The new international benchmark standard for environmental and social performance of the private sector in developing countries: will it raise or lower the bar?

As the International Finance Corporation (IFC) is preparing to launch a new set of business standards for managing environmental and social risks, which is be followed by commercial banks, this briefing paper examines the potential impact of these standards.

The briefing paper highlights:

• the new IFC Performance Standards are a collection of eight quality standards, covering some well-established environmental and social issues: bio-diversity conservation, involuntary resettlement etc.
• the standards represent a wholly new mechanism for deciding, investment–by-investment, where the "bar" on environmental and social performance should lie, which is a substantial methodological advancement
• the standards are presented as a single, comprehensive, risk and opportunities management framework, fully integrated with the core of the business
• the emphasis on "risks and opportunities" means that the company needs not only to avoid or reduce its environmental and social risks, but also to continuously search for opportunities that add environmental and socio-economic value to the investment
• a shift can be expected from hiring of consultants to undertake more general Environmental and Social Impact Assessment (ESIA) studies to hiring consultant to conduct audits of the company’s existing performance management systems, including its human resources procedures, local procurement practices and health, safety and environmental system.

The briefing paper concludes that in the areas of community health and safety, restoration of local livelihoods from land acquisition, labour standards and indigenous peoples rights, the new standards should lead to an improvement for those affected by new investments in infrastructure, manufacturing, mining, tourism or agriculture.