ENVIRONMENTAL AND SOCIAL

MANAGEMENT SYSTEMS

Kate Lazarus
Senior Asia ESG Lead
February 09, 2021
Environmental and social risks of hydroelectric dams
These risks present themselves as:

• Reputational risks: negative image of a company due to its bad

environmental and social practices
• Compliance risks: fees and fines to rectify environmental and social
damage
Both reputational and compliance risks
translate into financial risks
 What are IFC Performance Standards?

✓ Describe potential environmental and social risks

✓ IFC clients must pay particular attention to these risks
✓ Help the client to manage E&S risks and conduct
business in a sustainable manner

Performance Standard 1: E&S Management system

Performance Standards 2-8: E&S Performance criteria
Management Systems = Continuous improvement
IFC Performance Standard 1: Environmental and Social Management System

Policy Management Programs

Identification of Risks and Impacts Organizational Capacity

Stakeholder Engagement Emergency Preparedness

Grievance Mechanism

Ongoing Reporting to Affected Communities

Monitoring and Review

 Policy – What is your commitment?

What it is?
Establish expectations for conduct (objectives and rules).
Why is it important?
Signal to ALL that Environmental and Social performance is important.
How do I start?
Commit to comply with E&S regulations
Commit to conform to E&S sustainability standards (IFC Performance
Standards and WBG EHS Guidelines)
 Identification of risks and impacts

Is the starting point! You need to understand your risks to manage them.
 Identification of risks and impacts – Key considerations

Environmental and Social Impact Assessment (ESIA): Consider IFC

Performance Standards in the Terms of Reference for the ESIA. It reduces the
need of complementary studies.

Capacity: Rely on teams with adequate expertise and skills.

Scope: Include all project components, associated facilities (e.g. transmission

line), and activities outsourced to contractors.

Dynamic and ongoing: Throughout the life of the project – the ESIA is just the
first step.

Consultation: Involve stakeholders, affected communities, contractors, workers.

 Identification of risks and impacts – Dig deep - the devil is in the details!

Hidroelectrica La Higuera – greenfield 155MW run-of-river hydroelectric plant

situated in Chile. Sponsor: Committed senior management with robust
management structure.
✓ Failed to assess worse case scenario in cases of extreme drought
✓ Run-of-River and no net consumer of water – company minimized importance of effects with
downstream users
✓ After two consecutive years of drought, irrigation cooperative of 6,300 farmers had issues with
availability of water
✓ Issue was not net consumption but time when water was available
✓ Since it was a peaking plant, water was available only 6-8 hours per day
✓ High visibility in media and lawsuit requesting stoppage of operations
 Management Programs – The mitigation hierarchy

Example

AVOID Plan trajectory of the TL away from sensitive

Don’t do it biodiversity areas.

MINIMIZE Remove trees before bird nesting season.

Reduce the impact of what you are doing Install bird diverters to prevent collision.

COMPENSATE/OFFSET Regenerate and protect areas with native

You’ve done it. What will you do now? vegetation. Improve habitat for affected species.

Avoiding the impact is often the cheapest option!

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 Management Programs

What – environmental and social risks you need to address

Why – reasons (objectives) for the actions and procedures, and the expected
results (targets)

How – actions and procedures to be implemented to address the risk

When – timeframe and deadlines

Who – responsible people

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 Management Programs

Required plans, processes and procedures must be documented.

✓ Land Acquisition Framework and Procedures
✓ Resettlement and Livelihood Restoration Plan
✓ Biodiversity Action Plan
✓ Influx Management Plan – mitigation of risks linked to project induced immigration
✓ Stakeholder Engagement Plan
✓ Indigenous Peoples Plan
✓ Cultural Heritage Management Plan – Chance Finds Procedure
✓ Workforce Management Plan – terms of employment, benefits, accommodations, demobilization
✓ OHS Plan
✓ Waste Management Plan
✓ Hazardous Materials Management Plan
✓ Spill Prevention Plan
✓ Blasting Explosives Management Plan
✓ Transportation Safety/ Traffic Management Plan
✓ Emergency Preparedness and Response Plan
✓ Dam Safety Plan
✓ Site Security Management Plan
✓ Noise, Vibration, and Dust Control Plan
✓ Erosion Control Plan
✓ Site Rehabilitation Plan
✓ Contractors Assurance Plan
 Management Programs – Managing contractors E&S Performance

✓ Communicate E&S requirements to bidders

✓ Include E&S performance criteria in the
selection of contractors
✓ Include E&S provisions in contracts – what
do contractors need to comply with
✓ Include penalties for poor E&S performance
✓ Oversee E&S performance of contractors
during construction

The project sponsor is ultimately responsible!

Do not outsource E&S responsibility to contractors.
 Organizational capacity and competency

✓ E&S Team leader with access to senior management

✓ Dedicated multi-departmental team
✓ Budget spending authority
✓ Involved in business decisions

The implementation of E&S plans, processes and procedures

requires coordination among all parties involved in the project.
 Organizational capacity and competency

A management system is trained committed people regularly

following procedures. How do you make this happen?

✓ Integrate ESMS responsibilities in job descriptions and performance

evaluations
✓ Progressive training:
Awareness Commitment Implementation

✓ Training that addresses knowledge, skills and attitudes

 Emergency preparedness and response

Even when you are managing your risks, accidents can happen!
Being prepared can dramatically reduce the impact on workers, communities, and company’s facilities.
Key aspects:
✓ Identify potential emergency scenarios: earthquakes, landslides, flooding, glacial lake outburst flood
(GLOF), explosion, fire, civil unrest, release of hazardous substances, OHS accidents, pandemics
✓ Emergency equipment in line with risk assessment
✓ Regular training and drills in all shifts
✓ Communicate and collaborate with local communities and government agencies
✓ Revise your emergency plan periodically
 5. Emergency preparedness and response – Dam Safety

Failure of a dam as a result of natural phenomena or of inadequate design and

maintenance can have disastrous consequences.
World Bank’s Operational Policy [OP] 4.37, together with Bank Procedure [BP] 4.37,
on Dam Safety establishes requirements for projects financed by the WB.
 Stakeholder engagement

Your company can impact many people.

They can impact your business in return.
Stakeholder engagement – Affected Communities

It is the company's responsibility to obtain the

social license to operate:
✓ Prioritize engagement with those most impacted
✓ Identify vulnerable groups that may require additional
support for coping with negative impacts, but also for
taking advantage of project’s benefits (e.g., jobs)
✓ Provide early, timely, documented and meaningful
information
✓ Provide communities with opportunities to express their
concerns and suggestions
✓ Document concerns and suggestions
✓ Report back on what has been put in place to address
concerns and suggestions
✓ Build relationships over time
 External communication and Grievance mechanism

✓ Establish communication channels for people to present – open or

anonymously – questions, concerns and complaints
✓ Assign team with adequate competence and skills
✓ Implement procedure(s) for reception, registration, resolution, monitoring
✓ Establish a system to communicate back decisions taken and
implementation progress

In case of serious complaints from affected communities,

you may need independent mediators for resolution
Dedicated capacity and expertise are required to deal
with grievances from gender-based violence.
 An effective Grievance Mechanism is:

✓ Established early in the process (before land acquisition)

✓ Provides confidential and anonymous channels Truck traffic

✓ Well-publicized Dust

✓ Easily accessible and at no cost 3% 3% 2% 1% Noise

6% Not compliance of
✓ Predictable – people know when they can expect a response 7%
31% company's commitments
Land affectation
✓ Transparent about process and outcomes Water quality
19%
✓ Drives continual improvement 28%
Workers behaviors in the
community
Vibration

While contractors may be responsible for implementing corrective measures, the reception of
complaints, and the monitoring of resolutions must be centralized by the project sponsor.
An effective Grievance Mechanism provides early warnings!
 Ongoing reporting to Affected Communities

✓ Share progress on actions agreed with them

✓ Share results from monitoring reports (e.g. water quality)
✓ Share information on activities that could impact them and how are you
mitigating them
✓ Share information on priorities identified by Affected Communities (e.g.
number of workers employed from the community)
✓ Utilize locally appropriate channels (e.g. radio, meetings, posters)
✓ Local language and clear format
✓ Regularly
✓ Proactive, not reactive
 Monitoring and Review

✓ Monitoring is the CHECK of the PDCA cycle

✓ Review is the ACT of the PDCA cycle

Monitoring and Review must

drive continual improvement
 Monitoring and Review

✓ Monitor implementation and effectiveness of plans.

✓ Trained personnel responsible for collecting and
analyzing data.
✓ Indicators in line with E&S risks.

Techniques of monitoring:
✓ Measurement and testing (with calibrated equipment)
✓ Review of records and documentation
✓ Surveys and interviews
✓ Observation
 Monitoring and Review – EHS inspections

✓ Daily and weekly EHS inspections – both by

contractors and sponsor.
✓ Intensity of inspections in line with level of risk.
✓ Use of phone Apps to expediate inspections,
analysis of data, and closure of non-compliances.
✓ Analyze data to plan targeted trainings and
implement preventive measures.
 9. Monitoring and Review

Process indicators
✓ Number of workers and community members that can explain the grievance mechanism
✓ Number of EHS inspections performed
✓ Number of workers that can explain the company’s code of conduct
✓ Number of workers that can explain the OHS procedures

Performance indicators
✓ Open versus closed complaints
✓ Average number of days to close complaints
✓ Number of EHS deviations per hour of inspection
✓ Lost time injuries per million of hours worked
 Monitoring and Review

Management Review: Why is important?

✓ Keeps Senior Management up to date and engaged

✓ Accelerate decisions that must be made by Senior Management, such as capital expenditures
✓ Sends signal to employees that this is a top priority

No endorsement by Senior Management = Failure

✓ Must be frequent during construction – critical time / constant change.

✓ Present information in format that facilitates decisions by Senior Management
✓ Keep written records (minutes) of key topics discussed and decisions made in the meeting
ESMS Handbook

✓ Understand the benefits of an ESMS

✓ Learn the nine (9) elements of an IFC PS1 compliant
ESMS
✓ Explains environmental, OHS, labor, and community
risks and impacts in a simple, illustrative and concise
language.

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ESMS Self Assessment and Improvement Guide

✓ Questionnaire to assess a
company’s ESMS maturity and
parity with IFC PS 1
requirements.
✓ Tips to develop an ESMS
improvement plan.
✓ Incorporated into Excel to
expedite usage and analysis.

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 ESMS Toolkit

✓ Tools to strengthen weak or missing

elements in client’s existing ESMS
✓ Checklist
✓ Templates

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ESMS publications are available at ifc.org/esms

ESMS
HANDBOOK

The implementation of an
ESMS is mandatory for 100%
of IFC investment projects

ESMS ESMS SELF-

TOOLKIT ASSESSMENT &
IMPROVEMENT
GUIDE

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 The nine (9) elements of a PS1 compliant ESMS

✓ There are hundreds of management systems

standards with divergent objectives targeting
different aspects of conducting business.

✓ IFC clients comply or are certified against different

management systems and certification schemes,
such as:
✓ Quality: ISO 9001
✓ Occupational Safety and Health: ISO 45001
✓ Environmental Management: ISO 14001

✓ These systems must be enhanced to comply with

PS1 requirements and its nine (9) ESMS
elements.
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Learn more at: ifc.org/sustainability & ifc.org/sustainabilitypublications