alter habitats with both short and long-term diseaseconsequences. For example, water storage facilities may have significant consequences for the
distribution and transmission of vector-borne diseases such as malaria, schistosomiasis anddengue fever.
G19. Food security and nutritional status within communities may be positively or negatively
impacted by projects at both a household and community level. Significant food inflation may
marginalize vulnerable populations. Individuals who are resettled because of a project may
experience both short and long-term changes in nutritional status. These impacts can beobserved both acutely and chronically by changes in the levels of stunting, wasting andunderweight children under age five. Similar assessments can be made in other age groups
including working adults, women of reproductive ages, and adolescents.
G20. Consideration of the typical communicable infectious diseases is equally important.
Communicable diseases can pose a risk to the viability of businesses by affecting theavailability of a labor pool, the productivity of the workforce, or even the customer base.
Communicable diseases, also referred to as infectious diseases, are described as illnesses thatare attributable to specific infectious agents or their toxic products that arise throughtransmission of these agents or their products from an infected person, animal, or inanimate
reservoir to a susceptible host. Transmission may occur either directly or indirectly through anintermediate plant or animal host, vector, or the inanimate environment. Examples of
3

There is a clear differentiation between the traditional definition of “public health” with its disease-specific focus andthe more broadly defined “environmental health” which encompasses the “human living environment” (See theReferences section on Environmental Health: Bridging the Gap).

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communicable diseases include water-borne (e.g. amoebiaisis, cholera and typhoid), waterrelated (e.g. malaria and arboviral disease), food-borne (e.g. botulism, hepatitis A, andCreutzfeldt-Jakob disease), respiratory diseases (e.g. influenzas, SARS, and tuberculosis), andsexually transmitted diseases (e.g. Chlamydia, Syphilis, HIV/AIDS and Gonorrhea). The spreadof some communicable diseases can be difficult to control without a comprehensive approach
involving national and local governments, and in some cases, the support of international healthagencies.
G21. Paragraph 10 of Performance Standard 4 applies primarily to projects that may causesignificant changes in the natural hydrologic regime of an area, such as dams and irrigation
schemes or project located in areas without proper sanitary wastewater discharge andtreatment infrastructure. The waterborne diseases mentioned in Performance Standard 4 andthe types of project activities that may contribute to their incidence are described in further detailin Annex E. The client is encouraged to find opportunities during the project life-cycle toimprove environmental conditions, such as improvement in site drainage patterns, in order tolimit possible habitats for mosquitoes linked to water-based and water-related disease, or
through improvements in potable water availability or sanitary wastewater collection, treatment,
or discharge, especially where these improvements can be provided at marginal cost to theproject.
G22. The client should have adequate surveillance programs to screen the health of its
workers, which may include documenting and reporting on existing diseases as required inparagraph 16 of Performance Standard 2. If the client proposes to bring in skilled third-country
national workers for short term construction activities, then careful pre-employment screening
should be considered. The disease burdens of many important communicable diseases (e.g.,malaria, tuberculosis, influenza) can significantly vary from one region of the world to another.
Disease resistance patterns can also significantly vary (e.g., multi-drug resistant tuberculosis).
Therefore, the client should take precautions to avoid any inadvertent introduction of new or
highly resistant diseases into host communities. Similarly, the reverse situation -- hostcommunities introducing diseases into “naïve” work populations -- should also be anticipatedand avoided. Within the local community (including workers and their families), the client isencouraged to play an active role to prevent the transmission of communicable diseases
through communication and educational programs designed to raise awareness. If the client’s
workers are composed of a significant percentage of local community residents, they constitutean ideal “peer education” group for introducing positive health programs in host communities.
G23. Contractor action can also have significant health impacts in relation to two key areas;(i) transmission of Sexually Transmitted Infections (STIs), including HIV/AIDS; and (ii) accidents
and injuries. For example, in any settings, long-haul truckers have significantly higher rates of
STIs than the host communities. Clients should carefully consider the use of specific educationand training programs for transport contractors. .
G24. The client should also ensure that health information obtained as part of its efforts toprevent the transmission of communicable diseases, such as through the use of preemployment medical exams and other forms of health screening, will not be used for exclusionfrom employment or any other form of discrimination. For further details on good practices toaddress HIV/AIDS, see IFC’s Good Practice Note on HIV/AIDS in the Workplace, and the
HIV/AIDS Resource Guide for the Mining Sector.
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Emergency Preparedness and Response
12. The client will assess the potential risks and impacts from project activities and inform
affected communities of significant potential hazards in a culturally appropriate manner.
The client will also assist and collaborate with the community and the local government
agencies in their preparations to respond effectively to emergency situations, especiallywhen their participation and collaboration are necessary to respond to such emergency
situations. If local government agencies have little or no capacity to respond effectively, theclient will play an active role in preparing for and responding to emergencies associatedwith the project. The client will document its emergency preparedness and response
activities, resources, and responsibilities, and will disclose appropriate information in the
Action Plan or other relevant document to affected communities and relevant government
agencies.

G25. Where the consequences of emergency events are likely to extend beyond the projectproperty boundary or originate outside of the project property boundary (e.g. hazardous material
spill during transportation in public roadways), the client is required to design emergency
response plans based on the risks to community health and safety identified during the processof Social and Environmental Assessment. When projects need to develop such plans, theproposed actions and measures should be included in the client’s Action Plan. Emergency
plans should be developed in close collaboration and consultation with potentially affected
communities and should include detailed preparation to safeguard the health and safety ofworkers and the communities in the event of an emergency. Further requirements and guidanceon this subject, including some of the basic elements of emergency preparedness and responseplans, are provided in paragraph 16 of Performance Standard 2 and paragraph 7 of
Performance Standard 3 and the accompanying Guidance Notes.
G26. The client should provide relevant local authorities, emergency services, and theaffected community with information on the nature and extent of environmental and humanhealth effects that may result from routine operations or unplanned emergencies at the project
facility. Information campaigns should describe appropriate behavior and safety measures inthe event of an accident involving project facilities, as well as actively seek community views
concerning risk management and associated community preparedness. In addition, clientsshould consider including the community in regular training exercises (e.g. simulations, drills,
and debriefs of exercises and actual events) to familiarize them with proper procedures in theevent of an emergency. Emergency plans should address the following aspects of emergency
response and preparedness:









Specific emergency response procedures
Trained emergency response teams
Emergency contacts and communication systems / protocols
Procedures for interaction with local and regional emergency & health authorities
Permanently stationed emergency equipment & facilities (e.g. first aid stations,fire extinguishers/hoses, sprinkler systems)
Protocols for fire truck, ambulance and other emergency vehicle services
Evacuation routes and meeting points
Drills (annual or more frequently as necessary)90

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Additional guidance is provided in the General EHS Guidelines and Industry Sector EHS
Guidelines.
Security Personnel Requirements
13. When the client directly retains employees or contractors to provide security tosafeguard its personnel and property, it will assess risks to those within and outside theproject site posed by its security arrangements. In making such arrangements, the client
will be guided by the principles of proportionality, good international practices in terms ofhiring, rules of conduct, training, equipping and monitoring of such personnel, andapplicable law. The client will make reasonable inquiries to satisfy itself that those
providing security are not implicated in past abuses, will train them adequately in the use offorce (and where applicable, firearms) and appropriate conduct toward workers and the
local community, and require them to act within the applicable law. The client will not
sanction any use of force except when used for preventive and defensive purposes inproportion to the nature and extent of the threat. A grievance mechanism should allow theaffected community to express concerns about the security arrangements and acts of
security personnel.
14. If government security personnel are deployed to provide security services for theclient, the client will assess risks arising from such use, communicate its intent that the
security personnel act in a manner consistent with paragraph 13 above, and encourage therelevant public authorities to disclose the security arrangements for the client’s facilities tothe public, subject to overriding security concerns.
15. The client will investigate any credible allegations of unlawful or abusive acts of
security personnel, take action (or urge appropriate parties to take action) to prevent
recurrence, and report unlawful and abusive acts to public authorities when appropriate.

G27. Security arrangements to protect a client’s personnel and property will typically dependin large part on security risks in the operating environment, though other factors, such ascompany policy or the need to protect intellectual property or hygiene in production operations,can also influence security decisions. In determining what security arrangements andequipment are necessary, clients should apply the principle of proportionality. In many
circumstances, a night watchman may be all that is required, together with some basic security
awareness training for staff, sign-posting, or well-placed lighting and fences. In more complex
security environments, the client may have to directly employ further security personnel orengage private security contractors or even work directly with public security forces.
G28. It is important for clients to assess and understand the risks involved in their operations,based on reliable and regularly updated information. For clients with small operations in stablesettings, a review of the operating environment can be relatively straightforward. For larger
operations or those in unstable environments, the review will be a more complex and thoroughrisk assessment that may need to consider political, economic, legal, military and social
developments, and any patterns and causes of violence and potential for future conflicts. It may
be necessary for clients to also assess the record and capacity of law enforcement and judicial
authorities to respond appropriately and lawfully to violent situations. If there is social unrest or
conflict in the project’s area of influence, the client should understand not only the risks posed toits operations and personnel but also whether its operations could create or exacerbate

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conflict. Conversely, if provided consistent with Performance Standard 4, the client’s operations
involving the use of security personnel may avoid or mitigate adverse impacts on the situationand contribute to the improvement of security conditions around the project area. Clients should
consider security risks associated with the entire range and stages of their operational activities,
including personnel, products and materials being transported. The assessment should also
address negative impacts on workers and the surrounding communities, such as the potential
for increased communal tensions due to the presence of security personnel or the risk of theftand circulation of firearms used by security personnel.
G29. Community engagement is an important aspect of an appropriate security strategy, as
good relations with workers and communities can be the most important guarantee of security.
Clients should communicate their security arrangements to workers and the affected
community, subject to overriding safety and security needs, and involve workers andsurrounding communities in discussions about the security arrangements through thecommunity engagement process described in Performance Standard 1.
G30. Clients should require the appropriate conduct of security personnel it employs or
engages. Security personnel should have clear instructions on the objectives of their work andpermissible actions. The level of detail of the instructions will depend on the scope of permitted
actions (particularly if security personnel are permitted to use force and in exceptional
circumstances, firearms) and the number of personnel. The instructions should be based on
applicable law and professional standards. These instructions should be communicated as
terms of employment and reinforced through periodic professional training.
G31. If security personnel are permitted to use force, instructions must be clear on when andhow force may be used, specifying that security personnel are permitted to use force only as amatter of last resort and only for preventive and defensive purposes in proportion to the natureand extent of the threat, and in a manner that respect human rights (see paragraph G26 below).
When the use of firearms is appropriate, any firearms and ammunition issued should belicensed, recorded, stored securely, marked and disposed of appropriately. Security personnel
should be instructed to exercise restraint and caution, clearly prioritizing prevention of injuries orfatalities and peaceful resolution of disputes. Use of physical force should be reported to andinvestigated by the client. Any injured persons should be transported to medical facilities.
G32. The appropriate conduct of security personnel should be based on the principle thatproviding security and respecting human rights can and should be consistent. For example, any
security personnel who interact with workers should not harass or intimidate workers exercising
their rights in accordance with Performance Standard 2. If community members decide toassociate, assemble and speak out in opposition to the project, the client and any security
personnel who interact with them should respect the right of the local communities to do so.
The instructions for security personnel should also make clear that arbitrary or abusive use offorce is prohibited.
G33. Who provides security is as relevant as how security is provided. When employing or
engaging any security personnel, the client should make reasonable inquiries to investigate theemployment record and other available records, including any criminal record, of individuals or
firms and should not employ or use any individuals or companies that have been credibly

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alleged to have abused or violated human rights in the past. Clients should use only security
professionals who are and continue to be adequately trained.
G34. The client should record and investigate security incidents to identify any necessary
corrective or preventive actions for continuing security operations. To promote accountability,
the client (or other appropriate party such as the security contractor or appropriate public or
military authority) should take corrective and/or disciplinary action to prevent or avoid arepetition if the incident was not handled according to instructions. Unlawful acts of any security
personnel (whether employees, contractors or public security forces) should be reported to theappropriate authorities (bearing in mind that clients may have to use their judgment about
reporting violations if they have legitimate concerns about treatment of persons in custody).
Clients should follow-up on reported unlawful acts by actively monitoring the status ofinvestigations and pressing for their proper resolution. The grievance mechanism required
under Performance Standard 1 provides another avenue for workers or community members toaddress concerns about security activities or personnel within the client’s control or influence.
G35. There may be cases where the government decides to deploy public security forces toprotect a client’s operations, whether on a routine or as needed basis. In countries where it isillegal for companies to employ private security forces, the client may have no choice but toengage public security forces to protect its assets and employees. Governments have theprimary responsibility for maintaining law and order and the decision-making authority withrespect to deployments. Nonetheless, clients whose assets are being protected by public
security forces have an interest in encouraging those forces to behave consistently with therequirements and principles set out above for private security personnel in order to promote andmaintain good relations with the community, bearing in mind that public security forces may be
unwilling to accept restrictions on their ability to use offensive force where they consider
necessary. Clients are expected to communicate their principles of conduct to the public
security forces, and express their desire that security be provided in a manner consistent withthose standards by personnel with adequate and effective training. The client should requestthat the government make information about the arrangements to the client and the community,
subject to overriding safety and security needs. If clients are required or requested tocompensate the public security forces or provide equipment to public security forces, and if theoption of declining the request is not available or desirable, clients may choose to provide inkind compensation, such as food, uniform, or vehicles, rather than cash or lethal weapons.
Clients should also try to implement restrictions, controls and monitoring as necessary andpossible under the circumstances to prevent misappropriation or use of the equipment in amanner that is not consistent with the principles and requirements set out above.
G36. Pursuant to the requirement of paragraph 15 of Performance Standard 4 to reportunlawful and abusive actions to public authorities, IFC may require its client to update IFC on
the client’s use of security personnel and any material developments and incidents as part ofperiodic monitoring reports to be submitted to IFC.

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Annex A
Environmental Health Areas (EHAs)
Industrial projects will interact with influence health performance in surrounding communities. Potential
project related effects are considered across twelve key environmental health areas (EHAs). The EHAs
provide a standard framework for considering community and household level impacts.
1. Respiratory disease – projects can be associated with significant influx of workers and overcrowdingof living quarters and number of occupants per room. Many types of respiratory diseases, including
tuberculosis, are strongly related to housing conditions.
2. Vector-related disease – the physical setting and environment can be impacted by projects withlandscape alterations that can alter the size, location and intensity of existing vectors and theirbreeding grounds, e.g., mosquito breeding sites, location and distance to forests, temporary water
pools, discarded containers, rodents, flies, etc.
3. Veterinary Medicine – Zoonotic diseases are those illnesses that are typical present in an animal
host but can, under the right conditions, “jump” to humans. Zoonotic disease amplification can readily
occur when traditional herding/livestock management patterns are altered due to Project construction
and/or relocation of water bodies. .
4. Sexually Transmitted Infections (STIs) – including but not exclusive to HIV/AIDS- The key
consideration is “men, money, movement and mixing” with local communities and particularly young
women.
5. Soil, Water and food borne disease – the rapid influx of workers, families, and camp followers
triggered by a project can overtax existing community infrastructure and support services, such as
sanitation and waste management services/systems.
6. Nutrition related issues – significant changes in community level agricultural practices due tochanges in landownership status (ownership versus tenant farming), resettlement/relocation andphysical environmental alterations, such as increased or decreased availability of water, riverbank
gardens, can occur.
7. Accidents/injuries – significant increases in the level of road (e.g., car, truck, bicycle, andpedestrian), boat and air traffic within the project area. New physical structures, especially water
bodies, can be unintended attractors for community members, particularly children.
8. Exposure to potentially hazardous materials – potential project releases and/or emissions. Projectdrums and containers can inadvertently “leak” into the community and be recycled by community
members for food and water storage with unintended hazardous materials exposures.
9. Psychosocial – relocation, violence (especially gender-related), security concerns, substance abuse(drug, alcohol, smoking), depression and communal social cohesion including equitable distribution of
benefits.
10. Cultural Health Practices – including but not exclusive to the role of traditional medical providers,indigenous medicines and unique cultural or ethnic health practices. By developing on-site medical
services, particularly during construction, projects often bring a rapid ”infusion” of western medicine.
11. Health Services Infrastructure and Capacity – local health services/facilities, staffing levels,
management of national programs (e.g., malaria, TB, HIV/AIDS, etc.) and technical capabilities ofhealth care system.
12. Non-Communicable Diseases (NCDs) – Rising incomes and movement from rural toperiurban/urban lifestyle may trigger an epidemiological transition from infectious diseases to NCDs
including hypertension, diabetes, stroke, and cardiovascular disorders.

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overcrowding, falls, burns,
road traffic
squatter developments
adjacent to industrial
facilities with unplanned
releasesAccidents & Injuries

Non-Communicable; hypertension,
diabetes

Health Services Infrastructure &Capacity

Cultural Health Practices

Psychosocial; Gender Issues

changes in dietincreased visits for out andinpatient services

introduction of newpractices and/or
elimination of existing
practices

cultural shock due to rapid
societal change

influx of extended family,
more mouths to feed

Food & Nutrition

Hazardous Materials Exposure

overburdening existing
services/systems;
explosive food-borne
epidemics

mixing of high and low
prevalence groups

movement and migrationof livestock due to influx of
new groups

crowded housing, both
work camps andcommunity

Increasing human parasiteburdens (malaria)

Soil, Water & Sanitation

Sexually Transmitted Infections;
HIV/AIDS

Veterinary Medicine

Respiratory & Housing

Vector Related

Environmental Health Areas

Influxcamp followers, job
seekers, family, service
workers

July 31, 2007

periurban living versus highintensity subsistence
farming

increased visits for out andinpatient services if access
improves

introduction of newpractices and/or eliminationof existing practices

transformation of rural toperiurban/urban lifestylechanges in crop /garden
selection and planting cycle

shift from subsistence
agriculture to peri-urban
living/petty trading

95

drownings, boat accidentschanges in surface waterflows/quality, potential
groundwater drawdown

creation and/or movement of
livestock watering locations

creation and movement ofbreeding grounds

failure to anticipate
extended family influx ininitial design

mixing of high and low
prevalence groups

number of occupants perroom,; mix of occupants
children/elderly/adults(different vulnerability)
movement and migration of
livestock due to influx of
new groups

movement to different
prevalence area

Resettlement;
relocation

Water management
including creation of new
water bodies; altering
existing water bodies andchanges in drainage
patterns

Health Impact Issues

changes in accessroad traffic, increased
pedestrian activity
movement via trucks ofhazardous materials acrosscommunities to project
areas
greater ease of mixing ofdifferent social/ethnic
groupschanges in access togardens or local markets

facilitating movement ofhigh risk groups into rural
settings

facilitating mixing/interactionof different groups

improper drainage,
temporary water poolcreation

Linear features:
Roadways;transportation routes;
Transmission lines

Annex B: Environmental Health Areas and Issues

Community Health, Safety and Security

Guidance Note 4

unplanned
releases/emissions
use of Project drums andcontainers for water andfood storage; inadequate
incinerators design

releases into surface water ;long-term impacts togroundwater

inadvertent water source
contamination, of
streams/rivers

creation of breeding sites
with drums at household
level

Hazardous materials
control and disposal
including waste
containers (drums)

attraction of additional
privateproviders/increase ininsurance enrollment
shift from high physicalactivity to sedentary
lifestyleshift to western medicine

sudden money influx in abarter economic
structure

food inflation further
marginalizing vulnerable
groupsmen with money mixing
with vulnerable women

housing inflation
triggered crowding

Changes in income& expenditureconsumption
includingfood/housing inflation

96

Linear Features
Any physical structure, e.g., roads, bridges, transmission lines, pipelines, river systems, etc. that cross and/or connect diverse ecologic orhuman populations can be considered a linear feature. Linear features have the potential for both positive and negative health consequences
as the movement and interaction of diverse groups of humans and animal livestock is significantly facilitated.

Water Management
During active construction periods, projects may create new breeding sites for key mosquito vectors. Resettlement/relocation communities may
be in closer proximity to water bodies which will significantly increase the vector-borne disease risk. New water bodies, such as surface water
environmental control dams or new reservoirs may become attractors for local community members and increase the risks of injury including
accidental drowning. In addition, water storage facilities require careful environmental engineering (e.g., shoreline slopes and vegetation
control) in order to prevent development of vector breeding sites. During construction and operations phases, tires, drums and other containers
may become significant breeding sites for mosquitoes with subsequent increased risk of dengue fever outbreaks. Provide examples ofnegative impacts (vector borne, contamination of water which it may be used by nearby communities, exposure to community kids (drown), etc.
due to poor design and management of man-made water deposits (dam, reservoirs, ponds, etc)

Resettlement/relocation
The health effects of resettlement/relocation should be carefully considered above and beyond the more typical social/anthropologic analysis
that is triggered by resettlement/relocation.

Influx Management
When the project triggers significant migration (laborers, extended families. service providers, etc.) to the project area it can pose potential
significant impacts to surrounding communities. These impacts may occur, to varying degree levels, across all phases of the project(exploration, pre-construction, construction, operations and decommissioning). A strong interaction and mixing between local workers, imported
specialty workers, and expatriates can facilitate respiratory disease spread including the production of explosive epidemics that can pass andforth between the project and the community. In additions, explosive food-borne epidemics are significant consideration and can spread backand forth between the project worksite and the community via food handlers or petty traders.

Notes

Low Risk Potential

Medium Risk Potential

High Risk Potential

July 31, 2007

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Guidance Note 4

97Changes in Income & Expenditure Consumption
Projects have significant potential to positively alter underlying levels of community and household income poverty. These potential positiveeffects can have profound impact on a variety of health performance indicators for all populations in a community, e.g., children under age 5,
women of reproductive age, elderly, etc. Conversely, projects can trigger significant inflation impacting both food and housing in surrounding
communities. Significant food and/or housing inflation can adversely impact existing vulnerable groups with negative consequences on bothindividual and community level health performance indicators. Significant food/housing inflation can make recruitment and retainment of healthcare workers and teachers extremely difficult for local communities. Significant and sudden changes in income can have a marked effect on
alcohol usage and subsequent gender violence. Workforce education and training are potential key mitigation activities.

Hazardous Materials Control and Disposal
These materials are often “recycled” within communities with unusual consequences, e.g., increased small-scale breeding grounds for themosquito vectors of dengue and other arboviral diseases. In addition, waste storage drums may have industrial residues that adversely impact
household water and food supplies as these containers are often prized as inexpensive storage devices

July 31, 2007

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Guidance Note 4

Guidance Note 4

Community Health, Safety and Security
July 31, 2007

Annex CThe Health Impact Assessment Process
Screening: preliminary evaluation, determines whether an HIS is indicated and its complexity.
• Have there been any HIAs or other types of health risk assessments conducted on thisproject or in this area?
• Is there potential for positive or negative impacts as a result of the project?
• Are the potential negative impacts likely to affect a large number of people or cause
death or disability?
• Are the potential negative health impacts likely to be disproportionately greater for
disadvantaged or vulnerable population group?
• Is there uncertainty about what the potential health impacts might be?
Scoping: outlines the rage and types of hazards and beneficial impacts basis for TOR.
• How will the HIA fit in with the EIA and SIA?
• Are all phases of the project to be considered in the HIA (project conception,
design/engineer, construction, operations, decommissioning)?
• For each project phase, what processes are to be included in the HIA?
• What are the main factor determining health that may be affected by this project (healthdeterminants)?
• Which population will be addressed?
Stakeholder Communication and consultation: a two-way communication process carefullyplanned in a coordinated fashion responsive to overall business objectives.
• Who are the stakeholders?
• Has a stakeholder communication plan been developed?
• What health issues are of concern to the stakeholders within each phase of the project?
• Are there additional data or studies available to help address anticipated health issues?
Risk assessment / appraisal: appraises and qualitatively or quantitatively ranks the healthimpacts.
• Has existing data been evaluated for accuracy, relevance and completeness?
• If new baseline data is to be collected, are relevant study questions carefully formulated?
• What are the potential impacts on the determinants of health?
• Have all of the Health Areas of Concern been addressed?
• Has a ranking process taken place?
Decision making, establishing priorities, reporting: includes the development of a Health
Action Plan (HAP) with mitigation strategies.
• Have the rankings from the risk assessment process been addressed by a Health Action
Plan?
• Are mitigation strategies, including primary, secondary and tertiary, included in this plan?
• Is the Health Action Plan coordinated with the Environmental And Social Action Plan?
Implementation and monitoring: surveillance plan that captures early effects and unanticipatedconsequences.
• Has the Health Action Plan been expanded with specific implementation plans?
• Are responsibilities and timing defined?
• Is a monitoring/surveillance system designed to capture unanticipated effects?
Evaluation and verification: a system for determining that implementation has both occurredand is achieving the intended results.
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•
•
•
•

Is a system in place to verify that the Health Action Plan has been implemented
effectively?
Are milestones in place, i.e. malaria incidence rates, immunization rates, etc.?
Are both international and external independent audit systems in place?
Is contractor health performance verified and assessed?
Source: A Pocket Guide to Health Impact Assessments (IPIECA/OGP 2005)

Example of Critical Elements of a Health Impact Assessment report
Introduction to Health Impact Assessment
HIA within the Project
Scope of the HIA
Project TimescaleInterface of the HIA with environmental and social impact assessments
Impacts Categorization
Direct versus indirect effects
Cumulative impacts
Methodology
Key Sectors- housing, water/sanitation, transportation and information/ communication
Potential Impact Areas (PIAs)
Environmental Health Areas (EHAs)
Poverty and Health
Income Poverty and HealthCountry Poverty Data and Wealth Quintiles
Pre-Project Database
Sources of Data
Key demographic Characteristics
Physical Capital- housing, access, water/sanitation, consumer durables
Financial Capital- income, consumption expenditure
Human Capital
Education- literacy, household head education attainment
Health- EHAs
Social Capital
Environmental Capital
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Annex D
Examples of Risk-based Criteria for Assessment of Dams
In the case of dams and impoundments, qualified experts can base their evaluation of safety on specificrisk criteria. Experts can initially refer to national regulations and methodologies. Should such regulations
not be available in the country, existing, well-developed methodologies promulgated by authorities incountries with mature dam safety programs can be referred to and adapted as necessary to local
conditions. In broad terms, risk assessment criteria can include the following aspects:













Design flood
Design earthquake (maximum credible event)
Properties of construction process and properties of construction materials
Design philosophy
Foundation conditions
Height of dam and volume of materials contained
Quality control during construction
Management capacity of the client/operator
Provisions for financial responsibility and closure
Financial resources for operation and maintenance, including closure when applicable
Population at risk downstream of the dam
Economic value of assets at risk in case of dam failure

100Water-based
Water-based illnesses are caused byparasites that spend at least part oftheir life cycles in water. These
include guinea worm andschistosomiasis.

 Water-based diseases
and water-related vectorborne diseases can result
from water supply projects(including dams andirrigation structures) that
inadvertently provide
habitats for mosquitoes
and snails that areintermediate hosts ofparasites that cause
malaria, schistomsomisis,
lymphatic filariasis,onchocerciasis andJapanese encephalitis

Water-borne illnesses are thosecaused by consuming watercontaminated by human, animal, or
chemical wastes. These diseases areespecially prevalent in areas lacking
access to adequate sanitation
facilities, and include diarrhea, cholera
and typhoid.

 Contaminated water that isconsumed may result in waterborne diseases including viral
hepatitis, typhoid, cholera,dysentery and other diseases thatcause diarrhea

101

 Water-related vectorborne diseases can result
from water supply projects(including dams andirrigation structures) that
inadvertently provide
habitats for mosquitoesthat are intermediate
hosts of parasites thatcause malaria, lymphatic
filariasis, and Japanese
encephalitis

Water-related illnesses are thosetransmitted by vectors that live andbreed in or around water. Vectors are
insects or animals that carry andtransmit parasites between infected
people or animals. This category of
disease includes Malaria, transmitted
by mosquitoes.

Water-related

Annex E
Definitions of Water Diseases

Waterborne

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Community Health, Safety and Security

Guidance Note 4

 Ancylostomiasis (hookworm
infection) Ascariasis (roundworm infection)

Water-washed illnesses are those thatcan be prevented through more
frequent hand washing and bathing,including trachoma andonchocerciasis.

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Annex F
What types of Health Impact Assessment are available?
1. Mini HIA• Broad overview• Used at early development stage• Involves collecting and analyzing existing data
• No new data collection• Takes approximately two to six weeks (for one assessor)
2. Desktop HIA• More detailed• Most frequently used
• More thorough investigation of impacts• Involves collecting and analysing existing data and some new qualitative data fromstakeholders and key informants• Lasts approximately 12 weeks (for one assessor)
3. Comprehensive• Provides comprehensive assessment• Most robust definition of impacts• Involves collecting and analysing data using multiple methods and sources(quantitative and qualitative, including participatory approaches involving
stakeholders and/or their representatives and key informants).
• Lasts approximately six months (for one assessor).
Source: A Pocket Guide to Health Impact Assessments (IPIECA/OGP 2005)

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References
Several of the requirements set out in the Performance Standard are based on principles
expressed in the following international agreements and the related guidelines:

Natural Disasters: Protecting the Public's Health (Pan American Health Organization,2000) provides a framework to make effective decisions in managing the healthsector's activities to reduce the consequences of disasters.
http://www.paho.org/English/PED/sp575.htm



IFC’s Environmental, Health and Safety Guidelines (IFC) – technical guidance
informing those parts of the new policy structure related to environmental, health andsafety issues. http://www.ifc.org/ifcext/enviro.nsf/Content/EnvironmentalGuidelines

Guidance for Life and Fire Safety for new buildings accessible for public can be found in
the “Life and Fire Safety” section of the sub section “3.0 Community Health and Safety”
included in the General Environmental, health and Safety Guidelines of the IFC.
http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/gui_EHSGuidelines2007_General
EHS_3/$FILE/3+Community+Health+and+Safety.pdf

IFC’s Good Practice Note on HIV/AIDS in the Workplace (IFC, 2002) outlines thecosts of HIV/AIDS to businesses and gives companies concrete advice on designingand implementing workplace programs
http://www.ifc.org/ifcext/enviro.nsf/Content/Publications_GoodPractice

HIV/AIDS Resource Guide for the Mining Sector (IFC, 2004) an HIV/AIDS resource
guide for developing stakeholder competency in mining communities. Introduces a newframework for management strategies and workplace prevention, as well as care andoutreach programs to help combat the disease.
http://www.ifc.org/ifcext/aids.nsf/Content/Publications



Code of Conduct for Law Enforcement Officials (UN, 1979) – stipulates code of
conduct for law enforcement officials to uphold while serving and protecting all
persons against illegal acts. http://www.ohchr.org/english/law/codeofconduct.htm



Basic Principles on the Use of Force and Firearms by Law Enforcement Officials(UN, 1990) – provides rules and regulations for the use of firearms by law
enforcement officials. http://www.ohchr.org/english/law/firearms.htm



US/UK Voluntary Principles - Voluntary Principles on Security and Human Rights(US and UK Governments, 2000) – balance the need for safety while respecting
human rights. Provides guidance on risk assessment, relations with public security,
and relations with private security. http://www.voluntaryprinciples.org/

Conflict Sensitive Business Practice: Guidance for Extractive Industries (International
Alert, 2005) -- provides a set of tools for companies concerned about improving their

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impact on host countries to begin thinking more creatively about understanding andminimizing conflict risk, and actively contributing to peace.
http://www.international-alert.org/publications/234.php


Demographic Surveillance Site (DSS) (The INDEPTH Network) – DDS is anextremely cost-effective and well established program that can transparently andlongitudinally collect and evaluated a wide range of social, health and economic
survey data. http://www.indepth-network.org/

Health Impact Assessment: Main concepts and suggested approach (WHO/ECHP)
creates a common understanding of health impact assessment and provides a
departure point for discussion, comments and suggestions for the further
development of an HIA approach.
http://www.euro.who.int/document/PAE/Gothenburgpaper.pdf

A Guide to Health Impact Assessment in the oil and gas industry (IPIECA/OGP
2005) – It provides a summary checklist of activities consider when conducting
health impact assessments.
http://www.ipieca.org/activities/health/downloads/publications/hia.pdf

A Guide to Malaria Management Programmes in the oil and gas industry(IPIECA/OGP 2006) -- This Guide outlines and describes the scientific concepts,
rationale and value of Malaria Management Programmes (MMPs). The Guide
provides a broad overview of MMPs, and templates such as implementation
checklists and audit protocols that might typically form part of key activities when
implementing.
http://www.ipieca.org/activities/health/downloads/publications/malaria.pdf

Strategic Health Management: Principles and guidelines for the oil & gas industry,
International Association of Oil & Gas Producers (OGP 2000) – This document
provides a basis for incorporating workforce and community health consideration
systematically into project planning and management.
http://www.ogp.org.uk/pubs/307.pdf

Environmental Health: Bridging the Gap (World Bank 2001), James A. Listorti andFadi M. Doumani, World Bank Discussion Paper 422 – This review written by WorldBank consultants provides a detailed analysis of an approach to environmental
health assessment.



WHO Statistics and Health Information Systems – This information systems
introduce disability-adjusted life years (DALY), which is a health gap measure that
extends the concept of potential years of life lost due to premature death (PYLL) to
include equivalent years of ‘healthy’ life lost by virtue of being in states of poor healthor disability
http://www.who.int/healthinfo/boddaly/en/index.html

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For guidance on minimizing the occurrence and harmful effects of technological accidents andenvironmental emergencies:

APELL - Awareness and Preparedness for Emergencies on a Local Level (UNEP) –provides technical reports and other materials to assist disaster prevention andresponse planning in vulnerable areas http://www.uneptie.org/pc/apell/

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Land Acquisition and Involuntary Resettlement
July 31, 2007

This Guidance Note 5 corresponds to Performance Standard 5. Please also refer to the
Performance Standards 1-4 and 6-8 as well as the corresponding Guidance Notes for additional
information. Bibliographical information on all reference materials appearing in the text of this
Guidance Note can be found in the References Section at the end.

Introduction
1. Involuntary resettlement refers both to physical displacement (relocation or loss ofshelter) and to economic displacement (loss of assets or access to assets that leads to lossof income sources or means of livelihood) as a result of project-related land acquisition.1
Resettlement is considered involuntary when affected individuals or communities do nothave the right to refuse land acquisition that results in displacement. This occurs in casesof: (i) lawful expropriation or restrictions on land use based on eminent domain;2 and (ii)negotiated settlements in which the buyer can resort to expropriation or impose legal
restrictions on land use if negotiations with the seller fail.
2. Unless properly managed, involuntary resettlement may result in long-term hardshipand impoverishment for affected persons and communities, as well as environmental
damage and social stress in areas to which they have been displaced. For these reasons,involuntary resettlement should be avoided or at least minimized. However, where it isunavoidable, appropriate measures to mitigate adverse impacts on displaced persons andhost communities3 should be carefully planned and implemented. Experience demonstrates
that the direct involvement of the client in resettlement activities can result in cost-effective,
efficient, and timely implementation of those activities, as well as innovative approaches toimproving the livelihoods of those affected by resettlement.
3. Negotiated settlements help avoid expropriation and eliminate the need to use
governmental authority to remove people forcibly. Negotiated settlements can usually beachieved by providing fair and appropriate compensation and other incentives or benefits toaffected persons or communities, and by mitigating the risks of asymmetry of information
and bargaining power. Clients are encouraged to acquire land rights through negotiatedsettlements wherever possible, even if they have the legal means to gain access to the land
without the seller’s consent.
_________________________
1

Land acquisition includes both outright purchases of property and purchases of access rights, such as rights-

of-way.
2

Such restriction may include restrictions of access to legally designated nature conservation areas.

3

A host community is any community receiving displaced persons.

G1.
Through proper resettlement planning and implementation, the client can enhance thedevelopment impact of a project by enabling affected people to share directly in the benefits ofthe project and thereby improve their living standards. Investment in local economic and social
development pays dividends to the client in the form of enhanced goodwill within the hostcommunity, and an enhanced corporate reputation. Conversely, without proper planning andmanagement, involuntary resettlement may have negative consequences that diminish thedevelopmental impact of a project and affect the reputation of the client.

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Objectives
To avoid or at least minimize involuntary resettlement wherever feasible byexploring alternative project designsTo mitigate adverse social and economic impacts from land acquisition or
restrictions on affected persons’ use of land by: (i) providing compensation forloss of assets at replacement cost; and (ii) ensuring that resettlement activities
are implemented with appropriate disclosure of information, consultation, andthe informed participation of those affected
To improve or at least restore the livelihoods and standards of living ofdisplaced persons
To improve living conditions among displaced persons through provision ofadequate housing with security of tenure4 at resettlement sites_________________________


4

A resettlement site offers security of tenure if it protects the resettled persons from forced evictions.

G2.
IFC encourages its clients to avoid the acquisition of land that results in thedisplacement of people. Where such displacement is unavoidable, i.e., where suitable
alternative project sites are not available or the cost of developing those sites is prohibitive,
adverse impacts on individuals and communities should be minimized through adjustments inrouting or siting of project facilities (e.g., pipelines, access roads, plants, depots, etc.).
G3.
Compensation for land and other assets should be calculated at the market value plus
the transaction costs related to restoring the assets. In practice, those who suffer negativesocial and economic impacts as a result of the acquisition of land or land use rights for a project
may range from those having legally recognized rights or claims to the land, to those withcustomary claims to land, and those with no legally recognized claims, to seasonal resource
users such as herders or fishing families, hunters and gatherers who may have interdependent
economic relations with communities located within the project area. The potential variety ofland or land use claimants renders the calculation of full replacement cost difficult and complex.
G4.
For this reason, clients should identify and consult with all persons and communities thatwill be displaced by land acquisition as well as host communities who will receive those who areresettled, to obtain adequate information about land titles, claims and use. Affected
communities should also have the opportunity for informed participation in resettlement planning
so that the mitigation of the adverse project impacts is appropriate and the potential benefits ofresettlement are sustainable. More detailed information on consultation and engagement with
communities is provided in Performance Standard 1 and its accompanying Guidance Note.
G5.
Compensation alone does not guarantee the restoration or improvement of theeconomic conditions and social welfare of displaced persons and communities. Major
challenges associated with rural resettlement include restoring income based on land or natural
resources and the need to avoid compromising the social or cultural continuity of affected
communities, including the host communities to which the displaced population may beresettled. Resettlement in urban or peri-urban areas typically affects housing, employment andenterprises. A major challenge associated with urban resettlement is the restoration of wagebased or enterprise-based livelihoods that are often tied to location (such as proximity to jobs,
customers and markets). IFC encourages clients to undertake resettlement as a sustainable
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people. The following are recommendations for the design of measures to improve livelihoods
that are land-based, wage-based and enterprise-based:Land-based livelihoods – Depending on the site to which affected people arerelocated, they may require: assistance in acquiring or accessing replacement
land, including access to grazing land, forest and water resources; physicalpreparation of farm land (e.g., clearing, leveling, access routes and soil
stabilization); fencing for pasture or cropland; agricultural inputs (e.g., seeds,
seedlings, fertilizer, irrigation); veterinary care; small-scale credit, including ricebanks, cattle banks and cash loans; and access to markets.

Wage-based livelihoods – Wage earners in the community may benefit fromskills training and job placement, provisions made in contracts with project subcontractors for employment of qualified local workers, and small-scale credit tofinance start-up enterprises.

Enterprise-based livelihoods – Established and start-up entrepreneurs andartisans may benefit from credit or training (e.g., business planning, marketing,inventory and quality control) to expand their business and generate local
employment. Clients can promote local enterprise by procuring goods andservices for their projects from local suppliers.

G6.
Adequate housing or shelter can be measured by quality, safety, affordability,
habitability, cultural appropriateness, accessibility, and locational characteristics. Adequate
housing should allow access to employment options, markets, and basic infrastructure andservices, such as water, electricity, sanitation, health-care, and education. In addition, securityof tenure is an important component of adequate housing. Security of tenure affords residents
legal protection from forced eviction. Forced eviction means removal of people and theirbelongings from structures against their will and without any legal or other protection.
Performance Standard 5 affords adequate housing and security of tenure to displaced persons
at resettlement sites. Clients should include one or more of the aspects of adequate housing inthis paragraph in order to offer improved living conditions at the resettlement site, particularly tothose without recognizable legal right or claim to the land they occupy, as described inparagraph 14 (iii) of Performance Standard 5.
G7.
Displaced persons falling within the meaning of paragraph 14 (iii) of PerformanceStandard 5 are vulnerable to the risk of forced evictions and displacement in the future by thestate or others, particularly if they receive cash compensation but not a place to relocate. As aresult, additional consideration and protection should available to them. These are described inparagraph G34 of Guidance Note 5.
G8.
The living conditions at the new resettlement site should be an improvement overconditions at the site from which the displaced persons were resettled. The improved living
conditions to be provided under Performance Standard 5 should include improvement of one ormore of these aspects of adequate housing and security of tenure described above. In
particular, informal settlers without security of tenure should be provided with adequate housing
and security of tenure in the new resettlement sites. Generation of improvement options and108

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July 31, 2007priority setting for such improvements at resettlement sites should be done with the participationof those being resettled as well as host communities as appropriate.

Scope of Application
4. The applicability of this Performance Standard is established during the Social andEnvironmental Assessment process, while implementation of the actions necessary to meetthe requirements of this Performance Standard is managed through the client’s Social andEnvironmental Management System.
The assessment and management system
requirements are outlined in Performance Standard 1.
5. This Performance Standard applies to physical or economic displacement resulting
from the following types of land transactions:Type I: Land rights for a private sector project acquired through expropriationor other compulsory proceduresType II: Land rights for a private sector project acquired through negotiatedsettlements with property owners or those with legal rights to land, including
customary or traditional rights recognized or recognizable under the laws of
the country, if expropriation or other compulsory process would have resulted
upon the failure of negotiation5

Paragraph 18 and part of paragraph 20 below apply to displaced persons with norecognizable legal right or claim to the land they occupy.
6. This Performance Standard does not apply to resettlement resulting from voluntary landtransactions (i.e., market transactions in which the seller is not obliged to sell and the buyer
cannot resort to expropriation or other compulsory procedures if negotiations fail). In theevent of adverse economic, social, or environmental impacts from project activities otherthan land acquisition (e.g., loss of access to assets or resources or restrictions on landuse), such impacts will be avoided, minimized, mitigated or compensated for through theprocess of Social and Environmental Assessment under Performance Standard 1. If these
impacts become significantly adverse at any stage of the project, the client should consider
applying the requirements of Performance Standard 5, even where no initial land acquisition
was involved.
_________________________
5

These negotiations can be carried out by the private sector company acquiring the land or by an agent of thecompany. In the case of private sector projects in which land rights are acquired by the government, thenegotiations may be carried out by the government or by the private company as an agent of the government.

G9.
Performance Standard 5 applies to transactions where the buyer acquires land or land
use rights through direct negotiations with the seller, but where the buyer can resort togovernment authority to gain access to the land or impose limits on land use (such aseasements or rights of way) if the buyer and seller cannot agree on a price, or negotiations
otherwise fail. In these cases, the seller does not have the option to retain the land. The seller
must accept the buyer’s best offer or face expropriation or other legal proceedings based oneminent domain. This process of land acquisition by governments is commonly known as
expropriation, compulsory acquisition or eminent domain. Performance Standard 5 seeks toprotect sellers from a variety of risks of negotiated transactions that occur under these
conditions. It is not relevant to the application of Performance Standard 5 whether the client or109

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the government conducts the negotiations (directly or through third parties), since the seller islikely to accept inadequate compensation if he or she knows that the alternative (expropriation)is even less attractive, or if he/she lacks access to adequate information on market prices. The
seller may also be forced to accept a cash settlement in situations where alternative housing or
replacement land of equivalent value is not available in the area.
G10. In the event of potential adverse economic, social or environmental impacts by project
activities other than land acquisition, the client’s Social and Environmental Assessment process
under Performance Standard 1 should address how these impacts will be avoided, minimized,
mitigated or compensated for. Examples include loss of access to state-owned sub-surface
mineral rights 1 by artisanal miners; loss of access to marine fishing grounds due to project
activities; restriction of access to resources located within state-determined exclusion zones notacquired by the client; and demonstrated decreases in agricultural, livestock, forest, hunting andfishing yields resulting from project-related disturbance and/or pollution. In these cases,
restrictions of access to natural resources do not occur from project-related land acquisition.
While Performance Standard 5 will not apply to these situations, the client should nonethelessconsider appropriate measures for the affected people under Performance Standard 1 (seeparagraph G9 in Guidance Note 1). Even if the client’s Assessment determines at the outsetthat no significant project impacts are likely to occur, project conditions could subsequently
change and affect local communities adversely (e.g., future project-related pollution or project’s
extraction of water that affects water resources on which communities depend). If and whensuch conditions occur in the future, they should be assessed by the client under PerformanceStandard 1. If these impacts become significantly adverse at any stage of the project, so thatthe relevant communities are left with no alternative except to resettle, the client should
consider applying the requirements of Performance Standard 5, even where no initial projectrelated land acquisition was involved. In these cases, an option for the client may be to acquire
the relevant land that is subject to significant adverse impact, and apply the requirements of
Performance Standard 5.

Requirements
General Requirements
Project Design
7. The client will consider feasible alternative project designs to avoid or at least minimize
physical or economic displacement, while balancing environmental, social, and financial
costs and benefits.

Compensation and Benefits for Displaced Persons
8. When displacement cannot be avoided, the client will offer displaced persons andcommunities compensation for loss of assets at full replacement cost and other assistance6
to help them improve or at least restore their standards of living or livelihoods, as provided
in this Performance Standard. Standards for compensation will be transparent andconsistent within the project. Where livelihoods of displaced persons are land-based, or
where land is collectively owned, the client will offer land-based compensation, where
feasible.7 The client will provide opportunities to displaced persons and communities toderive appropriate development benefits from the project.

1 In most countries, surface land rights are legally distinct from sub-surface mineral rights.

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6

As described in paragraphs 18 and 20.

7

See also footnote 9.

G11. The rate of compensation for lost assets should be calculated at full replacement cost,i.e., the market value of the assets plus transaction costs. In applying this method of valuation,
depreciation of structures and assets should not be taken into account. For losses that cannot
easily be valued or compensated for in monetary terms, in-kind compensation may beappropriate. However, this compensation should be made in goods or resources that are ofequivalent or greater value and that are culturally appropriate. With regard to land andstructures, replacement costs are defined as follows:

Agricultural land—the market value of land of equal productive use or potential
located in the vicinity of the affected land, plus the cost of preparation to levels
similar to or better than those of the affected land, and transaction costs such as
registration and transfer taxes.

Land in urban areas—the market value of land of equivalent area and use, withsimilar or improved infrastructure and services preferably located in the vicinity of
the affected land, plus transaction costs such as registration and transfer taxes.

Houses and other structures—the cost of purchasing or building a new structure,with an area and quality similar to or better than those of the affected structure,
or of repairing a partially affected structure, including labor and contractors’ fees
and transaction costs such as registration and transfer taxes.

G12. As a matter of general principle under Performance Standard 5, preference should begiven to land-based resettlement strategies for physically or economically displaced persons
whose livelihoods are land-based. When displaced persons are to be physically displaced(whether in Type I or II transactions), these strategies may include resettlement on public landwith agreement of government or on private land acquired or purchased for resettlement. Whenreplacement land is offered, the combined characteristics of the land, such as productive
potential, advantages of location, and security of tenure, as well as the legal nature of the land
title or use rights should at least be equivalent to those of the old site. If land is not thepreferred option of the displaced persons, or sufficient land is not available at a reasonable
price, non-land-based options, such as employment opportunities or assistance to establish
businesses should be provided in addition to cash compensation for land and other affectedassets. The lack of adequate land should be demonstrated and documented. Persons
identified as vulnerable (as described in footnote 2 to Guidance Note 5) should be assisted to
fully understand their options for resettlement and compensation and encouraged to choose theoption with the lowest risk. In cases of economic displacement (whether in Type I or IItransactions), the preference for land-based strategies means that the compensation, targeted
assistance, and transitional support to be offered to economically displaced persons should beconsistent with their land-based livelihood. For additional guidance, see paragraphs G39 and
40 below.
G13. Payment of cash compensation for lost assets may be appropriate where: (i) livelihoods
are not land-based; (ii) livelihoods are land-based but the land taken for the project is a small
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fraction of the affected holding and the residual land is economically viable; (iii) replacement
land or housing of comparable quality is not available locally; or (iv) active markets for land,
housing, and labor exist locally, displaced persons use such markets, and there is sufficient
supply of land and housing. Cash compensation levels should be sufficient to replace the lostland (or lost access to land) and other assets at full replacement cost in local markets.
G14. Cash compensation may be offered to those people who do not wish to continue theirland-based livelihoods or who prefer to purchase land on their own. When payment of cash
compensation is considered, the abilities of the affected population to utilize cash to restore
standards of living should be assessed. It is common for households in subsistence-based
economies as well as poorer households in cash-based economies to divert cash compensationfrom longer-term investment to short-term consumption. Under these circumstances, payment
of in-kind compensation (e.g., livestock or other moveable/transferable property) or vouchers
earmarked for specific types of goods and services may be more appropriate. Detailed
guidance on opportunities to derive appropriate development benefits from the project can befound on pages 23 and 24 of IFC’s Handbook for Preparing a Resettlement Action Plan.
Consultation
9. Following disclosure of all relevant information, the client will consult with and facilitate
the informed participation of affected persons and communities, including hostcommunities, in decision-making processes related to resettlement. Consultation willcontinue during the implementation, monitoring, and evaluation of compensation payment
and resettlement to achieve outcomes that are consistent with the objectives of thisPerformance Standard.

Grievance Mechanism
10. The client will establish a grievance mechanism consistent with Performance Standard
1 to receive and address specific concerns about compensation and relocation that areraised by displaced persons or members of host communities, including a recourse
mechanism designed to resolve disputes in an impartial manner.

G15. Effective resettlement planning requires regular communication and consultation with awide range of project stakeholders. For the purpose of Performance Standard 5, the key
stakeholders groups are the displaced persons and the host community. Early communication
helps to manage public expectations concerning the impact of a project and its expected
benefits.
G16. Individuals and communities directly affected by resettlement should have theopportunity to participate in the negotiation of compensation packages and consultations
regarding eligibility requirements, resettlement assistance, suitability of resettlement sites andthe timing of resettlement activities. Special provisions apply to consultation with Indigenous
Peoples (see Performance Standard 7), as well as individuals belonging to vulnerable groups. 2
2

Vulnerable or “at-risk” groups includes people who, by virtue of gender, ethnicity, age, physical or mental disability,
economic disadvantage or social status may be more diversely affected by displacement than others and who may
be limited in their ability to claim or take advantage of resettlement assistance and related development benefits.
Vulnerable groups in the context of displacement also include people living below the poverty line, the landless, theelderly, women- and children-headed households, indigenous peoples, ethnic minorities, natural resource dependentcommunities or other displaced persons who may not be protected through national land compensation or land titling112

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For IFC’s requirements and guidance on consultation and informed participation, seeparagraphs 19 through 23 of Performance Standard 1 and its accompanying Guidance Note 1.
Guidance for effective public consultation can be found in the IFC publication Stakeholder
Engagement: A Good Practice Handbook for Companies Doing Business in Emerging Markets.
G17. Regardless of scale, involuntary resettlement may give rise to grievances among
affected persons and communities over issues ranging from rates of compensation andeligibility criteria to the location of resettlement sites and the quality of services at those sites.
Timely redress of grievances through an effective and transparent grievance mechanism is vitalto the satisfactory implementation of resettlement and to completion of the project on schedule.
G18. The client should make every effort to resolve grievances at the community level without
impeding access to any judicial or administrative remedies that may be available. The client
should designate an appropriate person to receive grievances and coordinate efforts to redress
those grievances through the appropriate channels, taking into consideration any customary
and traditional methods of dispute resolution within the affected community. Affected individuals
and communities should be informed, as part of the consultation process, of the process forregistering grievances and have access to this grievance mechanism. As with the Resettlement
Action Plan (see paragraph 13 of Performance Standard 5 and its accompanying GuidanceNote), the scope of the grievance mechanism will vary with the magnitude and complexity of the
project and its associated displacement. It should provide for fair, transparent and timely
redress of grievances and provide special accommodations for women and vulnerable groups tomake complaints. In addition, the grievance mechanism should enable those who feel that theirgrievances have not been adequately addressed to have recourse to an external, neutral
person or body for reconsideration of their case. This person or body should serve in anadvisory capacity so as to minimize the necessity for litigation. Nonetheless, as part of theconsultation process the client should inform affected individuals and communities of theirentitlements and the possibilities of administrative and legal recourse or remedies and any legal
aid available to assist them. Further guidance on establishing grievance procedures can befound on page 48 of IFC’s Handbook for Preparing a Resettlement Action Plan.
Resettlement Planning and Implementation
11. Where involuntary resettlement is unavoidable, the client will carry out a census withappropriate socio-economic baseline data to identify the persons who will be displaced by
the project, to determine who will be eligible for compensation and assistance, and to
discourage inflow of people who are ineligible for these benefits. In the absence of hostgovernment procedures, the client will establish a cut-off date for eligibility. Information
regarding the cut-off date will be well documented and disseminated throughout the projectarea.

G19. Effective resettlement planning entails compiling a census of displaced persons and an
inventory of affected land and assets at the household, enterprise and community level. The
date of completion of the census and assets inventory represents a cut-off date. Individuals
taking up residence in the project area after the cut-off date are not eligible for compensation orlegislation. These groups should be identified through a process of Social and Environmental Assessment(Performance Standard 1). Special measures in terms of consultation and development assistance may be needed
to allow such groups to participate in resettlement planning meaningfully and to benefit from development
opportunities. Persons identified as vulnerable should be assisted to fully understand their options for resettlement
and compensation, and encouraged to choose the option with the lowest risk.

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resettlement assistance provided that notification of the cut-off date is well documented anddisseminated. Similarly, the loss of fixed assets (such as built structures, crops, fruit trees, andwoodlots) established after the cut-off-date should not be compensated. Seasonal resource
users may not be present in the project area during the time of the census and special
consideration should be given to the claims of these communities.
12. In the case of Type I transactions (acquisition of land rights through the exercise ofeminent domain) or Type II transactions (negotiated settlements) that involve the physicaldisplacement of people, the client will develop a resettlement action plan or a resettlement
framework based on a Social and Environmental Assessment that covers, at a minimum, theapplicable requirements of this Performance Standard regardless of the number of people
affected. The plan or framework will be designed to mitigate the negative impacts ofdisplacement, identify development opportunities, and establish the entitlements of all
categories of affected persons (including host communities), with particular attention paid
to the needs of the poor and the vulnerable (see Performance Standard 1, paragraph 12).
The client will document all transactions to acquire land rights, as well as compensation
measures and relocation activities. The client will also establish procedures to monitor andevaluate the implementation of resettlement plans and take corrective action as necessary.
A resettlement will be considered complete when the adverse impacts of resettlement havebeen addressed in a manner that is consistent with the objectives stated in the resettlement
plan or framework as well as the objectives of this Performance Standard.

G20. A Resettlement Action Plan that is a component of the client’s Action Plan should be
prepared for any project that results in physical displacement, i.e., projects that involve therelocation of people from their homes. (Clients undertaking projects that entail land acquisition
but require no physical displacement of people will prepare procedures for determining andawarding compensation, as outlined in paragraph 13 of Performance Standard 5 and its
accompanying Guidance Note.) The scope and level of detail of the Resettlement Action Plan
will vary with the magnitude of displacement and the complexity of the measures required tomitigate adverse impacts. In all cases, the Resettlement Action Plan will describe the manner inwhich the objectives of Performance Standard 5 will be achieved. At a minimum, theResettlement Action Plan should: 1) identify all people to be displaced; 2) demonstrate that
displacement is unavoidable; 3) describe the process of consultation with affected people
regarding acceptable resettlement alternatives, and the level of their participation in thedecision-making process; 4) describe the entitlements for all categories of displaced people; 5)
enumerate the rates of compensation for lost assets and demonstrate that these rates areadequate, i.e., at least equal to the replacement cost of lost assets; 6) describe relocation
assistance to be provided; 7) outline the institutional responsibility for the implementation of theResettlement Action Plan and procedures for grievance redress; 8) provide details of thearrangements for monitoring and evaluation; and 9) provide a timetable and budget for the
implementation of the Resettlement Action Plan. More detailed guidance can be obtained fromof IFC’s Handbook for Preparing a Resettlement Action Plan.
G21. Women are often the first to suffer when resettlement is badly planned or executed asthey are often a disproportionately large number of the poor, have more limited access toresources, opportunities and public services than men, and as a result rely more heavily on
informal support networks within their existing communities. The resettlement process should
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necessary to provide women a role in decision making. Women may, for example, putparticular emphasis on maintaining the social continuity of the displaced community.
G22. The RAP should include measures to ensure that women are not disadvantaged in theresettlement process, are fully informed and aware of their rights, and are able to benefit equallyfrom the resettlement opportunities and benefits, by ensuring in particular that the
documentation for ownership or occupancy, such as title deeds and lease agreements, andcompensation (including the bank accounts established for payment of compensation) is issued
in the names of both spouses or women single head of households, as relevant to eachsituation, and that other resettlement assistance, such as skills training, access to credit and job
opportunities are equally available to women and adapted to their needs. Under circumstancesin which national law and tenure systems do not recognize the rights of women to hold orcontract in property, provision should be made to ensure that the access of women to security oftenure is equivalent to that of men.
G23. A project may include subprojects or multiple components that cannot be identified at
project appraisal or that may be implemented sequentially over an extended period (such as ahighway project in which all interchanges have not been determined or a mining project for
which land acquisition cannot be planned at one time). Under these circumstances, aResettlement Framework should establish the principles, procedures, entitlements and eligibility
criteria, organizational arrangements, arrangements for monitoring and evaluation, theframework for participation, and mechanisms for redressing grievances by which the client will
abide during the project implementation. A Resettlement Action Plan consistent with thisResettlement Framework should be prepared for each subsequent subproject or projectcomponent that entails physical and/or economic displacement. The Resettlement Action Planfor each subproject or subcomponent will be reviewed and approved by IFC.
G24. Depending on the scale of a project’s resettlement, it may be appropriate for the client tocommission an external completion audit of the Resettlement Action Plan to determine that theprovisions of the Resettlement Action Plan have been met. The completion audit should beundertaken after all inputs in the Resettlement Action Plan – including any developmental
initiatives – have been completed, but well before the client’s financial commitments to IFC havebeen met. The timing of the audit enables the client to complete corrective actions, if any, as
recommended by the auditors before the project is complete. Based on the outcome of thecompletion audit, IFC and the client together will determine if the objectives of PerformanceStandard 5 have been met. In the majority of cases, the completion of corrective actions
identified by the completion audit should bring the client’s responsibility for resettlement,compensation, livelihood restoration and development benefits to a close.
13. In the case of Type II transactions (negotiated settlements) involving economic (but notphysical) displacement of people, the client will develop procedures to offer to the affected
persons and communities compensation and other assistance that meet the objectives ofthis Performance Standard. The procedures will establish the entitlements of affected
persons or communities and will ensure that these are provided in a transparent,
consistent, and equitable manner. The implementation of the procedures will be considered
complete when affected persons or communities have received compensation and otherassistance according to the requirements of this Performance Standard. In cases whereaffected persons reject compensation offers that meet the requirements of this PerformanceStandard and, as a result, expropriation or other legal procedures are initiated, the client will

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explore opportunities to collaborate with the responsible government agency, and if
permitted by the agency, play an active role in the resettlement planning, implementation,and monitoring.

G25. In cases of land acquisition based on negotiated settlement that does not result in thephysical displacement of people, the client should provide the affected people with information
on current property values and methods of value appraisal. The client should document theprocedures for determining and awarding compensation in a Compensation Framework that: 1)
identifies all affected people; 2) provides an inventory of affected assets; 3) describes themethods applied for valuing land and other affected assets at full replacement cost; 4) indicatesthe rates of compensation to be paid; 5) outlines a schedule of land take and compensation
payments; and 6) describes the process whereby affected people can appeal property
valuations they deem to be inadequate. The client should summarize this information for public
disclosure to ensure that affected people understand the land acquisition procedures and knowwhat to expect at the various stages of the transaction (e.g., when an offer will be made to them,
how long they will have to respond, grievance procedures, legal procedures to be followed if
negotiations fail). The client should provide the affected communities the opportunity toparticipate in the negotiations based on the established procedures.
G26. Land-based compensation should be offered to affected people in cases where theirlivelihoods are land-based and the proposed land take is significant enough to render a landholding economically unviable. If it is not possible to offer replacement land (in cases ofdisplaced persons under paragraph 14 (i) or 14 (ii) of Performance Standard 5), the client will
provide opportunities that enable sellers of land to restore their livelihoods and standards ofliving to levels equivalent to, or better than, those maintained at the time of sale (seeparagraphs 20 and 21 of Performance Standard 5 and their accompanying Guidance Note). A
detailed action plan describing how this restoration will be achieved should be included in theCompensation Framework.
G27. If the affected people reject the client’s offer of compensation that meets therequirements of Performance Standard 5 and, as a result, expropriation or other legal
procedures are initiated, the affected people may be offered compensation based on theassessed value of the land, which may be less than the compensation required under
Performance Standard 5. The matter may proceed to litigation and may take a number of years
to be resolved. The court’s final determination may confirm compensation based assessedvalue. Because there is a risk of impoverishment from loss to the income base or livelihood of
the affected people or communities from a protracted process and depressed compensation,
IFC will ascertain whether such expropriation is consistent with Performance Standard 5 byrequesting information on the level of compensation offered by the government and theprocedures used under such expropriation. In addition, the client should explore opportunities
during these expropriation processes to play an active role in collaboration with the responsible
government agency to achieve outcomes that are consistent with the Objectives of PerformanceStandard 5. Whether the client will be permitted to play an active role will depend in part on theapplicable national law and the judicial and administrative processes and practices of the
responsible government agency.

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Displacement
14. Displaced persons may be classified as persons: (i) who have formal legal rights to theland they occupy; (ii) who do not have formal legal rights to land, but have a claim to landthat is recognized or recognizable under the national laws8; or (iii) who have norecognizable legal right or claim to the land they occupy.9 The census will establish thestatus of the displaced persons.
15. Land acquisition for the project may result in the physical displacement of people aswell as their economic displacement. As a result, requirements for both physicaldisplacement and economic displacement may apply.

Physical Displacement
16. If people living in the project area must move to another location, the client will: (i) offer
displaced persons choices among feasible resettlement options, including adequate
replacement housing or cash compensation where appropriate; and (ii) provide relocation
assistance suited to the needs of each group of displaced persons, with particular attention
paid to the needs of the poor and the vulnerable. Alternative housing and/or cash
compensation will be made available prior to relocation. New resettlement sites built for
displaced persons will offer improved living conditions.
_________________________
8 Such claims could be derived from adverse possession or from customary or traditional law.
9 Such as opportunistic squatters and recently arrived economic migrants who occupy land prior to the cut-off date.

G28. Where physical displacement is unavoidable, resettlement should be planned andexecuted in a manner that provides displaced persons with opportunities to participate in theplanning and implementing of resettlement activities to improve or at least restore theirstandards of living. Under these circumstances, the following steps should be undertaken: 1)
inform affected people of their options and entitlements concerning relocation and involve themin a process that considers alternatives to the project that minimizes displacement; 2) provide
technically and economically feasible options for resettlement based on consultation withaffected people and assessment of resettlement alternatives; 3) provide displaced people withprompt and effective compensation at full replacement value for any loss of assets due toproject activities; 4) provide relocation assistance (see below); and 5) provide temporary
housing (if necessary), permanent housing sites, and resources (in cash or in kind) for
construction of permanent housing inclusive of all fees, taxes, customary tributes, and utility
hook-up charges.
G29. Relocation assistance should be provided to people who are physically displaced by aproject. Assistance may include transportation, food, shelter, and social services that areprovided to affected people during their relocation. Additional measures, such as the provisionof emergency health care, should be designed for vulnerable groups during physical relocation,
particularly pregnant women, children, the elderly and the handicapped. Assistance may also
include cash allowances that compensate affected people for the inconvenience associated withresettlement and defray the expenses of relocating to a new location, such as moving expenses
and lost workdays.
G30. The living conditions at the new resettlement site built specifically to resettle people
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displaced persons were resettled. The improved living conditions to be provided under
Performance Standard 5 should include improvement of one or more of these aspects ofadequate housing and security of tenure described above. In particular, informal settlers
without security of tenure should be provided with adequate housing and security of tenure in
the new resettlement sites. Generation of improvement options and priority setting for such
improvements at resettlement sites should be done with the participation of those being
resettled as well as host communities as appropriate.
17. In the case of physically displaced persons under paragraph 14 (i) or (ii), the client willoffer the choice of replacement property of equal or higher value, equivalent or bettercharacteristics and advantages of location, or cash compensation at full replacement value
where appropriate.10_________________________
10 Payment of cash compensation for lost assets may be appropriate where: (a) livelihoods are not land-based; (b)livelihoods are land-based but the land taken for the project is a small fraction of the affected asset and the residual landis economically viable; or (c) active markets for land, housing, and labor exist, displaced persons use such markets, andthere is sufficient supply of land and housing. Cash compensation levels should be sufficient to replace the lost land andother assets at full replacement cost in local markets.

G31. Performance Standard 5 requires compensation be made for all land acquired frompersons and communities having legally recognized claims to that land. This condition applies
to legal owners, i.e., those who, prior to the cut-off date, have formal legal rights to land(including customary and traditional rights recognized under the laws of the country) as well as
to claimants, i.e., those who, prior to the cut-off date, do not have formal legal rights to land but
who have a claim to such land or assets, for example, through adverse possession (i.e., amethod of acquisition of title to real property by possession for a statutory period under certain
conditions), provided that such claims are recognized under the national laws.
18. In the case of physically displaced persons under paragraph 14 (iii), the client will offer
them a choice of options for adequate housing with security of tenure so that they canresettle legally without having to face the risk of forced eviction. Where these displaced
persons own and occupy structures, the client will compensate them for the loss of assets
other than land, such as dwellings and other improvements to the land, at full replacement
cost, provided that these people occupy the project area prior to the cut-off date for
eligibility. Compensation in kind will be offered in lieu of cash compensation where
feasible. Based on consultation with such displaced persons, the client will provide
relocation assistance sufficient for them to restore their standards of living at an adequate
alternative site.11 The client is not required to compensate or assist those who encroach on
the project area after the cut-off date.
_________________________
11

Relocation of informal settlers in urban areas often has trade-offs. For example, the relocated families may

gain security of tenure, but they may lose advantages of location.

G32. Persons with no recognizable legal right or claim to the land they occupy are entitled toadequate housing with security of tenure. For a description of adequate housing and security oftenure, see paragraph G6. Options for providing security of tenure will depend on national law
and tenure systems, but may include the following:

a title deed to land owned by the client
a title deed to land donated by the local government
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




communal titles
a pay-to-own scheme sponsored by a housing agency
a long-term leasing or occupancy arrangement
cooperative housing

Resettlement sites should be selected for locational advantage in terms of availability of basic
services and employment opportunities that enable the displaced persons to improve or at least
restore their livelihoods and standards of living. Options should be generated in consultation
with the displaced persons so that their priorities and preferences can be reflected in the options
from which they can make a selection.
G33. Persons with no recognizable legal right or claim are not entitled to compensation forland, but they should be compensated for the structures that they own and occupy and for any
other improvements to land at full replacement cost. In addition, they should be offered
resettlement assistance sufficient to restore their standards of living at a suitable alternative site.
Options for resettlement assistance should be generated through consultation with thedisplaced persons and reflect their priorities and preferences. These provisions apply topersons who are occupying the project area prior to the cut-off date.
G34. The construction or upgrading of infrastructure projects in urban settings often requires
the relocation of residential and commercial structures from areas that are legally required to be
free of occupants, such as rights-of-way of roads and transmission lines, sidewalks, parks, andhazardous areas. Families living or conducting businesses in these areas should be offered
opportunities to move to sites that can be occupied legally. Compensation in kind that facilitates
the transition to the new site (down payment for land, provision of building materials,
construction of basic infrastructure at the new site, etc.) is more likely to lead to permanent
housing solutions than compensation in cash. Cash payments to illegal occupants tend to be
used for consumption and may also result in informal resettlement in other unsafe or publicareas. The absence of opportunities to move to alternative resettlement sites may also prompt
displaced persons to resettle in informal settlements elsewhere, perpetuating their informal
status and potential illegal settlements in new areas. In designing resettlement plans for both
legal occupants as well as informal settlers on private or public lands, clients should take care
not to create economic incentives for the displaced persons to occupy public or hazardous
areas or to invade and occupy privately owned land.
19. Where communities of Indigenous Peoples are to be physically displaced from theircommunally held traditional or customary lands under use, the client will meet theapplicable requirements of this Performance Standard, as well as those of PerformanceStandard 7 (in particular paragraph 14).

G35. In the event that the affected communities of Indigenous Peoples are to be relocatedfrom their communally held traditional or customary lands under their use (as described inparagraph 12 of Performance Standard 7), the client will follow the requirements under
Performance Standard 7, including paragraph 14, in addition to the requirements under
Performance Standard 5 that pertain to Resettlement Action Plans and implementation. Where
individual members of the affected communities of Indigenous Peoples hold legal title, or where
relevant national law recognizes customary rights for individuals, the requirements of
Performance Standard 5 will apply, rather than those under Performance Standard 7.
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Economic Displacement
20. If land acquisition for the project causes loss of income or livelihood, regardless ofwhether or not the affected people are physically displaced, the client will meet thefollowing requirements:
Promptly compensate economically displaced persons for loss of assets oraccess to assets at full replacement cost
In cases where land acquisition affects commercial structures, compensate theaffected business owner for the cost of reestablishing commercial activities
elsewhere, for lost net income during the period of transition, and for the costsof the transfer and reinstallation of the plant, machinery or other equipment
Provide replacement property (e.g., agricultural or commercial sites) of equal or
greater value, or cash compensation at full replacement cost whereappropriate, to persons with legal rights or claims to land which are recognizedor recognizable under the national laws (see paragraph 14 (i) and (ii))
Compensate economically displaced persons who are without legally
recognizable claims to land (see paragraph 14 (iii)) for lost assets (such as
crops, irrigation infrastructure and other improvements made to the land) otherthan land, at full replacement cost. The client is not required to compensate or
assist opportunistic settlers who encroach on the project area after the cut-off
dateProvide additional targeted assistance (e.g., credit facilities, training, or job
opportunities) and opportunities to improve or at least restore their incomeearning capacity, production levels, and standards of living to economicallydisplaced persons whose livelihoods or income levels are adversely affectedProvide transitional support to economically displaced persons, as necessary,
based on a reasonable estimate of the time required to restore their incomeearning capacity, production levels, and standards of living

G36. Economic displacement results from an action that interrupts or eliminates people’s
access to jobs or productive assets, whether or not the affected persons must move to anotherlocation. In other words, there can be economic displacement with or without physicaldisplacement. While project-related land acquisition does not necessarily entail the relocation ofpeople occupying or using the land, it may have an impact on the income, living standards andlivelihood of people who depend on resources located in, on or around that land. For example,
a farming family may lose a portion of its land to a project without having to vacate its
homestead. Nevertheless, the loss of even a portion of its land may reduce the overall
productivity of that farm. This threat is magnified among some agrarian populations where farm
fields are typically small and often widely scattered, or those who do not own the land theycultivate.
G37. Compensation for economic displacement resulting from land acquisition should bemade promptly in order to minimize adverse impacts on the income stream of those who aredisplaced. In the event that compensation is paid by the responsible governmental agency, theclient should collaborate with the agency to help accelerate payments. Where due togovernment policy or practice, compensation payments cannot be made promptly, the client will
explore resettlement assistance options to help the displaced people with temporary loss of
income. On compensation for physical displacement, see Performance Standard 5, paragraph
16 and the accompanying guidance.

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G38. In cases where land acquisition affects commercial structures, the affected businessowner is entitled to compensation for the cost of reestablishing commercial activities elsewhere,
for lost net income during the period of transition, and for the costs of the transfer andreinstallation of the plant, machinery or other equipment.
G39. In addition, land acquisition may restrict a community’s access to commonly held
resources such as rangeland and pasture, non-timber forest resources (e.g., medicinal plants,
construction and handicraft materials), woodlots for timber and fuelwood, or riverine fishinggrounds. The client will provide assistance that will offset the loss of such resources to acommunity. Such assistance could take the form of initiatives that enhance the productivity of
the remaining resources to which the community has access (e.g., improved resource
management practices or inputs to boost the productivity of the resource base), in-kind or cash
compensation for loss of access or provide access to alternative sources of the lost resource. 3
G40. In cases where project-related land acquisition results in loss of livelihoods or income ofthose without any legal title or legally recognized or recognizable claim to land, they arenormally entitled to a range of assistance, including compensation for lost assets and any
structures on land (see the first two bullets under paragraph 20 of Performance Standard 5), as
well as targeted assistance and transitional support (see the last two bullets under paragraph 20
of Performance Standard 5). The nature and extent of such assistance will in part depend onwhether the livelihood of those affected is land-based, wage-based, or enterprise-based (seeguidance under paragraph G6 of this Guidance Note). Land-based compensation in thesecircumstances does not necessarily mean title to land, but may include continued access to land
to enable the affected people to maintain their land-based livelihoods. It will be necessary to
tailor compensation and entitlement options to the needs of the displaced. In cases where landacquisition does not result in the loss of livelihoods or loss of income, the client will pay faircompensation for the acquired land and lost assets on such land, as appropriate, at theirreplacement cost.
21. Where communities of Indigenous Peoples are economically displaced (but notrelocated) as a result of project-related land acquisition, the client will meet the applicablerequirements of this Performance Standard, as well as those of Performance Standard 7 (inparticular paragraphs 12 and 13).

G41. In the event that the affected communities of Indigenous Peoples are economicallydisplaced as a result of project-related land acquisition, and traditional or customary lands under
their use are involved (as described in paragraph 12 of Performance Standard 7), the client will
follow the requirements under Performance Standard 7, including paragraph 13, in addition to
the requirements under Performance Standard 5 that pertain to the requirements on
Resettlement Action Plans and implementation.
Private Sector Responsibilities under Government-Managed Resettlement
22. Where land acquisition and resettlement are the responsibility of the host government,
the client will collaborate with the responsible government agency, to the extent permitted
3 In rare cases, a project may result in restricted access to legally designated protected areas (e.g., national parks or other types of natural orcultural conservation areas). Under such circumstances, the client will refer to the applicable guidance provided by the World Bank Operational
Procedure 4.12 on Involuntary Resettlement.

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by the agency, to achieve outcomes that are consistent with the objectives of thisPerformance Standard. In addition, where government capacity is limited, the client willplay an active role during resettlement planning, implementation and monitoring, as
described below in paragraphs 23 through 25.
23. In the case of Type I transactions (acquisition of land rights through expropriation orother legal procedures) involving physical or economic displacement, and Type IItransactions (negotiated settlements) involving physical displacement, the client will
prepare a plan (or a framework) that, together with the documents prepared by the
responsible government agency, will address the relevant requirements of this PerformanceStandard (the General Requirements, except for paragraph 13, and requirements for
Physical Displacement and Economic Displacement above). The client may need to include
in its plan: (i) a description of the entitlements of displaced persons provided underapplicable laws and regulations; (ii) the measures proposed to bridge any gaps between
such entitlements and the requirements of this Performance Standard; and (iii) the financial
and implementation responsibilities of the government agency and/or the client.
24. In the case of Type II transactions (negotiated settlements) involving economic (but notphysical) displacement, the client will identify and describe the procedures that the
responsible government agency plans to use to compensate affected persons andcommunities.
If these procedures do not meet the relevant requirements of thisPerformance Standard (the General Requirements, except for paragraph 12, andrequirements for Economic Displacement above), the client will develop its own proceduresto supplement government action.
25. If permitted by the responsible government agency, the client will, in collaboration withsuch agency: (i) implement its plan or procedures established in accordance with paragraph
23 or 24 above; and (ii) monitor resettlement activity that is undertaken by the government
agency until such activity has been completed.

G42. Host governments may reserve the right to manage land acquisition, compensation
payments, and resettlement associated with a project. Nevertheless, the outcome of thisprocess should be consistent with the requirements of Performance Standard 5. In such cases,clients should offer to play an active role during the preparation, implementation and monitoringof the process and should coordinate with the relevant government authorities those aspects ofthe process that can be facilitated more efficiently by the client or other agents such as
consultants or civil society organizations. Whether the client will be permitted to play an activerole will depend in part on the applicable national law and the judicial and administrative
processes and practices of the responsible government agency.
G43. Because there is a risk of impoverishment from loss to the income base or livelihood of
the affected people or communities from a protracted expropriation process and depressedcompensation, IFC will review such expropriation to ascertain consistency with PerformanceStandard 5. Where IFC ascertains that the outcome of the government-managed resettlement
is not likely to meet the requirements of Performance Standard 5, IFC may not proceed with theproposed financing of the project, or proceed only if its Board of Directors agrees.
G44. Under certain circumstances, a client may be provided with an unoccupied project site,
unencumbered of any current claims, by a government agency or other authority. If
resettlement from the site has occurred in anticipation of the project, but not immediately
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preceding project implementation, the client should make a determination as to whether those
resettled were compensated in a manner consistent with the requirements of PerformanceStandard 5 and, if not, any corrective action is feasible to address the situation. Under suchcircumstances, the following factors should be considered: 1) the length of the intervening
period between land acquisition and project implementation; 2) the process, laws and actions bywhich the resettlement was carried out; 3) the number of people affected and the significance of
the impact of land acquisition; 4) the relationship between the party that initiated the landacquisition and the client; and 5) the current status and location of the people affected.
G45. Where compensation procedures are not addressed under national law or policy, theclient should establish methods for determining adequate compensation and for providing
adequate compensation to the affected people in the Resettlement Action Plan or Framework.
Where national law or policy does not provide for compensation at full replacement cost, or
where other gaps exist between national law or policy and the requirements with respect todisplaced people detailed in Performance Standard 5, the client should consider alternative
measures to achieve outcomes consistent with the objectives of Performance Standard 5. Suchmeasures could range from making or arranging for the payment of supplementary allowances
in cash or in kind to arranging for the provision of dedicated support services.
G46. In most cases, the client should collaborate with local government authorities in the
distribution of compensation payments. Those eligible for compensation should be given
advance notice of the date, time and place of payments via public announcement. Receipts
should be signed by all those receiving compensation payments and retained for auditing
purposes. The payment of compensation and resettlement assistance should be monitored andverified by representatives of the client as well as representatives of the affected communities,
which can often include community-based organizations. It may be appropriate for the client
and the government authorities to engage the services of a registered auditing firm to monitor
compensation payments.
G47. Where the responsible agency will enable the client to participate in the ongoing
monitoring of affected persons, the client should design and carry out a program of monitoringwith particular attention to those who are poor and vulnerable so as to track their standards ofliving and effectiveness of resettlement compensation, assistance and livelihood restoration.
The client and the responsible agency should agree to an appropriate allocation of
responsibilities with respect to completion audits and corrective actions.

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References
The following guidance from UN Habitat provides useful information on security of tenure andadequate housing:

Handbook on Best Practices, Security of Tenure and Access to Land (UN Habitat,2003) identifies recent innovations at the global level in the field of land management
and pinpoints land tenure trends.
http://www.unhabitat.org/list.asp?typeid=15&catid=24



Global Campaign for Secure Tenure, A Tool for Advocating the Provision of
Adequate Shelter for the Urban Poor (UN Habitat, 2004) provides a framework on
how to improve the conditions of people living and working in slums and informal
settlements around the world. http://hq.unhabitat.org/register/item.asp?ID=1482

In addition, the guidance and recommendations contained in the following World Bank/IFC
publications provide useful additional guidance:Stakeholder Engagement: A Good Practice Handbook for Companies Doing Business in
Emerging Markets (IFC, 2007) explains new approaches and forms of engagement withaffected local communities, including guidance on grievance mechanisms.
http://ifchq14.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_StakeholderEngagement_Full/$FILE/
IFC_StakeholderEngagement.pdf

Handbook for Preparing a Resettlement Action Plan (IFC, 2001) provides step-bystep guidance through the resettlement planning process and includes practical tools
such as implementation checklists, sample surveys and monitoring frameworks.
http://ifcln1.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_resettle/$FILE/ResettlementHandbook.PDF

Involuntary Resettlement Sourcebook (World Bank, 2004) provides guidance on
resettlement design, implementation, and monitoring, and, it discusses resettlement issues
particular to development projects in different sectors, such as urban development, natural
resource management, and the building of dams.

http://publications.worldbank.org/ecommerce/catalog/product?item_id=2444882

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This Guidance Note 6 corresponds to Performance Standard 6. Please also refer to the
Performance Standards 1-5 and 7-8 as well as the corresponding Guidance Notes for additional
information. Bibliographical information on all reference materials appearing in the text of this
Guidance Note can be found in the References Section at the end.

Introduction
1. Performance Standard 6 recognizes that protecting and conserving biodiversity—thevariety of life in all its forms, including genetic, species and ecosystem diversity—and its
ability to change and evolve, is fundamental to sustainable development. The componentsof biodiversity, as defined in the Convention on Biological Diversity, include ecosystems
and habitats, species and communities, and genes and genomes, all of which have social,economic, cultural and scientific importance. This Performance Standard reflects theobjectives of the Convention on Biological Diversity to conserve biological diversity andpromote use of renewable natural resources in a sustainable manner. This PerformanceStandard addresses how clients can avoid or mitigate threats to biodiversity arising fromtheir operations as well as sustainably manage renewable natural resources.

G1.
Biological diversity or biodiversity is recognized as an integrating concept that includes
the ecosystems within which the people of the world live, as well as the multitude of species thatare used by humankind for food, fiber, medicines, clothing and shelter. Protecting this global
biodiversity from damage and conserving it for future generations is recognized as being vitally
important in the Convention on Biological Diversity.

ObjectivesTo protect and conserve biodiversity
To promote the sustainable management and use of natural resources throughthe adoption of practices that integrate conservation needs and development
priorities

G2.
The objectives of Performance Standard 6 are derived from elements of the Convention
on Biological Diversity and the recognition of the important role that the private sector can playin protecting and conserving biodiversity for future generations and promoting the sustainable
management and use of renewable natural resources. The sustainable management and useof renewable natural resources by the private sector should be achieved by balancing
conservation and development priorities, and recognizing that this may require trade-offs oneach side.

Scope of Application
2. The applicability of this Performance Standard is established during the Social andEnvironmental Assessment process, while implementation of the actions necessary to meetthe requirements of this Performance Standard is managed through the client’s Social andEnvironmental Management System.
The assessment and management system
requirements are outlined in Performance Standard 1.

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3. Based on the Assessment of risks and impacts and the vulnerability of the biodiversity
and the natural resources present, the requirements of this Performance Standard areapplied to projects in all habitats, whether or not those habitats have been previously
disturbed and whether or not they are legally protected.

Requirements
Protection and Conservation of Biodiversity
4. In order to avoid or minimize adverse impacts to biodiversity in the project’s area ofinfluence (see Performance Standard 1, paragraph 5), the client will assess the significanceof project impacts on all levels of biodiversity as an integral part of the Social andEnvironmental Assessment process. The Assessment will take into account the differingvalues attached to biodiversity by specific stakeholders, as well as identify impacts on
ecosystem services. The Assessment will focus on the major threats to biodiversity, which
include habitat destruction and invasive alien species. When requirements of paragraphs 9,10, or 11 apply, the client will retain qualified and experienced external experts to assist in
conducting the Assessment.

G3.
As specified in Performance Standard 1, all projects with social or environmental risks
and potential impacts will be subject to the Social and Environmental Assessment process.
Issues regarding biodiversity and natural resource management form an integral part of theAssessment. As part of this process, the client should assess the type and importance of
biodiversity present, whether at the genetic, species, or ecosystem level, and consider the
potential impacts of project-related activities on it. The assessment of genetic diversity looks at
the frequency and diversity of different genes and/or genomes. Species diversity means thefrequency and diversity of different species, i.e., a population of organisms which are able tointerbreed freely under natural conditions. Ecosystems are defined in paragraph G4 below.
The client should take into account: (i) the location and scale of project activities, including thoseof associated facilities, and material impacts on biodiversity arising through supply chains orother third party relationships; (ii) the project’s proximity to areas that have importantbiodiversity; and (iii) the types of technology that will be used. If risks to biodiversity are not
identified through this screening, no further action for the direct identification, protection andconservation of biodiversity under Performance Standard 6 will be required.
G4.
Projects that are likely to have a significant impact on biodiversity should be subject tomore detailed assessment and analysis. Such further assessment and analysis should include
consideration of the short-term, long-term and cumulative context of such impacts, along withevaluation of impacts on ecosystem services and natural resources. Ecosystem services are
the benefits that people obtain from ecosystems, and include provisioning services (such as
food, fiber, fresh water, fuel wood, biochemicals, genetic resources); regulating services (suchas climate regulation, disease regulation, water regulation, water purification, degradation ofpollutants, carbon sequestration and storage, nutrient cycling); and cultural services (spiritualand religious aspects, recreation and ecotourism, aesthetics, inspiration, educational values,
sense of place, cultural heritage). As part of the consideration of these impacts, the client may
need to consult with key stakeholders that for the purpose of Performance Standard 6 include
potentially affected communities, public authorities and independent experts.
Generalrequirements and guidance on community engagement can be found in paragraphs 19 through23 of Performance Standard 1 and its accompanying Guidance Note.

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G5.
When specific potential significant biodiversity impacts are identified throughassessment and analysis, they should be further analyzed through specific studies. Thesestudies should be undertaken by qualified and experienced professionals using standard
sampling programs and tools. In all such cases, the client should consult with relevant national
and local authorities, affected communities and biodiversity experts. IFC can provide guidanceon the form and scope of such studies and consultation activities, and assist in the identificationof experts.
G6.
In sectors that rely on natural resources as raw materials (such as furniture
manufacturing and food processing), the impacts on biodiversity may also occur at several
points in the supply chain. In such situations, the client should identify any impacts caused bytheir commercial partners or suppliers and address them in a manner commensurate to theirdegree of control and influence. Additional information regarding supply chain management isprovided in paragraph 6 of Performance Standard 1 and its accompanying Guidance Note.
G7.
Assessment of biodiversity impacts can inform decisions on project alternatives.
Alternatives may include variations in the layout of the project site, alternative engineering
processes and construction practices, the selection of different sites or routing of linear facilities,
and screening of suppliers to select those with appropriate environmental/social risk
management systems. The Assessment should consider economic, financial, environmental
and social costs and benefits and describe to which parties these accrue. Depending on thecircumstances, the costs and benefits may be expressed in qualitative or quantitative terms, andthe professional judgment of the balance between costs and benefits should be explained.
G8.
Given the importance of biodiversity in not only environmental but also economic, social,
cultural and scientific terms, the various components of biodiversity can have different values todifferent stakeholders, and these different values should be clarified during consultation andtaken into account in the biodiversity Assessment.
G9.
In projects with significant biodiversity issues (e.g. sensitive habitats or endangered
species), a Biodiversity Action Plan should be prepared to highlight these issues and illustrate
how they will be addressed. The Biodiversity Action Plan should be incorporated into theclient’s Action Plan, including any specific measures and timelines for addressing biodiversity
issues, and disclosed and implemented through the client’s Social and Environmental
Management system consistent with the requirements of Performance Standard 1. Details on
the preparation of a Biodiversity Action Plan are presented in Annex A.
Habitat
5. Habitat destruction is recognized as the major threat to the maintenance of biodiversity.
Habitats can be divided into natural habitats (which are land and water areas where thebiological communities are formed largely by native plant and animal species, and where
human activity has not essentially modified the area’s primary ecological functions) andmodified habitats (where there has been apparent alteration of the natural habitat, often with
the introduction of alien species of plants and animals, such as agricultural areas). Bothtypes of habitat can support important biodiversity at all levels, including endemic orthreatened species.

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G10. Performance Standard 6 recognizes the need to consider impacts on biodiversity in bothnatural and modified habitats as modified habitats can also have significant biodiversity value,
often in managed agricultural landscapes. It is in modified habitats that much private sector
development takes place.
G11. In practice, natural and modified habitats exist on a continuum that ranges fromcompletely undisturbed, pristine natural habitats at one end of the scale, through habitats withsome degree of human impact, to modified habitats that are intensively managed and have an
artificial assemblage of plants and animals. The identification of an area as either a natural or amodified habitat can therefore be complex and often requires professional judgment. A project
may involve a mosaic of habitats that will each need to be addressed consistent with therequirements of Performance Standard 6. In recognizing and delineating natural or modified
habitats, clients may need to consult suitably qualified professionals for advice. Clients should
retain qualified and experienced external experts when dealing with critical habitat and legally
protected areas.
G12. Annex B provides a decision framework for project siting and illustrates what should beconsidered ‘no-go’ circumstances (i.e., circumstances which would be considered as notmeeting the requirements of Performance Standard 6 and therefore unlikely to be eligible forfinancing by IFC or others) when working in various types of habitat and legally protected areas.
Modified Habitat
6. In areas of modified habitat, the client will exercise care to minimize any conversion ordegradation of such habitat, and will, depending on the nature and scale of the project,
identify opportunities to enhance habitat and protect and conserve biodiversity as part oftheir operations.

G13. Modified habitat can provide living space for many species of plants and animals, even
where some of the ecological services it could provide have been decreased by the changes
from the original natural habitat. Clients should recognize these remaining values and avoid
further disturbance where technically and financially feasible, and cost-effective. For example,
on many industrial plant sites there may be wildland/wetland areas on the periphery of the sites
which could be left undisturbed as a buffer zone, or enhanced through planting of native species
and removal of alien invasive species.
Natural Habitat

7. In areas of natural habitat, the client will not significantly convert or degrade1 such
habitat, unless the following conditions are met:

There are no technically and financially feasible alternatives
The overall benefits of the project outweigh the costs, including those to theenvironment and biodiversity
Any conversion or degradation is appropriately mitigated

8. Mitigation measures will be designed to achieve no net loss of biodiversity where
feasible, and may include a combination of actions, such as:Post-operation restoration of habitats

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Offset of losses through the creation of ecologically comparable area(s) that is
managed for biodiversity2Compensation to direct users of biodiversity_________________________
1

Significant conversion or degradation is: (i) the elimination or severe diminution of the integrity of a habitat

caused by a major, long-term change in land or water use; or (ii) modification of a habitat that substantiallyreduces the habitat’s ability to maintain viable population of its native species.
2

Clients will respect the ongoing usage of such biodiversity by Indigenous Peoples or traditional communities.

G14. Performance Standard 6 requires that any significant conversion or degradation ofnatural habitat that could occur should be avoided (e.g., through project relocation or re-routing).
Where avoidance is not possible, such conversion or degradation should be restricted to cases
where it can be demonstrated that there are no technically and financially feasible alternatives,
where the benefits of the project outweigh the costs, and where the conversion or degradation is
reduced (e.g., through minimizing land take) or mitigated, in a manner appropriate to thecircumstances of the particular project.
G15. Mitigation measures should be developed to address the potential impacts on
biodiversity identified in the Social and Environmental Assessment. Mitigation measures should
be designed to achieve no net loss of biodiversity and favor impact avoidance and prevention
over reduction and compensation. Mitigation measures may include a combination of actions,such as:

Restoring impacted areas with appropriate native species and consistent with local
ecological conditions
Offsetting biodiversity losses through the creation of ecologically comparable area(s)elsewhere (comparable in size, quality and function) that is managed for biodiversity
Financial or in-kind compensation to direct users of biodiversity

G16. In all cases, mitigation measures should be defined in the Action Plan and supported byadequate financial resources from the client and, if necessary, supplemented by other financial
sources, such as donor funds. The client should identify roles and responsibilities for itself andany third party for mitigation monitoring arrangements.
G17. Of the key stages of a project, the construction phase can be particularly damaging tonatural habitat. Therefore, the client should give specific attention to impacts likely to arise at
this stage.
Critical Habitat
9. Critical habitat is a subset of both natural and modified habitat that deserves particularattention. Critical habitat includes areas with high biodiversity value3, including habitat
required for the survival of critically endangered or endangered species;4 areas having
special significance for endemic or restricted-range species; sites that are critical for thesurvival of migratory species; areas supporting globally significant concentrations or
numbers of individuals of congregatory species; areas with unique assemblages of species
or which are associated with key evolutionary processes or provide key ecosystemservices; and areas having biodiversity of significant social, economic or cultural
importance to local communities.

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10. In areas of critical habitat, the client will not implement any project activities unless thefollowing requirements are met:
There are no measurable adverse impacts on the ability of the critical habitat tosupport the established population of species described in paragraph 9 or thefunctions of the critical habitat described in paragraph 9
There is no reduction in the population of any recognized critically endangered or
endangered species5
Any lesser impacts are mitigated in accordance with paragraph 8_________________________


3

Such as areas that meet the criteria of the World Conservation Union (IUCN) classification.

4

As defined by the IUCN Red List of Threatened Species or as defined in any national legislation.

5

As defined by the IUCN Red List of Threatened Species or as defined in any national legislation.

G18. Critical habitat is a subset of both natural and modified habitat and is determined by thepresence of high biodiversity value based on one or more of the following criteria:i) large numbers of endemic or restricted-range species found only in a specific areaii) the presence of known critically endangered or endangered speciesiii) habitat that is required for the survival of particular migratory species or to support
globally significant concentrations or numbers of individuals of congregatory speciesiv) unique assemblages of species that cannot be found anywhere elsev) areas that have key scientific value due to the evolutionary or ecological attributes
presentvi) areas that include biodiversity that has significant social, cultural or economic
importance to local communitiesvii) areas recognized as particularly important for the protection of ecosystem services(such as aquifer protection).
Since the determination of critical habitat requires professional expertise and judgment, clientsshould retain suitably qualified external experts to provide assistance.
G19. Project activities should only be conducted in critical habitat if it can be demonstrated
that they will not have a measurable adverse impact on the ability of the critical habitat tomaintain its high biodiversity value. The probability of measurable adverse impacts on critical
habitat would be determined through a detailed biodiversity assessment. The assessment,using objective data, scientific methodology and analysis, would determine whether the project
would result in a quantifiable reduction in endangered or critically endangered species either
directly or indirectly through habitat destruction. Such quantification would describe a highprobability adverse outcome in terms expected reductions in population numbers, habitat
carrying capacity or other relevant parameters.
G20. Clients should not reduce the populations of any species recognized as criticallyendangered or endangered (in accordance with the IUCN Red List, or any national list
designated by the host government). Critically endangered or endangered species are species
that are under threat of extinction. In addition to the IUCN Red List, The World Conservation
Union (IUCN) provides useful information on protected areas, conservation and biodiversity
expertise, and other biodiversity and natural resources issues and has developed guidelines on

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protected areas including an outline of distinct categories of protected areas. These and othersources of information can be found in the References Section.
Legally protected Areas

11. In circumstances where a proposed project is located within a legally protected area,6
the client, in addition to the applicable requirements of paragraph 10 above, will meet thefollowing requirements:
Act in a manner consistent with defined protected area management plans
Consult protected area sponsors and managers, local communities, and otherkey stakeholders on the proposed project
Implement additional programs, as appropriate, to promote and enhance theconservation aims of the protected area_________________________


6

An area may be designated as legally protected for different purposes. This Performance Standard refers toareas legally designated for the protection or conservation of biodiversity, including areas proposed bygovernments for such designation.

G21. Performance Standard 6 specifies additional measures for projects located in legally
protected areas and areas officially proposed for protection. The client should ensure thatproject activities are consistent with any national land use, resource use, and management
criteria (including Protected Area Management Plans, National Biodiversity Action Plans orsimilar documents). This will entail securing the necessary approvals from the responsible
government agencies, and consulting with protected area sponsors and the local communities,
including communities of Indigenous Peoples, and other key stakeholders.
Additional
requirements and guidance for appropriate consultation are outlined in paragraphs 19 through23 of Performance Standard 1, Performance Standard 7 with respect to Indigenous Peoples,and Performance Standard 8 with respect to cultural heritage, and the accompanying GuidanceNotes.
G22. In the event that a project is proposed inside a protected area, it should bring financial orother tangible benefits to the protected area such that the conservation role of the protectedarea is enhanced and there are clear conservation advantages gained by the presence of the
project. This can be achieved through implementing programs that, for example, provide
support for park management, address alternative livelihoods for local residents, or carry out
research needed for the conservation aims of the protected area.
Invasive Alien Species
12. Intentional or accidental introduction of alien, or non-native, species of flora and fauna
into areas where they are not normally found can be a significant threat to biodiversity,
since some alien species can become invasive, spreading rapidly and out-competing native
species.
13. The client will not intentionally introduce any new alien species (not currently
established in the country or region of the project) unless this is carried out in accordancewith the existing regulatory framework for such introduction, if such framework is present,
or is subject to a risk assessment (as part of the client’s Social and Environmental
Assessment) to determine the potential for invasive behavior.
The client will not
deliberately introduce any alien species with a high risk of invasive behavior or any known

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invasive species, and will exercise diligence to prevent accidental or unintended
introductions.

G23. An alien plant or animal species is one that is introduced beyond its original range ofdistribution. Invasive alien species are alien species that may become invasive or spread
rapidly by out-competing other native plants and animals when they are introduced into a new
habitat that lacks their traditional controlling factors. Invasive alien species are now recognized
to be a major threat to biodiversity globally.
G24. The introduction of any new alien species as part of the client’s operations should beassessed for compliance with the existing host country regulatory framework for such
introductions. If such a regulatory framework does not exist in the host country, the client
should assess the potential impacts of the introduction as part of the client’s Assessment, as
explained, paying specific attention to the potential for invasive behavior, and identify any
appropriate mitigation measures to be included as part of the Biodiversity Action Plan.
G25. If not regulated under applicable laws or international agreements, clients engaged inshipping and other transportation sectors should identify and implement specific procedures in
the Action Plan and exercise diligence to prevent the accidental transportation and introductionof invasive alien plants and animals.
G26. Genetically-modified organisms, or GMOs (also known as Living Modified Organisms orLMOs), can also be considered to be alien species, with similar potential for invasive behavior
as well as potential for gene flow to related species. Any new introduction of such organisms
should be assessed in a manner consistent with the approach described in paragraph G24
above, with due regard to the Cartagena Protocol on Biosafety (see the Reference section ofthis Guidance Note).
Management and Use of Renewable Natural Resources
14. The client will manage renewable natural resources in a sustainable manner.7 Where
possible, the client will demonstrate the sustainable management of the resources throughan appropriate system of independent certification.8
15. In particular, forests and aquatic systems are principal providers of natural resources,and need to be managed as specified below.
_________________________
7

Sustainable resource management is the management of the use, development and protection of resources ina way, or at a rate, which enables people and communities, including Indigenous Peoples, to provide for theirpresent social, economic and cultural well-being while also sustaining the potential of those resources to meetthe reasonably foreseeable needs of future generations and safeguarding the life-supporting capacity of air,water and soil ecosystems.
8

An appropriate certification system would be one which is independent, cost-effective, based on objective andmeasurable performance standards and developed through consultation with relevant stakeholders, such as
local people and communities, indigenous peoples, civil society organizations representing consumer, producer,
and conservation interests. Such a system has fair, transparent, independent decision-making procedures thatavoid conflicts of interest.

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G27. In situations where renewable natural resources are harvested directly by the client, theclient should demonstrate that such resources are being managed in a sustainable fashion. For
some resources, such as forests, this can be demonstrated by independent certificationaccording to a certification scheme that meets the requirements under Performance Standard 6
and deemed acceptable by IFC, as outlined in Annex C. In the absence of a suitable
certification system for other types of resources, sustainable natural resource management canbe demonstrated through an independent evaluation of the client’s management practices or an
independent evaluation of the status of the resource populations in question. Additional detailon certification requirements is presented in Annex C.
G28. A number of international multistakeholder initiatives are underway in large commodity
sectors, such as palm oil, soy and sugarcane, with the objective of making these sectors moresustainable throughout their supply chain. These initiatives aim to set performance targets forthe sector, identifying and promoting better management practices. Being a member of theroundtables help companies improve their environmental and social performance, reduce
production costs, improve supply security, and calculate and manage risk. The initiatives areintended to be voluntary in nature (not required by Performance Standard 6), and supplement
any existing government regulations. IFC is a member of, and supports, the commodity
roundtables of palm oil (RSPO - Roundtable on Sustainable Palm Oil), soy beans (RTRS Round Table on Responsible Soy) and sugarcane (BSI - Better Sugarcane Initiative). See the"Reference Materials" section of this document for links to the initiative websites.
Natural and Plantation Forests
16. Clients involved in natural forest harvesting or plantation development will not cause
any conversion or degradation of critical habitat. Where feasible, the client will locate
plantation projects on unforested land or land already converted (excluding land that isconverted in anticipation of the project). In addition, the client will ensure that all naturalforests and plantations over which they have management control are independently
certified as meeting performance standards compatible with internationally accepted
principles and criteria for sustainable forest management.9 Where a pre-assessment
determines that the operation does not yet meet the requirements of such an independent
forest certification system, the client will develop and adhere to a time-bound, phased
action plan for achieving such certification.
_________________________
9

See footnote 7.

G29. In order to prevent the conversion or degradation of critical habitat, the client should (i)not harvest timber or non-timber forest products from, or otherwise disturb, any critical habitat(such as through road building or processing facilities); and (ii) obtain independent certificationof forestry operations owned or managed over a long-term through a concession or similararrangement by the client. Criteria on which to base an assessment of a certification system(including the defined standards of responsible forest management) are presented in Annex C.
G30. Clients who purchase timber or non-timber forest products from third parties, such as
wholesalers, retailers or independent harvesting companies, should seek to ensure to the extent
possible that such timber or non-timber forest products are independently certified as being
sourced from sustainably managed forests. Recognizing that in many circumstances the client
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non-timber forest products are sourced, the client should, as a minimum, implement policies andprocedures to ensure that such timber or non-timber forest products are at least legally
produced and traded. Implementation of a policy for the preferential purchasing of certified
timber or non-timber forest products will also help meet the requirements of this PerformanceStandard.
G31. If certified timber or non-timber forest products are available, the client should obtainchain-of-custody certification to demonstrate that the integrity of the certified timber ismaintained throughout its processing.
G32. Wherever feasible, the client should site plantation projects on unforested land or landthat has been already converted. The client should not establish plantation forests in critical
habitat, and should not adversely impact any adjacent or downstream critical habitat.
Therefore, prior to establishing a plantation, the client should assess the proposed plantation
location in order to identify any critical habitat, and prepare and implement a plan to manage
and conserve any such areas under the client’s control. The client should only convert noncritical habitat if it is allowed by host country laws and regulations and is consistent with therequirements of Performance Standard 6 and the outcome and recommendations of theAssessment. Certification of sustainable forestry management on timber plantations is required
under the same conditions as those described for natural forests.
Freshwater and Marine Systems
17.
Clients involved in the production and harvesting of fish populations or otheraquatic species must demonstrate that their activities are being undertaken in a sustainable
manner, through application of an internationally accepted system of independentcertification, if available, or through appropriate studies carried out in conjunction with theSocial and Environmental Assessment process.

G33. In order to prevent the over-harvesting of wild fish, shellfish stocks, and other marine or
freshwater resources (e.g., algae, other invertebrates, corals) and the conversion of or damage
to aquatic habitats, the client should: (i) not harvest aquatic products from, or otherwise disturb,
any critical habitat; and (ii) obtain independent certification, if available, that they meet
acceptable standards of responsible management and harvesting for that resource. Criteria on
which to base an assessment of a certification system are presented in Annex C.

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Annex A
Biodiversity Action Plans
In situations where there are recognized to be significant biodiversity issues associated with aninvestment, the preparation of a Biodiversity Action Plan is a valuable process which focuses
the client’s attention on the details of identifying and handling biodiversity issues in acomprehensive fashion. The Plan is usually carried out as an integral part of the project’s
Social and Environmental Assessment, and integrated into the assessment documentation.
The Plan will:Assess how proposed activities affect biodiversity and renewable natural resources
Determine how biodiversity and renewable natural resources can be managed aspart of the client’s activities and how adverse impacts can be mitigated
Identify responsibilities (internally and externally) and resources for management andmitigation

The scope and the content of the Plan will vary, depending on the size and scale of thebusiness and the physical location in which it is operating. The scale, depth and complexity of
the Plan will therefore be defined on a case-by-case basis, but the following components should
be present in all Plans.
Baseline Review and Impact Assessment: Baseline review involves the collection of relevant
information. This phase should customarily be integrated into the Assessment process, as per
Performance Standard 1. The review should consider:What biological and other natural resources will be affected by the proposed activity(including short-term, long term and cumulative impacts)
Who has legitimate interests in and responsibilities for these resources, and who
represents those interests
Whether there are there already biodiversity (or other natural resources)
management plans that cover the area of operations
What the key environmental and social issues are for the area (and whether thesewill affect biodiversity plans that the client is developing)

In situations where projects are being developed in locations where little is known about therange and importance of biodiversity, but where it is likely to be significant, a rapid assessment
program may be appropriate. Rapid appraisals are increasingly used as the first stage of acomprehensive biodiversity assessment. They utilize a combination of international and local
expertise to undertake an initial assessment of the biological value of poorly known areas(including assessment of the value of biodiversity to local communities, Indigenous Peoples,and other resource dependent peoples).
Defining Scope of the Plan: When sufficient information on biodiversity and natural resources
has been gathered and agreement has been reached on the likely impacts of client operations,as well as an understanding of wider impacts on natural resources that may become apparent,
the client must decide the scope and scale of the plan, and its timescale. This will be informed
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Regulatory and compliance expectations
Business drivers - for example the Plan might be influenced by the need to ensure
raw material supply or services (including water and soil), address reputational risks
or secure and maintain a local license to operate
The need to engage and consult with other stakeholders (particularly local
communities) who use or have interests in the biodiversity and natural resources thatwill be affected by client operations

Clients will need to demonstrate how they will avoid significant adverse impacts (demonstratingcompliance with IFC’s performance standards should ensure this). Impacts should be avoided
where possible, reduced and mitigated where avoidance is not practical, and offset where
impacts are unavoidable (offsetting might include purchase and management of other areas thathave similar biodiversity). Opportunities for enhancing biodiversity (through active managementof natural habitats) should also be considered, as appropriate to the specific circumstances.
Establishment of Objectives, Targets, and Responsibilities: The Plan should identify detailed
objectives and targets which specify the desired outcomes. Targets should be prioritized,
discussed with relevant stakeholders, realistic and time-bound. Clients may choose to use
indicators to monitor progress towards targets and objectives as well as to measureperformance in their achievement. Indicators can be set at site and company levels dependingon needs. Site-based indicators are used for measuring impacts in and around project sites andreporting on the impact of biodiversity management efforts at specific locations or as part ofspecific business activities (e.g., impacts of supply chains). Company-level indicators may
reflect a more process-oriented set of targets–such as the delivery of strategic policy
commitments (e.g., training programs for staff, number of sites with active biodiversity actionplans).
Overall, the indicators should have the following attributes:
Focus on factors that have the greatest impacts on biodiversity (these may be direct
or indirect impacts)
Reflect the key risk management needs of the site or the company’s operations
Reflect both positive and negative impacts
Be quantitative where possible and be practical in terms of the collection of data/
monitoring

Biodiversity objectives should, to the extent possible, be aligned with and integrated into wider
business objectives and targets. The “mainstreaming” of biodiversity objectives increases thelikelihood of their successful implementation and ensures that biodiversity impacts which willaffect business prospects and the long term viability of client operations are seen as an integral
part of core business decision-making. Responsibilities for specific outcomes and reportinglines need to be defined. Where there is an existing social and environmental management
system, there will be opportunities to explore how biodiversity objectives and targets can be
integrated into the existing social and environmental management system since this canincrease cost efficiencies and effective delivery of biodiversity objectives and targets.

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NO GONO GO

Use thealternative

No

No

Yes

• Exercise care to minimize
conversion or degradation• Consider identifying
opportunities to enhance
habitat

Yes

No

Will there be significant
conversion or degradation?

NaturalS&EA Process

Yes

Yes

Are the project activities
consistent with theprotected area
management plan?

No

Will there be measurable adverse impacts on
the habitat’s ability to support its high value
species and functions?

No

Will the project reduce populations of
any recognized criticallyendangered or endangered
species?

Yes

Yes

Yes

Have appropriate additional programs
been implemented to promote &enhance the conservation aims of
the protected area?

Yes

Have the protected area sponsors and managers, local
communities and other key stakeholders been consulted
and their views taken into account?

Yes

MITIGATE ANY REMAINING IMPACTS,
DEFINE MEASURES IN THE ACTION PLAN
AND MONITOR

Can any significant conversion
or degradation be mitigated toacceptable levels?

Yes

Do the overall benefits
outweigh costs?

No

Yes

Is the site critical
habitat?

No

Is the site legally protectedor proposed for protection?

No

Is it modified or
natural habitat

Are there technical andfinancially feasible
alternatives?

Modified

Annex B
Habitat Decision Framework

July 31, 2007

Biodiversity Conservation andSustainable Natural Resource Management

Guidance Note 6

No

No

NO GO

NO GO

NO GO

NO GO

NO GO

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Annex C
Certification of Natural Resource Management
Independent certification of sustainable resource management is a valuable tool for clients todemonstrate that they are meeting high standards for resource management. A variety ofcertification systems have been or are now in a state of active development.
General IFC Requirements: When IFC requires that a sponsor demonstrate compliancethrough certification, generally the certification system should:Be independent, cost-effective, and based on objective and measurable performancestandards that are defined at the national level and are compatible withinternationally accepted principles and criteria for responsible management and use
Require independent, third-party assessment of management performance
Have standards which are developed through a process of consultation and dialoguethat included representatives from the private, public and civil society sectors
Have decision-making procedures which are fair, transparent, independent, anddesigned to avoid conflicts of interest

In the absence of an acceptable certification system operational for the particular resource inthe country concerned, the client should:Commit to operating in a fashion consistent with accepted international principles orpractice, as shown through regular independent audits against a generic set ofprinciples and criteria acceptable to IFC
Actively engage in the development of a national standard, to the extent appropriate
for the client
Commit to achieving certification when an acceptable certification system isdeveloped for the resource and country concerned

If an acceptable certification system exists, but the client does not meet the requirements forcertification, the client will commit to improving its operations to meet the certification
requirements, and will provide a time-bound, phased action plan acceptable to IFC so that itmeets the requirements for certification within a set period of time.
Forests and Plantations: Certification processes are currently most advanced within the forest
products sector. This sector is most likely to rely on certification to demonstrate that its
operations meet the IFC requirements. To be acceptable to IFC, forest certification systems
must meet the general requirements listed above. In addition, forest certification systems
should include the following aspects:Compliance with relevant law
Respect for any customary land tenure and use rights of Indigenous Peoples
Respect for the rights of workers for the forest enterprise, including sub-contracted
workers, and compliance with occupational health and safety measures (consistent
with the requirements in Performance Standard 2)

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







Incorporation of measures to maintain or enhance sound and effective community
engagement, including an appropriate level of engagement with relevant
stakeholders
The conservation of biodiversity, including protection of endangered species andecological functions
Inclusion of measures to maintain or enhance environmentally-sound multiple
benefits accruing from the forest
Prevention or minimization of adverse environmental and social impacts of forest use
Effective forest management planning
Active monitoring and assessment of relevant forest management areas
Maintenance of critical habitat affected by the forestry operations

Marine and Freshwater Resource Harvesting: Certification systems for capture fisheries andaquaculture operations are under development or in the early stages of implementation. To be
acceptable to IFC, certification systems for such natural resources should meet the general
requirements listed above, along with requirements for the specific natural resource comparable
to those for Forests and Plantations.

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References
Several of the requirements set out in the Performance Standard relate to standards set by thefollowing international agreements:
Convention on Biological Diversity (1992) - provides information on the convention,
lists of signatory nations and biodiversity experts and other useful information.
http://www.biodiv.org/default.aspx

Ramsar Convention - The Convention on Wetlands, Iran (1971), is anintergovernmental treaty which provides the framework for national action andinternational cooperation for the conservation and wise use of wetlands and theirresources. There are presently 140 Contracting Parties to the Convention, with 1374
wetland sites, totaling 121.4 million hectares, designated for inclusion in the Ramsar
List of Wetlands of International Importance. http://www.ramsar.org/

CITES - The Convention on International Trade in Endangered Species of Wild
Fauna and Flora is an international agreement aimed at ensuring that international
trade in specimens of wild animals and plants does not threaten their survival.
Around 25,000 plant species and 5,000 animal species are covered by the provisionsof the Convention.
The CITES website provides substantial resources on
endangered species. http://www.cites.org/index.html

World Heritage Convention - The Convention Concerning the Protection of World
Cultural and Natural Heritage (UNESCO, 1972). It aims to identify and conserve theworld’s cultural and natural heritage. Its World Heritage List contains sites ofoutstanding cultural and natural value. www.unesco.org/whcConvention on Migratory Species (Bonn Convention) – The Convention on Migratory
Species (CMS) is an intergovernmental treaty which aims to conserve terrestrial,
marine and avian migratory species throughout their range. The CMS website
includes information on species covered by the Convention and on other supportinginternational agreements. http://www.cms.int/index.html

Cartagena Protocol on Biosafety – The Cartagena Protocol is an international
agreement on biosafety, as a supplement to the Convention on Biological Diversity.
http://www.cbd.int/biosafety/default.shtml

In addition, the guidance and recommendations issued by the following organizations provide
useful information:


A Guide to the Convention on Biological Diversity (IUCN) – provides analysis on theConvention for those involved in the implementation of the Convention
Glowka, L, et al., (1994), A Guide to the Convention on Biological Diversity, IUCN
Gland and Cambridge. xii + 161pp., 2nd printing 1996

World Conservation Union (IUCN) -- provides useful information on endangered
species (http://www.redlist.org/), protected areas (http://www.iucn.org/themes/wcpa/),

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conservation and biodiversity expertise and other biodiversity and natural resources
issues.
World Conservation Union (IUCN) -- The IUCN Guidelines for Protected Area
Management Categories (1994) also provides useful information on protected areas
and outlines a number of distinct categories of protected areas.
http://app.iucn.org/dbtw-wpd/edocs/1994-007-En.pdf

World Conservation Monitoring Centre (WCMC) – provides information on
biodiversity, habitats and species, as well as protected areas, conservation
legislation and related issues. http://www.unep-wcmc.org/

Global Environment Facility (GEF), established in 1991, helps developing countries
fund projects and programs that protect the global environment. GEF grants support
projects related to biodiversity, climate change, international waters, landdegradation, the ozone layer, and persistent organic pollutants. IFC works with GEF
to assist IFC clients to protect and enhance global biodiversity benefits associatedwith their operations. http://www.gefweb.org/

The Global Invasive Species Programme (GISP) was established in 1997 to address
global threats caused by Invasive Alien Species (IAS), and to provide support to theimplementation of Article 8(h) of the Convention on Biological Diversity. GISP
maintains a website with links to databases and related information on invasive
species. www.gisp.org



The World Bank-WWF Alliance for Forest Conservation and Sustainable Use
maintains a website which includes information on the identification and conservationof high conservation value forests and forest certification systems.
www.forest-alliance.org

Birdlife International – Birdlife International is a global partnership of conservation
organizations that focuses on conservation of birds, bird habitat and global biodiversity.
Birdlife International makes available data on endangered bird species and importantbird areas through its publications and on-line database. http://www.birdlife.org/

FAO – Food and Agriculture Organization of the United Nations – FAO is the UN
agency which specializes in agriculture, forestry and fisheries. Their website provides
information on biodiversity aspects in food and agriculture, including aspects related
to agro-ecosystems and biotechnology. http://www.fao.org/biodiversity/



The International Association for Impact Assessment (IAIA) provides a variety ofresources on the impact assessment process, including a special publication on
Biodiversity in Impact Assessment. http://www.iaia.org/

IFC’s Biodiversity Guide - provides further information to guide IFC clients in thedevelopment of Biodiversity Action Plans and also provides further information on
how businesses can address biodiversity in their business activities.
http://www.ifc.org/ifcext/enviro.nsf/Content/BiodiversityGuide
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The HCV High Conservation Value Resource Network - developed by WWF, provides
useful tools and information in assessing conservation value and critical habitats.
http://www.hcvnetwork.org/

See the following websites for additional information on commodity roundtables:
Better Sugarcane Initiative (BSI)
http://www.bettersugarcane.org/
Round Table on Responsible Soy (RTRS)
http://www.responsiblesoy.org/
Roundtable on Sustainable Palm Oil (RSPO)
http://www.rspo.org/

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Indigenous Peoples
July 31, 2007

This Guidance Note 7 corresponds to Performance Standard 7. Please also refer to the
Performance Standards 1-6 and 8 as well as the corresponding Guidance Notes for additional
information. Bibliographical information on all reference materials appearing in the text of this
Guidance Note can be found in the References Section at the end.

Introduction
1. Performance Standard 7 recognizes that Indigenous Peoples, as social groups withidentities that are distinct from dominant groups in national societies, are often among themost marginalized and vulnerable segments of the population. Their economic, social andlegal status often limits their capacity to defend their interests in, and rights to, lands andnatural and cultural resources, and may restrict their ability to participate in and benefit
from development. They are particularly vulnerable if their lands and resources aretransformed, encroached upon by outsiders, or significantly degraded. Their languages,
cultures, religions, spiritual beliefs, and institutions may also be under threat. These
characteristics expose Indigenous Peoples to different types of risks and severity of
impacts, including loss of identity, culture, and natural resource-based livelihoods, as well
as exposure to impoverishment and disease.
2. Private sector projects may create opportunities for Indigenous Peoples to participate
in, and benefit from, project-related activities that may help them fulfill their aspiration foreconomic and social development. In addition, this Performance Standard recognizes thatIndigenous Peoples may play a role in sustainable development by promoting andmanaging activities and enterprises as partners in development.

Objectives









To ensure that the development process fosters full respect for the dignity,
human rights, aspirations, cultures and natural resource-based livelihoods of
Indigenous Peoples
To avoid adverse impacts of projects on communities of Indigenous Peoples,or when avoidance is not feasible, to minimize, mitigate, or compensate forsuch impacts, and to provide opportunities for development benefits, in a
culturally appropriate manner
To establish and maintain an ongoing relationship with the Indigenous Peoples
affected by a project throughout the life of the project
To foster good faith negotiation with and informed participation of Indigenous
Peoples when projects are to be located on traditional or customary lands
under use by the Indigenous Peoples
To respect and preserve the culture, knowledge and practices of Indigenous
Peoples

G1.
IFC recognizes that the rights of Indigenous Peoples are being addressed under bothnational and international law. Under international law, key UN human rights conventions (seethe References section below) form the core of international instruments that provide the rights
framework for the world’s indigenous peoples. In addition, some countries have passed
legislation or ratified other international or regional conventions for the protection of Indigenous
Peoples, such as ILO Convention 169, ratified by 17 countries (see ILO 169 and the Private
Sector, IFC’s practical guide for IFC clients who operate in countries that have ratified ILO 169).
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While such legal instruments establish responsibilities of states, it is increasingly expected thatprivate sector companies conduct their affairs in a way that would uphold these rights and notinterfere with states’ obligations under these instruments. It is in recognition of this emerging
business environment that IFC expects that private sector projects financed by IFC foster fullrespect for the dignity, human rights, aspirations, cultures and customary livelihoods of
Indigenous Peoples.
G2.
The objectives of Performance Standard 7 also underscore the need to avoid adverse
project impacts on Indigenous Peoples’ communities living in the project’s area of influence, orwhere avoidance is not feasible, to minimize, mitigate or compensate for such impacts throughmechanisms that are tailored to their specific cultural characteristics and expressed needs ofthe Indigenous Peoples, in a manner commensurate with the scale of project risks and impacts.
G3.
The client and the affected communities of Indigenous Peoples should establish an
ongoing relationship throughout the life of the project. To this end, Performance Standard 7
requires the client to engage in a process of free, prior and informed consultation and informed
participation. In the high risks scenarios described in the paragraphs 11 through 15 of
Performance Standard 7, the client’s engagement process will include a good faith negotiation(see paragraph G24 below) and documentation of the successful outcome of such negotiation.
Taking into account the Indigenous Peoples’ understanding of the changes brought about by aproject helps to identify both positive and negative project impacts. Similarly, the effectivenessof impact avoidance and mitigation and compensation measures is enhanced if the points ofviews of affected Indigenous Peoples are taken into consideration and form part of the decisionmaking process.
G4.
Many Indigenous Peoples’ cultures and identities are inextricably linked to the lands onwhich they live and the natural resources on which they depend. In many cases, their cultures,
identities, traditional knowledge and oral histories are connected to, and maintained through theuse of and relationships with, these lands and natural resources. These lands and resources
may be sacred or have a spiritual significance. Use of sacred sites and other places of cultural
significance may have important functions for the conservation and sustainable use of thenatural resources upon which Indigenous Peoples rely for their livelihoods and well-being.
Thus, project impacts on lands, forests, water, wildlife, and other natural resources may affecttheir institutions, livelihoods, economic development, and their ability to maintain and develop
their identities and cultures. Performance Standard 7 sets out specific requirements when
projects affect these relationships.

Scope of Application
3. The applicability of this Performance Standard is established during the Social andEnvironmental Assessment process, while implementation of the actions necessary to meetthe requirements of this Performance Standard is managed through the client’s Social andEnvironmental Management System.
The assessment and management system
requirements are outlined in Performance Standard 1.
4. There is no universally accepted definition of “Indigenous Peoples”. Indigenous
Peoples may be referred to in different countries by such terms as “Indigenous ethnic

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minorities,” “aboriginals,” “hill tribes,” “minority nationalities,” “scheduled tribes,” “firstnations,” or “tribal groups.”
5. In this Performance Standard, the term “Indigenous Peoples” is used in a generic sense
to refer to a distinct social and cultural group possessing the following characteristics invarying degrees:Self-identification as members of a distinct indigenous cultural group andrecognition of this identity by others
Collective attachment to geographically distinct habitats or ancestral territories
in the project area and to the natural resources in these habitats and territories
Customary cultural, economic, social, or political institutions that are separate
from those of the dominant society or culture
An indigenous language, often different from the official language of thecountry or region

6. Ascertaining whether a particular group is considered as Indigenous Peoples for the
purpose of this Performance Standard may require technical judgment.

G5.
Over the past 20 years, “indigenous peoples” has emerged as a distinct category ofhuman societies under international law and in the national legislation of many countries.
However, there is no internationally accepted definition of “indigenous peoples.”
For thisreason, Performance Standard 7 does not define “Indigenous Peoples” but the applicability of
Performance Standard 7 is determined on the basis of the four characteristics presented inparagraph 5 of Performance Standard 7. Each characteristic is evaluated independently, andno characteristic weighs more than the others. In addition, Performance Standard 7 applies togroups or communities, rather than individuals.
G6.
Clients will need to exercise judgment in determining whether a group or communities
should be considered Indigenous for the purpose of Performance Standard 7. In making thisdetermination, the client may undertake a number of activities, including ethnographic andarchival research, participatory approaches with the affected communities of Indigenous
Peoples, assessment of the traditional institutions, and investigation of the applicable nationallaws and regulations, including customary laws, and laws reflecting host country obligations
under international law. The client should retain qualified social scientists to carry out this work.
G7.
As part of its social and environmental review process, IFC will form its own professional
judgment on the applicability of Performance Standard 7 on the basis of evidence presented by
the client and its own due diligence. IFC will consult with the World Bank from time to time on
developments in national and international law and the consistent application of the definition ofIndigenous Peoples to particular group or community of people.
G8.
Clients should be aware that Performance Standard 7 may apply to communities ofIndigenous Peoples who have lost collective attachment to lands and territories in the project
area of influence as a result of forced severance that occurred within the Indigenous Peoples’
lifetime, because of conflict, involuntary resettlement programs by governments, dispossession
from their lands, or natural calamities, if they are expected to be adversely affected by the
project.

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G9.
Performance Standard 7 applies to communities of Indigenous Peoples who no longer
live on the lands affected by the project, but who still retain ties to those lands throughcustomary usage, including seasonal or cyclical use.
G10. Performance Standard 7 addresses vulnerabilities pertinent to Indigenous Peoples.
Other vulnerable groups affected economically, socially or environmentally by project impacts
are addressed through the process of Social and Environmental Assessment and managementof social and environmental impacts set out in Performance Standard 1 and Guidance Note 1.

Requirements
General Requirements
Avoidance of Adverse Impacts
7. The client will identify through a process of Social and Environmental Assessment allcommunities of Indigenous Peoples who may be affected by the project within the project’s
area of influence, as well as the nature and degree of the expected social, cultural (including
cultural heritage1), and environmental impacts on them, and avoid adverse impacts
whenever feasible.
8. When avoidance is not feasible, the client will minimize, mitigate or compensate forthese impacts in a culturally appropriate manner. The client’s proposed action will be
developed with the informed participation of affected Indigenous Peoples and contained in atime-bound plan, such as an Indigenous Peoples Development Plan, or a broader
community development plan with separate components for Indigenous Peoples consistent
with the requirements of paragraph 9.2_________________________
1

Additional client requirements on protection of cultural heritage are set out in Performance Standard 8.

2

The determination of the appropriate plan will require technical judgment. A community development plan

may be appropriate when Indigenous Peoples are integrated into larger affected communities.

G11. The screening phase of the Assessment should identify the existence of communities ofIndigenous Peoples in the project’s area of influence (as defined in paragraph 5 of PerformanceStandard 1) that may be potentially affected by the client’s project. If the screening indicatespotentially adverse impacts on Indigenous Peoples, further analysis should be undertaken tocollect baseline data on those communities, covering key socio-economic and environmental
aspects that may be impacted by the project. The analysis should also identify positive impacts
and potential benefits of the project to Indigenous Peoples and consider ways to enhance them.
The breadth, depth and type of analysis should be proportional to the nature and scale of the
proposed project’s potential impacts on these communities. Qualified social scientists should
be retained to carry out such analysis as part of the project’s Assessment. Such analysis
should use participatory approaches and reflect the views of the affected communities ofIndigenous Peoples on expected project risks, impacts and benefits. Further guidance on
possible social impacts and mitigation approaches is provided in IFC Good Practice Note:
Addressing the Social Dimensions of Private Sector Projects and guidance on the conduct of
cultural, environmental and social impact assessments is available in the Akwé: Kon Guidelines.
G12. Because projects can adversely impact Indigenous Peoples’ identity, natural resourcebased livelihoods, food security and cultural survival, the priority should be to avoid such

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impacts. Clients should explore viable alternative project designs, consult the affected
communities of Indigenous Peoples, and seek advice of social scientists, in an effort to avoid
such impacts.
G13. If adverse impacts are unavoidable, the client should prepare an Indigenous Peoples
Development Plan outlining the actions to minimize, mitigate or compensate for adverse
impacts in a culturally appropriate manner. Depending on local circumstances, a free-standing
Indigenous Peoples Development Plan may be prepared, or it may be a component of abroader community development plan where communities of Indigenous Peoples exist in thesame area with other similarly affected communities or where the Indigenous Peoples areintegrated within a larger affected population. These plans should detail actions to minimize,and mitigate, and compensate for adverse social and economic impacts, and to identify
opportunities and actions to enhance positive impacts of the project on the Indigenous Peoples.
Where appropriate, the plan may also include measures to conserve and manage the natural
resources on which they depend on a sustainable basis, consistent with Performance Standard
6. These plans become part of the Action Plan (as outlined in Performance Standard 1 and its
accompanying Guidance Note) to be implemented by the client, and should include a clear
statement of roles and responsibilities, funding and resource inputs, a time-bound schedule ofactivities and a budget. Recommended contents of an Indigenous Peoples Development Plan
can be found in Annex 1. Further guidance on community development programs is provided in
IFC’s Community Development Resource Guide: Investing in People: Sustaining Communities
through Improved Business Practice.
Information Disclosure, Consultation and Informed Participation
9. The client will establish an ongoing relationship with the affected communities ofIndigenous Peoples from as early as possible in the project planning and throughout the lifeof the project. In projects with adverse impacts on affected communities of Indigenous
Peoples, the consultation process will ensure their free, prior, and informed consultationand facilitate their informed participation on matters that affect them directly, such as
proposed mitigation measures, the sharing of development benefits and opportunities, andimplementation issues.
The process of community engagement will be culturally
appropriate and commensurate with the risks and potential impacts to the Indigenous
Peoples. In particular, the process will include the following steps:







Involve Indigenous Peoples’ representative bodies (for example, councils ofelders or village councils, among others)
Be inclusive of both women and men and of various age groups in a culturally
appropriate manner
Provide sufficient time for Indigenous Peoples’ collective decision-making
processes
Facilitate the Indigenous Peoples’ expression of their views, concerns, andproposals in the language of their choice, without external manipulation,interference, or coercion, and without intimidation
Ensure that the grievance mechanism established for the project, as describedin Performance Standard 1, paragraph 23, is culturally appropriate andaccessible for Indigenous Peoples

G14. The client should engage with the affected communities of Indigenous Peoples within
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informed participation. The general characteristics of engagement with affected communities
are described in Performance Standard 1 and the accompanying Guidance Note, and arefurther described below as they apply to Indigenous Peoples. Further guidance on engagement
processes is provided in Stakeholder Engagement: A Good Practice Handbook for Companies
Doing Business in Emerging Markets.
G15. During the process of information disclosure, consultation and informed participation, theclient should engage with the affected communities of Indigenous Peoples in a process of “free,prior, and informed consultation,” which entails consultation that occurs freely and voluntarily,
without any external manipulation, interference or coercion, and without intimidation. In
addition, the affected communities of Indigenous Peoples should have access to relevant
project information prior to any decision making that will affect them, including information on
potential adverse impact on them at each stage of project planning, implementation andoperation and decommissioning.
G16. Clients should adopt free, prior, and informed consultation approaches that rely on
existing customary institutions and collective decision making processes utilized by Indigenous
Peoples. In many cases, community elders or leaders, who are not necessarily the elected
officials of these communities, play a key role. However, clients should also keep in mind thatthe communities of Indigenous Peoples are not necessarily homogeneous and that somesegments of the community, such as women, youth and the elderly, may be more vulnerable
than others. The consultation should take into account the interests of these segments in thecommunity while being cognizant of traditional cultural approaches that may exclude segmentsof the community from the decision-making process. In some cases, the affected communities
of Indigenous Peoples may require communication or consultation within their communities
consistent with their traditional or customary practices.
G17. Free, prior, and informed consultation with and within affected communities ofIndigenous Peoples may span over a period of time. Adequately informing the members of theindigenous community about the project’s potential adverse impacts and proposed mitigation
measures may involve an iterative process over time with various segments of the community.
Thus, (i) consultation should start as early as possible in the assessment stage; (ii) project
information should be made available in understandable format, using the indigenous languages
where appropriate; (iii) the communities should have sufficient time for consensus building anddeveloping responses to project issues and options that benefit their community; and (iv) clientsshould allocate time to fully consider and address concerns and suggestions about the project
into the project design and implementation.
G18. The client may consider effective communication and capacity building programs toenhance the effectiveness of the process of free, prior and informed consultation with
Indigenous Peoples and their informed participation in key aspects of the project. For example,
the client should seek active participation of the affected communities of Indigenous Peoples
throughout the key stages of the process of Assessment on matters that pertain to them.
Enabling Indigenous Peoples’ access to legal advice about their rights and entitlements tocompensation, due process, and benefits under national law is an effective way of building
knowledge and capacity within the affected communities. In cases where no establisheddecision making process or leadership exists within the affected communities, the client may
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the participation of the communities. Further capacity building and involvement in areas suchas participatory monitoring and community development may prove useful to enable Indigenous
Peoples to fully participate in, and benefit from, private sector developments.
G19. When financing projects with adverse impacts to affected communities of Indigenous
Peoples, IFC will review the client’s documentation of its community engagement process.
Before presenting the project for approval to its Board of Directors, IFC will ascertain that:

the client’s community engagement has involved free, prior and informed
consultation with affected communities of Indigenous Peoples
this process has enabled the informed participation of affected communities ofIndigenous Peoples; andthis process has lead to broad community support for the project among the affected
communities of Indigenous Peoples

Broad community support is a collection of expression by the affected communities, throughindividuals and/or their recognized representatives, in support of the project. There may bebroad community support even if some individuals or groups object to the project. Additional
guidance on broad community support can be found in Guidance Note 1 and IFC’s
Environmental and Social Review Procedure.
G20. The client’s general grievance mechanism for the project in accordance with therequirements of Performance Standard 1 or a grievance mechanism dedicated to Indigenous
Peoples matters that meets the requirements of Performance Standard 1 should enable theaffected communities of Indigenous Peoples to raise and receive response to grievances andcomplaints. Such grievance mechanism should be culturally appropriate and should notinterfere with any existing processes or institutions within the affected communities ofIndigenous Peoples to settle differences among them. As part of the engagement process,affected communities of Indigenous Peoples should be informed of the client’s grievancemechanism. The grievance mechanism should provide for fair, transparent, and timely redressof grievances at no cost, and if necessary provide special provisions for women, youth and theelderly.
Development Benefits
10. The client will seek to identify, through the process of free, prior, and informed
consultation with and the informed participation of the affected communities of Indigenous
Peoples, opportunities for culturally appropriate development benefits. Such opportunities
should be commensurate with the degree of project impacts, with the aim of improving theirstandard of living and livelihoods in a culturally appropriate manner, and to fostering thelong-term sustainability of the natural resource on which they depend. The client will
document identified development benefits consistent with the requirements of paragraphs 8
and 9 above, and provide them in a timely and equitable manner.

G21. Private sector operations may provide unique opportunities for Indigenous Peoples’ own
development. In general, these development opportunities are offered as part of an overall
approach to mitigate and compensate for adverse impacts of a project, and in proportion to thepotential adverse impacts on Indigenous Peoples. In large scale projects, the client should be
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community development effort or effort to stimulate local enterprises and economy. The client
may also look for opportunities to support existing programs tailored to deliver development
benefits to Indigenous Peoples, such as bilingual educational programs, maternal and childhealth and nutrition programs, employment generation activities, and the arrangement for microcredit schemes.
G22. The scale and nature of appropriate development opportunities will vary. It is important
to identify, plan and implement development programs in close consultation with affected
communities of Indigenous Peoples. Activities to realize development opportunities for
Indigenous Peoples can be effectively delivered as an integrated program either through an
Indigenous Peoples Development Plan or a Community Development Plan. The latter may be
more appropriate where Indigenous Peoples live alongside other affected groups who are notindigenous, but share similar vulnerabilities and related livelihoods.
Special Requirements
11. Because Indigenous Peoples may be particularly vulnerable to the project
circumstances described below, the following requirements will also apply, in thecircumstances indicated, in addition to the General Requirements above. When any ofthese Special Requirements apply, the client will retain qualified and experienced external
experts to assist in conducting the Assessment.

Impacts on Traditional or Customary Lands under Use
12. Indigenous Peoples are often closely tied to their traditional or customary lands andnatural resources on these lands. While these lands may not be under legal ownershippursuant to national law, use of these lands, including seasonal or cyclical use, bycommunities of Indigenous Peoples for their livelihoods, or cultural, ceremonial, or spiritual
purposes that define their identity and community, can often be substantiated anddocumented. Paragraphs 13 and 14 below specify the requirements that the client will
follow when traditional or customary lands are under use in a manner described in thisparagraph.
13. If the client proposes to locate the project on, or commercially develop natural
resources located within, traditional or customary lands under use, and adverse impacts3
can be expected on the livelihoods, or cultural, ceremonial, or spiritual use that define theidentity and community of the Indigenous Peoples, the client will respect their use by taking
the following steps:







The client will document its efforts to avoid or at least minimize the size of land
proposed for the project
The Indigenous Peoples’ land use will be documented by experts incollaboration with the affected communities of Indigenous Peoples without
prejudicing any Indigenous Peoples’ land claim4
The affected communities of Indigenous People will be informed of their rights
with respect to these lands under national laws, including any national law
recognizing customary rights or use
The client will offer affected communities of Indigenous Peoples at least
compensation and due process available to those with full legal title to land in
the case of commercial development of their land under national laws, together
withculturally
appropriate
development
opportunities;
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compensation or compensation-in-kind will be offered in lieu of cash
compensation where feasibleThe client will enter into good faith negotiation with the affected communities
of Indigenous Peoples, and document their informed participation and thesuccessful outcome of the negotiation_________________________
3

Such adverse impacts may include impacts from loss of access to assets or resources, or restrictions onland use, resulting from project activities.
4

While this Performance Standard requires substantiation and documentation of the use of such land,clients should also be aware that the land may already be under alternative use, as designated by the hostgovernment.

G23. If issues related to land use as described in paragraph 13 of Performance Standard 7
are identified in the screening phase, the client will engage qualified and experienced external
experts to carry out the Assessment with active participation of the affected communities ofIndigenous Peoples. The Assessment should describe the Indigenous Peoples’ customary land
and resource tenure system within the project’s area of influence. The Assessment should
identify and record all customary use of land and resources, including cultural, ceremonial or
spiritual use, and any ad hoc, seasonal or cyclical use of land and natural resources (forexample, for hunting, fishing, grazing, or extraction of forest and woodland products), and any
potential adverse impacts on such use. Customary use of land and resources refers to patternsof long-standing community land and resource use in accordance with Indigenous Peoples’
customary laws, values, customs, and traditions, including seasonal or cyclical use, rather thanformal legal title to land and resources issued by the state. Cultural, ceremonial and spiritual
uses are an integral part of Indigenous Peoples’ relationships to their lands and resources, areembedded within their unique knowledge and belief systems, and are key to their cultural
integrity. Such uses may be intermittent, may take place in areas distant from population
centers, and may not be site specific. Any potential adverse impacts on such use must be
documented and addressed within the context of these belief systems. Any information fromthe client’s Assessment that identifies the existence of critical habitats and critical cultural
resources consistent with Performance Standards 6 and 8 within the project area of influence
will be relevant in the analysis and should be taken into account. Indigenous Peoples’ claims toland and resources not legally owned under national law should also be documented as part of
the Assessment process. No documentation of land claims (or absence of land claim) should
prejudice existing or future legal proceedings of Indigenous Peoples to establish legal title.
G24. The priority objective of the Assessment process is to identify measures to avoid
adverse impacts on these lands and resources. Where avoidance is not feasible, mitigation orcompensation measures should be developed to ensure the availability of land and natural
resources necessary for the livelihood and cultural survival of the affected communities ofIndigenous Peoples. The client should offer at least the same level of compensation and due
process that it will offer to those with full legal title in the jurisdiction. Land-based compensation
should be preferred, provided that suitable land is available. In addition, the client shouldobserve due process, such as appropriate notification and responses to inquiries, for theaffected communities of Indigenous Peoples. In some cases, land under Indigenous Peoples’
claim may already be designated by the host government for alternate uses, which may include
nature reserves, mining concession areas, or as individual land users who have obtained title tothe land. In this case, the client should seek to involve the relevant government agency in any
consultation and negotiation with the affected communities of Indigenous Peoples.
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G25. Whether the project should proceed with the potential adverse impacts on these lands
should be subject to good faith negotiation with the affected communities of Indigenous
Peoples. Good faith negotiation generally involves: (i) willingness to engage in a process andavailability to meet at reasonable times and frequency; (ii) provision of information necessary for
informed negotiation; (iii) exploration of key issues of importance; (iv) mutual acceptableprocedures for the negotiation; (v) willingness to change initial position and modify offers where
possible; and (vi) provision for sufficient time for decision making. The client should document
the process of negotiation with the Indigenous Peoples, including their informed participation in
the negotiation process, and the successful outcomes of such negotiation. Impacts onvulnerable groups within the affected communities of Indigenous Peoples should be adequately
addressed in the negotiation and documentation. Examples of such documentation include amemorandum of understanding, a letter of intent, a joint statement of principles, and writtenagreements. It may be appropriate to recite or reflect the contents of a Community
Development Plan or an Indigenous Peoples Development Plan in such documents oragreements to confirm and clarify the responsibilities of involved parties with respect to therelevant plan.
G26. In cases involving good faith negotiation, IFC will both review the client’s documentation
for the negotiation process and its outcomes and verify that the affected communities ofIndigenous Peoples are broadly in support of the project.
G27. In some cases, it may be possible for the client to work with a national governmental
agency to facilitate the legal recognition of lands claimed or used by affected communities ofIndigenous Peoples in connection with land titling programs of the government. The client canbase this work on the customary land tenure information gathered during the Assessment
process and help the affected communities or members of the affected communities to pursue
land titles, if the Indigenous Peoples so request and participate in such programs. Examples ofsuch best practice in IFC financed projects are available from IFC.
Relocation of Indigenous Peoples from Traditional or Customary Lands
14. The client will consider feasible alternative project designs to avoid the relocation ofIndigenous Peoples from their communally held5 traditional or customary lands under use.
If such relocation is unavoidable, the client will not proceed with the project unless it enters
into a good faith negotiation with the affected communities of Indigenous Peoples, anddocuments their informed participation and the successful outcome of the negotiation. Any
relocation of Indigenous Peoples will be consistent with the Resettlement Planning and
Implementation requirements of Performance Standard 5. Where feasible, the relocatedIndigenous Peoples should be able to return to their traditional or customary lands, should
the reason for their relocation cease to exist.
_________________________
5

Where members of the affected communities of Indigenous Peoples individually hold legal title, or where therelevant national law recognizes customary rights for individuals, the requirements of Performance Standard 5
will apply, rather than the requirements under this heading.

G28. Because physical relocation of Indigenous Peoples is particularly complex and may havesignificant and irreversible adverse impacts on their cultural survival, the client is expected tomake every effort to explore feasible alternative project designs to avoid any physical relocationof Indigenous Peoples from their communally held traditional or customary lands under use.
The potential relocation may result from the project’s acquisition of land, or through restrictions
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July 31, 2007or alterations on land use or resources (for example, where the communally held traditional or
customary lands under use by Indigenous Peoples are designated by the relevant government
agency for another use in conjunction with the proposed project, such as establishment ofprotected areas for resource conservation purposes). Any physical relocation should only beconsidered after the client has established that there is no feasible alternative to avoid
relocation and the client has entered into and successfully concluded good faith negotiation withthe affected communities of Indigenous Peoples building on the process of their informed
participation. In addition, IFC will evaluate the client’s documentation of its engagement
process to establish that broad community support for the project exists among the affected
communities.
G29. In case the host government has made the decision to relocate Indigenous Peoples,
consultation with relevant government officials would be important to understand the rationale
for such relocation, and whether a good faith negotiation based on informed participation of the
Indigenous Peoples has been implemented and successfully concluded regarding the aspectsof the project and the relocation affecting communities of Indigenous Peoples, prior to thedecision to finance the project.
G30. Upon the successful conclusion of the process of good faith negotiation that provides forthe relocation of Indigenous Peoples and consistent with the conclusion of the negotiation, theclient will prepare a Resettlement Action Plan in accordance with the paragraphs 11 through 13
of Performance Standard 5. The client should be guided by paragraph 13 of PerformanceStandard 7 on the level of compensation for land. Such Plan should include a provision to allow
the affected communities, where possible and feasible, to return to their lands when the reasonsfor their relocation cease to exist.
G31. The requirements under Performance Standard 7, paragraph 14, are intended forsituations where traditional or customary land is held and used by Indigenous Peoples
communally. Where individual members of the affected communities of Indigenous Peoples
hold legal title, or where relevant national law recognizes customary rights for individuals, therequirements of Performance Standard 5 will apply. However, even where individuals within theaffected communities of Indigenous Peoples hold legal title to land individually, the client should
be aware that the decision of relevant individuals to cede title and to relocate may still be
subject to a community-based decision making process, as these lands may be not be
considered private property but ancestral lands.
Cultural Resources
15. Where a project proposes to use the cultural resources, knowledge, innovations, or
practices of Indigenous Peoples for commercial purposes, the client will inform the
Indigenous Peoples of: (i) their rights under national law; (ii) the scope and nature of the
proposed commercial development; and (iii) the potential consequences of suchdevelopment. The client will not proceed with such commercialization unless it: (i) enters
into a good faith negotiation with the affected communities of Indigenous People; (ii)documents their informed participation and the successful outcome of the negotiation; and(iii) provides for fair and equitable sharing of benefits from commercialization of suchknowledge, innovation, or practice, consistent with their customs and traditions

G32. Knowledge, innovations and practices of Indigenous Peoples are often referred to as
intangible cultural heritage in international conventions. Knowledge, innovations and practices
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July 31, 2007of Indigenous Peoples often remain in use for sacred or ritual purposes, and can be held secretby the community or designated members. Commercial development of intangible cultural
heritage is the subject of current international discussions, with international standards
emerging slowly. The one exception is in the commercial use of genetic resources andassociated traditional knowledge of indigenous or traditional communities as reflected in theConvention on Biological Diversity. Useful guidance in this area is provided by the Bonn
Guidelines and the Akwé Kon Guidelines issued under the Convention on Biological Diversity(see the References section). Examples of commercial development include commercializationof traditional medicinal knowledge or other sacred or traditional techniques for processing
plants, fibers or metals. Expressions of folklore, such as sale of art or music, should be treatedin accordance with national law.
G33. Where such resources are proposed for commercial development, the client should
document the process and the successful outcome of a good faith negotiation with the affected
Indigenous Peoples’ communities on the proposed commercial development, in addition to any
requirements pursuant to national law. Some national laws require the consent of Indigenous
Peoples’ communities in this regard.
G34. If the client wishes to exploit and develop any knowledge, innovation or practices ofIndigenous Peoples for commercial purposes and to protect any intellectual property createdfrom such development, the client may be legally required to disclose or publicly release thesource of the materials. Examples include genetic materials proposed for medical application.
Because such materials may be used for sacred or ritual purposes by communities ofIndigenous Peoples, and may be held secret by such communities or designated members, theclient should take care before proceeding, and in any event, enable the relevant communities tocontinue to use the genetic materials for customary or ceremonial purposes.
G35. Where a project proposes to exploit, develop, and commercialize intangible cultural
heritage, Performance Standard 7 requires that the client share the benefits accruing from suchuse with the affected community of Indigenous Peoples. Benefits should be determined as partof the process of good faith negotiation. Benefits may include development benefits in the formof employment, vocational training, and benefits pursuant to community development andsimilar programs.
G36. Clients should be aware that use of indigenous names can be sensitive and should
consult with the relevant communities before using them even for such purposes as naming
project sites, pieces of equipment.
G37. Clients should refer to similar requirements and guidance available in PerformanceStandard 8 and Guidance Note 8 with respect to the cultural heritage of communities other thanthose of Indigenous Peoples.

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Annex A
Indigenous Peoples Development Plan (IPDP)
The IPDP is prepared in a flexible and pragmatic manner, and its level of detail varies
depending on the specific project and the nature of the effects to be addressed. In general andwhere appropriate, an IPDP should include the following elements:(a) Baseline information (from Social and Environmental Assessment)
Summary of relevant baseline information that clearly profiles the affected communities, theircircumstances and livelihoods, description and quantification of the natural resources uponwhich the Indigenous Peoples depend.
(b) Key Findings: Analysis of Impacts, Risks & Opportunities (from Social andEnvironmental Assessment)
Summary of key findings, analysis of impacts, risks and opportunities and recommended
possible measures to mitigate adverse impacts, enhance positive impacts, conserve andmanage their natural resource base on a sustainable basis, and achieve sustainable community
development.
(c) Result of Consultations (during Social and Environmental Assessment process) andFuture Engagement
Description of the process of information disclosure, consultation and informed participation withthe affected communities of Indigenous Peoples, and how issues raised have been addressed.
The consultation framework for future engagement should clearly describe the process for ongoing consultations with, and participation by Indigenous Peoples, in the process of
implementing and operating the project.
(d) Avoid, Minimize, and Mitigate Negative Impacts and Enhance Positive Impacts
Clearly describe the measures agreed to in the process of information disclosure, consultationand informed participation to avoid, minimize and mitigate potential adverse effects on
Indigenous Peoples, and to enhance positive impacts. Include appropriate action times thatdetail the measures to be taken, responsibilities and agreed schedule and for implementation(who, how, where and when) (refer to Performance Standard 1 and Guidance Note 1 for moredetails of the contents of an Action Plan). Whenever feasible, avoidance or preventative
measures should be given primacy over mitigatory or compensatory measures.
(e) Community Based Natural Resource Management Component
Where applicable, this component should focus on the means to ensure continuation of
livelihood activities key to the survival of these communities and their traditional and cultural
practices.
Such livelihood activities may include grazing, hunting, gathering, or artisanal
fishing. This component clearly sets out how the natural resources upon which the affected
communities depend, and the geographically distinct areas and habitats in which they arelocated, will be conserved, managed and utilized on a sustainable basis.

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July 31, 2007(f) Measures to Enhance Opportunities
Clearly describe measures to enable Indigenous Peoples to take advantage of opportunities
brought about by the project, and to conserve and manage on a sustainable basis the utilizationof the unique natural resource base upon which they are dependent. Such opportunities should
be culturally appropriate.
(g) Grievance Mechanism
Describe appropriate procedures to address grievances by affected Indigenous Peoples arisingfrom project implementation and operation. When designing the grievance procedures, theclient will take into account the availability of judicial recourse and customary dispute settlement
mechanisms among the Indigenous Peoples. Affected communities must be informed of theirrights and the possibilities of administrative and legal recourse or remedies, and any legal aid
available to assist them as part of the process of consultation and informed participation. The
grievance mechanism should provide for fair, transparent and timely redress of grievances
without costs, and if necessary provide for special accommodations for women, youth and theelderly, and other vulnerable groups within the community to make complaints.
(h) Costs, budget, timetable, organizational responsibilities
Include an appropriate summary of costs of implementation, budget and responsibility forfunding, timing of expenditure and organizational responsibilities in managing and administering
project funds and expenditures.
(i) Monitoring, Evaluation & Reporting
Describe monitoring, evaluation and reporting mechanisms (including responsibilities,
frequencies, feedback and corrective action processes).
Monitoring and evaluation
mechanisms should include arrangements for on-going information disclosure, consultation andinformed participation with the affected Indigenous Peoples.

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References
The requirements set out in the Performance Standard relate to the following international
convention and guidelines:
The six UN Conventions of relevance to indigenous peoples are as follows:







International Covenant on Civil and Political Rights
International Covenant on Economic, Social and Cultural Rights
International Convention on the Elimination of All Forms of Racial Discrimination
Convention on the Rights of the Child
Convention Against Torture and Other Cruel, In human or Degrading Treatment of
Punishment
Convention on the Elimination of All Forms of Discrimination Against Women

A list of the six UN Conventions and the countries that have ratified each of them is available at:
http://www.ohchr.org/english/law/index.htm. The ratification status of each convention bycountry is available at: http://www.unhchr.ch/pdf/report.pdf
The following conventions and guidelines are also of relevance:ILO Convention on Indigenous and Tribal Peoples (No. 169) (ILO, 1989)
http://www.ilo.org/ilolex/cgi-lex/convde.pl?C169
ILO Convention on Indigenous and Tribal Peoples (No. 169): A Manual (ILO,
1989) provides definitions and useful guidance on ILO Convention 169 on
Indigenous and Tribal Peoples.
http://www.ilo.org/public/english/standards/norm/egalite/itpp/convention/manual.pdf

Convention on Biological Diversity (1992) - provides information on the convention,
lists of signatory nations and biodiversity experts and other useful information.
http://www.biodiv.org/default.aspx

Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing of
the Benefits Arising Out of their Utilization (Secretariat of the Convention on
Biological Diversity, 2002) guidelines on establishing legislative, administrative or
policy measures on access and benefit-sharing and/or when negotiating contractual
arrangements for access and benefit-sharing.
http://www.biodiv.org/doc/publications/cbd-bonn-gdls-en.pdf



Akwé: Kon Guidelines (Secretariat of the Convention on Biological Diversity, 2004)
voluntary guidelines for the conduct of cultural environmental and social impact
assessments regarding developments proposed to take place on, or which are likely
to impact on, sacred sites and on lands and waters traditionally occupied or used byindigenous or local communities.
http://www.biodiv.org/doc/publications/akwe-brochure-en.pdf

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In addition, the guidance and recommendations issued by IFC and the World Bank provide
useful additional guidance:Operational Policy OP 4.10 - Indigenous Peoples (World Bank, 2005) - underscores
the need for Borrowers and Bank staff to identify indigenous peoples, consult withthem, ensure that they participate in, and benefit from Bank-funded operations in a
culturally appropriate way - and that adverse impacts on them are avoided, or where
not feasible, minimized or mitigated.
http://wbln0018.worldbank.org/Institutional/Manuals/OpManual.nsf/B52929624EB2A35
38525672E00775F66/0F7D6F3F04DD70398525672C007D08ED?OpenDocumentGood Practice Note: Addressing the Social Dimensions of Private Sector Projects(IFC, 2003) – A practitioner’s guide to undertaking social impact assessment at the
project level for IFC-financed projects
http://ifcln1.ifc.org/ifcext/enviro.nsf/Content/Publications

Investing in People: Sustaining Communities through Improved Business Practice(IFC, 2001) a resource guide in establishing effective community development
programs.
http://ifcln1.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_comdev/$FILE/Community
Guide.pdf

Handbook for Preparing a Resettlement Action Plan (IFC, 2001) provides step-bystep guidance through the resettlement planning process and includes practical tools
such as implementation checklists, sample surveys and monitoring frameworks.
http://ifcln1.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_resettle/$FILE/ResettlementHandbook.PDF

Stakeholder Engagement: A Good Practice Handbook for Companies Doing
Business in Emerging Markets (IFC, 2007) explains new approaches and forms ofengagement with affected local communities.
http://ifchq14.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_StakeholderEngagement_Full/$FILE/IFC_StakeholderEngagement.pdf

The IFC publication ILO Convention 169 and the Private Sector “( March 2007) isintended as a practical guide for IFC clients who operate in countries that have ratified
Convention 169 on Indigenous and Tribal Peoples.
http://ifchq14.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/p_ILO169/$FILE/ILO_169.pdf

A useful treatment of the development of Free Prior and Informed Consent definitions canbe found in:Preliminary working paper on the principle of free, prior and informed consent ofindigenous peoples in relation to development affecting their lands and natural
resources E/CN.4/Sub.2/AC.4/2004/4(Antoanella-Iulia Motoc and Tebtebba
Foundation, 2004) provides useful information on the principle of Free, Prior andinformed consent.
http://www.ohchr.org/english/issues/indigenous/docs/wgip22/4.pdf
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Guidance Note 8
Cultural Heritage
July 31, 2007

This Guidance Note 8 corresponds to Performance Standard 8. Please also refer to the
Performance Standards 1-7 as well as the corresponding Guidance Notes for additional
information. Bibliographical information on all reference materials appearing in the text of this
Guidance Note can be found in the References Section at the end.

Introduction
1. Performance Standard 8 recognizes the importance of cultural heritage for current andfuture generations. Consistent with the Convention Concerning the Protection of the World
Cultural and Natural Heritage, this Performance Standard aims to protect irreplaceable
cultural heritage and to guide clients on protecting cultural heritage in the course of theirbusiness operations. In addition, the requirements of this Performance Standard on a
project’s use of cultural heritage are based in part on standards set by the Convention on
Biological Diversity.

ObjectivesTo protect cultural heritage from the adverse impacts of project activities andsupport its preservation
To promote the equitable sharing of benefits from the use of cultural heritage inbusiness activities

G1.
The objectives of Performance Standard 8 aim to preserve and protect cultural heritageby avoiding, minimizing or mitigating the adverse impacts that projects might cause to cultural
heritage. In addition, private sector projects can play a role in promoting awareness of andappreciation for cultural heritage. Where the project proposes to use cultural heritage of acommunity, Performance Standard 8 seeks to ensure that the development benefits accruing
from the commercial use of cultural heritage flow equitably to the affected communities.

Scope of Application
2. The applicability of this Performance Standard is established during the Social andEnvironmental Assessment process, while implementation of the actions necessary to meetthe requirements of this Performance Standard is managed through the client’s Social andEnvironmental Management System.
The assessment and management system
requirements are outlined in Performance Standard 1.
3. For the purposes of this Performance Standard, cultural heritage refers to tangible
forms of cultural heritage, such as tangible property and sites having archaeological(prehistoric), paleontological, historical, cultural, artistic, and religious values, as well as
unique natural environmental features that embody cultural values, such as sacred groves.
However, for the purpose of paragraph 11 below, intangible forms of culture, such as
cultural knowledge, innovations and practices of communities embodying traditional
lifestyles, are also included. The requirements of this Performance Standard apply tocultural heritage regardless of whether or not it has been legally protected or previously
disturbed.

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G2.
Tangible cultural heritage is considered a unique and non-renewable resource thatpossesses cultural, scientific, spiritual or religious value and includes moveable or immovable
objects, sites, structures, groups of structures, natural features, or landscapes that havearchaeological, paleontological, historical, architectural, religious, aesthetic or other culturalvalue. Further descriptions of different tangible cultural heritage examples are included in
Annex A.
G3.
Integration of preservation and protection of cultural heritage into the assessment
process and management systems of projects is essential because damage to cultural heritage
can result from activities other than direct excavation or refurbishing buildings. Some project
aspects may also impact cultural heritage in less direct ways, for example by increasing erosion
to a coastal site, or building a road into a previously inaccessible area. The client should
consider these possible impacts and address them through appropriate measures.
G4.
When in doubt about whether something is cultural heritage, the client should seek theknowledge and advice of local and international experts, government authorities, and membersof local communities and Indigenous Peoples. The knowledge of local communities isparticularly important for identifying cultural heritage that may be tied to the natural environment
and not evident to outsiders.
G5.
Determining whether knowledge, innovations or practices of commercial value are theintangible cultural heritage of a community requires tracing that knowledge back to its
community of origin. International practice now expects people developing products with origins
in the natural environment to know where the intellectual property originates (see paragraph 11
of Performance Standard 8).
G6.
Performance Standard 8 applies to cultural heritage that have been undisturbed as well
as disturbed. The client may undertake measures for the protection of cultural heritage that has
already been disturbed that are different from measures for the protection of untouched cultural
heritage. Many types of cultural heritage cannot be put back once they have been disturbed,
but they may still be valued.

Requirements
Protection of Cultural Heritage in Project Design and Execution
Internationally Recognized Practices
4. In addition to complying with relevant national law on the protection of cultural heritage,
including national law implementing the host country’s obligations under the Convention
Concerning the Protection of the World Cultural and Natural Heritage and other relevantinternational law, the client will protect and support cultural heritage by undertaking
internationally recognized practices for the protection, field-based study, anddocumentation of cultural heritage. If the requirements of paragraphs 7, 8, 9, 10 or 11 apply,
the client will retain qualified and experienced experts to assist in the Assessment.

G7.
While clients may be in compliance with applicable national law, they should measure
the risks associated with a project that might go contrary to a host country’s obligations under
an international convention that the host country has signed, but not yet ratified. A company

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may, for instance, have a concession associated with a particular cultural heritage site, which
may be revoked by the government to meet the terms of a convention once it has been ratified.
G8.
The client should apply internationally recognized practices to site surveys, excavation,
preservation and publication, in addition to compliance with national law. An internationallyrecognized practice is defined as the exercise of professional skill, knowledge, diligence,
prudence and foresight that would reasonably be expected from experienced professionals
engaged in the same type of undertaking under the same or similar circumstances globally.
Where the client is in doubt on what constitutes internationally recognized practice, international
peer reviewers are able to provide guidance.
G9.
Potential impacts on cultural heritage should be considered as an integral part of theSocial and Environmental Assessment. The screening phase of the Assessment should identify
the extent and complexity of potential cultural heritage impacts in the project’s area of influence(see paragraph 5 of Performance Standard 1). If the screening indicates potential adverse
impacts, further analysis will be necessary to ascertain the nature and scale of these impacts
and proposed mitigation measures. The breadth, depth and type of analysis should be
proportionate to the nature and scale of the proposed project’s potential adverse impacts on
cultural heritage resources. Qualified personnel should be retained to carry out such analysis aspart of the Assessment.
G10. The Assessment should generally address potential adverse impacts to cultural heritage
and, where possible, opportunities for enhancement of cultural heritage. In cases where cultural
heritage is deemed a significant issue, a focused assessment may be necessary even if a fullscale social and environmental impact assessment is not required. The project’s Action Planand Social & Environmental Management System as outlined in Performance Standard 1
should reflect identified issues. For ground disturbing projects, depending on the project
location, it may be appropriate to develop a chance find procedure that addresses and protects
cultural heritage finds made during a project’s construction and/or operation phases (seeparagraph 5 of Performance Standard 8). Further process guidance on the heritage aspects of
the Assessment can be found in Annex B.
G11. Data collection and other Assessment studies should be undertaken to avoid, minimize,and mitigate potential project impacts to cultural heritage resources. Sites containing cultural
heritage should not be excavated or otherwise disturbed unnecessarily. Best international
practice recommends that cultural heritage be left undisturbed if at all possible. If excavation in
the course of the project cannot be avoided, cultural heritage professionals, both local andinternational, should carry out excavations or other activities in accordance with internationallyrecognized practices.
G12. The findings of the cultural heritage component of the Assessment should generally bedisclosed as part of, and in the same manner as, the relevant Assessment documentation.
Exceptions to such disclosure, however, should be considered where the client, in consultation
with IFC and persons with relevant expertise, determines that disclosure would compromise orwould jeopardize the safety or integrity of the cultural heritage involved and/or would endanger
the source of information about the cultural heritage. In such cases, such sensitive information
relating to these particular aspects may be omitted from the Assessment documentation.

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Chance Find Procedures
5. The client is responsible for siting and designing a project to avoid significant damage
to cultural heritage. When the proposed location of a project is in areas where cultural
heritage is expected to be found, either during construction or operations, the client will
implement chance find procedures established through the Social and Environmental
Assessment. The client will not disturb any chance finds further until an Assessment by acompetent specialist is made and actions consistent with the requirements of thisPerformance Standard are identified.

G13. The chance find procedure is a project-specific procedure that outlines what will happen
if previously unknown heritage resources, particularly archaeological resources, areencountered during project construction or operation. The procedure includes record keeping
and expert verification procedures, chain of custody instructions for movable finds, and clear
criteria for potential temporary work stoppages that could be required for rapid disposition ofissues related to the finds. It is important that this procedure outline the roles andresponsibilities and the response times required on the part of both project staff and any
relevant heritage authority, as well as any agreed consultation procedures. This procedure
should be incorporated in the Action Plan and implemented through the client’s Social andEnvironmental Management System. As with cultural heritage identified during the Social andEnvironmental Assessment, consideration should be given, where feasible, to alternative sitingor design of the project to avoid significant damage.
Consultation
6. Where a project may affect cultural heritage, the client will consult with affected
communities within the host country who use, or have used within living memory, thecultural heritage for long-standing cultural purposes to identify cultural heritage ofimportance, and to incorporate into the client’s decision-making process the views of theaffected communities on such cultural heritage. Consultation will also involve the relevant
national or local regulatory agencies that are entrusted with the protection of cultural
heritage.

G14. Since cultural heritage is not always documented, or protected by law, consultation is an
important means of identifying it, documenting its presence and significance, assessing
potential impacts, and exploring mitigation options.
G15.

For cultural heritage issues, the following groups may be relevant for consultation:






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Historical or traditional users and owners of cultural heritage
Indigenous Peoples
Traditional communities embodying traditional lifestyles
Ministries of archeology, culture or similar national or heritage institutions
National and local museums, cultural institutes, and universities
Civil society concerned with the cultural heritage or historical preservation, areas ofenvironmental or scientific interest, affected indigenous peoples, and religious
groups for whom the cultural heritage is traditionally sacred

G16. The client should make special efforts to consult with the historical or traditional users orowners of tangible cultural heritage, especially inhabitants of the area impacted by a project162

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within the host country, since the interests of these users or owners may be different than thedesires expressed by experts or government officials. The client should provide early
notification and engage with such groups regarding possible public use, relocation of or otheradverse impacts on significant cultural heritage resources. The consultation process should
actively seek to identify concerns of these users or owners of tangible cultural heritage, and,
where possible, clients should take these concerns into account in the way their project deals
with the cultural heritage.
Requirements on the community engagement of affected
communities can be found in paragraphs 19 through 22 of Performance Standard 1.
Removal of Cultural Heritage
7. Most cultural heritage is best protected by preservation in its place, since removal islikely to result in irreparable damage or destruction of the cultural heritage. The client will
not remove any cultural heritage, unless the following conditions are met:

There are no technically or financially feasible alternatives to removal
The overall benefits of the project outweigh the anticipated cultural heritage loss
from removal
Any removal of cultural heritage is conducted by the best available techniqueG17. Non-replicable cultural heritage is best protected by preservation in place, since removalof the cultural heritage will result in irreparable damage or destruction of the heritage. Examplesof non-replicable cultural heritage may include an ancient city or temple, or a site unique in the
period that it represents. Accordingly, projects should be designed to avoid any damage tocultural heritage through removal or project related activities, such as construction. Where
avoidance is not feasible, no alternatives to removal exist, and the project benefits outweigh theloss of cultural heritage, the client should remove and preserve the cultural heritage according
to the best available technique. The best available technique proposed by the client or its expert
will benefit from a peer review by other experts. In addition, prior to removal of the cultural
heritage, the client should consult the historical or traditional owners and users of the cultural
heritage, as provided in paragraph 6 of Performance Standard 8, and take their views into
account.
G18. Loss of non-replicable tangible cultural heritage is a loss of a public good, not just for thepresent generation, but for future generations as well. Thus, consideration of project benefits,
for the purpose of Performance Standard 8, should focus on the public benefits of the project,particularly for those who may have immediate ties to the heritage. The analysis should also
look at whether those benefits are sustainable beyond the life of the project. Any lost benefits
that would otherwise arise from commercial or other use of the site based on its existing cultural
heritage should also be taken into account. IFC will decide whether the overall benefits
outweigh the anticipated cultural heritage loss before proceeding with consideration of financing
for the project and may ask for additional benefits and/or protection measures.
Critical Cultural Heritage
8. Critical cultural heritage consists of (i) the internationally recognized heritage ofcommunities who use, or have used within living memory the cultural heritage for longstanding cultural purposes; and (ii) legally protected cultural heritage areas, including those
proposed by host governments for such designation.

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9. The client will not significantly alter, damage, or remove any critical cultural heritage. In
exceptional circumstances, where a project may significantly damage critical cultural
heritage, and its damage or loss may endanger the cultural or economic survival ofcommunities within the host country who use the cultural heritage for long-standing cultural
purposes, the client will: (i) meet the requirements of Paragraph 6 above; and (ii) conduct a
good faith negotiation with and document the informed participation of the affected
communities and the successful outcome of the negotiation. In addition, any other impacts
on critical cultural heritage must be appropriately mitigated with the informed participationof the affected communities.
10. Legally protected cultural heritage areas are important for the protection andconservation of cultural heritage, and additional measures are needed for any projects thatwould be permitted under the applicable national laws in these areas. In circumstanceswhere a proposed project is located within a legally protected area or a legally definedbuffer zone, the client, in addition to the requirements for critical cultural heritage cited
above in Paragraph 9, will meet the following requirements:Comply with defined national or local cultural heritage regulations or theprotected area management plans
Consult the protected area sponsors and managers, local communities andother key stakeholders on the proposed project
Implement additional programs, as appropriate, to promote and enhance theconservation aims of the protected area

G19. Cultural heritage is considered critical when it is part of a legally-protected cultural
heritage area. In addition, when cultural heritage is critical to a people who continue to use it for
long-standing cultural purposes, such heritage may be considered critical, even if it is not legally
protected. In the latter instance, the requirements under paragraph 10 of PerformanceStandard 8 apply where the loss or damage of such heritage could endanger the livelihoods, orcultural, ceremonial, or spiritual purposes that define the identity and community of the peopleusing it. Performance Standard 8 is intended to allow such users to participate in decisions
about the future of that heritage and to negotiate equitable outcomes that outweigh any loss.
G20. The client is strongly advised to avoid any significant damage of critical cultural heritage.
If it appears that a project may significantly damage critical cultural heritage, the client may
proceed with such activities only after a good faith negotiation with and a documented processof informed participation of the affected communities. Good faith negotiation generally involves
for each party: (i) willingness to engage in a process and availability to meet at reasonable times
and frequency in ways acceptable to all parties; (ii) provision of information necessary for
informed negotiation; (iii) exploration of key issues of importance; and (iv) willingness to change
initial position and modify offers where possible.
G21. Projects in legally-protected areas (such as World Heritage Sites and nationallyprotected areas) may range from tourism projects that actually support the objectives of cultural
heritage protection, to mining projects that will need to be carried out with considerable
sensitivity. Such projects are expected to provide additional assurances beyond meeting
applicable national laws. All regulations and plans applicable to the protected area should be
respected in project design and execution. The Assessment should identify and address theserequirements. A process of information disclosure, consultation, and informed participation with
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relevant stakeholders should be carried out, including the protected area’s managers andsponsors. Further, the project should contribute to the conservation of cultural heritage. Where
the project has no intrinsic contribution, additional programs should be undertaken to promoteand enhance the conservation aims of the protected area. These may range from support forthe protection and conservation of the area as a whole, to specific projects to restore orenhance specific, important features. The United Nations Education, Scientific and Cultural
Organization’s (UNESCO) World Heritage List provides additional information on World
Heritage Sites.
Project’s Use of Cultural Heritage
11.
Where a project proposes to use the cultural resources, knowledge, innovations, or
practices of local communities embodying traditional lifestyles for commercial purposes,
the client will inform these communities of: (i) their rights under national law; (ii) the scopeand nature of the proposed commercial development; and (iii) the potential consequencesof such development. The client will not proceed with such commercialization unless it: (i)enters into a good faith negotiation with the affected local communities embodying
traditional lifestyles; (ii) documents their informed participation and the successful outcomeof the negotiation; and (iii) provides for fair and equitable sharing of benefits fromcommercialization of such knowledge, innovation, or practice, consistent with their customs
and traditions.

G22. For the purposes of Performance Standard 8, Intangible cultural heritage refers tocultural resources, knowledge, innovations and/or practices of indigenous or local communities
embodying traditional lifestyles. The term applies similarly to cultural resources, knowledge,
innovations and/or practices of Indigenous Peoples under Performance Standard 7. The areaof intangible cultural heritage and its commercial development is the subject of current
international discussions, with international standards emerging slowly. The one exception is in
the commercial use of genetic resources derived from the traditional knowledge of indigenous or
traditional communities, as reflected in the Convention on Biological Diversity. The Bonn
Guidelines and the Akwé Kon Guidelines issued under the Convention on Biological Diversity
provide useful guidance in this area.
G23. Examples of commercial development include commercialization of traditional medicinal
knowledge or other sacred or traditional techniques for processing plants, fibers or metals. With
respect to expressions of folklore, such as sale of art or music, the requirements of paragraph
11 of Performance Standard 8 does not apply. Such expressions should be treated inaccordance with national law.
G24. Where such resources are proposed for commercial development, the client should
document the process and the successful outcome of a good faith negotiation with the affected
communities on the proposed commercial development, in addition to any requirements
pursuant to national law. Some national laws require the consent of affected communities inthis regard.
G25. If the client wishes to exploit and develop any knowledge, innovation or practices ofaffected communities for commercial purposes and to protect any intellectual property createdfrom such development, the client may be legally required to disclose or publicly release thesource of the materials. Examples include genetic materials proposed for medical application.
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Because such materials may be used for sacred or ritual purposes by affected communities,
and may be held secret by such communities or designated members, the client should takecare before proceeding, and in any event, enable the affected communities to continue to use
the genetic materials for customary or ceremonial purposes.
G26. Where a project proposes to exploit, develop, and commercialize intangible cultural
heritage, Performance Standard 8 requires that the client share the benefits accruing from suchuse with the affected communities. Benefits may include development benefits in the form of
employment, vocational training, and benefits pursuant to community development and similar
programs.
G27. Clients should be aware that use of indigenous or local names can be sensitive andshould consult with the relevant communities before using them even for such purposes asnaming project sites, pieces of equipment.

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Annex A
Tangible Cultural Heritage Resource Types
A. Archaeological Site: Concentrated and patterned physical remains of past humanactivity, especially human settlement. A site may include artifacts, plant and animal
remains, structural remains, and soil features. It may be a large ancient city completely
or partially buried by surface soils or other sediment or the ephemeral and superficial
remains of a temporary nomad camp or other short-term activity. Sites may beunderwater, including shipwrecks and flooded habitation sites. Although all sites, as well
as isolated (off site) finds, are a record of human activity, the importance of anarchaeological site may vary widely according to site type and condition. In general,
while sites may be identified by surface remains or suggestive topography, thecharacteristics of a site and its cultural or scientific importance cannot be identified
based on surface examination alone.
B. Historic Structure: Also referred to as historic monuments, this category includes aboveground architectural features (e.g., house, temple, market place, church) that havereached a designated age or have other characteristics, such as association with animportant event or person, that make them ‘historic’ and therefore worthy of
consideration as a heritage resource. As with archaeological sites, the importance of an
historic structure will vary widely according to the age, type and condition of thestructure. Some historic structures may have associated archaeological deposits
thereby making them both historic structures and archaeological resources. An historic
structure may be abandoned or occupied.
C. Historic District: This is a contiguous assemblage of historic structures and associatedlandscape features that constitute a heritage resource extending over a larger area thanany single structure. Integrity and thematic interest are the key considerations fordefining and determining the importance of an historic district. Temple precincts,
graveyards, urban neighborhoods, and sometimes entire villages or towns can beclassified as historic districts. Historic districts may contain thematically un-related or‘non-contributing’ structures that may or may not merit protection in their own right.
Historic structures and districts may require protection from direct physical impacts but
should also be considered in their visual dimension. Possibly discordant construction inor near an historic district or structure might require special design considerations to
mitigate ‘visual’ impacts to heritage resources.
D. Historic or Cultural Landscape: An area where traditional land-use patterns have createdand maintained landscape features that reflect a particular culture, life-way, or historicaltime period which merits consideration as a heritage resource. An historic landscape
may include historic monuments and archaeological sites as well. Integrity anduniqueness are most relevant for judging the importance of this type of resource. Whilean historic landscape may share aspects of an historic district, the term typically refers toa non-urban area with heritage value. This resource type may also include culturally
important natural features such as sacred lakes, forests and waterfalls. Sacred trees, forinstance, are common in Africa.

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E. Artifact: A portable object that is created by past human activity and becomes part of anarchaeological site or isolated archaeological find. Most archaeological artifacts lose
substantial cultural and scientific value when removed from their ‘context’ in the ground.
Archaeological artifacts, in context or not, are most often the property of the national
government. Their scientific collection and use is controlled through a permitting processadministered by national heritage authorities. National law and international treaty forbid
the sale and export of archaeological artifacts. An object removed from an historic
structure will have the same legal status as an archeological artifact.

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Annex B
Process Guidance
Cultural Heritage Feasibility Studies:
A. It is good practice to identify possible heritage issues and costs even prior to the start of theSocial and Environmental Assessment process through project screening or feasibility
studies. This is especially true for large infrastructure or resource extraction projects suchas pipelines, mines, hydroelectric dams, regional irrigation systems, highways, or any
project that involves substantial grading, excavation, or large-scale changes in hydrologicalpatterns. These studies should involve comparison of general project features against
known or anticipated heritage baseline conditions in the proposed project area. Heritage
experts and project planning and/or engineering staff should be included on the study workteam(s). The purpose of these types of studies is to identify any ‘fatal flaw’ issues, such as
major cost or design constraints. Findings of these types of studies typically remain
confidential until the public consultation phase of the Assessment.
Cultural Heritage Aspects of Social and Environmental Assessment:
B. For projects with known or potential heritage issues, the Assessment often includes thefollowing elements: 1) a detailed description of the proposed project including its
alternatives; 2) heritage baseline conditions in the project’s area of influence; 3) an analysis
of project alternatives in relation to the baseline conditions to determine potential impacts;
and 4) proposed impact mitigation measures, which may include avoidance or reduction of
impacts by project design changes and/or the introduction of special construction andoperational procedures, and compensatory mitigations such as data recovery and/or
detailed study.
C. Expertise Needed for Assessment Studies -- Where heritage issues are identified, aheritage expert(s) will normally be needed on the Assessment study team. It will be mostuseful to recruit those with general expertise in the heritage field and experience with theenvironmental planning or heritage management process. While a particular type ofheritage specialist (e.g. a Middle Bronze Age Pottery expert) may be needed to addresscertain finds or issues, an expert with the broad perspective (e.g., a cultural geographer) will
normally be most suitable.
D. Permitting and Approval of Assessment Studies -- In most cases, Assessment heritage
studies will need to be formally permitted by the appropriate national heritage authority.
Further, because national heritage law often lacks detailed implementing regulations,required heritage protection measures may need to be formulated as a project-specificagreement that is negotiated and signed by a project representative and the heritage
authority. Although the client has the prerogative to employ heritage specialists it finds mostappropriate, it should be noted that both the investigations and the individuals performing
such studies might require permitting by national heritage authorities.
E. Disclosure and Consultation -- Early and detailed public disclosure of project heritage data,
including the methodology, findings and analyses of the Assessment heritage team, isintegral to the planning and consultation model of the Assessment. Findings of the cultural
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heritage component of the Assessment should be disclosed as part of, and in the samemanner as, the Assessment report, except where such disclosure would jeopardize thesafety or integrity of the physical cultural resources involved. In such cases, sensitive
information relating to these particular aspects may be omitted from the Assessment’s public
documentation.
The client may need to undertake discussions with a host country’s
heritage agency to establish an acceptable compromise between the need for public
consultation on heritage issues and the traditional prerogatives of the national heritage
authority.
F. Purpose and Scope of Assessment Studies -- It is important that the client and the national
heritage authority have a mutually shared understanding of the purpose and appropriate
scope of Assessment heritage studies. Data collection and other Assessment studies areundertaken in order to avoid, minimize, and mitigate potential project impacts to cultural
heritage resources. A general ‘capacity building’ effort, which might be of benefit to theproject and a country’s heritage program, may be the building of the regulatory capacity of
the heritage authority in ways that relate specifically to the client’s project.
G. Project Design and Execution – Necessary avoidance and mitigation measures identified
through the Assessment process should be incorporated into the project’s Action Plan andexecuted in coordination with other required project action items. Unlike most otherenvironmental resources, direct impact to heritage is typically localized to the area of project
construction activity, making a project’s area of influence more spatially restricted than forother resources such as critical habitat, a natural water supply, or endangered species.
Thus, it is often possible to avoid impacts to heritage by minor project design changes.
Because cultural heritage is non-renewable, its protection is best accomplished by‘preservation-in-place.’ This method is generally preferred over removal, which is an
expensive and partially destructive process. As with pre-implementation phase measures,the client may need to engage heritage consultant(s) to implement the part of the Action
Plan related to heritage matters.

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References
Several of the requirements set out in Performance Standard 8 relate to the followinginternational agreements and the related guidance and recommendations:Convention on Biological Diversity (1992) - provides information on the convention,
lists of signatory nations and biodiversity experts and other useful information.
http://www.biodiv.org/default.aspx

Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing of
the Benefits Arising Out of their Utilization (Secretariat of the Convention on
Biological Diversity, 2002) guidelines on establishing legislative, administrative or
policy measures on access and benefit-sharing and/or when negotiating contractual
arrangements for access and benefit-sharing.
http://www.biodiv.org/doc/publications/cbd-bonn-gdls-en.pdf



Akwé: Kon Guidelines (Secretariat of the Convention on Biological Diversity, 2004)
voluntary guidelines for the conduct of cultural environmental and social impact
assessments regarding developments proposed to take place on, or which are likely
to impact on, sacred sites and on lands and waters traditionally occupied or used byindigenous or local communities.
http://www.biodiv.org/doc/publications/akwe-brochure-en.pdf

Convention on the Safeguarding of Intangible Cultural Heritage (UNESCO, 2003)
ensures the safeguarding of international cultural heritage and to strengthensolidarity and cooperation at regional and international levels in this field.
http://unesdoc.unesco.org/images/0013/001325/132540e.pdf

Convention on the Means of Prohibiting and Preventing the Illicit Import, Export andTransfer of Ownership of Cultural Property (UNESCO, 1970) status the necessarymeans in order to prohibit and prevent illicit import, export and transfer of ownershipof cultural property http://www.unesco.org/culture/laws/1970/html_eng/page1.shtml

Convention Concerning the Protection of the World Cultural and Natural Heritage(UNESCO, 1972) establishes a system of collective identification, protection, andpreservation of cultural and natural heritage and to provide both emergency andlong-term protection for cultural and natural heritage.
http://whc.unesco.org/world_he.htm

World Heritage List (from the Convention Concerning the Protection of the World
Cultural and Natural Heritage) - list forming part of the cultural and natural heritage
which the World Heritage Committee considers as having outstanding universal value.
http://whc.unesco.org/pg.cfm?cid=31

Convention on the Protection of Underwater Cultural Heritage (UNESCO, 2001) protects underwater cultural heritage.
http://www.unesco.org/culture/laws/underwater/html_eng/convention.shtml

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In addition, the following guidance from the World Bank provides useful information:
World Bank - Cultural Heritage Country Files – These are data files now in place with
the World Bank. They contain valuable information for clients who are in the initial
phases of project development and are concerned with possible heritage issues andconstraints in the host country. The files contain existing, readily available technicaland contact information, and a checklist of additional information that should beobtained.

World Bank - Physical Cultural Resources Safeguard Policy- Safeguard Policy
Handbook.
This contains instructions for implementing The World Bank’s
Operational Policy 4.11 – Physical Cultural Resources. It also has broader utility asa general guide for treating physical cultural resources as a component ofEnvironmental Impact Assessment (EIA). – The Handbook provides a definition ofphysical cultural resources, describes how they are integrated into the EIA, andincludes specific guidance for project financing agencies, borrowers, EIA teams andEIA reviewers. It also discusses common impacts on physical cultural resources ofprojects in several sectors, including:hydroelectric power, roads, urban
development, cultural heritage and coastal zone management. Written for the nonspecialist, the Handbook is designed to assist professionals who participate in allphases of development projects, including: identification, preparation,
implementation, operation and evaluation.

World Bank - Physical Cultural Resources Country Profiles (work in progress since2003.). – A Physical Cultural Resources Country Profile for each client country of theWorld Bank contains information on important aspects of the tangible cultural
heritage as well as on environmental laws and regulations. The profiles are intended
primarily as reference tools to ensure that physical cultural resources are taken into
account during all phases of development projects, including in Environmental
Impact Assessments (EIAs). As of 2006, a draft profile exists for each client countryof The World Bank, and completed profiles, commissioned from local experts, areavailable for 20 countries. All profiles are displayed on a website located on theWorld Bank’s Intranet. Completion of profiles continues, and a maintenance manual
provides instructions for updating information. The profiles follow a standard format
that includes: a map of the country and notes on geography and history;
characteristic types of physical cultural resources and their locations; internationallyrecognized sites; institutions, laws and regulations governing cultural heritage andthe environment; inventories of physical cultural resources; geospatial data andmaps; and sources of information and professional expertise for the various subfields of cultural heritage.

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