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Environmental and Sustainability Initiatives
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| Sector |
Company |
Initiative |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
PROVIDING ELECTRICITY AND SAFEGUARDING THE ENVIRONMENT
With the collapse of the Soviet Union, the subsequent civil war, and sharp economic decline, the diesel generation plants in the
Gorno-Badakhshan region of eastern Tajikistan ceased to operate. As a result, the population of this very poor region has come to depend
on wood as fuel, and an estimated 70 percent of the tree cover has been cut down in a decade. Schools and other public
institutions have had to close during the coldest weather, indoor pollution has become acute, and economic activity has been stifled.
IFC and the Aga Khan Fund for Economic Development have established Pamir Energy, a private concessionaire that is taking control
of hydropower plants and other facilities that serve 250,000 residents and were previously state owned. The project, the first private
investment in the power sector in Tajikistan, will double the capacity of a Soviet-era power plant, improve transmission and distribution
facilities, and regulate the level of a lake to ensure adequate flow in the winter. The project also aims to reduce emissions and natural
resource depletion. It will create local contract employment during construction, and a more reliable power supply will contribute to the
region’s economic recovery.
IFC is investing $8 million in the new company, of which $3.5 million is in equity and $4.5 million in loans. With donor support, we
earlier provided the technical assistance needed to structure and fund this investment. In an innovative example of IFC–World Bank
cooperation, IDA is providing $10 million to the Tajik government to help keep tariff rates affordable for the local population. A further
grant from the Swiss government will ensure that a minimum monthly supply of electricity is delivered at a very low rate to even the
poorest households. |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
REDUCING EMISSIONS, HELPING THE COMMUNITY
Usha Beltron is India’s leading manufacturer of specialized wires, steel wire ropes, and rods—and the world’s fourth largest.
But like other midsize companies in India, it has limited access to long-term financing. IFC played a key role in restructuring
Usha Beltron’s operations by providing debt and equity financing on its own account and by mobilizing loans from other investors.
IFC also provided the company with valuable advice on setting up a cogeneration power plant that will reduce emissions and
power costs by using waste flue gases from the company’s iron plant to generate power.
Usha Beltron has a strong corporate commitment to community development. It sponsors Krishi Gram Vikas Kendra, a
nongovernmental organization whose activities include watershed development projects in more than 50 villages near Usha
Beltron’s plants; health care and agricultural development programs in two of India’s poorest states, Bihar and Jharkhand; and
women’s enterprise development in partnership with the Self-Employed Women’s Association. Usha Beltron also operates research
and learning centers that offer training in business management to small businesses and other local manufacturers. |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
INVESTMENT AT THE GRASS-ROOTS LEVEL
In frontier markets where private capital flows are limited at best, grass-roots groups’ income
generation projects can make a big difference in poor people’s lives. This year, for example,
the Mekong Private Sector Development Facility helped create a commercially viable small
business in partnership with Hagar, a Cambodian nongovernmental organization that has
rebuilt the lives of 20,000 destitute mothers and children over the past decade.
MPDF has been active with Hagar since 1999, providing business advice on the planned
commercialization of the nonprofit group’s silk handicrafts and soy milk production activities.
For the latter, MPDF conducted a market study that showed great potential demand for
a repackaged product. It then helped shape the business proposal that this year attracted a
$450,000 IFC equity investment in newly launched Hagar Soya Ltd. and agreed to provide
postinvestment marketing and sales support to Hagar as well. This financing will allow Hagar
Soya to expand its daily output from 300 to as many as 12,000 liters per day. It will use
locally grown soybeans to produce a nutritious drink that is affordable for Cambodia’s poor
and often malnourished population.
MPDF has also helped Hagar Design, enabling it to obtain $65,000 in funding from IFC’s
SME Capacity Building Facility to improve its silk production operations. Hagar Design has
established an international market and employs more than 50 previously disadvantaged
women to sew high-quality handbags, table mats, and other fabric products. |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
SUSTAINABLE ECONOMIC BENEFITS FROM SAVING SPECIES
As part of its commitment to preserving biodiversity in developing countries, IFC has launched innovative projects in Peru and
Mongolia in partnership with local civil society organizations. The projects are funded by the Global Environment Facility.
In the rainforests of Peru, IFC is working with two nongovernmental organizations to establish a ranching and export business for
poison dart frogs. This will help rural communities generate income from a practice that enriches the rainforest rather than
depleting its diversity. The project is expected to stabilize or increase the population of at least 60 frog species, many of which have
been smuggled out of the area. It will also employ about 250 families and conserve more than 3,000 hectares of tropical forest.
In northern Mongolia, IFC invested in a river conservation project that will protect the Siberian salmon, a threatened fish species,
and provide a sustainable source of income for local nomadic communities.The project contributes $1 million to help the Taiman
Conservation Fund, a nongovernmental organization, develop a financially sustainable conservation management system for the
Eg-Urr watershed. The plan allows for development of low-impact tourism in this wild and scenic waterway. |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
PROTECTING A CULTURAL ICON
The grasslands of the Ha Tien Plain in southwest Vietnam
represent the last ecosystems of their type in the country and
hold significant biodiversity, including the globally endangered
sarus crane. The world’s tallest flying bird, the crane
is a cultural icon throughout the region, symbolizing long life
and evident in every place of worship.
The grasslands have been subject to rapid conversion to
agriculture, much of it unsustainable. Examples of land use
in the area include 22,000 hectares of failed eucalyptus
plantation and low-yield rice farming. Meanwhile, a rapid
increase in shrimp aquaculture leads to acidic water that is
in constant need of neutralization.
In collaboration with Holcim Vietnam, an IFC client based
in the region, and the International Crane Foundation, IFC’s
Corporate Citizenship Facility supported a land use mapping
and critical natural habitat identification exercise in early
2003. The results of this work were presented in a workshop
to key stakeholders, from which specific conservation
proposals emerged. A fundraising effort is now underway to
allow a detailed feasibility analysis of the proposals. |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
COMMERCIALIZING ENERGY EFFICIENCY FINANCE
Central European countries remain three to five times more inefficient in energy use than their Western European neighbors.
This inefficiency impairs economic competitiveness, creates social pressures, causes air pollution, and poses obstacles to EU
accession. The demand for new, energy-efficient technologies is strong, but there is little capital available. Local financial
intermediaries consider energy efficiency projects high risk because of their novelty and the difficulty in structuring collateral.
To promote such projects, IFC, in partnership with the Global Environment Facility and bilateral donors, has established a
$90 million guarantee facility, including up to $75 million invested by IFC. The facility provides a partial guarantee for loans
made by local financial intermediaries when they invest in energy efficiency projects. This innovative structure will enable IFC
to leverage more than $225 million in private capital investments. IFC launched a similar project in Hungary in 1997 and
began this new initiative in the Czech Republic, Estonia, Latvia, Lithuania, and Slovakia in June 2002.
The goal is to build a sustainable market for financing energy efficiency. The initiative uses a combination of technical
assistance and credit enhancement instruments to enable local financial institutions to develop a profitable business in
energy efficiency lending.
This effort will have significant economic, environmental, and social benefits, and it supports the participating countries’
targets for EU accession. Examples of program impacts in Hungary include investments in projects to upgrade street lighting
in small towns in the poorest parts of the country and to replace outdated, unreliable heating technologies in hospitals. |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
MARKET MECHANISMS THAT REDUCE EMISSIONS
In addition to offering project financing, for eligible projects IFC can help companies increase their income while reducing
environmental impacts. For example, IFC recently committed $15 million in financing to Balrampur Chini Mills Limited, one of
India’s premier sugar companies, to help finance a 20-megawatt cogeneration plant that will produce electricity from the biomass
waste product of its sugar operations. The IFC-Netherlands Carbon Facility is also negotiating to purchase up to 2 million tonnes
of emission reductions from their operations.
Another example of combining conventional project financing and carbon financing to help companies lower costs and
increase efficiency is the El Canadá hydroelectric project in western Guatemala, which will displace about 144,000 tonnes
annually of greenhouse gas emissions that would otherwise be generated through thermal plants. In addition to $27 million in
financing (including a $12 million syndicated loan), IFC collaborated with the sponsors and the Prototype Carbon Fund to arrange
carbon credit financing.
IFC is also promoting the market for greenhouse gas emission reductions by helping companies in which it is not investing
directly. This year the IFC-Netherlands facility struck a C= 15 million deal to purchase 5 million tonnes of emission reductions
from V&M do Brasil, a leading producer of steel tubes in Brazil that uses sustainably produced biomass charcoal instead of coal
in its steel production. Revenues from this sale of carbon credits will be used by the company to continue maintaining its biomass
plantations. IFC also facilitated a one-time sale of 400,000 tonnes of credits by V&M to Toyota Tsusho Corporation of Japan. |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
Commercial Banks Adopt IFC’s Environmental and Social Policies
Through consultation with IFC, ten major international banks have decided to adopt environmental and social monitoring
procedures in their global project finance activities based on IFC and the World Bank’s environmental and social policies and guidelines.
The banks have all agreed to what have become known as the Equator Principles (see box, p. 6). Four more banks have already
signed on, and others are expected to adopt these principles in the coming months.
Banks agreeing to the principles will review potential projects much as IFC does for its own investment activities. These
investment projects will be categorized for environmental and social impact using the same criteria as IFC. Based on this ex ante
categorization, projects will be expected to comply with the requirements for environmental assessments, environmental
management plans, and public disclosure as similarly used in IFC projects. |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
BRAZIL: COMBATING HUNGER AND POVERTY
Although a decade of economic liberalization has given Brazil a better foundation for improving living standards, millions of
people still live on less than $1 a day. The new administration of President Luiz Inacio Lula da Silva has launched Fome Zero
(Zero Hunger), a major campaign to address the issue of social inequality, focusing on food security for poor people and calling
for involvement of the private sector and civil society. IFC is supporting this campaign and rallying the country’s private sector
to participate.
As a first step, the Brazilian government has allocated funds to supply 1.5 million of its neediest families with a monthly
subsidy to buy food. For its part, IFC is granting $300,000 to the Ethos Institute, a nongovernmental organization, and the
Polis Institute, a think tank. These Brazilian partners will create innovative links between businesses and the communities to
be served by the Zero Hunger program.
This IFC-supported project will set up a database to record the needs of more than 900 municipalities and the contributions
being offered by corporate participants. Polis and Ethos will also set up a call center and a Web site where companies
can receive information and be matched with local communities.
IFC has many long-standing Brazilian clients with strong managerial experience and a commitment to social responsibility.
With the expertise of its two local partners, IFC is well positioned to help connect private sector resources with the needs of
Brazil’s poorest communities. This public-private partnership is an important element in advancing the Zero Hunger program. |
| Banks, Insurance, and Diversified Financials |
International Finance Corporation |
IFC AGAINST AIDS
IFC works with clients to address HIV/AIDS in many developing
member countries through the IFC Against AIDS
program.In much of the world,HIV/AIDS is as much a business
issue as a health and humanitarian concern.Workforces
and consumers alike are being ravaged by the virus, with
economic harm likely to extend into future generations.
IFC Against AIDS works with client companies in
high-risk settings to develop specifically tailored tools and
advice that address workforce and community-related issues
stemming from the disease. IFC has also published a “Good
Practice Note on HIV/AIDS in the Workplace,” which
provides general guidance and corporate good practice
examples to a wider audience. Highlights from IFC Against
AIDS activities for fiscal 2003 include:
• Jamaica Public Service Co., Jamaica. IFC provided
guidance to this power company on how to formulate
an HIV policy and develop an action plan to address
HIV/AIDS in the workplace and surrounding communities.
IFC will also provide guidance on implementation.
• Kenya Tea Development Agency,Kenya. IFC provided
terms of reference for a technical assistance project to help
the agency develop an HIV/AIDS awareness, prevention,
and care program for its communities of small outgrowers.
• Mozal, Mozambique. IFC supported the Mozal
Community Development Trust in efforts on women’s
health and voluntary HIV counseling and testing. In
particular,the program will help the trust establish a strategy
for prevention of mother-to-child transmission of HIV.
• MSI, Africa. IFC is helping the mobile telephone
company refine its HIV policy and develop an action plan
to address HIV/AIDS in the workplace and potentially in
surrounding communities. IFC’s Corporate Citizenship
Facility is funding a cost-benefit analysis and examining
the likely impact of providing antiretroviral treatment for
employees as part of the action plan.
• Odebrecht,Angola. Odebrecht, a Brazilian engineering
and construction company, earmarked $1 million of a
$280 million corporate loan from IFC for efforts against
AIDS. In August 2002, IFC and Odebrecht launched an
education, prevention, and care program reaching 30,000
people in the communities near the company’s operations
in Angola. The program places special emphasis on
women’s health and prevention of HIV transmission
from mother to infant and will assess the feasibility of
providing antiretroviral therapy at the company’s sites.
Odebrecht has adopted an HIV/AIDS policy for all its
operations worldwide.
• Promasidor, Africa. IFC provided an overview of the
impacts of HIV/AIDS on businesses to the food and
beverage company’s management. Using a risk assessment
tool that IFC provided, the company evaluated the
relevance of a wellness program for its operations and
decided to place emphasis on its Nigerian operations. |
| Banks, Insurance, and Diversified Financials |
Swiss Reinsurance |
|
Roberts Environmental Center at Claremont McKenna College
W.M. Keck Science Center
925 N. Mills Avenue
Claremont, CA 91711-5916
(909) 621-8190 or (909)621 8698 or (909) 621-8298
FAX (909) 607-1185
emorhardt@cmc.edu
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