ENVIRONMENTAL 

AND SOCIAL 

POLICY AND 

PROCEDURES 

July 2020 

dfc.gov 
 

 

 

 

TABLE OF CONTENTS 

1. INTRODUCTION ......................................................................................................................... 3 

2. SCREENING AND CATEGORIZATION ....................................................................................... 5 

3. ENVIRONMENTAL AND SOCIALREVIEW ................................................................................ 9 

4. ENVIRONMENTAL AND SOCIALSTANDARDS ...................................................................... 17 

5. PUBLIC CONSULTATION AND DISCLOSURE......................................................................... 19 

6. CONDITIONS ANDCOMPLIANCE............................................................................................ 23 

7. MONITORING ........................................................................................................................... 26 

8. CLIMATE CHANGE AND RENEWABLEENERGY..................................................................... 28 

9. COUNTRY ELIGIBILITY - LABOR............................................................................................. 31 

APPENDIX A – Illustrative List of Category A Projects ............................................................ 34 

APPENDIX B – Categorical Prohibitions .................................................................................... 37 

APPENDIX C – World Bank Group Environmental, Health and Safety (EHS) Guidelines .... 40 

APPENDIX D – Glossary ............................................................................................................... 42 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. INTRODUCTION 

DFC Introduction 

1.0 The U.S. International Development Finance Corporation (DFC), U.S. International 

Development Finance Corporation (DFC) is America’s development bank. DFC partners 

with the private sector to finance solutions to the most critical challenges facing the 

developing world today. We invest across sectors including energy, healthcare, critical 

infrastructure, and technology projects. DFCalso provides financingfor small businesses 

and women entrepreneurs in order to create jobs in emerging markets. DFC investments 

adhere to high standards and respect the environment, human rights, and worker rights. 

Statement of Purpose and Scope 

1.1 This Environmental and Social Policies and Procedures (“ESPP”) addresses DFC’s 

commitments regarding the environmental and social dimensions of sustainable 

development and provides Applicants notice of the general environmental and social 

requirements that are applied in evaluating prospective projects and monitoring on- going 

supported projects. These environmental and social requirements apply to all projects 

supported through insurance, reinsurance, direct loans, or investment guaranties. 

DFC Commitment 

1.2 It is the policy of the DFC to facilitate market-based private sector development and 

inclusive economic growth in less developed countries through the provision of credit, 

capital, and other financial support— 

• to mobilize private capital in support of sustainable, broad-based economic growth, 

poverty reduction, and development through demand-driven partnerships with the 

private sector that further the foreign policy interests of the United States; 

• to finance development that builds and strengthens civic institutions, promotes 

competition, and provides for public accountability and transparency; 

• to help private sector actors overcome identifiable market gaps and inefficiencies 

without distorting markets; 

• to achieve clearly defined economic and social development outcomes; 

• to coordinate with institutions with purposes similar to the purposes of the 

Corporation to leverage resources of those institutions to produce the greatest 

impact; 

• to provide countries a robust alternative to state directed investments by 

authoritarian governments and United States strategic competitors using best 

practices with respect to transparency and environmental and social safeguards, 

which take into account the debt sustainability of partner countries; 

• to leverage private sector capabilities and innovative development tools to help 

countries transition from recipients of bilateral development assistance toward 

increased self-reliance; and 

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• to complement and be guided by overall United States foreign policy, development, 

and national security objectives, taking into account the priorities and needs of 

countries receiving support. 

1.3 This ESPP outlines how the DFC will put into practice its commitment to the 

development goals through its environmental and social review and monitoring processes. 

Specifically, the DFC will ensure through its processes that projects receiving support: 

• Are environmentally and socially sustainable. 

• Are compatible with low and no-carbon economic development. 

• Avoid prejudice and discrimination and respect Human Rights, including the rights 

of Workers and the rights of Project Affected People. 

• Avoid adverse impacts and, if such impacts are unavoidable, properly mitigate or 

compensate for theimpacts. 

• Undertake Meaningful Consultation with Project Affected People regarding 

project activities. 

• Are undertaken in countries that are taking steps to adopt and implement laws that 

extend Internationally Recognized Worker Rights. 

1.4 DFC will implement best practices in environmental management and reporting in 

accordance with the provisions of Executive Order 13834– Efficient Federal Operations 

(May 17, 2018). 

Source of Policy 

1.5 This ESPP implements applicable environmental and social requirements and 

procedures contained in U.S. law and, the International Finance Corporation’s (“IFC,”) 

Performance Standards on Social and Environmental Sustainability ("Performance 

Standards,"), and Industry Sector Guidelines. Any subsequent revisions to those standards 

are incorporated into this ESPP by reference. 

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2. SCREENING AND CATEGORIZATION 

2.0 Objectives: (1) to define the Area of Influence of the Project for the purposes of 

environmental and social review as well as public consultation; (2) to identify the nature 

and magnitude of environmental and social risks and impacts, including those project 

impacts that could preclude support; (3) to identify issues to be investigated in detail in the 

environmental and social review process; and (4) to determine requirements for 

documentation, consultation, disclosure, notification and third party audits. 

2.1 Scope of Application: The requirements contained within this section apply to all 

projects supported through DFC insurance, reinsurance, direct loans, or investment 

guaranties. 

DFC Roles and Responsibilities 

2.2 Applications are screened to identify as early as possible the risk of adverse 

environmental and social impacts of proposed projects and to identify project impacts that 

could preclude support because a project is a Categorically Prohibited Project. 

2.3 Projects listed in Appendix B Categorically Prohibited Projects will not be supported. 

2.4 The DFC reviews the risks and impacts identified by the Applicant, the Applicant’s 

defined Area of Influence, and information on Project Affected People to determine 

whether the information is adequate, accurate, objective and appropriate to the size and 

nature of project activities. Additional information may be required from the Applicant and 

from knowledgeable third parties. 

2.5 Projects are categorized based on a preliminary assessment of (1) the potential 

environmental and social risks and impacts within a project’s Area of Influence in the 

absence of any required mitigation, (2) the Applicant’s commitment and capacity to 

effectively manage the environmental and social risks and impacts, including the ability to 

implement any required mitigation and (3) the potential role of third parties in achievement 

of successful outcomes. Below are aspects of projects that may lead to a categorization of 

heightened environmental or social risk (i.e., Category A or Special Consideration). 

• Projects considered high risk are those that discharge high levels of contaminants 

(including Greenhouse Gases) into the environment in the absence of adequate 

pollution controls, as well as those projects that are considered high risk due to the 

absence of sound environmental and social management. Examples of these 

categories of projects are provided in Appendix A. 

• Large-scale projects are generally considered to represent a high risk because of the 

greater potential to impact large geographic areas outside of a project boundary or a 

large number of people living in nearby communities. Although quantitative 

screening thresholds that define what is meant by “large-scale” are not available for 

all projects, several examples are provided in Appendix 

• Projects that could result in the significant diminishment of priority ecosystem 

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services or social values at a particular site are considered high risk. Ecosystem 

services are benefits that people obtain from ecosystems including food, freshwater, 

shelter, timber, surface water purification, carbon storage and sequestration, 

climate regulation, and protection from natural hazards. 

Examples of social values include site attributes important for ethnic or religious 

reasons or attributes of cultural or historic significance. Examples of ecologically or 

socially sensitive locations are provided in Appendix A. 

• Projects that are in locations, industries, or sectors with historical issues related to 

adverse impacts on Project Affected People are considered high risk. Other 

circumstances that may be considered high risk include projects with demonstrated 

local opposition, environments of fragile security or history of security personnel 

abuses, legacy of gender or ethnic discrimination/violence, or country contexts 

where national Human Rights laws do not meet international standards. 

• Projects that are in locations, industries, or sectors with a documented history of 

Labor Rights issues are considered high risk. Examples of such high-risk projects may 

involve significant construction activities, manual harvesting of agricultural 

commodities, Extractive Industries, and industries which may present 

circumstances that make it difficult for Workers to exercise trade union rights, or 

have a higher likelihood of using forced (including trafficked) or child labor. 

2.6 All projects and Subprojects are categorized as Category A, B, C or D based on 

environmental and social factors. An additional classification of Special Consideration may 

apply to projects that have heightened potential for adverse project-related social risks 

related to the involvement of or impact on Project Affected People including Workers. 

• Category A projects may have significant adverse environmental and/or social 

impacts that are irreversible, sensitive, diverse, or unprecedented in the absence of 

adequate mitigation measures. Category A projects are considered high risk. 

Appendix A provides an illustrative list of sensitive sectors and project siting factors 

that may lead to a Category A categorization. 

• Category B projects are likely to have limited adverse environmental and/or social 

impacts that are few in number, generally site-specific, largely reversible and readily 

addressed through mitigation measures. Category B projects are considered 

medium risk. For these reasons, the scope of environmental and social assessment 

for Category B projects is narrower than that required for Category A projects. 

Examples of Category B projects may include small to medium scale housing 

developments in urban areas, restaurants, and light manufacturing. 

• Category C projects are likely to have minimal adverse environmental or social 

impacts. Examples of Category C projects may include financial services, 

telecommunications projects not involving new physical infrastructure, bid bonds 

and data processing. 

• Category D is reserved for initial approval of guaranties to Financial 

Intermediaries, which will make investments in or provide financing to projects or 

enterprises (“Subprojects,”) engaged in activities within Categories A, B or C. 

Subprojects, originated by the Financial Intermediaries screened as Category D, 

are subsequently screened and subjected to the full scope of environmental and 

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social assessment process including public disclosure and consultation, 

Greenhouse Gas emission accounting, and conditions and monitoring requirements 

as warranted by the nature and scope of the Subproject and its environmental and 

social risks and impacts. See Financial Intermediaries Paragraphs 3.28 to 3.33. 

• Special Consideration projects potentially have heightened adverse projectrelated social risks associated with the involvement of or impact on Project 

Affected People including Workers. Projects may be classified as Special 

Consideration based on an assessment of the severity of possible social risks, and 

their relevance to a project. Key risk factors that are taken into consideration may 

include: 

• Industry or sector: labor-intensive industries or sectors that are statistically 

more likely to infringe upon LaborRights. 

• Regional vulnerabilities: projects in countries (i) with a documented history of 

Labor Rights issues, (ii) having recently experienced conflict associated with 

Project Affected People, or (iii) with weak or compromised regulatory systems. 

• Presence of vulnerable groups: (i) utilization or reliance to a large degree on 

large pools of sub-contracted, unskilled, temporary, and/or migrant Workers, 

including within the supply chain; (ii) project risks or impacts that fall 

disproportionately on Project Affected People who, because of their particular 

circumstances, may be disadvantaged or vulnerable, or (iii) sectors in which 

there is a high risk for the use of forced labor or child labor. 

• Significant adverse impacts: (i) projects anticipated to have adverse impacts on 

a significant number of Workers, or (ii) projects that by their nature or footprint 

could cause or be anticipated to cause (or be complicit in) significant adverse 

Human Rights impacts. 

2.7 In categorizing projects, direct, indirect, induced, supply-chain related, regional, transboundary and cumulative environmental and social impacts are considered. Risks are 

assessed at key stages in the project life cycle including pre-construction, construction, 

operations, decommissioning and closure. 

2.8 In categorizing investments in existing projects, including privatizations, environmental 

and social impacts and risks associated with (1) current operations and 

(2) any risks and impacts from planned expansions or modifications are assessed. 

Applicant Roles and Responsibilities 

2.9 Applicants must meet the requirements of the Performance Standards. Included 

within this requirement are the risk and impact identification requirements of 

Performance Standard 1, which requires (1) Identification of all relevant environmental and 

social risks of the Project including issues identified in Performance Standards 2 through 

8; (2) Identification of all factors that define the Project’s Area of Influence; and 

(3) Identification of groups and communities that may be directly or indirectly affected by 

the Project (i.e., Project Affected People), including groups and communities that may be 

differentially or disproportionately affected by the project because of their disadvantaged 

or vulnerable status. The process of identifying risks, impacts, Area of Influence and 

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Project Affected People shall be adequate, accurate, objective and appropriate to the 

severity of Project risks and significance of Project impacts. 

2.10 Consistent with the requirements of Performance Standard 1, Applicants are 

required to provide an overarching policy statement of the environmental and social 

objectives and principles that will be used to guide the Project and achieve sound and 

sustainable environmental and social performance. The policy statement should identify 

the individual who will be responsible for execution of the policy statement and the means 

of communicating the policy statement within the Applicant’s organization. The policy 

statement shall be appropriate to the size and nature of the Applicant’s organization. 

2.11 Consistent with the requirements of Performance Standard 1, Applicants are 

required to identify whether the environmentally and socially sound and sustainable 

outcome of the Project is dependent on the performance of a third party. A third party may 

be a government agency (e.g., acting as a regulator or implementer of a relocation or 

compensation program), a contractor or subcontractor, or a supplier. 

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3. ENVIRONMENTAL AND SOCIALREVIEW 

3.0 Objectives: (1) to determine whether projects seeking support can be implemented in accordance 

with this ESPP and the Performance Standards; (2) to identify opportunities to avoid adverse impacts 

and, if impacts are unavoidable, to identify required mitigation and compensation; (3) to identify 

opportunities to improve environmental and social performance of projects seeking support; and (4) 

to establish specific performance requirements for certain project sectors. 

3.1 Scope of Application: The requirements contained within Paragraphs 3.2 – 3.15 of this section 

apply to all projects supported through insurance, reinsurance, direct loans, or investment 

guaranties. The requirements in Paragraphs 3.16 – 3.33 of this section only apply to those projects in 

the relevant project sector. 

DFC Roles and Responsibilities 

3.2 A review of an Applicant’s Environmental and Social Management System 

(“ESMS,” See Glossary) is performed to determine whether the ESMS meets the requirements of 

Performance Standard 1 and whether environmental, health, safety and social aspects of a project 

can be effectively managed by an Applicant. The review will consider direct, indirect, induced, supplychain related, regional, trans-boundary and cumulative environmental and social risks and impacts. 

3.3 DFC reviews the Applicant’s evidence of Meaningful Consultation with 

Project Affected People within the defined Area of Influence. 

3.4 The identified set of policies and objectives for environmental and social performance must be 

adequate to address identified environmental and social risks and impacts and are appropriate to the 

size and nature of the project activity. As necessary, supplemental actions that are required to meet 

the Performance Standards will be identified to avoid adverse impacts or enhance environmental and 

social performance. DFC will incorporate the Performance Standards that the project is required to 

meet, including project specific conditions and actions, in DFC Agreements. 

3.5 For consistency across U.S. Government agencies, DFC relies on guidance provided by the U.S. 

Department of State, the lead U.S. agency on Human Rights matters and determinations. 

3.6 Support for a project will be declined when (1) a project is a Categorically Prohibited Project; (2) 

a project fails to address environmental and social issues in a satisfactory manner and cannot be 

expected to meet the requirements of the Performance Standards over a time frame considered 

reasonable and feasible; (3) residual impacts after mitigation are 

unacceptable; (4) a project does not comply with the host country’s environmental and social laws or 

regulations; or (5) a project does not respect Human rights including Labor Rights. 

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Applicant Roles and Responsibilities 

3.7 Applicants must meet the requirements of the Performance Standards. Applicants 

are required to establish an ESMS that meets the requirements in Performance Standard 

1. The level of detail and complexity of the ESMS should be risk-based, extend across a project’s Area 

of Influence, and be commensurate with the significance of potential impacts or the severity of the 

risks of the project. Key areas of an ESMS are human resources management, environmental 

management, occupational health and safety management and effective management of community 

impacts and relations, including mechanisms and frequency for reporting to Project Affected People 

on project performance. An acceptable framework for an ESMS is one that provides for the effective 

management of the environmental and social risks and impacts associated with a project, including 

risks related to Labor Rights and Human Rights (See Paragraph 3.15). 

3.8 Applicants are required to undertake Meaningful Consultation with Project 

Affected People within the defined Area of Influence. For all projects Applicants are required to 

meet the requirements related to Stakeholder engagement, Stakeholder analysis and engagement 

planning, access to information, consultation, reporting to Stakeholders and the establishment of a 

grievance mechanism. The form and scope of the consultation should be commensurate with the 

project risks and the nature and scope of the project. 

3.9 The requirement to establish an ESMS extends to Subprojects undertaken by supported Financial 

Intermediaries. Financial Intermediaries shall have a mechanism in place to assess the 

environmental and social impact of their DFC supported investments and operations and take action 

to ensure compliance of subprojects with DFC policies. 

3.10 Environmental and social impact assessment is the process used to identify potential 

environmental and social impacts and risks associated with the Project. The assessment process also 

identifies any mitigation, in accordance with a Mitigation Hierarchy, or corrective measures that will 

enable the Project to meet the applicable requirements in Performance Standards 2 through 8, any 

applicable host country laws and regulations, and DFC requirements. Applicants seeking support for 

Category A and B projects, and Special Consideration projects, must conduct some form of 

environmental and social assessment. Depending on the type of project and the nature and 

magnitude of the risks and impacts, the assessment could involve an Environmental and Social 

Impact Assessment (“ESIA,” See Glossary), a limited or focused environmental and social review, or a 

straightforward application of environmental siting, pollution standards, design criteria or 

construction standards. The types of issues, risks to be examined, impacts to be assessed and 

Meaningful Consultation to be undertaken can also vary considerably, depending on the nature of 

the Project and its size, location, stage of development, severity of risks and impacts, geographical 

extent of impact and ability to mitigate. For those projects with heightened social risks (See Paragraph 

2.6, Special Consideration), DFC will review the process by which the Project has incorporated Social 

Risk Due Diligence into its assessment and operations. The following general topics, when applicable, 

are examined during the environmental and social assessment review: 

• Environmental issues, including site description, existing land use, description of manufacturing or 

commercial process, materials used and stored on-site, land use impacts resulting from the 

Project, impacts to any aquatic or terrestrial resources, biological diversity, including rare and 

endangered plants and animals and their habitat, air emissions, including emissions of 

Greenhouse Gases, energy efficiency, water use, liquid effluents and solid wastes, pollution 

controls or other mitigation measures employed, identification of project alternatives and 

opportunities to minimize adverse impacts and maximize benefits, occupational and community 

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health and safety protections, impact on the source of raw materials if derived from areas 

including ecologically sensitive areas and supply chains identified in Performance Standard 2. 

Category A projects are required to include a Climate-related Vulnerability assessment as part 

of the ESIA. 

• Project-related social issues, including affected populations, housing, income, employment and 

working conditions, land use, visual impacts, noise and lighting impacts, as well as any fiscal, 

cultural, ethnic, religious, and Human Rights impacts. Information should also be provided on 

impacts to Project Affected People including any Economic or Physical Displacement, 

individuals and groups that may be particularly vulnerable because of gender, poverty or other 

factors, and the potential for increased transmission of communicable diseases. Where conditions 

exist for discrimination or community conflict, details should be provided, as well as management 

plans to mitigate impacts of the project on such conflicts. Project- related social impacts should be 

quantified to the extent feasible. 

3.11 Greenfield Category A projects and significant expansions or modifications of existing projects 

that are screened as Category A require the submission of a full-scale ESIA. Depending on potential 

environmental and social risks DFC also may require the submission of a Baseline Audit of existing 

Category A or B facilities. The purpose of a Baseline Audit is to identify past and present concerns, 

current status of regulatory compliance, management systems and performance as well as potential 

risks and liabilities of the Project. Additional guidance on the format and content requirements for 

ESIAs and Baseline Audits may be found in Guidance Note 1 – Social and Environmental Assessment 

and Management Systems at: https://www.ifc.org/wps/wcm/connect/ab6cffa1-e357-42e3-a27bc759ffa561a1/2007%2BUpdated%2BGuidance%2BNote_1.pdf?MOD=AJPERES&CVID 

=jqeu0U7 

3.12 For Category B projects DFC requires submission of sufficient information and documentation 

on which to base the review of the ESMS. The level of detail required will vary depending on the type 

and size of the Project, but, at a minimum, Applicants should submit one or more documents or 

analyses that describe: 

• The Project and its environmental and social aspects 

• Maps, drawings or schematics of the Project and Area of Influence 

• Compliance with the legal and regulatory framework of the host country and applicable 

international environmental, health and safety, and social, including labor, performance 

requirements (See Section 4.0) 

• Key potential impacts and risks, including identification of any Project Affected People and 

estimated Direct Emissions of Greenhouse Gases 

• Planned mitigation measures and any residual risks or impacts 

• Planned monitoring and reporting of environmental and social performance 

• A description of the process of Meaningful Consultation. 

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3.13 Projects that have been screened as Category C (i.e., projects with minimal environmental or 

social impacts) are not required to establish a formal ESMS, but are required to establish policies and 

procedures that will be used to guide the project (See Paragraph 2.10), submission of sufficient 

information necessary to confirm the absence of potential adverse environmental and social risks, 

and a worker and community grievance mechanism (See Paragraph 3.9). 

3.14 When specific mitigation measures or actions are required for a project to comply with the 

Performance Standards, host country laws and regulations, or DFC’s environmental and social 

requirements, Applicants are required to prepare and implement an Environmental and Social 

Action Plan (“ESAP”). The level of detail required will depend on the nature and magnitude of the risks 

and adverse impacts of the Project or Subproject and may range from a brief description to a series of 

specific plans. ESAPs are required for all Category A projects and for Category B projects that are 

dependent on mitigation and monitoring measures to avoid or reduce potentially significant 

environmental and social impacts. Draft ESAPs for Category A projects must be prepared as part of 

the required ESIA and made public in accordance with 

DFC’s disclosure requirements. The ESAPs shall: 

• Describe the actions necessary to implement mitigation measures or corrective actions to be 

undertaken 

• Prioritize these actions 

• Include a timeline for their implementation 

• Be disclosed to Project Affected People and Stakeholders in a timely manner 

• Describe the schedule and mechanism for external reporting on the implementation of the 

ESAP. 

3.15 Applicants are required to establish, maintain, update and strengthen as necessary, an ESMS is 

required for effective project implementation, including any actions required under the ESAP. 

Management systems must have organizational structures with clearly defined roles, responsibilities 

and authorities, appropriate human and financial resources allocated for implementation and 

adequate training for employees and contractors. If there are material weaknesses in the 

management system, DFC will require strengthening of the management system as a condition of 

DFC support. Additional guidance on the establishment of an ESMS 

may be found in Guidance Note 1 –Assessment and Management of Environmental and Social Risks 

and Impacts: 

https://www.ifc.org/wps/wcm/connect/ab6cffa1-e357-42e3-a27bc759ffa561a1/2007%2BUpdated%2BGuidance%2BNote_1.pdf?MOD=AJPERES&CVID=jqeu0U 7 

Tailored Reviews 

3.16 DFC undertakes detailed, tailored environmental and social reviews (See Paragraphs 3.16 to 

3.33) for certain sectors and types of projects in response to DFC policies and practices and new DFC 

products or initiatives, which are based on emerging trends in international best practices related to 

environmental and social safeguards. 

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Investments in Large, Diverse Enterprises 

3.17 Applicants seeking DFC support for investments in large, diverse enterprises are required to 

define the scope of the intended use of proceeds from the investment in terms of specific projects for 

which the environmental and social impacts can be readily assessed. 

Project Development Activities 

3.18 Project development activities including non-invasive, non-construction activities are often 

required in response to competitive bidding announcements or to raise capital. These activities 

include the posting of bid bonds and preparing environmental impact assessments, feasibility studies, 

and design documents. Projects involving these types of activities are screened as Category C 

provided: 

• The projects do not involve invasive or construction activities 

• The project under development is not subject to a categorical prohibition (See Appendix B); 

and 

• DFC support for the development investment does not obligate DFC to support future 

project implementation. 

Construction and Operations of Dams 

3.19 For projects involving the construction and operation of dams that are not otherwise 

categorically prohibited (See Appendix B), DFC applies screening and environmental and social 

assessment criteria consistent with international best practice. ESIAs prepared for hydroelectric 

projects should, at a minimum, address issues cited in the International Finance Corporation’s Good 

Practice Note: Environmental, Health and Safety Approaches for Hydropower Projects. 

https://www.ifc.org/wps/wcm/connect/79ad4356-6f18-4955-bf35-

adcd6d072897/GPN_EHSHydropower.pdf?MOD=AJPERES&CVID=mR5BwAV 

Forestry Projects 

3.20 DFC will not support commercial forestry projects that involve the extraction of timber from 

Critical Forest Areas (See Glossary) or related Critical Natural Habitats (See Glossary) or the 

clearance of Critical Forests or related Critical Natural Habitats for non-forestry activities (See 

Appendix B). All projects involving timber extraction from Natural Forests, including all boreal, 

temperate, and plantation Forests must be, and remain, certified by an independent nongovernmental organization. 

3.21 Certifiers must be accredited by an international accreditation body (such as the Forest 

Stewardship Council (https://us.fsc.org/en-us) that can hold the certifier accountable to a common 

set of environmental and social principles and procedural protocols, including periodic review and reaccreditation. The purpose of certification is to demonstrate that timber extraction activities are 

managed sustainably. 

3.22 Any forest product labeling associated with a certified Forest must be guaranteed by a credible 

independent certification body that connects the labeled product to its certified forest- of-origin. 

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Health Care 

3.23 All projects providing patient care must obtain satisfactory accreditation based on a quality 

evaluation of the technical competence of the institution’s resources and organization by an 

internationally recognized accreditation organization (such as those accredited by ISQua 

https://www.isqua.org/) or in the case of a health care service provider for which accreditation 

standards are not available, certification or similar high quality rating by a third- party expert in the 

health care field satisfactory to DFC. All projects must maintain this accreditation, certification or 

high-quality rating throughout the term of DFC support. The cost of this accreditation or certification 

is the responsibility of the Applicant. 

3.24 DFC may consider support for health care projects that include elements of traditional medicine 

where there is an established national policy that regulates traditional treatments; establishes the role 

of traditional medicine within the national health care system; and clarifies the relationship between 

traditional medicine and the official health service system. 

3.25 All hospitals, medical centers, and other projects that purchase pharmaceuticals for the purpose 

of providing them, directly or indirectly, to patients shall restrict drug purchasing to pharmaceuticals 

registered for use in the host country and to drug suppliers that comply with the World Health 

Organization’s Good Manufacturing Practices for both imported and locally produced goods. 

https://www.who.int/medicines/areas/quality_safety/quality_assurance/TRS986anne x 2.pdf?ua=1 

3.26 Projects involving the manufacturing of pharmaceuticals or medical equipment are reviewed 

closely. Prior to supporting such projects, evidence that the safety and effectiveness of such products 

are certified by the U.S. Food and Drug Administration or an equivalent foreign public health 

authority must be received. DFC also requires evidence that the products have not been withdrawn 

from the U.S. market for reasons of safety or lack of effectiveness. 

Renewable Fuels Projects 

For the purposes of this policy Renewable Fuels are defined as fuels that meet all of the following 

criteria:1 (1) fuels that are produced only from Renewable Biomass; (2) fuels that are used to replace 

or reduce the quantity of fossil fuel present in transportation fuel, heating oil or jet fuel; and (3) fuels 

that meet lifecycle Greenhouse Gas emissions reduction thresholds when compared to the 2005 

baseline average gasoline and diesel that they replace. Emissions reduction thresholds are as follows: 

Renewable Fuel – 20 %; Advanced Biofuel – 50%; Biomass-based Diesel – 50%; and Cellulosic 

Biofuel – 60%. Renewable Fuels projects that meet these criteria are considered “clean technology” 

projects for the purposes of Section 8.7 of this policy provided the Applicant annually demonstrates 

compliance with the criteria in this section through an annual independent third-party audit. Direct 

Greenhouse Gas Emissions associated with fossil fuel combustion in Renewable Fuel projects are 

subject to DFC Greenhouse Gas policy requirements (Section 8), including annual cap allocation 

(Sections 8.4) and Category A screening thresholds (See Appendix A). 

1Foradditionalinformation oneligibilitycriteria,lifecycleanalysesandthird-party auditrequirements see40CFRPart 

80–RegulationofFuelsandFuelAdditives. U.S.Environmental ProtectionAgency. 

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Financial Intermediaries 

3.27 No Financial Intermediary may use DFC support for the purpose of investing in, lending to, or 

providing services to an entity engaged in a Categorically 

Prohibited Project. 

3.28 Review of Subprojects involves screening, assessment, disclosure, compliance and monitoring 

procedures as all other direct Applicants, including Category A disclosure and Greenhouse Gas 

policy requirements (See Section 8). Subprojects may be provided prior written consent on the basis 

of potential environmental and social risks. 

Environmental and social review of Subprojects of Financial Intermediaries are not delegated unless 

consent is provided in advance based on criteria in Paragraph 3.31. 

3.29 A Financial Intermediary’s proposed investment or lending strategy is taken into account in 

DFC’s assessment of the risk of adverse environmental and social impacts associated with the 

Financial Intermediary’s Subprojects at the time the Financial Intermediary’s structure is approved 

by DFC. Factors taken into consideration include the size and nature of the prospective investments, 

the prospective use of proceeds from the investment, the term of the investment, the targeted 

investment sectors and the capacity of the Financial Intermediary to identify and mitigate the risk of 

adverse environmental and social impacts associated with their Subprojects. All prospective 

investments may be provided a consent, provided that the DFC Agreement contains exclusion lists 

prohibiting investments in entities engaged in categorically prohibited activities or activities likely to 

have significant adverse environmental or socialimpacts. 

3.30 Financial Intermediaries are required to maintain at all times an ESMS to ensure compliance 

with DFC policies (See Paragraph 3.10). 

3.31 If a Financial Intermediary’s lending or investment strategy indicates the potential for significant 

adverse environmental, health, safety or social impacts associated with prospective investments, 

additional mitigation to reduce risk and potential liabilities may be required. Examples of additional 

mitigationinclude: 

• Additional capacity building including retention of an environmental and social coordinator to 

provide full time supervision and implementation of DFC requirements with respect to 

environmental, health, safety and social concerns; 

• Use of binding restrictions on the use of proceeds; and/or 

• More frequent reporting to the DFC on the environmental and social performance of 

Subprojects. 

3.32 Where Financial Intermediary operations and related investments could have significant adverse 

environmental or social impacts, the Financial Intermediary shall cause, or in the case of noncontrolling minority positions use commercially reasonable efforts to cause, such investments to (a) 

identify potential environmental and social risks and mitigants through an environmental/social 

impact assessment, and (b) require appropriate actions to ensure Subproject’ operations are in 

compliance with DFC policies. 

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In cases where the relevant IFC Performance Standards are more stringent than host country law, 

the FI shall apply the relevant IFC Performance Standards to their operations and investment 

activities with specific targeted actions to be implemented over an appropriate timetable. For the 

avoidance of doubt, in cases where Financial Intermediaries are providing debt, Financial 

Intermediaries shall cause or use commercially reasonable efforts to cause (as applicable) compliance 

with (a) and (b) above by contractually requiring such compliance and enforcing such contractual 

rights. 

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4. ENVIRONMENTAL AND SOCIALSTANDARDS 

4.0 Objectives: (1) to specify standards of performance necessary to achieve environmentally and 

socially sustainable outcomes; and (2) to identify project- specific international best practices. 

4.1 Scope of Application: The requirements in this section apply to all projects supported through 

DFC insurance, reinsurance, direct loans and loan guaranties. 

DFC Roles and Responsibilities 

4.2 All projects must meet the Performance Standards, applicable Industry Sector Guidelines, 

including any revisions issued by IFC, Internationally Recognized Worker Rights, and host country 

laws, regulations and standards related to environmental and social performance, including host 

country obligations under international law. In addition, where DFC has developed sector-specific 

approaches (See Paragraphs 3.17 – 3.33), DFC requires projects to meet those requirements, when 

applicable. In accordance with the provisions of Performance Standard 3, alternative pollution 

prevention and control technologies may be approved, provided that (1) the alternative performance 

levels are consistent with the overall requirements of Performance Standard 3; and (2) the alternative 

performance levels are protective of the environment and Project Affected People within the Area 

of Influence. 

4.3 DFC is responsible for identification of supplemental standards (over and above those standards 

identified in Paragraph 4.2) when additional preventative or protective measures are necessary to 

adequately mitigate specific project-related environmental and social risks and impacts. 

Supplemental standards include (1) standards issued by other international organizations relating to 

public health, safety and the environment such as the World Health Organization, the International 

Maritime Organization, the Food and Agriculture Organization and the International Civil Aviation 

Organization; (2) relevant and applicable U.S. federal standards; and (3) standards of best practice 

developed by governments, industry associations, and non-governmentalorganizations. 

4.4 DFC is responsible for ensuring that all DFC Agreements include the specific performance 

requirements that a project is required to meet throughout the life of DFC support. 

4.5 DFC is responsible for disclosing project-specific performance requirements in project summaries 

that are posted on the DFC web site. Any approved alternative pollution prevention and control 

technologies will be identified in projectsummaries. 

4.6 For those projects in which a Multilateral Development Bank (MDB) such as the European Bank 

for Reconstruction and Development, the African Development Bank, the Asian Development Bank, 

or the Inter-American Development Bank is involved, DFC may apply the policies, in whole or in part, 

of the respective MDB (other than the Performance Standards) to a project to facilitate DFC in the 

transaction. 

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Applicant Roles and Responsibilities 

4.7 Applicants are required to meet the Performance Standards, Industry Sector Guidelines, 

Internationally Recognized Worker Rights, and host country laws, regulations and standards related 

to environmental and social performance, including host country obligations under international law. 

Applicants are also required to meet any sector-specific requirements (See Paragraphs 3.17 – 3.33), 

when applicable, and supplemental performance requirements as identified by DFC (See Paragraph 

4.3). 

4.8 The requirement to meet the project-specific performance requirements extends to on-site 

contractors and sub-contractors of the Project that work for a substantial duration of time on the 

Project or are material to the primary operations of the Project. Applicants are responsible for 

ensuring that on-site contractors and sub- contractors meet the performance requirements. 

4.9 Projects that involve new facilities or business activities are required to meet the project- specific 

performance requirements from the outset. 

4.10 For existing projects (e.g., privatizations), the performance requirements must be attained within 

a reasonable period of time following the receipt of DFC support, with the exception of Labor Rights 

requirements, which must be met from the outset. If material compliance has not been demonstrated 

at the time of DFC approval, Applicants are required to prepare and implement a corrective action or 

Remediation Plan demonstrating how compliance with the Project-specific requirements will be 

achieved within the specified time period. Remediation Plans for Category A projects are subject to 

public disclosure and third- party audits. 

4.11 Applicants seeking DFC support must demonstrate compliance with host country 

environmental, health, safety and social requirements. Where host country requirements differ from 

the Performance Standards, Industry Sector Guidelines, and Internationally Recognized Worker 

Rights, the project is expected to meet whichever are morestringent. 

Revision of Standards 

4.12 International organizations, the United States Government and industry groups periodically 

revise guidelines and standards to reflect technological advances and improved understanding of 

environmental, health, safety and social risks. Complete applications that are received after the 

effective date of a new guideline or standard will be assessed against that new guideline or standard. 

4.13 Complete applications that are received before the effective date of a new guideline or standard 

will be assessed against the guideline or standard in effect on the date of application provided that 

DFC commitment to provide support is achieved within one year of the effective date of the new 

guideline or standard. If commitment is not achieved within one year after the effective date of the 

new guideline, the project will be subject to the new guideline. 

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5.PUBLIC CONSULTATION AND DISCLOSURE 

5.0 Objectives: (1) to ensure that Project Affected People are informed and consulted during project 

preparation and implementation; and (2) to enhance transparency and accountability related to DFC’s 

environmental and social management. 

5.1 Scope of Application: The requirements contained within this section apply to all projects 

supported through DFC insurance, reinsurance, direct loans, or investment guaranties, including 

support through Financial Intermediaries. 

DFC Roles and Responsibilities 

5.2 DFC makes information available concerning its activities to enable Applicants and Stakeholders, 

including Project Affected People and members of the interested public. Institutional information 

that is made available on DFC’s web site includes annual reports, audited financial statements, 

program handbooks, Board resolutions, claims determinations, arbitral awards, bilateral agreements 

and annual Greenhouse Gas accounting for DFC's portfolio. 

5.3 Although disclosure of project-related information is primarily the responsibility of Applicants, 

DFC is committed to making non-confidential project-specific information available to enhance 

transparency and accountability and to foster good governance. Project-related information that is 

posted on the DFC web site includes project summaries, summaries of DFC environmental and social 

site-monitoring reports, DFC’s active portfolio list and portfolio company investments of DFCsupported investment funds. Notwithstanding this commitment, DFC may withhold records or 

portions of records that are exempted from public disclosure under the Freedom of Information Act 

(FOIA). Additional information on DFC’s FOIA implementing regulation is available at 

https://www.dfc.gov/who-we-are/transparency-and-accountability 

5.4 DFC provides advance notice and information about potential projects to be voted on by DFC’s 

Board of Directors. Information summaries on projects to be voted on by the DFC Board are made 

public at least 15 days in advance of the Board meeting. The summaries include the following 

environmental and social information as appropriate to the nature and scale of a project and 

commensurate with the potential environmental and social risks and impacts: 

• Rationale for screening category 

• Environmental and social standards used in the project assessment 

• Description of the major environmental and social risks and impacts of the Project 

• Key measures required to mitigate environmental and social risks to acceptable levels 

• Description of action(s) required to achieve conformance with the environmental and social 

standards used in project assessment 

• Information related to DFC environmental and social site monitoring visits; and 

• Description of the Applicant’s consultation with Project Affected People. 

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5.5 DFC provides advance notice and information on Category A projects, whether subject to Board 

approval or not, to ensure that interested parties have sufficient information to meaningfully 

contribute to the DFC decision-making process. ESIAs and Baseline Audits required for Category A 

projects are made public on DFC’s web site for a designated comment period of not less than 60 days 

before DFC makes a decision on whether to support a project. Acceptance of a document for 

disclosure does not imply project approval. Public comment on the projects are invited and considered 

by DFC in advance of any decision on a project. No application for a Category A project may be 

approved without this public disclosure and opportunity for comment. At the same time the 

Applicant’s ESIA or Baseline Audit is released for public comment, DFC posts on its web site an initial 

project summary. The initial project summaries identify the rationale for designating the project as 

Category A, environmental and social standards to be used in project assessment and the location for 

local access to environmental and social project information. 

5.6 Comments received on projects, including any comments received during public hearings, as well as 

DFC management’s response to those comments, will be posted on DFC’s web site at least 7 days prior 

to presenting a project for approval. 

5.7 For those projects with the potential for significant adverse impacts on Project Affected People, 

DFC will confirm prior to project approval that: (1) the Applicant has engaged the affected groups and 

communities as required under Performance Standard 1 and (2) there is Broad Community Support 

for the Project. 

5.8 DFC also prepares and discloses project summaries which contain environmental and social 

information related to non-Category A, non-Board projects. These project summaries are posted on 

DFC’s web site for a period of not less than 30 days prior to execution of the DFC Agreement. 

5.9 An Applicant’s ESIA or Baseline Audit submitted for disclosure often does not contain all of the 

final negotiated commitments made by an Applicant to mitigate or remediate environmental and 

social risks and impacts. The final ESAP or final 

Remediation Plan for Category A projects is made public on DFC’s web site following DFC 

acceptance. 

5.10 DFC requires Applicants to conduct and certify that they have conducted third- party audits for 

all Category A projects. Third-party auditors must supply certifications that the audit has been 

completed and that the Category A projects are in compliance with all environmental and social 

conditions contained within the DFC Agreement. The auditor certification and a publicly releasable 

summary of audit findings is made public on the DFC web site. 

5.11 DFC is required to notify host country governments of any environmentally sensitive investment 

considered for support. This notification is required to identify guidelines and other standards of 

international organizations relating to public health, safety or the environment that are applicable to 

the Project and, to the maximum extent practicable, any restriction related to public health or safety 

that would apply to the project if it were undertaken in the United States. This requirement applies to 

all proposed investment support screened as Category A. All Host Country Notifications are made 

public on DFC’s website. 

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5.12 DFC is committed to disseminating information that meets its standards for objectivity, integrity 

and utility in accordance with its Information Quality Guidelines. 

5.13 DFC has established an Office of Accountability to assess and review complaints about DFCsupported projects. The Office of Accountability gives local communities, which may be materially, 

directly and adversely affected by DFC-supported projects, a means through which complaints may 

be raised. The Office of Accountability’s mandate is to deliver problem-solving and compliance review 

services in a manner that is fair, objective and transparent, thereby enhancing DFC's mission 

effectiveness. Requests for assistance should be directed to: 

Director, Office of Accountability 1100 New York Ave., NW Washington DC 20527 

Tel. 1-202-357-3910 

Fax 1-202-408-5133 

E-mail: accountability@DFC.gov 

Applicant Roles and Responsibilities 

5.14 Applicants must meet the requirements of the Performance Standards, and host country laws, 

regulations and standards related to public consultation and disclosure of information. In order to 

more effectively manage risks and impacts of projects, all Applicants are required to engage Project 

Affected People through (1) disclosure of information, (2) Meaningful Consultation and (3) the 

development and implementation of systems for responding to complaints and grievances 

commensurate to the level of social risk. The nature, frequency and level of effort of this engagement 

will be commensurate with the project’s risks and impacts and the project’s phase of development. 

Costs associated with translation, dissemination of information and consultation are the 

responsibility of the Applicant. 

5.15 Applicants are required to disclose to Project Affected People 

DFC’s potential participation in a proposed investment. 

5.16 For projects with the potential for significant adverse impacts on Project Affected People, 

Applicants are required to (1) engage the affected groups and communities as required under 

Performance Standard 1 and (2) demonstrate that there is Broad Community Support for the 

Project. For projects involving impacts to Indigenous People or Cultural Heritage, Applicants are 

required to comply with the additional consultation and disclosure requirements identified in 

Performance Standards 5, 7 and 8. 

5.17 If the Project is screened as Category A, Applicants are required to submit an ESIA (and for 

existing projects a Baseline Audit) for public disclosure on the DFC web site. ESIAs and Baseline 

Audits submitted for public disclosure must be in English or accompanied by an English- language 

translation. The ESIAs and BaselineAudits must adequately describe potential risks and proposed 

mitigation measures and include a draft ESAP, draft Remediation Plan (if required) and Stakeholder 

engagement plan (See 

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paragraph 5.19). At a minimum, the Applicant is required to provide a local language translation of 

the executive summary of the 

ESIA (and Baseline Audit) and make the summary available to Project Affected People in a format 

that is readily understandable and tailored to meet the information needs of Project Affected 

People. The translated summary should be distributed by means that take into account the ability of 

Project Affected People to receive, address and effectively comment on the content. DFC also 

discloses this summary on its web site. 

5.18 Projects are required to develop and implement a Stakeholder engagement plan tailored to 

project risks and impacts in accordance with the requirements of Performance Standard 1. The 

Stakeholder engagement plan is required to be included as part of the document(s) submitted to 

DFC for disclosure under Paragraph 

5.5 of this policy. 

5.19 Applicants are required to provide periodic reports (at least annually) to Project Affected 

People concerning (1) implementation of any ESAP and Remediation Plan and 

(2) issues that have been identified as of concern to those Project Affected People. Any material 

changes to the project design, management systems or mitigation measures will also be 

communicated to Project Affected People. All reports must be in a language and format accessible to 

the Project Affected People. 

5.20 Prior to DFC’s issuance of approval for a project that significantly involves an Extractive 

Industry and where DFC’s support to the project is valued at $10 million or more (including 

contingent liability) (1) Applicants must agree to implement Extractive Industry Transparency 

Initiative (EITI) principles and criteria, or substantially similar principles and criteria related to the 

Project; and (2) the host country where the project is to be carried out must have committed to EITI 

principles and criteria or substantially similar principles and criteria or be taking the necessary steps 

to establish functioning systems. DFC may approve an Extractive Industry project if the host country 

does not meet the requirements of this paragraph only if DFC determines that it is in the foreign 

policy interest of the United States to provide support to the Project and the host country does not 

prevent the Applicant from meeting the disclosure requirements of (1) above. 

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6. CONDITIONS ANDCOMPLIANCE 

6.0 Objectives: (1) to establish specific requirements for environmental and social performance in 

DFC Agreements; (2) to define remedies in the event performance requirements are not met. 

6.1 Scope of Application: The requirements contained within this section apply to all projects 

supported through DFC insurance, reinsurance, direct loans, or investment guaranties, including 

support through Financial Intermediaries. 

DFC Roles and Responsibilities 

6.2 DFC reviews information provided by the Applicant with respect to baseline environmental and 

social conditions, technical design, operating performance, mitigation measures and residual impacts 

of projects. Based on this information, DFC develops appropriate undertakings (covenants) required 

of the Applicant, which are included in the DFC Agreement. The terms of the covenants take into 

account, among other things, the level of project control which the Applicant will have regarding 

compliance with DFC standards and the Applicant’s role in the Project. The covenants remain in 

effect during the term of the DFC Agreement. The coverage of the covenants includes (1) compliance 

with all applicable Performance Standards, Industry Sector Guidelines, Internationally Recognized 

Worker Rights, host country laws, regulations, and standards, including host country obligations 

under international law, and any supplemental standards identified by DFC; (2) mitigation 

commitments, including those contained within any required ESAP or Remediation Plan; (3) 

notification and reporting requirements, including the format for annual reports based on DFCapproved monitoring methodology; and (4) on- going Stakeholder engagement and reporting 

requirements. 

6.3 All DFC Agreements include contractual language that addresses Internationally Recognized 

Worker Rights in substantially the following form (as outlined in Section 1451(d)(2) of the Build Act of 

2018. ): 

‘‘The person receiving support agrees not to take actions to prevent employees of the foreign 

enterprise from lawfully exercising their right of association and their right to organize and bargain 

collectively. The person further agrees to observe applicable laws relating to a minimum age for 

employment of children, acceptable conditions of work with respect to minimum wages, hours of 

work, and occupational health and safety, and not to use forced labor or the worst forms of child labor 

(as defined in section 507 of the Trade Act of 1974 (19 U.S.C. 2467)). The person is not responsible 

under this paragraph for the actions of a foreign government.’’ 

6.4 In addition to the environmental and social performance requirements that are included in all 

covenants contained in DFC Agreements, in the case of all Category A projects DFC Agreements 

include, at a minimum, the following requirements: 

• Develop and implement an ESAP 

• Prepare and submit to DFC an annual environmental and social report summarizing the 

environmental and social performance based on monitoring of the Project over the 

preceding year to demonstrate compliance with DFC Agreement covenants and conditions 

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• Timely notification to DFC of the occurrence of any accident that has resulted in a disability or 

loss of human life, or that has, or that could be foreseen to have, a material adverse impact on 

the environment or local communities; and 

• Conduct at least one third-party audit. The timing of the third-party audit is specified in the 

DFC Agreement covenants and is reflective of the nature and magnitude of the risks in the 

Project lifecycle (e.g., if the major risks are expected to occur during construction, the audit is 

required to take place during construction). 

6.5 In addition to the environmental and social performance requirements that are included in all 

covenants contained in DFC Agreements, in the case of all Special Consideration projects DFC 

Agreements include, at a minimum, the following requirements: 

• Prepare and submit to DFC an annual report summarizing the project’s performance over the 

preceding year, based on monitoring of identified social risks and impacts, to demonstrate 

compliance with DFC Agreement; and 

• Conduct at least one third-party audit. The timing of the third-party audit is specified in the 

DFC Agreement covenants and is reflective of the nature and magnitude of the risks in the 

Project lifecycle (e.g., if the major risks are expected to occur during construction, the audit is 

required to take place during construction). 

6.6 For all projects, material misrepresentations or material non-compliance with contractual 

environmental and social provisions, including reporting requirements, may constitute an event of 

default under the terms of the applicable DFC Agreement. DFC determines what is material and 

whether a default is curable or incurable. DFC makes determinations as to materiality based, for 

example, on the severity of the environmental, health, safety or social, including labor, impacts or 

other result caused by the non- compliance and the nature and degree of such non-compliance by the 

Applicant. 

6.7 In the case of a curable default, remediation generally is required by DFC to cure the default. In 

the case of an incurable default, DFC may exercise contractual remedies including insurance contract 

termination, acceleration of loan repayment, or divestiture of an investment of a DFC-supported 

investment fund. 

Applicant Roles and Responsibilities 

6.8 Applicants are required to comply with all contractual conditions, covenants, and representations 

whether or not the Applicant has a controlling interest in the Project. The terms of the applicable 

covenants, as well as DFC’s remedies for breach thereof, will appropriately reflect the nature of the 

Applicant’s role and interest in the project. 

6.9 Applicants investing in Category A projects or Special Consideration projects are required to 

conduct additional certified third-party audits if: (1) the Applicant fails to submit contractually 

required annual self-monitoring reports in a timely manner, (2) DFC monitoring or other information 

indicates a need for additional independent audits, or (3) when project risks are expected to change 

over time. 

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6.10 If DFC requires the preparation of a Remediation Plan for a Subproject, Financial Intermediaries are 

required to enter into an agreement with the applicable Subproject to adopt and to implement the 

required plan to the satisfaction of DFC. DFC will work with Financial Intermediaries to review and 

modify the plan as required. Following acceptance of the plan, the Financial Intermediary shall use 

all reasonable efforts, including the enforcement of related rights, to cause the Subproject to 

implement the plan as promptly as possible. Final Remediation Plans for Category A projects are 

made public on the DFC web site. 

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7. MONITORING 

7.0 Objectives: (1) to review and evaluate DFC-supported projects’ compliance withthe environmental 

and social performance requirements; (2) to evaluate the effectiveness of mitigation measures, action 

plans, and corrective actions. 

7.1 Scope of Application: The requirements contained within this section apply to all projects 

supported through DFC insurance, reinsurance, direct loans, or investment guaranties, including 

support through Financial Intermediaries. 

DFC Roles and Responsibilities 

7.2 DFC monitors project compliance with all environmental and social requirements (and underlying 

representations) that are reflected in conditions and covenants in DFC Agreements throughout the 

term of the contract. DFC monitors changes in projects and local context that may affect the 

environmental and social profile of projects. 

7.3 DFC or its consultants conduct periodic site visits to DFC-supported projects to review their 

environmental and social performance and to ensure that they meet the environmental and social 

requirements in the DFC Agreements. DFC site visits are determined through a risk- based 

prioritization process. The scope, timing and periodicity of the visits are commensurate with the 

significance and severity of environmental and social risks and impacts of a project. DFC endeavors to 

conduct at least one site visit to all Category A projects and Special Consideration projects within 

three years of execution of the DFC Agreement. A summary of the site visit findings will be made 

public on DFC’s web site. 

7.4 DFC reviews periodic monitoring reports submitted by Applicants to ensure that adverse risks 

and impacts are mitigated as required in DFC Agreements. 

7.5 DFC works with Applicants to rectify any failures to comply with the environmental and social 

requirements in the DFC Agreements and exercises remedies to either reestablish compliance or 

pursue termination of DFC support. 

Applicant Roles and Responsibilities 

7.6 All DFC-supported projects that have been operational for at least 12 months are required to 

submit an annual Development Outcomes Survey. The survey is one of the tools used by DFC to 

indicate compliance with DFC’s policy requirements, including environmental and social 

requirements. 

7.7 Annual environmental and social reports are required for all Category A projects and some 

Category B projects. Annual environmental and social reports enable DFC to monitor the 

performance of the project with respect to environmental, occupational and community health, 

safety and social issues. At a minimum, the reports include information on the following: 

• Results of environmental and social monitoring or sampling activity 

• Compliance with all conditions and covenants in DFC Agreement 

• Project-related accidents impacting the environment or Project Affected People or resulting 

in a disability or loss of life 

• Summary of training provided on environment, health, and safety issues 

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• Environmental and safety deficiencies identified by the local regulatory authorities as well as 

any remedial actions taken 

• Community engagement activities 

• Complaints or grievances received from Project Affected People or Stakeholders and 

actions taken to resolve the issues. 

7.8 Annual reports are required for all Special Consideration projects. Annual reports enable DFC to 

monitor the performance of the project with respect to heightened social risks. The annual report for 

Special Consideration projects will summarize the social performance based on monitoring of the 

Project over the preceding year to demonstrate compliance with DFC Agreement covenants and 

conditions. At a minimum, the reports should contain the following: 

• Results of social impact monitoring and/or stakeholder engagement activities pertaining to 

Special Consideration status 

• Compliance with all conditions and covenants in DFC Agreements pertaining to Special 

Consideration status 

• Summary of compliance issues identified by regulatory authorities pertaining to Special 

Consideration status and any remedial actions taken 

• Summary of complaints or grievances received from Project Affected People, including 

Workers, or Stakeholders and actions taken in response to complaints or grievances. 

7.9 Applicants are required to conduct and certify that third-party audits for all Category A projects 

and Special Consideration projects have been completed. DFC may require third-party audits of 

some Category B projects. The purpose of the audit is to (1) evaluate a project’s compliance with all 

environmental and social requirements (and underlying representations) that are reflected in DFC 

Agreements; and (2) validate the methodology used in Annual Environmental and Social Reports 

required under DFC Agreements. 

7.10 At least one third-party audit is required for all Category A projects and Special Consideration 

projects. The audit should be performed at a time specified in the DFC agreement, and usually within 

the first three years of receiving DFC support. For certain projects, third-party audits may be required 

during the construction phase. Applicants are required to obtain DFC approval of the audit scope of 

work and the selection of third-party auditors. The Applicant is responsible for all costs associated 

with conducting the audit(s). 

7.11 DFC requires submission of certification from the third- party auditor that the audit has been 

conducted in accordance with the agreed scope of work and that the Project is in compliance with all 

environmental and social conditions and covenants (and underlying representations) contained 

within the DFC Agreement. The auditor certification for Category A projects and Special 

Consideration projects is made public on the DFC web site. The third-party audit certification for 

Category A projects and Special Consideration projects also must include a summary of the audit 

findings which can be made public on DFC’s web site. 

7.12 Applicants are required to retain the rights afforded under each investment structure, to ensure that 

DFC has the rights to (1) visit and inspect projects and Subprojects; (2) access project and Subproject 

environmental and social performance monitoring records, including human resources records; and 

(3) meet with project and Subproject management and Project Affected People. 

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8. CLIMATE CHANGE AND RENEWABLEENERGY 

8.0 Objectives: (1) to support the reduction of Greenhouse Gas emissions associated with projects; (2) 

to promote energy efficiency and conservation; (3) to promote low and no-carbon fuels and 

technologies; and (4) to encourage carbon sequestration in land use and forestry practices. 

8.1 Scope of Application. The requirements contained within this section apply to all projects 

supported through DFC insurance, reinsurance, direct loans, or investment guaranties, including 

support through Financial Intermediaries. 

DFC Roles and Responsibilities 

8.2 New investments are screened for Climate-related Risks and Climate- related Vulnerability.

2 A 

desk-based climate vulnerability/impact assessment will utilize publicly available tools and databases 

such as the World Bank Climate Change Knowledge Portal. 

8.3 DFC is continuing OPIC’s commitment to reduce the Direct Greenhouse Gas Emissions 

associated with projects in OPIC’s active portfolio by 50 percent over a fifteen-year period (June 30, 

2008 – September 30, 2023). “Active portfolio” is defined as all insurance contracts in force and all 

guaranty and direct loans with an outstanding principal balance. 

8.4 The baseline that is used to assess progress toward the commitment identified in Paragraph 8.2 is 

the sum of Direct Emissions from projects with Greenhouse Gas emissions exceeding 25,000 metric 

tonnes of CO2eq per year to which OPIC provided a commitment between 1974 and 2008 and which 

were in OPIC’s active portfolio on June 30, 2008. 

8.5 In order to achieve the 50 percent reduction goals (Paragraph 8.2) DFC establishes an annual 

transactional cap for all new projects with significant Direct Greenhouse Gas Emissions.

3 For the 

purposes of allocation of the annual cap, new projects are defined as those projects that receive DFC 

support within a given year. In cases where an Applicant requests DFC support for a portfolio of 

projects, DFC will allocate cap individually, as necessary, to each Project within the Applicant’s 

portfolio. For years in which the annual emissions associated with DFC committed projects are less 

than the annual cap for that year, the remaining capacity may be allocated to subsequent years. 

Allocation of the annual transactional cap is at DFC’s discretion. With respect to projects that involve 

the construction of coal-fired power plants, DFC will give strong preference to projects that capture 

and sequester 85 percent of Greenhouse Gas emissions. 

2ExecutiveOrder13677 (September 23,2014) requires theintegrationofclimate-resilience considerations intoall United 

Statesinternational developmentwork. 

3Projects that are exempt from this requirement areany coal-firedor otherpowergeneration projectthe purpose 

of whichisto(i)provideaffordableelectricity inInternational Development Association(IDA)-eligible countries; and(ii) 

increaseexportsofgoods and services from theUnited Statesor prevent the lossofjobsfrom the United States. 

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8.6 Extension of financing, insurance and reinsurance terms shall be treated as new commitments for 

the purpose of this policy. 

8.7 Projects involving Renewable Energy are assigned a Greenhouse Gas emission level of zero 

(provided there are no fossil fuel components of the Project) for the purpose of this policy. 

8.8 Recognizing that meaningful reductions in Greenhouse Gas emissions can be achieved either 

through: (a) modest percent energy efficiency improvements in large projects; (b) large percent energy 

efficiency improvements in small projects; or (c) significant reduction in direct Greenhouse Gas 

emissions in any project. Projects that achieve either energy efficiency improvement of 15 percent or 

more or significant Direct Greenhouse Gas Emissions reductions of greater than 100,000 tons 

CO2e/year are assigned a Greenhouse Gas emission level of zero for the purposes of this policy, provided 

Life Cycle Accounting demonstrates that the project will not result in a net increase in emissions over 

the projected life of the project when compared to the “no project” alternative. Projects that fail to meet 

either the 15 percent efficiency threshold or the absolute aggregate emissions reduction target will 

have their entire net emissionscounted. 

8.9 DFC tracks and annually reports direct and indirect Greenhouse Gas emissions associated with 

DFC office operations in accordance with accounting and reporting methods of the Greenhouse Gas 

Protocol (http://www.ghgprotocol.org) and Executive Order 13514. 

8.10 DFC tracks and reports on an individual project basis the annual Greenhouse Gas emissions 

associated with projects within DFC’s active portfolio with Direct Emissions that exceed 25,000 

metric tonnes CO2eq per year. DFC calculates Greenhouse Gas emissions using internationally 

accepted GHG accounting protocols, including those from the U.S. Environmental Protection Agency 

and methodologies approved by the Climate Registryhttp://www.theclimateregistry.org. 

8.11 DFC reports on an annual basis the projected Greenhouse Gas emissions associated with each 

newly committed project with Direct Emissions that exceed 25,000 metric tonnes of CO2eq per year. 

Annual Greenhouse Gas emission estimates are subject to third party verification. 

Applicant Roles and Responsibilities 

8.12 For new projects, Applicants must meet the requirements of the Performance Standards, 

including resource efficiency requirements of Performance Standard 3, which require identification 

and implementation of technically and financially feasible and cost- effective measures for improving 

efficiencies in consumption of energy, water and other resources and material inputs. Rehabilitation 

and other modifications of existing projects should plan to meet the requirements of the 

Performance Standards, including resource efficiency requirements of Performance Standard 3, 

within a feasible period of time. 

8.13 Consistent with the requirements of Performance Standard 3, Applicants must demonstrate 

that measures to reduce significant, Project-related Greenhouse Gas emissions were evaluated and 

that technically and financially feasible and cost- effective measures were incorporated into the final 

design of their Project. 

8.14 As a condition of DFC support, all projects that are expected to produce or currently produce 

Direct Emissions exceeding 25,000 metric tonnes of CO2eq per year must quantify and annually 

report to DFC the Direct Emissions from their Project. As a condition of DFC support and consistent 

Environmental and Social Policy and Procedures Page 29 
 

 

 

 

 

 

 

 

 

 

with the requirements of Performance Standard 3, Applicants also shall quantify the significant 

indirect emissions associated with off-site production of electricity used by the Project. 

8.15 As a condition of DFC support, projects in Energy Intensive Sectors must meet energy efficiency 

guidelines and benchmarks established by international organizations, or develop and implement an 

energy management program to achieve these guidelines and benchmarks within a feasible period of 

time. Energy management programs should be appropriate to the nature and scale of project 

operations. The project shall document methods to reduce overall energy usage patterns through 

reduction in energy losses and improvements in energy conversion efficiency. In some projects, 

process modifications will be required to achieve guidelines and benchmarks. Industry specific 

resources on energy efficiency may be obtained from the Energy Star program 

https://www.energystar.gov/buildings/facility-owners-and-managers/industrial- plants/measuretrack-and-benchmark/energy-star-energy-0 . 

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9. COUNTRY ELIGIBILITY - LABOR 

U.S. Law Requirements 

9.0 Section 1451(d) of the Build Act of 2018 contains the following provision: 

The Corporation should support projects under title II in countries that are taking steps to adopt and 

implement laws that extend internationally recognized worker rights (as defined in section 507 of the 

Trade Act of 1974 (19 U.S.C. 2467)) to workers in that country, including any designated zone in that 

country. 

Determining Country Eligibility: The USTR Process 

9.1 The statute establishing the Generalized System of Preferences (“GSP,” See Glossary 

) program provides that the President of the United States shall not designate a country as a GSP 

beneficiary if it “has not or is not taking steps to afford Internationally 

Recognized Worker Rights to workers in that country” (See 19 U.S.C. 2462). In addition, the 

President must consider “whether or not such country has taken or is taking steps to afford . . . 

Internationally Recognized Worker Rights” in determining whether to designate a country as a 

beneficiary. For consistency of worker rights country-level determinations across the U.S. 

Government, DFC accepts the determinations made by the President for the purpose of the GSP 

program. 

9.2 Through the Office of the U.S. Trade Representative (“USTR,”), the Trade 

Policy Staff Committee (“TPSC”), chaired by the USTR and made up of representatives from the 

U.S. Department of State, U.S. Department of Labor, and other U.S. Government agencies, advises 

the President as to which countries should be designated as GSP beneficiaries. 

Any person may request to have the GSP status of any beneficiary country reviewed with respect to 

any of the eligibility criteria, including the “taking steps” country standard for worker rights. 

9.3 If a petition is accepted for review, the TPSC review typically includes examination of the issues 

raised in the petition and encouragement of the foreign government to implement worker rights 

reforms. USTR also solicits comments through the Federal Register and holds a public hearing. 

9.4 Upon completion of a country review, a country’s eligibility status may remain unchanged, or be 

withdrawn, suspended, or limited. Based on the country review, should the President 

determine that a country’s GSP beneficiary status be withdrawn, suspended, or limited, DFC 

implements the determination with respect to its own programs. If a country’s GSP beneficiary status 

is withdrawn for failure to meet the statutory worker rights standard, the country becomes ineligible 

for DFC programs from the effective date of that country’s ineligibility under the GSP program. 

However, if a country becomes ineligible for GSP benefits on grounds other than worker rights, that 

country remains eligible for DFC programs. 

9.5 Modifications to countries’ GSP eligibility are implemented by Executive Order or Presidential 

Proclamation, and are published in the Federal Register. If a country’s GSP beneficiary status is 

withdrawn or suspended for failure to meet the worker rights standard, the country list on DFC’s 

website is updated to remove the country as of the effective date of the withdrawal or suspension of 

GSP benefits, and DFC staff are notified of the change of country status. If the determination is that 

GSP eligibility should be limited, DFC staff are instructed to follow the same limitations in the conduct 

of DFC’s programs 

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Reviewing Country Eligibility: The DFC Process 

9.6 In making its determinations as to whether non-GSP-eligible countries where DFC programs are 

being offered are taking steps to afford workersInternationally 

Recognized Worker Rights, DFC utilizes a similar petition and review process. Petitions 

can be submitted to DFC at its annual public hearing to reexamine whether the status of any such 

country should be changed on worker rights grounds. 

9.7 Upon an initial petition review, if DFC makes the determination that the petition merits a formal 

review, DFC will consult with, at a minimum, the U.S. Department of State, U.S. Department of Labor, 

and the USTR to carry out such a review. DFC may use multiple instruments to inform its country 

practices review, including: 

• The U.S. Department of State’s Annual Country Reports on Human Rights Practices 

• Reports, observations and recommendations of the International Labor Organization (See 

Glossary, “ILO”) 

• Independent consultants’ country practice reviews 

• Information received through DFC’s public hearings; and 

• Consultations with labor organizations. 

9.8 The “taking steps” standard is a purposely flexible standard to reflect the varying levels of 

economic and social development in developing countries. In its country reviews, DFC takes into 

account the totality of circumstances and facts available relevant to Internationally Recognized 

Worker Rights, and uses certain general criteria to assess whether countries meet the statutory 

standard, including: 

Progress towards ratification of the relevant ILO eight fundamental conventions; and the progress 

the country has taken or is taking to adopt and implement laws and practices that extend 

Internationally Recognized Workers Rights in areas where national law and practice have not met 

the international standard. 

Granting Country Eligibility on Worker Rights Grounds 

9.9 For non-GSP-eligible countries that are deemed particularly sensitive on worker rights grounds 

due to a documented history of issues relating to Internationally 

Recognized Worker Rights, and where DFC seeks to implement its programs for the first time or to 

lift suspension of DFC programs due to foreign policy or other priorities, DFC will consult with, at a 

minimum, the U.S. Department of State, U.S. Department of Labor, and the USTR in making its “taking 

steps” determination. 

Country Status Effect on DFC-Supported Projects 

9.10 If a country becomes ineligible for DFC support on worker rights grounds, the change of status 

does not affect projects to which DFC made a legally binding commitment prior to the date on which 

the country status changed. All other projects that have not been formally committed to by DFC prior 

to the official ineligibility date will not be eligible for DFC support during the term of the country’s 

ineligibility. If a country is under a formal review on worker rights grounds (by either the TPSC or 

DFC), projects that are in the application process are subject to a review that is sensitive to the labor 

issues highlighted in the GSP or DFC petition. 

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APPENDIX A – Illustrative List of Category A Projects 

Although decisions on categorization are made on a case-by-case basis, the following list is indicative of 

the types of projects that are screened by DFC as Category A. 

1. Large-scale industrialplants. 

2. Large-scale industrialestates. 

3. Crude oil refineries and installations for the gasification and liquefaction of 500 tonnes or more of 

coal or bituminous shale per day. 

4. Major Greenhouse Gas emitting projects, defined as projects with Direct Greenhouse Gas 

Emissions of more than 100,000 (short) tons (91,000 metric tonnes) of CO2eq per year. 

5. Cement manufacturing with an annual production rate of greater than one million dry weight 

tons. 

6. Integrated works for the initial smelting of cast iron and steel; installations for the production of 

non-ferrous crude metals from ore, concentrates, or secondary raw materials by metallurgical, 

chemical or electrolytic processes. 

7. Installations for the extraction of asbestos and for the processing and transformation of asbestos 

and products containing asbestos; for asbestos-cement products with an annual production of 

more than 20,000 tonnes of finished product; for friction material with an annual production of 

more than 50 tonnes of finished product; and for other asbestos utilization of more than 200 

tonnes per year. 

8. Integrated chemical installations, i.e. those installations that manufacture, on an industrial scale, 

substances using chemical conversion processes in which several units are juxtaposed and are 

functionally linked to one another and which produce: basic organic chemicals; basic inorganic 

chemicals; phosphorous, nitrogen or potassium based fertilizers (simple or compound fertilizers); 

basic plant health products and biocides; basic pharmaceutical products using a chemical or 

biological process; explosives. 

9. Projects that manufacture, store, transport or dispose hazardous or toxic materials. 

10. All projects that pose potentially serious occupational or health risks. 

11. Construction of motorways, express roads, lines for long-distance railway traffic, and airports with 

a basic runway length of 2,100 meters or more. Construction of new roads with four or more lanes 

or realignment and/or widening of an existing road so as to provide four or more lanes where such 

new road, or realigned and/or widened section of road, would be 10 km or more in a continuous 

length. 

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12. Pipelines, terminals, and associated facilities for the large-scale transport of gas, oil, and chemicals. 

13. Large-scale seaports and also inland waterways and ports for inland waterway traffic; trading 

ports, piers for loading and unloading connected to land and outside ports (excluding ferry piers). 

14. Waste-processing and disposal installations for the incineration, chemical treatment or landfill of 

hazardous, toxic or dangerous wastes. 

15. Construction or significant expansion of large dams and reservoirs not otherwise prohibited. 

16. Groundwater abstraction activities or artificial groundwater recharge schemes in cases where the 

annual volume of water to be abstracted or recharged amounts to 10 million cubic meters or more. 

17. Industrial plants for the (a) production of pulp from timber or similar fibrous materials; or 

(b) production of paper and board with a production capacity exceeding 200 air- dried metric 

tonnes per day. 

18. Large-scale peat extraction. 

19. Large-scale quarries, mining, or processing of metal ores orcoal. 

20. Major exploration and development of onshore oil and gas reserves. 

21. Exploration and development of offshore oil and gas reserves. 

22. Installations for storage of petroleum, petrochemical, or chemical products with a capacity of 

200,000 tonnes or more. 

23. Large-scale logging. 

24. Large-scale power transmission. 

25. Municipal wastewater treatment plants servicing more than 150,000 people. 

26. Municipal solid waste-processing and disposal facilities. 

27. Large-scale tourism and retail development. 

28. Large-scale land reclamation. 

29. Large-scale primary agriculture/plantations involving intensification or conversion ofpreviously 

undisturbed land. 

30. Plants for the tanning of hides and skins where the treatment capacity exceeds 12 tonnes of 

finished products per day. 

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31. Installations for the intensive rearing of poultry or pigs with more than: 85,000 places for broilers 

and 60,000 places for hens; 3,000 places for production pigs (over 30 kg); or 900 places for sows. 

32. All projects with potentially major impacts on people or which pose serious socio- economic risk, 

including Physical and Economic Displacement, impacts on Indigenous Peoples and adverse 

impacts on Cultural Heritage. 

33. Greenfield housing developments that contain more than 2,500 residential units. 

34. Projects, not categorically prohibited, but located in or sufficiently near sensitive locations of 

national or regional importance which may have apparent environmental impacts on: 

• Wetlands 

• Areas of archeological significance 

• Areas prone to erosion and/or desertification 

• Areas of importance to ethnic groups/indigenous peoples 

• Primary temperate/boreal Forests 

• Coral reefs 

• Mangrove swamps 

• Nationally designated seashore areas; and 

• Managed resource protected areas, protected landscape/seascape (International Union for 

the Conservation of Nature (IUCN) categories V and VI) as defined by IUCN’s Guidelines for 

Protected Area Management Categories. Additionally, these projects must meet IUCN’s 

management objectives and follow the spirit of IUCN definitions. 

Environmental and Social Policy and Procedures Page 36 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPENDIX B – Categorical Prohibitions 

1. Conversion or degradation of Critical Forest Areas 1 or forest-related Critical Natural Habitats. 2 0 1 

2. Leasing or financing of logging equipment, unless an environmental and social impact assessment 

indicates that; (i) all timber harvesting operations involved will be conducted in an 

environmentally sound manner which minimizes forest destruction; and (ii) the timber harvesting 

operations will produce positive economic benefits and sustainable forest management systems. 

3. Construction of dams that significantly and irreversibly: (a) disrupt natural ecosystems upstream or 

downstream of the dam; or (b) alter natural hydrology; or (c) inundate large land areas; or (d) impact 

biodiversity; or (e) displace large numbers of inhabitants (5,000 persons or more); or(f) 

impact local inhabitants’ ability to earn a livelihood. 

4. Production or trade in any product or activity deemed illegal under host country laws or 

regulations or international conventions and agreements or subject to international phase- outs 

or bans such as pharmaceuticals,4 pesticides/herbicides,5 ozone depleting substances,6 

polychlorinated biphenyls7 and other hazardous substances,8 wildlife or wildlife products 

regulated under the Convention on International Trade and Endangered Species of Wild Fauna 

and Flora,9 and trans-boundary trade in waste or wasteproducts.

10 

5. Resettlement of 5,000 or morepersons. 

6. Any impact on natural World Heritage Sites https://whc.unesco.org/en/list/ unless it can be 

demonstrated through an environmental assessment that the project (i) will not result in the 

degradation of the protected area and (ii) will produce positive environmental and social 

benefits. 

7. Any impact on areas on the United Nations List of National Parks and Protected Areas 

https://www.protectedplanet.net/unless it can be demonstrated through an environmental 

assessment that the project (i) will not result in the degradation of the protected area and (ii) will 

produce positive environmental and social benefits. 

8. Extraction or infrastructure in or impacting protected area Categories I, II, III, and IV (Strict 

Nature Reserve/Wilderness Areas and National Parks, Natural Monuments and Habitat/ Species 

Management Areas), as defined by the International Union for the Conservation of Nature 

(IUCN). Projects in IUCN Categories V (Protected Landscape/Seascape) and VI (Managed 

Resource Protected Area) must be consistent 

1 A type of natural forest that qualifies as Critical Natural Habitat. Critical Forest Areas include primary Forests and old growth Forests that 

may serve as critical carbon sinks.

2 1) Existing internationally recognized protected areas, areas initially recognized as protected by traditional local communities (e.g., sacred 

groves), and sites that maintain conditions vital to the viability of protected areas (as determined by the environmental assessment 

procedure); and (2) Sites identified on supplementary lists by authoritative sources identified by OPIC. Such sites may include areas 

recognized by traditional local communities (e.g., sacred groves), areas with known high suitability for biodiversity conservation and sites that 

are critical for vulnerable, migratory or endangered species. Listings are based on systematic evaluations of such factors as species richness, 

the degree of endemism, rarity, and vulnerability of component species, representativeness and the integrity of ecosystem processes. 

Environmental and Social Policy and Procedures Page 37 
 

 

 

 

 

 

 

 

 

 

with IUCN management objectives https://www.protectedplanet.net/ unless it can be 

demonstrated through an environmental assessment (i) there is no degradation of the protected 

area and (ii) there are positive environmental and social benefits. 

4Alist ofpharmaceutical products subject to phase-outs or bans is available at https://www.who.int/medicines/publications/restrictions/en/ 

5 A list of pesticides and herbicides subject to phase-outs or bans is available at http://www.pic.int 

6A listofthechemicalcompoun dsthatreactwith anddepletestratosph eric ozonetogether withtargetreduction andphase-out dates 

is availableat https://www.epa.gov/ozone-layer-protection/ozone-depleting-substances 

7Polychlorinated biphenyls are likely to be found in oil-filled electrical transformers, capacitors, and switchgear dating from 1950 to 1985. 

8 A list of hazardous chemicals is available at http://www.pic.int 9 A list is of CITES species is available at http://www.cites.org 10 

As defined by the Basel Convention; see http://www.basel.int 

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9. Production of, trade in or use of un-bonded asbestos fibers.12 

10. Marine and coastal fishing practices, such as large-scale pelagic drift net fishing and fine mesh net 

fishing, harmful to vulnerable and protected species in large numbers and damaging to biodiversity 

and habitats. 

11. Use of forced labor13 or child labor.14 

12. Projects or companies known to be in violation of local applicable law related to environment, 

health, safety, labor, and public disclosure. 

13. Projects or companies where the primary business activities are in the following prohibited 

sectors: gambling; media communications of an adult or political nature; military production or 

sales; alcoholic beverages (if contrary to local religious or cultural norms); or tobacco and related 

products. 

14. Projects or companies that replace U.S. production or are likely to cause a significant reduction in 

the number of employees in the U.S. including “runaway plants” and outsourcing the provision of 

goods and services (e.g., Business Process Outsourcing) from the U.S. 

15. Projects or companies subject to performance requirements that are likely to reduce substantially 

the positive trade benefits to the U.S. 

16. Projects or companies in which host country governments have majority ownership or effective 

management control (except for investments in privatizing companies made in accordance with the 

Finance Agreement). 

17. Companies found by a court or administrative body of competent jurisdiction engaging in 

unlawful monopolistic practices. 

18. Projects or companies that provide significant, direct support to a government that engages in a 

consistent pattern of gross violations of internationally recognized Human Rights, as determined 

by the U.S. Department of State. 

19. Projects or companies that perform abortions as a method of family planning; motivate or coerce 

any person to practice abortions; perform involuntary sterilizations as a method of family 

planning; coerce or provide any financial incentive to any person to undergo sterilizations; or 

perform any biomedical research which relates in whole or in part, to methods of, or in the 

performance of, abortions or involuntary sterilization as a means of family planning. 

20. Companies which are treated as inverted corporations under 6 U.S.C. 395(b). 

12 Th is does not apply to the purchase an d use of bonded asbestos cement sheeting where the asbestos content is less than 20%. 

13 Forced labor means all work or service, not voluntarily performed, that is exacted from an individual under threat of force or 

penalty, such as indentured labor, bonded labor, or similar labor-contracting arrangements. 

14Child labor means the employment of children (persons below theageof18) that is economically exploitative, or is likely 

to be hazardous to or interfere with the child’s education, or be harmful to the child’s health or physical, mental, spiritual, 

moral, or social development. 

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APPENDIX C – World Bank Group Environmental, Health and Safety (EHS) Guidelines 

https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustain ab ilityat-ifc/policies-standards/ehs-guidelines 

General EHS Guidelines 

Industry Sector Guidelines 

Forestry 

Board and Particle-based Products 

Sawmilling and Wood-based Products 

Forest Harvesting Operations 

Pulp and Paper Mills 

Agribusiness/Food Production 

Mammalian Livestock Production 

Poultry Production 

Perennial Crop Production 

Annual Crop Production 

Aquaculture 

Sugar Manufacturing 

Vegetable Oil Processing 

Dairy Processing 

Fish Processing 

Meat Processing 

Poultry Processing 

Breweries 

Food and Beverage Processing 

General Manufacturing 

Cement and Lime Manufacturing 

Ceramic Tile and Sanitary Ware Manufacturing 

Glass Manufacturing 

Construction Materials 

Extraction Textiles Manufacturing 

Tanning and Leather Finishing 

Semiconductors and Electronics Manufacturing 

Printing 

Foundries 

Integrated Steel Mills 

Base Metal Smelting and Refining 

Metal, Plastic, Rubber Products Manufacturing 

Oil and Gas 

Offshore Oil and Gas Development Onshore Oil and Gas Development Liquefied Natural Gas 

(LNG) Facilities 

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Infrastructure 

Tourism and Hospitality 

Development Railways Ports, Harbors and Terminals Airports 

Airlines Shipping 

Gas Distribution Systems 

Toll Roads 

Telecommunications 

Crude Oil and Petroleum Product 

Terminals 

Retail Petroleum Networks 

Health Care Facilities 

Waste Management Facilities 

Water and Sanitation 

Chemicals 

Pharmaceuticals and Biotechnology Manufacturing 

Coal Processing 

Natural Gas Processing 

Oleochemicals Manufacturing 

Nitrogenous Fertilizer Manufacturing 

Phosphate Fertilizer Manufacturing 

Pesticides Formulation, Manufacturing and Packaging 

Petroleum-based Polymer Manufacturing 

Petroleum Refining 

Large Volume Petroleum-based Organic Chemicals Manufacturing 

Large Volume Inorganic Compounds Manufacturing and Coal Tar Distillation 

Mining 

Mining 

Power 

Wind Energy 

Geothermal Power Transmission and Distribution 

Thermal Power 

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APPENDIX D – Glossary 

Advanced Biofuel – means Renewable Fuel, other than ethanol derived from cornstarch, which has lifecycle 

Greenhouse Gas emissions that are at least 50 percent less than baseline Greenhouse Gas emissions. 

Annual Country Reports on Human Rights Practices – Reports that are submitted annually by the U.S. 

Department of State to the U.S. Congress in compliance with sections 116(d) and 502B(b) of the Foreign 

Assistance Act of 1961 (FAA), as amended, and section 504 of the Trade Act of 1974, as amended. 

Applicants – Investors, lenders, insurers or projects sponsors seeking DFC support. 

Area of Influence – Areas potentially affected by a project including (1) the primary project site(s) and 

related facilities that the Applicant develops or controls, such as power transmission corridors, pipelines, 

canals, tunnels, access roads, borrow and disposal areas and construction camps; (2) associated facilities 

that are not funded as part of the project (funding may be provided separately by the Applicant or by third 

parties including the government), and whose viability and existence depend exclusively on the project and 

whose goods and services are essential for the successful operation of the project; (3) areas and 

communities potentially affected by cumulative impacts that result from the incremental impact on areas 

or resources used or directly impacted by the project, and from any existing, planned or reasonably defined 

developments at the time the risks and impacts identification process is conducted; and (4) areas and 

communities 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 might occur without the project or independently of the project. Any identifiable supply chain 

expansion of materials or resource development that is inherent to a project’s success should be included 

within a project’s Area of Influence. 

Baseline Audit - An assessment of environmental and social impacts of pre-existing or ongoing activities 

that is required for all Category A projects that involve the acquisition of pre-existing facilities or new 

construction on a site where prior industrial activities have occurred. 

Broad Community Support – The collective expression by Project Affected People, through individuals or 

their recognized representatives, in support of a project. Broad Community Support may exist even if 

some individuals or groups object to a project. 

Biomass-based Diesel –A Renewable Fuel that has lifecycle Greenhouse Gas emissions that are at least 50 

percent less than 2005 baseline lifecycle Greenhouse Gas emissions and (1) is a transportation fuel, fuel 

additive, heating oil or jet fuel; (2) meets the definition of either biodiesel or non-ester; and (3) is approved 

for use as a motor vehicle fuel or fuel additive. Renewable fuel that is co-processed with petroleum is not 

Biomass-based Diesel. 

Build Act of 2018 - Better Utilization of Investments Leading to Development Act of 2018, Division F of Public 

Law 115-254 

Categorically Prohibited Project – A project of the type listed in Appendix B where potential adverse 

environmental or social impacts of the project preclude DFC support. 

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Cellulosic Biofuel – A Renewable Fuel derived from any cellulose, hemi-cellulose or lignin that has 

lifecycle Greenhouse Gas emissions that are 60 percent less than the 2005 baseline lifecycle 

Greenhouse Gas emissions. 

Climate-related Risks – Combination of the magnitude of the potential consequence(s) of climate change 

impacts) and the likelihood that the consequence(s) will occur. 

Climate-related Vulnerability – The degree to which a system is susceptible to, or unable to cope with, 

adverse effects of climate change, including variability and extremes. 

Vulnerability is a function of the character, magnitude and rate of climate variation to which a system is 

exposed, its sensitivity and its adaptive capacity. 

CO2eq – Carbon Dioxide Equivalents are a metric measure used to compare the emissions from various 

Greenhouse Gases based upon their global warming potential (GWP) over a given timeframe. The carbon 

dioxide equivalent for a gas is derived by multiplying the tonnes of the gas by the associated GWP. For 

example, the 100-year GWP for methane (CH4) is 28 and for nitrous oxide (N2O) 265. This means that the 

emissions of 1 million metric tonnes of methane and nitrous oxide respectively are equivalent to emissions 

of 28 and million metric tonnes of carbon dioxide.15 

Critical Forest Areas - A type of Natural Forest that qualifies as Critical Natural Habitat. Critical Forest 

Areas include primary Forests and old growth Forests that may serve as critical carbon sinks. 

Critical Natural Habitats - (1) Existing internationally recognized protected areas, areas initially recognized 

as protected by traditional local communities (e.g., sacred groves), and sites that maintain conditions vital 

to the viability of protected areas (as determined by the environmental assessment procedure); and (2) 

Sites identified on supplementary lists by authoritative sources identified by DFC. Such sites may include 

areas recognized by traditional local communities (e.g., sacred groves), areas with known high suitability 

for biodiversity conservation and sites that are critical for vulnerable, migratory or endangered species. 

Listings are based on systematic evaluations of such factors as species richness, the degree of endemism, 

rarity, and vulnerability of component species, representativeness and the integrity of ecosystem 

processes. 

Cultural Heritage – Tangible property or sites having archaeological (prehistoric), paleontological, 

historical, cultural, artistic and religious value, as well as unique environmental features that embody 

cultural values, such as sacred groves. Cultural 

Heritage also includes intangible forms of culture, such as cultural knowledge, innovations and practices 

of communities embodying traditional lifestyles. 

DFC Agreement – A DFC loan agreement, guaranty agreement, project consent or insurance contract. 

Direct Emissions – Emissions from sources that are owned or controlled by a project, including stationary 

combustion emissions, mobile combustion emissions, process emissions and fugitive emissions. 

Economic Displacement – Loss of assets or access to assets that leads to loss of income sources or means 

of livelihood. 

Energy Intensive Sectors – Projects in the following sectors: aluminum, brewing, cement, mining, corn 

refining, forest products, glass, metal casting, motor vehicle manufacturing, oil and natural gas production, 

petroleum refining, pharmaceuticals, pulp and paper, steel and iron, and thermal power. 

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Environmental and Social Action Plan (ESAP) – A systematic program designed to prevent, mitigate and 

monitor anticipated environmental and social impacts of prospective and ongoing activities. Required on 

all Category A projects. The ESAP provides an implementation schedule for measures that must be 

carried out as part of the project showing phasing and coordination with overall implementation plans 

and the capital and recurrent costs estimates and sources of funds for implementing the ESAP. 

Environmental and Social Impact Assessment (ESIA) – A comprehensive analytical body of work designed to 

evaluate environmental and social impacts of major projects having the potential to have significant, 

diverse and irreversible impacts on the natural environment and on humans dependent on that 

environment. Required for all Category A projects involving new (greenfield) developments or significant 

expansion of existing facilities. 

Environmental and Social Management System (ESMS) – Part of a project’s overall management system 

that includes the organizational structure, responsibilities, practices and resources necessary for 

implementing the project-specific management program developed through the environmental and social 

assessment of the project. 

Executive Order – An order issued by the President, the head of the executive branch of the federal 

government. 

Extractive Industry – An enterprise engaged in the exploration, development, or extraction of oil and gas 

reserves, metal ores, gemstones, industrial minerals (except rock used for construction purposes), or 

coal. 

Federal Register – The official daily publication for rules, proposed rules, and notices of Federal agencies 

and organizations, as well as Executive Orders and other presidential documents. 

Financial Intermediary –Investment funds, banks or other financial institutions, or other entities or 

vehicles that receive financing, guaranties or insurance. 

Forest - An area of land not less than 1.0 hectare with a tree crown cover (or equivalent stocking level) of 

more than 10 percent that has trees with the potential to reach a minimum height of 2 meters at maturity 

in situ. A Forest may consist of either closed forest formations, where trees of various stories and 

undergrowth cover a high proportion of the ground, or open Forest. Young natural stands and all 

plantations that have yet to reach a crown density of 10 percent or tree height of 2 meters are included 

under Forest, as are areas normally forming part of the forest area that are temporarily unstocked as a 

result of human intervention such as harvesting or natural causes but that are expected to revert to 

Forest. The definition includes Forests dedicated to forest production, protection, multiple uses, or 

conservation, whether formally recognized or not. The definition excludes areas where other land uses 

not dependent on tree cover predominate, such as agriculture, grazing or settlements. In countries with 

low forest cover, the definition may be expanded to include areas covered by trees that fall below the 10 

percent threshold for canopy density, but are considered Forest under local conditions. 

15 GWP values f rom the IPCC Fifth Assessment Report, 2014. 

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Generalized System of Preferences (GSP) – A trade preferences program, overseen by the USTR that 

provides preferential duty-free entry for products from designated beneficiary countries and territories 

with the purpose of promoting economic growth in the developing world. 

Greenhouse Gases – The following six gases or class of gases: carbon dioxide (CO2), nitrous oxide (N2O), 

methane (CH4), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). 

Host Country Notification – A notification to government officials in the country where a Category A 

project is located that identifies international guidelines and standards and restrictions under U.S. law 

that would be applicable to the project. 

Human Rights – Those rights expressed in the International Bill of Rights and the principles concerning 

fundamental rights set out in the International Labour Organization’s Declaration on Fundamental 

Principles and Rights at Work. 

Industry Sector Guidelines – Technical reference documents issued by the International Finance 

Corporation with general and industry specific performance levels and measures. 

International Finance Corporation (IFC) – An affiliate of the World Bank group that makes loans to and 

investments in, private sector projects in developing countries and emerging markets. 

International Labour Organization (ILO) – The tripartite United Nations agency that brings together 

governments, employers and workers of its member states in common action to promote decent work 

throughout the world. 

Internationally Recognized Worker Rights – The term, as specified in the Trade Act of 1974 (as amended), 

includes: (1) the right of association; (2) the right to organize and collective bargaining; (3) prohibition on 

forced labor and the worst forms of child labor; (4) a minimum age for the employment of children; and 

(5) acceptable conditions of work with respect to minimum wages, hours of work, and occupational 

health and safety. 

Labor Rights – Rights of Workers, which includes Internationally Recognized Worker Rights, and 

protection from discrimination with respect to employment and occupation on the basis of personal 

characteristics that are unrelated to inherent job requirements. 

Life Cycle Accounting– An analytical method used for evaluating and comparing the climate change 

implications of a product or system. For the purposes of this policy, the boundary definition of the 

analysis for both the project and the “no project” alternative includes raw material input acquisition, raw 

material transport, energy conversion and product transport to consumers. 

Mitigation Hierarchy – A system used to anticipate and avoid,or whereavoidanceis notpossible, 

minimize,and,whereresidualimpactsremain,compensate/offsetrisks and impacts to the 

environment. 

Meaningful Consultation – A process that (1) begins early in the project preparation stage and is carried 

out on an on-going basis throughout the project life cycle; (2) provides timely disclosure of relevant and 

adequate information that is understandable and readily accessible to Project Affected People; (3) is 

undertaken in an atmosphere free of intimidation or coercion; (4) is gender inclusive and responsive, and 

tailored to the needs of disadvantaged and vulnerable groups; and 

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(5) enables the incorporation of all relevant views of affected people and other Stakeholders into 

decision making, such as project design, mitigation measures, the sharing of development benefits and 

opportunities, and implementation issues. 

Office of the U.S. Trade Representative (USTR) – An agency of the U.S. Government that is responsible 

for developing and coordinating U.S. international trade, commodity, and direct investment policy, and 

overseeing negotiations with other countries. 

Performance Standards – Technical reference documents issued by the International Finance 

Corporation with environmental and social impact management performance criteria. 

Physical Displacement – Relocation or loss of shelter. 

Presidential Proclamation – An instrument that states a condition, declares a law and requires obedience, 

recognizes an event or triggers the implementation of a law (by recognizing that the circumstances in law 

have been realized). 

Project – All facilities owned or controlled within a physical project boundary that constitute a 

commercially viable business unit eligible for DFC support. 

Project Affected People – Individuals, workers, groups or local communities, including within the supply 

chain, which are or could be affected by the project's Area of Influence, directly or indirectly, including as 

a result of cumulative impacts. Emphasis should be placed on those who are directly and adversely 

affected, disadvantaged or vulnerable. 

Remediation Plan – A systematic program designed to reverse adverse environmental and social impacts of 

previous activities at a site. The Remediation Plan will provide an implementation schedule for the 

measures that must be carried out as part of the project, and capital and recurrent costs estimates and 

sources of funds for implementing the Remediation Plan. 

Renewable Biomass – Each of the following (including any incidental de minimis contaminants that are 

impractical to remove and are related to customary feedstock production and transport): (1) planted 

crops and crop residue harvested from existing agricultural land cleared or cultivated prior to December 

19, 2007 and that was non-forested and either actively managed or fallow on December 19, 2007; (2) 

planted trees and tree residue from a tree plantation that was cleared at any time prior to December 19, 

2007 and actively managed on December 19, 2007; (3) animal waste material and animal byproducts; (4) 

slash and pre-commercial thinning from forestland that is not ecologically sensitive; (5) biomass (organic 

matter that is available on a renewable or recurring basis) obtained from the immediate vicinity of 

buildings and other areas regularly occupied by people or public infrastructure, in an area at risk for 

wildfire; (6) algae; and 

(7) separated yard waste and food waste, including recycled cooking and trap grease and separated 

municipal solid waste. 

Renewable Energy Resources – Energy resources that are naturally replenishing but flow- limited. They 

are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of 

time. Renewable energy resources include biomass, hydro, geothermal, solar, wind, ocean thermal, wave 

action, and tidal action. 

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Renewable Fuel – A fuel that meets the following criteria: (1) a fuel produced from Renewable Biomass 

(2) a fuel that is used to replace or reduce the quantity of fossil fuel present in a transportation fuel, 

heating oil or jet fuel; and (3) a fuel that has lifecycle Greenhouse Gas emissions that are at least 20 

percent less than 2005 baseline lifecycle Greenhouse Gas emissions. 

Retrenchment-The elimination of a significant number of Workersor the dismissal or layoff of a 

significant number of Workers, generally by reason of project closing or for cost savings. 

Retrenchment does not include isolated cases of termination of employment for cause or voluntary 

departure. 

Social Risk Due Diligence – Process through which the Applicant identifies and manages heightened risks 

pertaining to Project Affected People, including communities and Workers, and related to socioeconomic 

status, vulnerability, gender, Human Rights, Cultural Heritage, Labor Rights and working conditions, 

health and safety, security, and participation in decision making. Includes risk identification, consultation 

with Project Affected People and Workers, and resulting management and monitoring programs. 

Process can be integrated into the Applicant’s Environmental andSocial Management System provided 

it identifies, manages, and communicates risks to Project Affected People and Workers. 

Special Consideration – A screening classification that is applied to a project when there are heightened 

social risks within a project. The decision to designate a project as Special Consideration will take into 

consideration the significance of the social risk, as determined by the scale and severity of the potential 

impacts and vulnerability of the affected people. The Special Consideration classification of a project 

indicates (1) a project’s heightened potential for Labor Rights or Human Rights risks or impacts; and (2) a 

higher risk to Workers or Project Affected People. 

Stakeholder – Stakeholders are persons or groups who are directly or indirectly affected by a project, as 

well as those who may have interests in a project and/or the ability to influence its outcome, either 

positively or negatively. Stakeholders may include Project Affected People and their formal and 

informal representatives, national or local government authorities, politicians, religious leaders, civil 

society organizations and groups with special interests, the academic community, or other businesses. 

Subproject – A project or enterprise that receives financing or investment from a DFC-supported 

Financial Intermediary. 

U.S. Department of Labor – An agency of the U.S. Government that is responsible for administering labor 

laws on working conditions, unemployment insurance benefits and re- employment services, and tracks 

national economic measurements. 

U.S. Department of State – An agency of the U.S. Government that is responsible for the international 

relations of the United States. 

Workers – Individuals who are employed directly by the project or under a project contract, and who 

perform on-site work for a substantial duration of time on a project or are material to the primary 

operations of a project. Workers can be temporary or permanent. 

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