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Environmental Safeguards

What are environmental safeguard policies of international financing institutions?

Safeguard policies are essential tools to prevent and mitigate undue harm to people and their environment during the development process. When identifying and designing a project, safeguards should help assess the possible environmental and social risks and the impacts (positive or negative) associated with a development intervention. During project implementation, safeguards should help define measures and processes to effectively manage risks and enhance positive impacts. The process of applying safeguard policies can be an important opportunity for stakeholder engagement, enhancing the quality of project proposals and increasing ownership.

Most International Financing Institutions (IFIs) require the application of safeguards to approve projects, and while protocols and formats vary, the issues considered are common.

Environmental safeguards (as well as Social Safeguards) are a cornerstone of IFI support to sustainable development. The objective of these policies is to avoid or, when avoidance is not possible, to minimize and mitigate adverse project impacts on the environment and affected people, and to help borrowers (and grant recipients) strengthen their own safeguard systems and develop the capacity to manage environmental risks. Key environmental safeguard considerations include biodiversity conservation, sustainable natural resource management, pollution prevention and abatement, pesticide use and greenhouse gas emissions. Safeguard policies provide guidelines for IFI and borrower/country staffs in identifying, preparing, and implementing programmes and projects. They also provide a mechanism for integrating environmental concerns into development decision-making.

Some IFIs, such as the Asian Development Bank (ADB), have a single safeguard policy statement that addresses both environmental and social impacts and includes specific requirements that borrowers/clients are obliged to meet when delivering safeguards for projects supported by the Bank. Other IFIs, such as the World Bank (WB), adopt separate sets of environmental and social safeguard policies1.  However, they emphasize the importance of addressing environmental and social impacts and risks comprehensively; the WB has an umbrella environmental assessment policy and specific environmental safeguard policies to address critical issues in natural habitats, forests, pest management, physical cultural resources and safety of dams. As in the case of the ADB, these policies must be addressed as an integral part of the environmental assessment process.

Many countries have strengthened their own environmental policies and regulatory frameworks; however, others continue to have less developed systems and often rely on policies and procedures established by IFIs. 

Why are environmental safeguards important in agricultural investment?

Environmental safeguards are key tools for ensuring that investment operations do not harm the environment. Consideration of the applicable safeguard policies and procedures occurs during the preparation of the Environmental Assessment (EA) report, which is required by the IFI and prepared by the borrower or grant recipient. EA is a process designed to ensure that decision-makers are made aware of the potential environmental consequences of their actions, with the intention of improving the “quality” of development decisions, ensuring that environmental considerations are incorporated into every stage of the investment cycle.

In addition, the EA process considers national and local laws and regulations that apply to the project/programme and identifies gaps between local laws and the IFI's policy requirements, providing suggestions on how to address them. The EA process provides a unique opportunity for project information disclosure, consultation, and public participation. Sufficient and timely application of safeguard policies is essential to prevent delays in IFI approval or potentially even rejection of investment project/programme proposals

BOX 1: Key messages

Environmental and social safeguards are a cornerstone of IFI support to sustainable development and poverty reduction.

EAs analyse and evaluate potential environmental impacts of proposed projects/programmes and/or policies. They facilitate the improved planning, design and implementation of projects/programmes by providing for the systematic collection, analysis and transfer of relevant environmental information to decision-makers.

Teams working on social and environmental safeguard policies should be closely linked. When well-coordinated, they will increase efficiency in preventing and mitigating undue harm to both people and their environment in the development process.

The procedures for applying environmental safeguards vary from one IFI to another. In general, the main steps are:

  • Screening and scoping of the main environmental issues at concept stage, at which point the IFI will assign a category to the proposed project, based upon the estimated level of impact and a corresponding level of required EA treatment  –  from a full Environmental Impact Assessment (EIA) to more limited environmental reviews.
  • Conducting an EA of the proposed investment project/programme or, in the case of an investment plan, mainstreaming EA into the plan’s formulation process. Ensuring meaningful consultation, public participation and disclosure of the EA report.
  • Reflecting the EA and Environmental Management Plan (EMP) in project budgets, appraisal documents and implementation plans/manuals.

To address critical issues in natural habitats, forests, pest management or any other environmental safeguard issue, the EMP will set up preventive and mitigation measures, a monitoring programme, cost estimates, a budget, and institutional arrangements to be implemented after approval of the project/programme/plan.

What steps are used to apply environmental safeguards?

The key steps for applying environmental safeguards during a project design phase are as follows:

  1. Conduct an environmental screening2 and scoping of the main issues, as the first phase of the EA process. The IFI will then assign an initial category to a project/programme, indicating an estimated level of anticipated impact and a corresponding level of required EA treatment – from a full Environmental Impact Assessment (EIA) to more limited environmental reviews. Depending on the significance of project impacts and risks, the assessment may comprise a full-scale EIA for projects in Category A (or Category 1)3 or a partial assessment (for projects in Category B or Category 2), which requires an environmental analysis and/or an environmental management plan (EMP). If the project/programme is likely to have minimal or no adverse environmental impacts (Category C or Category 3), no further EA action or other environmental analysis is required. The project environmental screening and scoping is conducted by the IFI.
  2. Prepare Terms of Reference for an EA and, if needed, request assistance from the IFI Environmental Specialist, so as to ensure clarity on objectives, scope, content, methodology and deliverables in the EA report.
  3. Conduct an EA of the proposed investment project/programme or, in the case of an investment plan, mainstream EA into the plan’s formulation process (see details below). The EA report will include an EMP. Key elements of EMPs are mitigation measures, environmental monitoring and reporting requirements, related institutional or organizational arrangements, capacity development and training measures, implementation schedules, budgets and performance indicators.
  4. Ensure meaningful consultation, public participation and disclosure of the EA report.
  5. Ensure that the cost of EMP implementation is included in the project/programme cost.
  6. Provide all information required by the concerned IFI/donor to comply with its safeguards, to allow a smooth process of IFI approval of the investment proposal. 
  7. Implement EMP and environmental performance monitoring – i.e. monitor EMP implementation.

What are roles and responsibilities of international financing institutions and borrowers or grant recipients?

Implementation of the provisions of safeguard policies is the responsibility of the borrower or grant recipient. Borrowers are required to undertake EAs, carry out consultations with affected people and communities, prepare and implement safeguard plans, monitor the implementation of these plans, and prepare and submit monitoring reports. The IFI’s role is to explain policy requirements to borrowers or grant recipients, to help borrowers meet those requirements during project processing and implementation through capacity development programmes, to ensure due diligence and review, and to provide monitoring and supervision. IFI’s project completion reports and other project performance evaluation reports should include review of the implementation of safeguards.

How are environmental considerations applied at the strategic planning level?

EAs can be project-specific or strategic, the latter being related to broader investment planning processes. Depending on the situation, three different types of strategic EAs can be applied: 

  • Sectoral Environmental Assessment and related EMP: Changes in sector policies can have effects on the environment. Sectoral EAs are tools that assess environmental impacts associated with a sector-specific strategy, policy, plan, programme or series of projects within a single larger project. It is a characteristic of sectoral EAs to recommend broad measures intended to strengthen environmental management in the sector. 
  • Regional Environmental Assessment: Similar to sectoral EAs, Regional Environmental Assessments are instruments used to examine issues and impacts associated with a particular strategy, policy, plan, programme, or series of projects that have been implemented in a particular region (for example, coastal zone or watershed). These assessments help to establish a sound planning and management framework that provides for addressing cumulative, direct and indirect impacts of ongoing and planned investments through a special approach to mitigating, monitoring and management.
  • Strategic Environmental Assessment (SEA) and multi-sectoral impact: In recognition of the restrictions implied by project-specific EAs – which in many cases are considered to be reactive in nature – the SEA has evolved as a tool that promotes incorporation of environmental considerations into a broader policy context, in order to exert a greater influence on the decision-making process. It has the advantage of taking the EA analysis “upstream” from the project-specific EA and can be used for policy and programme or investment plan formulation (e.g. structural adjustment and policy-based lending). 

How should results of the analysis be applied?

The EMP derived from the EA clearly defines the environmental requirements of the project and presents measures to comply with all environmental safeguard issues relevant to the project. Effective implementation of commitments set out in the EMP relies upon clear understanding on the part of both borrower and IFI staff regarding their respective responsibilities at each stage of the project cycle. These should be spelled out clearly, in legally binding commitments, for example by summarizing the main measures and responsibilities in the Project Document and/or in the loan or letter of agreement. 

The IFI should request that the borrower or grant recipient monitor and measure the progress of implementation of the EMP. In addition to recording information to track performance, the borrower should undertake inspections to verify compliance with the EMP and measure progress toward the expected outcomes. The IFI usually conducts one or two environmental supervisions per year to ensure that the borrower implements the project/programme responsibly with regard to the agreed environmental safeguards and the need to address any unanticipated environmental problems.

Footnotes

1 The World Bank is preparing a new Environmental and Social Framework. The Board has authorized the release of a proposal document for consultation purposes to seek feedback on its content. It has not endorsed this content, and the Committee on Development Effectiveness and the Board will consider the proposal after consultations.

2 In the case of the WB, in addition to application of the EA policy that operates as an umbrella safeguard policy, the application of other WB safeguard policies and procedures may also be required, such as those concerning natural habitats and pest management. For this reason, the WB undertakes screening of each proposed project to determine the appropriate extent and type of EA to be undertaken and whether or not the project may trigger other safeguard policies.

3 The terminology for environmental categories and the corresponding level of EA treatment (and required documents) for each category varies from IFI to IFI. Category A terminology used by WB, International Fund for Agricultural Development (IFAD), ADB and Inter-American Development Bank (IDB) is equivalent to Category 1 used by the African Development Bank (AfDB). Category B terminology used by WB, IFAD, ADB and IDB is equivalent to Category 2 used by the AfDB. Category C is equivalent to Category 3 of AfDB; and Category FI, adopted by the WB and ADB, is equivalent to Category 4 of AfDB. The number of categories also varies; for example, the AfDB, WB and ADB use four categories (A, B, C, FI) and IFAD and IDB use three categories (A, B, C). 

Key resources

Environmental and social (E&S) management Guidelines (FAO, 2015)

Covers guidelines to identify, assess and manage E&S risks; principles and safeguard standards; and procedures for integrating the management of E&S risks into the project cycle.

A framework terms of reference for environmental assessment of development assistance projects (UNEP, 2002)

Includes guidance on topics to be addressed, basic requirements, procedural considerations, operational considerations and project stages.

Environmental Impact Guidelines (FAO, 1999)

Provides a brief treatment of the EA concept, procedures and tools; addresses critical environmental issues associated with agricultural project formulation.

Strategic Environmental Assessment: Better Practice Guide (Portuguese Environment Agency and Redes Energéticas Nacionais, 2012)

Offers practical guidance on how to conduct SEA in an innovative and sustainability-oriented way. SEA is a decision support instrument that can contribute to strengthening societal commitment to sustainable development, efficient management of resources and green economy.

Background Information on United Nations Development Programme Environmental and Social Safeguards Policies and Procedures (2011)

Collects the main key documents and initiatives UNDP has carried out with respect to the Environmental Safeguards in a simple and schematic way. Refers to the operational principles, policies and procedures, and compares with the WB Policies and Procedure on Environmental Assessment.

Country examples:

Brazil 

Poland