Why do we still have issues when IFC standards are applied within the EU? Because developers think that the EU has stringent requirements that should be sufficient to pass the rigorous IFC project appraisal. But this is often not the case.. Let me explain.
The EU directives that are relevant for environmental and social performance include:
Existing Directives:
· Environmental Impact Assessment (EIA) Directive (2011/92/EU, amended by 2014/52/EU)
· Strategic Environmental Assessment (SEA) Directive (2001/42/EC)
· Habitats Directive (92/43/EEC)
· Birds Directive (2009/147/EC)
· Water Framework Directive (2000/60/EC)
· Waste Framework Directive (2008/98/EC)/ Directive 2018/851/EU (amending the Waste Framework Directive) *2023 Amendment proposed to focus on textiles waste
· Industrial Emissions Directive (2010/75/EU)
· Seveso III Directive (2012/18/EU) on major accident hazards
· Non-Financial Reporting Directive (2014/95/EU)
Planned or Recent Directives:
· Corporate Sustainability Due Diligence Directive (proposed in 2022)
· Corporate Sustainability Reporting Directive (CSRD) (adopted in 2022, to replace Non-Financial Reporting Directive)
· EU Deforestation Regulation (adopted in 2022, to come into effect in 2024)
Other applicable directives mentioned less frequently:
· Directive 2014/24/EU: This directive relates to public procurement and it emphasises sustainable practices in supply chains, requiring public bodes to consider environmental aspects when procuring goods and services.
· Regulation No 1143/2014 of the European Parliament and of the Council on the prevention and management of the introduction and spread of invasive alien species.
· Equal Treatment Directive (2000/78/EC) – relevant due to indirect impacts on supply chain by promoting equal treatment in employment.
While compliance with these is a regulatory requirement for many companies, the directives often have a different scope and require less from companies when compared with the IFC PSs. So let’s see how they compare. It is a long list so i included them as expendable windows for easy use. If you want to spend 7 minutes watching me do the research and listen to some good beats, follow the link to YouTube.
EU EIA Directive vs. IFC PSs
Similarities:
- Both the IFC Performance Standards and the EU EIA Directive emphasize the importance of assessing the social and environmental impacts of projects, ensuring compliance throughout the project lifecycle.
- Stakeholder engagement is a key requirement in both frameworks. IFC stresses inclusive engagement with affected communities, while the EU EIA Directive mandates public participation in the assessment process.
Differences:
1. Scope and Purpose:
- IFC Performance Standards: Focus on private sector projects, providing a comprehensive framework to manage environmental and social risks across project lifecycles. They include specific standards addressing labour rights, community health, and biodiversity.
- EU EIA Directive: Primarily targeted at public and private projects that could significantly impact the environment. It strictly governs the process of EIA with emphasis on procedural compliance.
2. Stakeholder Engagement:
- IFC: Requires a Stakeholder Engagement Plan that is tailored to the risks and impacts of the project, emphasizing informed consultation and participation.
- EU EIA Directive: While it also mandates public participation, the specifics on engagement methods are less pronounced compared to the IFC's broader requirement for continuous engagement with affected groups.
3. Performance Depth:
- IFC Performance Standards: Include specific requirements regarding labour conditions, resource efficiency, community health and safety, which go beyond mere environmental considerations.
- EU EIA Directive: Focus primarily on environmental impacts and does not delve into social performance metrics to the extent of the IFC standards.
4. Flexibility and Applicability:
- IFC: Applies to projects in emerging markets under diverse financial institutions and is adaptive to a wide variety of contexts, including private investments.
- EU EIA Directive: Is more prescriptive and regulatory, tailored largely for EU member states without the same level of adaptability for varying contexts.
Detailed Comparison:
- Environmental Assessment Requirements:
- IFC requires a comprehensive Environmental and Social Impact Assessment (ESIA) and the establishment of an Environmental and Social Management System (ESMS).
- EU EIA Directive mandates the completion of an EIA report, assessing overall environmental impact with prescribed content and format.
- Completion Audits:
- The IFC outlines the need for periodic performance reviews to ensure compliance with stakeholder engagement and environmental management practices.
- The EU EIA does not explicitly mention ongoing audits; it focuses on compliance checks primarily at the initial EIA and permitting stages.
This comparison highlights how both frameworks impose significant requirements for managing environmental and social impacts but differ in their scope, flexibility, and specific procedural methodologies.
EU Habitats Directive vs. IFC PSs
EU Birds Directive vs IFC PS6
EU Water Framework Directive vs. IFC PSs
EU Waste Framework Directive vs IFC PSs
EU Non-Financial Reporting Directive vs. IFC PSs
Main Overlaps between IFC Performance Standards and CSRD/CSDDD
EU Deforestation-Free Regulation vs. IFC PSs
Down the rabbit hole – how will the EUDR impact global supply chains?
EU Industrial Emissions Directive vs. IFC PSs
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