At the Inter-American Development Bank (IDB), we work to improve lives in Latin America and the Caribbean. We do this through financial and technical support and through advancing infrastructure, from roads, bridges and power plants, to water supply, hospitals, housing and much more.
Equally as important in our work is to achieve development in a sustainable, climate-friendly way. We can’t build a road where local flora or fauna is threated unless we have adequate mitigation measures. We can’t use groundwater to provide water supply to a village if its misuse leads to drought or contamination. And we can’t build a power plant if its emissions are not in line with the IDB’s commitment to specific emission reduction and climate resilience plans.
We rely on the Environmental Impact Assessment to provide warning signs of these potential issues in development projects. This assessment is made available to affected populations and local nongovernmental organizations before the Bank conducts its Analysis/Due Diligence Mission. Yet while countries in the Latin American and Caribbean Region have requirements for Environmental Impact Assessment (EIA) at the national and subnational levels, these generally focus on the physical environment. Typically, social issues (e.g. indigenous rights, gender issues, physical and economic displacement, consultations and stakeholder engagement) are not addressed comprehensively as part of the assessment process. Typical shortcomings include focusing on some aspects but ignoring others; being overly descriptive and lacking in clear analysis or basis for operational decisions; depending on secondary data sources without field work or primary data collection; or conducting social impact assessment as separate and stand-alone exercises rather than integrated into overall project management.
The IDB has published a Technical Note on Social Impact Assessment (SIA) to help strengthen the assessment and management of environmental and social issues. The SIA as described in this note is informed by, and intended to be consistent with, an emerging consensus on how to integrate social issues in projects, and what a good SIA should consist of.
Why undertake Social Impact Assessment?
An SIA improves the quality of project design and implementation in numerous ways. Among them are:
- Assessment and management of project-related risks and benefits. A major purpose of the SIA is to identify and manage potential adverse impacts, and to maximize project benefits to local communities and other groups.
- Local understanding and support. By addressing local needs and priorities, the SIA process helps to strengthen local understanding and support for the project.
- Efficiency and effectiveness of project implementation. During implementation, the SIA provides information and continued stakeholder engagement to enable adaptive, responsive, and cost-effective project management.
- Evaluation of project outcomes and impacts. The SIA process includes establishing robust baseline data, providing the basis and means to evaluate social outcomes and impacts of a project.
Ten elements of social impact assessment
The note is structured around ten key elements, which should be embedded in an SIA process in projects of moderate to high risk, scale, and complexity. These elements are not addressed separately or sequentially. They inform each other, and may be studied, consulted on, and managed at different times of the project cycle. The ten SIA elements discussed in the note are:
- Legal and Normative Foundation. An SIA should be done with a normative framework in mind, reflecting country legal frameworks and other relevant norms and standards.
- Social Context. The SIA process should provide an understanding of local social groups, categories and institutions, with a particular emphasis on poverty, social exclusion, and vulnerability.
- Stakeholder Engagement. Stakeholder analysis and meaningful engagement are essential parts of the SIA process, providing inputs to informed decision making. (The IDB published an in-depth guidance note on meaningful stakeholder consultation in 2017)
- Benefits and Opportunities. The SIA process provides the basis for determining how a project can benefit local communities and other stakeholders, and promote local ownership and support for the project.
- Risk Identification. The SIA process helps ensure that any potential or actual adverse impacts a project may cause or contribute to are identified.
- Indicators, Baseline, and Methodology. Having good data is essential in order to monitor and manage project implementation, and to document impacts on project stakeholders.
- Design and Implementation. Once risks have been identified, they must be managed. This is done through applying a logical sequence of steps, referred to as a mitigation hierarchy.
- Reports and plans. There needs to be systematic documentation of the analysis and consultations undertaken, and of the various action plans where relevant.
- Project Management System. The SIA process should provide the information needed not only to produce studies and reports, but also to ensure that social issues are appropriately managed and integrated into project decision-making processes on an ongoing basis.
- Monitoring, Adaptive Management, and Evaluation. A system of monitoring and adaptive management should be established to reflect changing circumstances, demonstrate accountability, and contribute to knowledge and learning.
These ten elements should be aligned with the project stages, with different areas of focus, activities, and outputs at different times. The earlier the SIA starts, the easier it is to maximize benefits and minimize risk, and to add value to the project through improved designs and implementation.
The approach suggested in this note assumes that there is or will be an identified project sponsor or proponent responsible for project planning and implementation, and that a financing institution such as the IDB will provide financial and technical support. Both borrower and lender have requirements and complementary roles and responsibilities related to how social issues should be addressed in the project.
Related note: Meaningful Stakeholder Consultation