4 facts about IDB’s standard on assessment and management of environmental and social risks and impacts

The new Environmental and Social Policy Framework (ESPF), which has been in force since October 2021, emerged as an opportunity to improve and harmonize environmental and social standards within the IDB Group with those of other multilateral organizations, such as the IFC’s Performance Standards on Environmental and Social Sustainability, the World Bank’s Environmental and Social Standards, or EBRD’s Performance Requirements. The ESPF comprises ten Environmental and Social Performance Standards (ESPSs) that describe the requirements that borrowers must meet for IDB-financed projects to be environmentally and socially sustainable.

Within this group of standards, ESPS 1 stands out: Assessment and Management of Environmental and Social Risks and Impacts. ESPS 1 is considered an “umbrella” standard, as it provides the basis for the rest by establishing the importance of assessing, managing and monitoring the environmental and social risks and impacts associated with each project stage, in order to achieve results that are consistent with all ESPF requirements in a timely and adequate manner.

Here are four things you should know about ESPS 1.

1. ESPS 1 provides continuity to the previous safeguard policies

In broad terms, the requirements for assessment and management of environmental and social risks and impacts are similar to those included in the IDB’s previous safeguards policies (OP-703 Operational Policy on Environment and Safeguards Compliance), as our borrowers are still required to conduct an environmental and social assessment of their facilities or activities and take steps to comply with the requirements. These measures, agreed upon between the borrower and the Bank, are part of the legal documents of the operation and constitute an obligation for the borrower.

ESPS 1 also gives continuity to the need to use one or more risk and impact assessment and management instruments, depending on the project, such as environmental and social impact assessments, disaster risk assessments, environmental and social management plans, resettlement plans, indigenous peoples plans, etc.

2. ESPS 1 highlights the need to have a good Environmental and Social Management System

One of the novel approaches of the standard is the use of an Environmental and Social Management System (ESMS) as a tool through which the borrower will ensure that its projects achieve an adequate environmental and social performance that is under constant improvement. The ESMS is the set of processes, resources, roles and responsibilities assigned by the borrower for the adequate management of environmental and social aspects in the project life cycle in accordance with local legislation and with the objectives of the ESPF.

The ESMS comprises seven elements that are necessary for the planning, execution, verification and implementation of the environmental and social requirements of the rest of the standards. You can learn more about the ESMS and its elements in this post:

The seven key elements of an Environmental and Social Management System

3. ESPS 1 underscores the relevance of the environmental and social risks described in the other standards

ESPS 1 emphasizes the importance of identifying and evaluating environmental and social risks related to the requirements of the other standards (ESPS 2 to ESPS 10), particularly on issues such as:

• Human rights: they should be respected, any infringement should be avoided and project-related risks and impacts must be addressed.
• Gender equality: the focus is on identifying and managing the risks of gender-based exclusion and sexual and gender-based violence, which include sexual exploitation, human trafficking and the spread of sexually transmitted diseases. The ESPF also requires the inclusion of people of all gender identities and sexual orientations in consultation processes.
• Non-discrimination and inclusion of vulnerable groups: it is necessary to identify the differentiated impacts on vulnerable people or groups that may be affected by the projects, and to develop and apply appropriate mitigation measures.
• Disaster risk and climate change: risks and impacts associated with natural hazards and climate change, either for the project or exacerbated by it, must be identified, along with opportunities for adaptation measures.
• Safety and health: the safety of both workers and the community are taken into consideration, including specific provisions on the risks and impacts associated with pandemics, epidemics and any spread of communicable diseases caused or exacerbated by project activities.
• Land use and natural resources: potential impacts of projects on local land use patterns, access, food security and land value, and any risk related to conflicts or disputes over land and natural resources are assessed. In addition, any substantial threat to the protection, conservation, maintenance and restoration of natural habitats and biodiversity is considered, as well as those related to ecosystem services and the use of natural resources, including transboundary risks and impacts.

4. ESPS 1 prioritizes proper stakeholder engagement

The systematic approach to stakeholder engagement under the ESPF enables strong, constructive and responsive relationships to successfully manage the social and environmental impacts of projects. The nature, frequency, and level of effort involved in stakeholder engagement can vary considerably and will be commensurate with the risks and impacts of each project. ESPS 1 promotes appropriate redress mechanisms for communities, stakeholders and workers, which include adequate processes to address claims related to gender violence, sexual harassment, discrimination, retaliation, among others.

ESPS 1: plan, do, review and act

ESPS 1 promotes the effective management of environmental and social risks and impacts caused by projects through a systematic process based on the “plan, do, review and act” cycle. The goal is to achieve an appropriate environmental and social performance in which the projects not only focus on the mitigation of risks and adverse impacts, but rather achieve social and environmental sustainability by applying the principle of “doing good” beyond just “doing no harm.”