Sustainability Policy
Stakeholder Feedback
Frequently Asked Questions
Why does the proposed mitigation hierarchy use
“reduce” instead of “minimize” with respect to
impacts?
Why does the Policy not require IFC to exert
stronger oversight of projects in countries with
weak regulatory environments?
How does IFC define risks and impacts?
Is IFC’s categorization of projects determined by
pre-mitigation risks and impacts?
How does IFC assess E&S risks in advisory
projects?
Note: IFC’s responses to questions and comments are based on the current draft (Version 2) of IFC’s
Sustainability Framework. They are subject to change as the Framework is further revised. No text in
the Framework or in these interim comments and responses is final until approved by IFC’s
Management and Board.
IFC Response
IFC has adjusted the proposed mitigation hierarchy in Version 2 of
the Sustainability Framework, and “minimize” has replaced
“reduce” in order to reflect industry-wide practice. Additional
clarification on the mitigation hierarchy is provided in Guidance
Note 1.
IFC’s approach to supervision is based on the level of existing
risks and potential impacts. A weak regulatory framework might
increase risks and IFC takes this into consideration; however this
fact does not necessarily need to be explicitly reflected in the
Policy. It is an operational rather than a policy issue.
IFC defines environmental and social risk as a combination of
probability or frequency of certain hazard occurrence and severity
of impacts resulting from such an occurrence. ”Impact” is defined
as any potential change to the physical, natural or cultural
environment, surrounding community, or health of community or
workers directly resulting from the business activity to be
supported.
Mitigation measures are incorporated in the project design from an
early project development stage. IFC’s categorization decision is
based on information related to potential risks and impacts
available during its appraisal process. By definition, actions
already undertaken by clients before IFC’s involvement do not
constitute risk, as risks refer to future, not past events.
IFC's social and environmental due diligence applies to the full
spectrum of IFC investments and advisory services (AS) activities.
In case of advisory activities, IFC reviews the overall social and
environmental risks associated with an AS activity and screens the
activity for potential social and environmental risks, as well as
against the IFC Exclusion List. Should the review result in the
identification of environmental and/or social risks, the advice
provided to clients should be consistent with the Performance
Standards as a framework of good international industry practice
in social and environmental risk management.