Four Things You Should Know about the Standard for the Evaluation and Management of Environmental and Social Risks and Impacts

The new Environmental and Social Policy Framework (ESPF), in force since October 2021, represents an opportunity to improve and harmonize the IDB Group’s environmental and social standards with those of other multilateral organizations such as the International Finance Corporation’s Performance Standards on Environmental and Social Sustainability, the World Bank’s  Environmental and Social Standards, and the Performance Requirements of the European Bank for Reconstruction and Development (EBRD),  among others. The ESPF establishes 10 Environmental and Social Policy Standards (ESPS) that outline the requirements that must be met by borrowers to ensure that projects financed by the IDB are environmentally and socially sustainable.   Noteworthy among the group of standards is ESPS 1: Evaluation and Management of Social and Environmental Risks and Impacts. ESPS 1 is considered to be an “umbrella” standard because it serves as the basis for the other standards in establishing the importance of evaluating, managing, and monitoring the environmental and social risks and impacts associated with each project stage, with the aim of achieving results consistent with all of the ESPF standards in an acceptable manner and time frame. In what follows, we’ll tell you four things that you should know about ESPS 1.

1.    ESPS 1 Provides Continuity with Previous Safeguard Policies

In general terms, the requirements for the evaluation and management of environmental and social risks and impacts are similar to those that we already require in the application of previous safeguard policies (OP-703 Operational Policy on Environment and Safeguards Compliance and Guidelines). Our borrowers are already required to carry out an environmental and social evaluation of their facilities or activities and adopt measures to meet the relevant requirements. Those measures, agreed upon between the borrower and the Bank, form part of the legal agreements of the operation and the complementary documentation, as applicable, and constitute an obligation on the part of the borrower.   

ESPS 1 also provides continuity in terms of the need to use one or more instruments for the evaluation and management of risks and impacts, depending on the project. These instruments include environmental and social impact evaluations, disaster risk evaluations, environmental and social management plans, resettlement plans, and plans for indigenous communities, among others.

2. ESPS 1 Points to the Need for an Effective Environmental and Social Management System

One of the new areas of focus of the standard regards the use of the Environmental and Social Management System (ESMS) as a tool that will enable the borrower to achieve a satisfactory environmental and social performance and continually improve it. The ESMS is understood as a set of processes, resources, roles, and responsibilities directed to the borrower for the satisfactory management of environmental and social aspects during the project life cycle, in line with local legislation and with the objectives of the ESPF.

The ESMS consists of seven elements that are necessary for planning, execution, verification and action regarding the environmental and social requirements of the rest of the standards. You can learn more about the ESMS at the following link:

The seven key elements of an Environmental and Social Management System

3. ESPS 1 Highlights the Relevance of Environmental and Social Risks Described in 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), with a particular focus on the following topics:

• Human rights: Being respectful is mandated, including avoiding infringing on human rights and addressing human rights risks and impacts in projects.
• Gender equality: Aims to identify and manage the risks of gender-based and sexual and gender violence, including sexual exploitation, human trafficking, and the spread of sexually transmitted diseases, and requires the inclusion of persons of all gender identities and sexual orientations in consultation processes.
• Non-discrimination and the inclusion of vulnerable groups: Requires identifying the different impacts on vulnerable people or groups that can be affected by projects, designing and applying appropriate mitigation measures.
• Disaster risk and climate change: Requires identifying the risks and impacts associated with natural threats and climate change, whether caused or exacerbated by the project, and the opportunities for adaptation.  
• Security and health: The security of both workers as well as the community are taken into account, including specific provisions regarding risks and impacts linked to pandemics, epidemics, and any other contagion of transmissible disease caused or exacerbated by project activities.
• Land use and natural resources: Potential impacts of projects are evaluated in terms of local land-use patterns and access to them, food security, and land values, as well as any risk related to conflicts or disputes over land and natural resources.  In addition, consideration is given to any substantial threat to the protection, conservation maintenance, and rehabilitation of natural habitats and biodiversity, and to threats related to ecosystem services and the use of natural resources, including watershed and cross-border risks and impacts.

4.  ESPS 1 Prioritizes Participation of Stakeholders

The systematic focus on the participation of stakeholders under the ESPF allows for establishing solid, constructive, and receptive relations for the successful management of the environmental and social impacts of projects. The nature, frequency, and level of effort corresponding to the participation of stakeholders can vary widely and will be adapted to the risks and impacts of each project.  ESPS 1 is open to complaint mechanisms appropriate for particular communities, interest groups and workers that include satisfactory processes to address complaints related to gender violence, sexual assault, discrimination, and retaliation, among other issues.

ESPS 1: Plan, Do, Check, and Act

ESPS 1 promotes the effective management of environmental and social risks originating in projects through a systematic process based on the “plan, do, check, act” cycle.  This is all directed towards achieving the appropriate environmental and social performance in such a way that projects focus not only on mitigating risks and adverse impacts, but on achieving social and environmental sustainability by applying the principle of “doing good beyond just doing no harm.”