U.S. Position on the Compliance Review Report of the IDB Invest Guatemala projects 

Generadora San Mateo S.A. and Generadora San Andrés S.A 

Tuesday, August 3, 2021 

 

This Compliance Review Report on two IDB Invest Guatemala projects – Generadora San 

Mateo and Generadora San Andrés -- illustrates the importance of recognizing and addressing 

the complexity of the social and environmental context in order to deliver projects which will 

help meet the energy needs of Central American countries with critical needs. The recently 

published USG root causes strategy for Central America underscores the important role of 

multilateral development banks (MDBs) in infrastructure development, as well as the need to 

improve energy infrastructure and promote climate resilient electricity generation. We reiterate 

our zero-tolerance for violence and retaliation in any form, and stress that dialogue and 

consultation are the best means for reducing social tension and mitigating risks. 

Therefore, the United States supports all 29 recommendations proposed by the Independent 

Consultation and Investigation Mechanism (MICI) in its report and instructs management to 

prepare a robust action plan no later than two months after the settlement date. MICI should then 

monitor the implementation of the action plan. 

Given the likelihood of an exit from the transaction, IDB Invest has a responsibility to take 

measures that can help decrease tensions and ensure that the harm on communities and projectaffected people is recognized and compensated appropriately. IDB Invest’s eight areas of 

noncompliance elevate its responsibility to ensure that its exit from the project is responsible. In 

particular, indigenous women in the project area should be consulted and be given a proper 

platform to voice their concerns. 

Two recommendations are important to highlight: 

First, recommendation 27, to establish a procedure or mechanism that allows projects to be 

reclassified after the screening/classification phase. It is imperative to have a mechanism in 

place that is a check and balance on operations to ensure proper classification. Publicly 

reclassifying a project as a Category A, even after the project has been initiated, ensures that the 

appropriate environmental and social safeguards are applied. This is even more critical in areas 

where contextual risks are high, as they were in this case. IDB Invest was already treating this 

operation as a Category A (internally) but did not make it a Category A (publicly) even after it 

was restructured. Management should use this project as a catalyst to create a mechanism to 

prevent such mis-categorization from happening with future projects. 

Second, on recommendation 29, MICI’s forward thinking approach regarding what a responsible 

exit would entail is appreciated. As mentioned, Management should prepare a transition plan for 

a responsible exit which, at a minimum, should contain all measures described by MICI in 

recommendation 29. The United States urges Management to work closely with the client to 

secure any external resources necessary to implement the transition plan. Proper consultations 

with project-affected peoples during project exit will be essential. The need for significant 

attention to the elevated risk of reprisals during this phase must be emphasized, as the region 
struggles with violence toward environmental defenders. We take this opportunity to recognize 

IDB Invest’s proactive approach to the sensitive topic of reprisals, as highlighted by the good 

practices note published earlier this year jointly with the IFC. 

Additionally, Management should include in its action plan: the carrying out of an updated 

environmental and social impact assessment, a social baseline study, and an evaluation of the 

gender-differentiated impacts in order to map out an adequate and responsible exit strategy that 

ensures that the information about the impact of this project is accurate. 

To close, the United States recognizes that this is a complex and difficult situation for all parties 

involved, and believes that IDB Invest has a responsibility to pursue those avenues that may help 

reduce the tensions generated by this investment and address the harms that have been incurred.