Equator Principles Financings – Mitigating Potential Legal Risks for Canadian Banks

Alison FitzGerald and Michael Torrance of Norton Rose Fulbright Canada discuss the legal risks for Canadian Financial Institutions associated with the recently revised Equator Principles (“EP”), whose third iteration (“EP III”) took effect on June 4th, 2013. The new EP appears to have caused little stir in the Canadian financial services sector or the legal community that serves it. The muted reaction might lead one to believe that EP III presents no significant legal risks for financial institutions (“FIs”). Alternatively, it may suggest that many of the risks inherent to the EP are poorly understood. This article looks at the EP framework and innovations to this framework adopted in EP III. We consider the potential legal risks presented by EP III for Canadian FIs and their clients, and offer some simple strategies to mitigate these risks.

Escalating Social Risk for Mining Sector

Canada's CSR Counsellor for the Extractive Sector, Marketa Evans, writes in the Canadian Mining Journal about social risks affecting the mining industry globally.  In the management of social risk, including the risks of community conflicts and social opposition, Ms. Evans states that the industry has so far taken more limited measures than have been taken for environmental risks, even though increasing evidence suggests that social risk constitutes a material risk to mining operations. Full article can be read here.

New Case May Affect Whether Equator Principles Adoption Creates a Global Duty of Care on Canadian Banks

The recently revised Equator Principles (EP), whose third iteration (“EP III”) took effect on June 4th, 2013, appears to have caused little stir in the Canadian banking legal counsel community. Many legal counsel have never even heard of the EP, even those who structure the deals that the EP apply to. The muted reaction might lead one to believe that the new EP or its predecessors present no significant legal risks for the industry. Alternatively, it may suggest that many of the risks inherent to the EP are poorly understood and risk becoming the next “black swan” that catches legal counsel flat-footed. A case currently being considered in an Ontario court, Choc v. Hudbay 2013 ONSC 1414 could have bearing on those questions and affect the potential legal risks of EPFI and is worth monitoring by banks and their counsel.

Consultants to Banking Industry Come Under Scrutiny

The New York Times reports that regulatory scrutiny of the consulting industry is intensifying.  The US Government is investigating the consulting industry which, as one government regulator says, has been infected by an ‘I’ll scratch your back if you scratch mine’ culture and a stunning lack of independence.” A senior federal banking regulator said he was exploring new ways to curb the use of consultants by the banking industry. These developments should give Equator Principles Financial Institutions (EPFI) pause when deciding whether to work with consultants to advise on Equator Principles compliance. As we have discussed, no legal professional privilege attaches to the advice of consultants, which could be very valuable in the event of a regulatory investigation.

Corporate liability for human rights violations in Canada?

Can a Canadian parent company with a subsidiary operating in a foreign jurisdiction be liable for human rights violations in the foreign jurisdiction that occur at the level of the subsidiary? Janne Duncan, Michael Torrance and Janet Howard discuss a recent decision in which a Canadian court has allowed this issue to proceed to trial. Whatever the outcome at trial where issues of liability will ultimately be determined, one thing is clear: international public expectations are changing, and directors and officers of Canadian companies need to be aware of the potential risk of claims by foreign plaintiffs seeking redress for alleged harm committed beyond Canada’s borders.

UN Global Compact: Canadian launch of the Guiding Principles

Janne Duncan writes about the the UN Global Compact (UNGC) Canadian launch this year and how it fits into related sustainability initiatives of the Government of Canada.

Export-Import Bank Sued by Environmental Groups for Coal Export Loan Guarantee

Columbia Law School's Climate Law Blog discusses a recent lawsuit by the NGO Earthjustice against US Ex-Im, regarding the Defendant's alleged failure to conduct an environmental assessment for a coal production related loan.

First trial and conviction under Canadian corruption of foreign officials law

Stephen Natrass writes about the the first trial under Canada's Corruption of Foreign Public Officials Act (CFPOA) which recently concluded with a conviction on August 15, 2013.

Increased Risks of Liability for International Human Rights Claims Brought in Canada

On July 22, 2013, the Ontario Superior Court of Justice in Choc v. Hudbay Minerals Inc. 2013 ONSC 1414 (the “Hudbay Decision”) dismissed a preliminary motion of the Defendants, Canadian mining company, Hudbay Minerals (Hudbay), thereby allowing the lawsuit against the company to proceed. The claim, which is yet to be proven, alleges Hudbay is responsible for human rights abuses allegedly committed by mine security personnel at Hudbay’s wholly owned and controlled subsidiary, Compania Guatemala de Niquel (CGN), in eastern Guatemala.

As noted, the matter has yet to proceed to trial and none of the allegations raised have yet been proven. That being so, this case has important implications for Canadian businesses operating abroad. In essence, the finding means that a complaint

Business and Human Rights: The State of Play

Ruth Cowley, Jon Hari and Stuart Neely discuss the "state of play" of business and human rights.

New Sustainability Rules Requiring Legal Strategy Rethink

This article considers the legal implications of new rules of the recently revised Equator Principles (EP), whose third iteration (“EP III”) took effect on May 14th, 2013. The Equator Principles is a framework agreed upon by 79 global financial institutions to identify, assess and manage environmental and social risk in certain types of financings around the world.  The goal is to provide an overview of the EP III with discussion of steps that counsel to EP Financial Institutions (EPFI) might consider to minimize potential legal risks and update contractual documentation.

Human Rights Due Diligence in International Finance

Revisions to the Equator Principles (EP) have created new requirements for businesses to conduct human rights due diligence in order to qualify for financing from 79 of the world’s largest financial institutions. The EP apply globally to all project financing with a value of over $10 million and to certain types of corporate loans, bridge loans and project finance advisory services. This development brings the importance of human rights due diligence beyond reputational risk management and ties it directly to access to capital for many companies. It also significantly increases the significance of human rights considerations for the financial industry.

Corporate Criminal Liability for Bribery of Foreign Public Officials by Employees

This article looks at the nature of corporate liability for corrupt acts of employees in international business operations, in the context of the Canadian anti-bribery legislation, the Corruption of Foreign Public Officials Act [CFPOA].

U.S. to Suspend Trade Privileges With Bangladesh Over Labour Safety Standards

The NYT reports that the Obama administration on Thursday will suspend trade privileges for Bangladesh over concerns about safety problems and labor rights violations in that country’s garment industry, according to administration and Congressional officials. This follows a factory building  collapse there in April, killing 1,129 workers, and a factory fire killing 112 workers last November. See full article here.

Canada to mandate disclosure of payments to foreign governments

Canada has announced its intention to introduce new legislation mandating the disclosure of payments made
by mining companies to domestic and foreign governments. This article provides an overview of the new requirements.

Managing Lender Liability in Equator Principles Implementation - Regulatory Offences

The Equator Principles III ("EP III") states that: "As financiers and advisors, we work in partnership with our clients to identify, assess, and manage environmental and social risks and impacts in a structured way, on an ongoing basis." It is well known that lender liability for environmental and social matters may arise from operational or managerial control by a lender over a project, or where a lender aids and abets regulatory offences of their borrowers. This article considers the risks associated with regulatory prosecutions of an Equator Principles Financial Institution (EPFI), acting as auditors and possibly co-managers of environmental and social risk management of their borrowers. We also consider management strategies, including the role of legal professional privilege. This article is part three of a three part look at managing lender liability in EP implementation.  The first article looked at post-loan legacy liabilities, and the second at third party beneficiary rights in the EP context.

Managing Lender Liability in Equator Principles Implementation - Third Party Beneficiary Rights in Contract Law

I read an interesting and provocative journal article by Marissa Marco, published in the Fordham International Law Journal in 2011, entitled "Accountability in International Project Finance: The Equator Principles and the Creation of Third-Party Beneficiary Status for Project-Affected Communities".  The article discusses the law on third party beneficiary rights under US contract law and considers whether the provisions of the Equator Principles (EP) relating to Affected Communities might create enforceable rights for those communities under those principles.

This article will discuss this issue and suggest a risk management strategy for EP Financial Institutions (EPFI - i.e. EP signatories) addressing and managing such risks in Equator Principles implementation.

Managing Lender Liability in Equator Principles Implementation - Legacy Liabilities (Post-Loan following Repayment or Default)

This post will consider a rather controversial topic - the possible existence of liabilities linked to Equator Principles (EP) implementation that may extend beyond the life of the underlying loan or activity to which the EP were originally applied.

The purpose will be to consider whether there are plausible legacy liability risks affecting EP implementation and, if so, how such risks could be managed by Equator Principles Financial Institutions (EPFI) before they materialize.

Please note that, as this is a blog post, the analysis is high level and intended to raise points for reflection and thought rather than to be an exhaustive review of the law on these subjects. Hopefully it raises some useful considerations and I am very much open to comment (and criticism) of the topic and ideas put forward. The goal is to generate a dialogue that may help push the boundaries of our understanding of these issues.

New York Times: U.S. Retailers See Big Risk in Safety Plan for Factories in Bangladesh

The New York Times reports that American retailers remain sharply opposed to joining an international plan to improve safety conditions at garment factories in Bangladesh as their European counterparts and consumer and labor groups dismiss the companies’ concerns about legal liability. Full article here.

Final Equator Principles III and the August 2012 Draft - What are the differences?

Some of the main differences are:

1. Elimination of the High Income OECD threshold for application of the IFC Performance Standards in the final version. Now there is a concept of "Designated Countries" which basically has the same effect but is not based on high income status;

2. Only a summary of an ESIA rather than full disclosure of the ESIA and ESMP is required in the final version;

3. In the final version only a "majority" of a corporate loan meeting the appropriate thresholds must be tied to a project, that caveat wasn't in the draft;

4. New emphasis in principle 3 that compliance with relevant host country laws, regulations and permits are to be address "in the first instance" in Assessments;

5. Some changes to Appendix B setting out EPFI reporting requirements;

6. More specific reference to the Guiding Principles on Business and Human Rights due diligence requirement.

Update: Equator Principles III is approved and launched - new trends and a strategy rethink

The Equator Principles (EP) is an agreement amongst 76 global financial institutions (known as EP Financial Institutions or "EPFI") to apply environmental and social standards to certain investment decisions. The third iteration of the EP (EP III) was released on May 14, 2013 and will take effect (with certain transition allowances) on June 4, 2013.

The release of EP III follows a major revision of the IFC Performance Standards on Environmental & Social Sustainability in 2012 (IFC Performance Standards), a set of guidelines that is incorporated by reference into the EP framework. Together, these changes mark an important evolution in best practice in environmental and social risk management of particular importance for both bankers and those seeking access to capital.

This article reviews the new ground rules of environmental and social risk management and considers some new trends that may begin to emerge. We also consider what risks and opportunities arise from these developments that should be considered by both financiers and those seeking finance who must comply with these frameworks to meet their business goals.

Anna Kirkpatrick: Kiobel v Shell - What the decision says and what it left out

Anna Kirkpatrick of Norton Rose in London England discusses the recent US Supreme Court decision in Kiobel v. Shell, and the implications of the decision for business and human rights expectations and litigation in the United States. 

This decision is particularly of interest for Equator Principles (EP) financings in light of the human rights due diligence requirements of the new IFC Performance Standards on Environmental and Social Sustainability, incorporated by reference into the EP.

Read on for Anna's discussion of what the decision says and what remains to be determined in US law.

Reflections on Migrant Labour in China - Application of IFC Performance Standards and Equator Principles

Reading a recent blog post on migrant workers in China made me reflect on the implications for Labour and Working Conditions requirements of the Equator Principles. My blog entry considers what the IFC Performance Standards on Environmental and Social Sustainability say about the topic.

Equator Principles in Brazilian Transactions

An excellent article by Brazilian lawyers Antonio Mazzuco and Jorge Khauaja published in the International Financial Law Review. The authors see an inevitable trend towards greater adoption of EP-like environmental and social standards, by Brazilian financial institution and government.  The article also touches on the interrelationship between environmental and social standards like the EP and legal obligations on the same topics.

Equator Principles Banks: The New Global Regulators of Environmental and Social Performance

So, you are confident you can make a business case to your financier as to why they ought to invest in your mining project. You are also sure your project will meet regulatory requirements of local governments. It is a good start, but thanks to a paradigm shift in global regulation of mining activity, it is probably not enough. To get a project off the ground, many mining proponents will also need to demonstrate compliance with the environmental and social regulations of their financiers in accordance with the Equator Principles (EP).

Human Rights Due Diligence and the Equator Principles

The 2012 IFC Performance Standards (as referred to in the Equator Principles) states that in “limited high risk circumstances” it may be appropriate for the Client to complement its environmental and social risks and impacts identification process with specific human rights due diligence.  This article will describe these requirements which have significance for the Equator Principles.

Addressing Substantial Legal Restrictions on Freedom of Association in Equator Principles Projects

Freedom of Association may be substantially restricted by law in some countries. This reality creates complex challenges for Equator Principles (EP) implementation, since the requirements of the Equator Principles require compliance with host country laws and in some cases addressing the overlapping and interrelating requirements of the IFC Performance Standards on Environmental & Social Sustainability (IFC Performance Standards). 

As we discuss in this article, the IFC Performance Standards establish standards for the protection of Freedom of Association rights, even in circumstances where the law substantially interferes with those rights.

Climate Conversations - Norway’s government pension fund divests from palm oil producers

Norway’s government pension fund – one of the world’s largest – has withdrawn US$314 million in investments from a string of companies that it says produce palm oil “unsustainably”.

As AlertNet reports, in March, the Norwegian Government Pension Fund Global released its 2012 Annual Report announcing that it had sold its stakes in 23 of the world’s largest palm oil companies, reducing its investments in the Indonesian and Malaysian palm oil industry by more than 40 percent.

Listed Magazine: "Shifting The Equator" by Sandra Odendahl

Sandra Odendahl, director of corporate sustainability at RBC writes in Listed Magazine that Equator Principles banks use to assess the social and environmental impact of major resource-based projects they finance might soon look very, very different. 

Article Note, these views are Sandra's own, not necessarily those of RBC.

To Compliance and Beyond: Getting the Most From Global Incident Investigation

Michael Tooma and Michael Torrance write about global incident investigation in this month's Mining People and Environment magazine. For more information on this topic see my earlier blog post here on global incident investigation.

Keewatin v Ontario: Court of Appeal affirms Ontario’s unilateral ability to take up treaty lands

Jocelyn Kearney of Norton Rose, one of the authors of IFC Performance Standards on Environmental and Social Sustainability: A Guidebook, writes about a recent key decision of the Ontario Court of Appeal that will have implications for the understanding of indigenous rights and the duty to consult in Canada. This development should be of interest to Equator Principles banks grappling with the meaning of Free Prior and Informed Consent, which is now part of the IFC Performance Standards requirements, which must be interpreted with consideration to the well developed legal concepts from which its meaning derives.

International Financial Law Review: The Sustainability Case Under the Equator Principles

The third iteration of the Equator Principles (EP) framework will be released in the first quarter of 2013. Like its predecessors, the revised framework will have substantial implications for billions of dollars in international financings. It will also reinforce the importance of environmental and social reviews in addressing legal and reputational risks facing Equator Principles Financial Institutions (EPFI). It makes it timely to reconsider the critical role legal counsel have in EP implementation.  This article examines the "sustainbility case" approach to Equator Principles implementation and the role of legal and regulatory oversight of that process. See article link HERE

What's the Goal of the Equator Principles: Managing Credit Risk or Regulating "Do No Harm"? The World Bank CAO Opines

The World Bank's Compliance Advisor Ombudsman (CAO) completed a Compliance Audit of IFC's Financial Sector Investments, releasing a report on October 10, 2012 (CAO Audit). The CAO Audited a Sample of IFC Investments in Third-Party Financial Intermediaries.  One critique of the IFC's own approach to implementation of the IFC Performance Standards on Environmental and Social Sustainability (IFC Performance Standards) was the application by the IFC of two potentially contradictory aims in its environmental and social diligence: "Do No Harm" and "Credit Risk". The same contradictory aims affect the application of the Equator Principles (EP) by EP Financial Institutions (EPFI). 

This article argues that for the sake of clarity and effectiveness, the regulatory nature of the EP and IFC Performance Standards must be fully recognized and permeate the EP implementation process, while credit risk objectives should be considered quite secondary to the real dynamic of EP implementation as a private regulatory process.

Alberta Oil Magazine: Bay Street could be where the next battle over the oil sands is waged

Statoil's Manager of Environment and Climate, Dan Zilnik writes in Alberta Oil magazine: "...the bulk of investment in the oil sands will likely come from large publicly traded companies who can secure the massive financing necessary to make significant oil sands investment. Many of these companies take on debt to finance their activities. It is of little surprise that through their funding of debt, three of the “Big Five” Canadian banks are the largest investors in the oil sands."

The article goes on to say:

"...Advocacy organizations have long recognized the importance of the financial sector in the development of megaprojects which they oppose, traditionally mines and dams. These same organizations have set their sights on the oil sands, which means engaging the Big Five.
The Rainforest Action Network has done extensive advocacy with Canada’s banks, including commissioning reports on the environmental and economic impacts on investing in renewables versus oil sands.

Just as importantly, financial institutions have begun considering the environmental and social impacts of their investments. All of the Big Five have signed onto the Equator Principles, a credit risk framework for managing environmental and social risk in project finance transactions. All of the Big Five report their carbon emissions and have stated ambitions to reduce their greenhouse gases.
As the context for oil sands investment evolves, expect the road to northern Alberta to start on Bay Street. Expect Canada’s Big Five to continue strengthening their understanding of the environmental and social implications of their investments. The oil sands debate has been fraught with mine truck moments, and don’t be surprised if the next one happens on Bay Street."

CAO Compliance Audit of IFC's Financial Sector Investments

On February 5, 2013, the World Bank Compliance Advisor Ombudsman (CAO) released its audit of IFC's financial sector investments, together with IFC's official response.

• The CAO Audit of a Sample of IFC Investments in Third-Party Financial Intermediaries, October 10, 2012 can be found here.
   
• The IFC's Response to the Report on Audit of a Sample of IFC Investments in Third-Party Financial Intermediaries, January 31, 2013 can be found here. 


• The CAO Appraisal of IFC's Investment Projects in the Financial Sector, June 27, 2011 report can be found here.

The key CAO findings summarized in this post are derived from the CAO's press release. 

I will discuss these findings along with the IFC's approach to environmental and social risk management in Financial Intermediary relationships in future posts. Read on for the summary of the report...

World Bank Compliance Advisor Ombudsman 2012 Annual Report

The Compliance Advisor Ombudsman (CAO) of the World Bank, which oversees implementation of the IFC Performance Standards on Environmental and Social Sustainability for the IFC and MIGA, released its 2012 Annual Report. The Report provides an overview of CAO's work in the busiest year for the office since it was established in 1999. CAO has seen a consistent increase in requests for its services, and handled 33 cases during the year through its dispute resolution and compliance functions. This year's report focuses on outcomes delivered by CAO in FY2012, in addition to a summary of outreach activities, M&E findings, and advisory work.

Laws against bribery have global reach

In this article we look at anti-corruption and bribery laws and consider their global reach, with particular focus on the recently updated Corruption of Foreign Public Officials Act (CFPOA) of Canada.

Beefing up Canada’s anti-corruption legislation

On February 5, 2013, broad amendments to the Corruption of Foreign Public Officials Act (CFPOA) were tabled in the Senate through Bill S-14, which will effectively bring Canada’s anti-corruption regime more closely in line with the US Foreign Corrupt Practices Act (FCPA) by creating a “books and record” offence, and the UK Bribery Act by eliminating facilitation payments. Bill S-14 may move quickly through both the Senate and the House of Commons if the bill is given priority by the Senate.

Technical Revision of the World Bank Group Environmental, Health, and Safety Guidelines

The World Bank Group has begun a three-year process to review and update its Environmental, Health and Safety (EHS) Guidelines. More information can be found on the International Finance Corporation (IFC) website HERE.

The EHS Guidelines are technical reference documents with general and industry-specific examples of Good International Industry Practice (GIIP). They contain the performance levels and measures that are normally acceptable to the World Bank Group, and that are generally considered to be achievable in new facilities at reasonable costs by existing technology. They are used by the World Bank, IFC and Multilateral Investment Guarantee Agency (MIGA).

PDAC: Community demands of mining companies to increase

Reporting from the PDAC conference in Toronto, the Mining Journal published the following this week:

Community demands of how mining companies share the economic benefits from natural resources will continue to increase, according to the International Finance Corporation (IFC), the World Bank’s private lender.

The warning came from Tom Butler, the global head of mining at IFC who was speaking at the Prospectors & Developers Association of Canada 2013 convention in Toronto. Butler said the mining sector had done a great deal in managing social risks, but indigenous communities would expect more in the future.

The Equator Principles and Performance Standard 6 on Biodiversity Conservation - An Evolving Concept with Broad Implications

Performance Standard 6 of the IFC Performance Standards on Environmental and Social Sustainability (IFC Performance Standards) deals with the topic of Biodiversity Conservation and Sustainable Management of Living Natural Resources.  Performance Standard 6 has been the focus of a lot of attention and industry research with significant implications for the Equator Principles (EP) and EP Financial Institutions (EPFI) and their clients (Clients). This post discusses some of these developments and their implications, with reference to guidance from a chapter on Performance Standard 6 by Richard King and Lucas Thacker in the book IFC Performance Standards on Environmental and Social Sustainability: A Guidebook, published by Lexis Nexis in 2012.

OHS and Environmental Incident Investigations: Best Practice in Equator Principles Compliance

Industries like mining and energy know all too well that a health and safety disaster can cost shareholders millions and create untold legal and reputational liabilities. What may not be so well known is that disasters are often averted, not through prescient foresight, but by acting on the warning signs that precede most major health and safety incidents. Those warning signs are identified through one of the most potent tools in the occupational health and safety (OHS) arsenal: incident investigation.

This article discusses incident investigation in the context of mining companies operating in emerging markets, possibly seeking to comply with the requirements of the Equator Principles and IFC Performance Standards. To this end, we introduce a new process for investigation pioneered by OHS expert Michael Tooma in Australia, called the Positive Incident Investigation.

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Grievance Mechanisms and the Equator Principles

Principle 6 of the Equator Principles (EP) requires that, for all Category A and B projects, the borrower must create a “grievance mechanism” as part of the Environmental and Social Management System (ESMS). A grievance mechanism must be designed to receive and facilitate resolution of concerns about the project’s environmental and social performance.

This article will discuss the Grievance Mechanism requirement in the EP, including as set out in the IFC Performance Standards on Environmental and Social Sustainability (IFC Performance Standards).

Making the Sustainability Case: The Convergence of Independent Reviews and Legal Risk Management in Equator Principles Implementation

The third iteration of the Equator Principles (EP) framework will be released in the first quarter of 2013. The revised framework will, like its predecessors, have substantial implications for billions of dollars in international project financings. It will also reinforce the importance of environmental and social reviews in addressing legal and reputational risks facing Equator Principles Financial Institutions (EPFI). This article highlights the critical role legal counsel can (and should) play in EP implementation - particularly in the independent review process required by Principle 7.

Independent Review Requirements in Equator Principles III

The requirement for "independent reviews" has been strengthened in the last draft of the EP III.  This means that Equator Principle Financial Institutions (EPFI) will need to be more cognizant of how they conduct such reviews and who they choose to do them.  The final draft of the EP III is set to be released in the first quarter of 2013.

Seminar Invitation: Equator Principles III - The New Benchmark for Sustainable Finance in Emerging Markets

Equator Principles III (EP III) is set to be released in the first Quarter of 2013. EP III is an agreement amongst global financial institutions - including major financial institutions in Australia and Asia - to apply environmental and social standards to project financing. To RSVP CLICK HERE

Based on the practices of the International Finance Corporation of the World Bank, these principles set the industry gold standard for environmental and social sustainability, particularly in emerging markets like Indonesia, Myanmar, Papua New Guinea and the Peoples' Republic of China.

Our seminar examines the new EP III and its implications for companies looking for financing and for their financiers. How can you comply more efficiently? What is expected and how do they affect you?

This seminar features a panel that includes a representative from the Export Finance and Insurance Corporation (EFIC) and the lead author of the first comprehensive book on the IFC Performance Standards. The session will provide an essential guide on these issues, with a practical orientation for bankers and those seeking access to capital.

Venue: Norton Rose Australia Level 18 Grosvenor Place 225 George Street Sydney

Information: 5:15pm registration 5:30pm seminar begins 7:00pm seminar ends with networking drinks to follow
Norton Rose hosts: Tessa Hoser, Partner Chris Redden, Partner Michael Torrance, Senior Associate

Enquiries: Lynette Shelley, 02 9330 8935

To RSVP CLICK HERE

Legal practitioners can claim 1.5 CPD points in the Substantive Law category for attendance

Understanding "Consent" in Free Prior and Informed Consent (FPIC) of Indigenous Peoples - Implications for the IFC Performance Standards and Equator Principles

This article considers the meaning of "consent" in Free Prior and Informed Consent (FPIC) applied to an Equator Principles governed project where the IFC Performance Standards on Environmental and Social Sustainability (the Performance Standards) apply.  The contents are derived from a chapter by Pierre-Christian Labeau in the book IFC Performance Standards on Environmental and Social Sustainability: A Guidebook.

Good Practice Note on Cumulative Impact Assessment and Management for the Private Sector in Emerging Markets

IFC is preparing a Good Practice Note on Cumulative Impact Assessment and Management for the Private Sector in Emerging Markets, with the intention of providing practical guidance to companies investing in emerging markets to improve their understanding, assessment, and tools to manage cumulative environmental and social impacts associated with their projects or business activities.

More information on the external consultation process can be found here.  A link to the draft Good Practice Note can be found here.

Sample Chapter Excerpt - "IFC Performance Standards on Environmental and Social Sustainability: A Guidebook"

Here is a link to a chapter sample for the new Guidebook, "Chapter Two, Performance Standard Two: Labour and Working Conditions".  For more information on the book and to order click here.

IFC Performance Standards Mitigation Hierarchy and the Important Role of "Offsets" in Sustainable Development

A primary focus of the environmental and social management program required by the Equator Principles and Performance Standard One of the IFC Performance Standards on Environmental and Social Sustainability (IFC Performance Standards) is mitigation of identified risks, along with the implementation of performance improvement measures. To this end, Clients are expected to design a mitigation approach that follows a structure — referred to as a “hierarchy” — of avoidance,minimization and compensation or offset.  While offset may be the least desirable mitigation strategy, it has a very important role to play in the implementation of the IFC Performance Standards and the promotion of sustainable development.

Kearney & Labeau: Yukon Court of Appeal (Canada) confirms that “open-entry” mining system does not preclude the application of the duty to consult

In December 2012, a three-judge Court of Appeal for Yukon decided unanimously that the recording of a mineral claim by the Mining Recorder, pursuant to Yukon’s Quartz Mining Act (the Act), triggers the duty to consult. Furthermore, the court held that merely providing notice of recorded claims to affected First Nations was not necessarily sufficient to discharge the government’s obligation to consult. The decision has significant implications for the mining and prospecting system in Yukon, and potentially for other open- or free-entry systems in Canada.  This case also has implications for our understanding of FPIC, a requirement of the IFC Performance Standards, which is analogous to the consultation obligations of highly developed legal regimes like Canada.