NGOs have welcomed updates to the International Finance Corporation’s (IFC’s) guidelines for sustainable investment, which they say increase transparency.

Last week, the IFC released details of its new Sustainability Framework, which will come into effect in 2012. [http://www.ifc.org/ifcext/policyreview.nsf#SF]

The framework includes the Performance Standards, which set the environmental and social standards projects must meet to receive financing from the institution. The Performance Standards also underpin the Equator Principles, voluntary sustainability guidelines that commercial banks apply to project finance.

William Bulmer, IFC director for environment, social and governance, said: “In addition to supporting IFC’s own clients, the Performance Standards have become a global benchmark for sustainable business. We recognise this and have welcomed the very positive feedback from external stakeholders during our update process.”

Raymond Offenheiser, president of Oxfam America, said: “Although we would have liked to see stronger human rights language in the policies, we hope that the IFC’s new requirements on community consent and transparency will raise the bar for better social and environmental performance, and set a precedent for international financial institutions, export credit agencies, companies and governments to follow.”

The Bank Information Center, a Washington, DC-based NGO that advocates for the World Bank Group to improve its transparency and accountability, welcomed some of the changes the updated Sustainability Framework will usher in. For example, it requires developers of extractive projects to disclose their contracts with host governments, as well as project-level information on the environmental and social impacts of the projects supported by the bank.

Another change praised by development NGOs is a new requirement for clients of the IFC to secure “free, prior and informed consent” from indigenous communities when they may be adversely affected by the project.

“The revised IFC Sustainability Framework has the potential to help indigenous people get their fair share of natural resource wealth, particularly in emerging economies and conflict-prone countries where Australian mining companies are increasingly doing business,” said Andrew Hewett, executive director of Oxfam Australia.

Another change will require companies to identify gender-specific environmental and social risks and impacts.

Jess McCabe