Letter from the IFC in response to 'One Step Forward, One Step Back' - September 29, 2006

September 29, 2006

Mr. Fraser Reilly-King
Halifax Initiative Coalition
153 Chapel St., Suite 104
Ottawa, On KIN I H5

Dear Mr- Reilly-King:

Thank you for forwarding your report "One Step Forward, One Step Back" together with your cover letter of June 23, 2006. We read the report with interest. Most of the specific comments on IFC's Policy and Performance Standards (PPS) have previously been raised by you or other organizations that collaborated with you an this report either directly to us or to the offices of the relevant Executive Director prior to IFC's Board approval of the PPS. We have already responded to these inquiries directly or through the Executive Directors’ offices. Nonetheless, we think it would be useful to repeat our views on the points you raised as a matter of public record. Please find our detailed responses in the attached Annex 1. Annex 2 contains a description of IFC's approach to human rights. We only deal with the points that we felt needed to be responded to. On the whole, the central requirements section that appears at the outset of each policy analysis is a useful one and we did not find the need to comment on them.

The PPS contain robust standards that are intended for application to all sectors in all regions of IFC’s operations. You are also aware that the Extractive Industries Review (EIR) and the World Bank Group’s Management Response (EIR MR) to the EIR influenced the content of the Performance Standards in a significant way. In fact, the EIR MR helped IFC ensure that its standards are adequate for application to extractive projects. All of IFC’s commitments made in the EIR MR with respect to environmental and social safeguard issues arising in extractive projects have been addressed in the PPS. As a result, we feel strongly that the PPS provide an appropriate set of standards to be used by oil, gas and mining companies when preparing projects for financing, either by IFC or by Equator Principles Financial Institutions.

Beyond the many environmental and social safeguard issues raised by EIR, it also asked important questions about poverty, revenue management and governance issues that are prevalent in extractive projects. While the EIR MR made commitments to address these issues as well, they are mostly outside the scope of the PPS, and principally managed through the World Bank Group’s Oil, Gas, Mining and Chemicals Department. Information on the status of implementation of the EIR MR can be found at www.ifc.org/ogmc including an implementation report.

Thank you for your report and your consideration of our response. We are committed to sound implementation of the PPS and will be shortly setting up a web-based platform for ongoing dialogue with our stakeholders on PPS implementation issues. We hope that you would participate in the dialogue and look forward to further exchange of ideas to improve our PPS implementation.

Yours sincerely,

Rachel Kyte
Director Environment and Social Development

Cc: Ms. Sharmila Prakash Khare, Advisor to the Executive Director, World Bank Group