Learning from AMEC's Oil and Gas Asset Support ... - CommDev

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project financing. Box 6 lists the institutions that are currently signatories to the principles. Theprinciples are given in full in Box 7.The EPs can be used to exclude financing of projects which fail to meet minimum environmental andsocial standards, to identify improvements needed in projects' design and performance, and to holdoperators accountable for meeting performance standards. There has been concern expressed bypressure groups that many banks are not upholding or are violating the EP standards, and for a lackof transparency about implementation of the EPs. 22 Subsequently financial institutions met withNGOs to review progress and to address concerns.Contractors, especially when preparing bids for projects that arelikely to involve IFI finance or finance from signatories to the EPs,might benefit from identifying how, as contractors, they can assisttheir clients meet these requirements. With regards to socialperformance, for projects in low and low-middle incomecountries 23 , this will include satisfaction of the WBG’s specificpolicies on indigenous peoples, cultural property and child andforced labour 24 .A key role for contractors will also be to incorporate in their qualitysubmissions reassurance to the clients that they have thenecessary capabilities to implement the conditions laid out in therelated project environmental or social management plans.Particular attention needs to be paid to the actions required inthese plans to mitigate adverse impacts and enhance local socialand economic benefits. It is worth noting that, other than onindigenous peoples, cultural property and child and forced labour,there are no specific standards under the EPs for social andeconomic benefits. However, a strong indication of what is instore for contractors can be gained from reference to the IFCBox 6 Signatories to the WorldBank’s Equator Principles• ABN AMRO Bank, N.V.• Bank of America• Barclays plc• BBVA• Calyon• CIBC• Citigroup Inc.• Credit Suisse Group• Dexia Group• Dresdner Bank• EKF• HSBC Group• HVB Group• ING Group• KBC• MCC• Mizuho Corporate Bank• Rabobank Group• Royal Bank of Canada• Standard Chartered Bank• The Royal Bank of Scotland• WestLB AG• Westpac Banking Corporationpublication: ‘Good Practice Note on Addressing the Social Dimensions of Private Sector Projects’. Itis also worth noting that, at the time of writing, Shell International are preparing a guidance note toassist operations meet the social conditions likely to be imposed by project financing institutions,including those arising from application of the EPs and WBG social performance standards.22BankTrack report ‘Principles, Profits, or Just PR? Triple P investments under the Equator Principles’http://www.banktrack.org/fileadmin/user_upload/documents/0_BT_own_publications/PPP_report_0406_final.pdf23The World Bank Development Indicators Database – http://www.worldbank.org/data/countryclass/classgroups.htm24See specific policies and standards at: http://www.equator-principles.com/exhibit2.shtml30
Box 7The "Equator Principles": An Industry Approach for Financial Institutions in Determining, Assessing and ManagingEnvironmental & Social Risk in Project FinancingSTATEMENT OF PRINCIPLES referenced from http://www.equator-principles.com/principles.shtmlWe will only provide loans directly to projects in the following circumstances:1. We have categorised the risk of a project in accordance with internal guidelines based upon the environmental and social screeningcriteria of the IFC as described in the attachment to these Principles (Exhibit 1 – http://www.equator-principles.com/exhibit1.shtml).2. For all Category A and Category B projects, the borrower has completed an Environmental Assessment (EA), the preparation of which isconsistent with the outcome of our categorisation process and addresses to our satisfaction key environmental and social issues identifiedduring the categorisation process.3. In the context of the business of the project, as applicable, the EA report has addressed:a) assessment of the baseline environmental and social conditionsb) requirements under host country laws and regulations, applicable international treaties and agreementsc) sustainable development and use of renewable natural resourcesd) protection of human health, cultural properties, and biodiversity, including endangered species and sensitive ecosystemse) use of dangerous substancesf) major hazardsg) occupational health and safetyh) fire prevention and life safetyi) socio-economic impactsj) land acquisition and land usek) involuntary resettlementl) impacts on indigenous peoples and communitiesm) cumulative impacts of existing projects, the proposed project, and anticipated future projectsn) participation of affected parties in the design, review and implementation of the projecto) consideration of feasible environmentally and socially preferable alternativesp) efficient production, delivery and use of energyq) pollution prevention (liquid effluents and air emissions) and waste minimization and solid and chemical waste managementNote: In each case, the EA will have addressed compliance with applicable host country laws, regulations and permits required by theproject. Also, reference will have been made to the minimum standards applicable under the World Bank and IFC Pollution Prevention andAbatement Guidelines …and, for projects located in low and middle income countries as defined by the World Bank Development IndicatorsDatabase, the EA will have further taken into account the then applicable IFC Safeguard Policies (Exhibit II – http://www.equatorprinciples.com/exhibit2.shtml).In each case, the EA will have addressed, to our satisfaction, the project's overall compliance with (orjustified deviations from) the respective above-referenced Guidelines and Safeguard Policies.4. For all Category A projects, and as considered appropriate for Category B projects, the borrower or third party expert has prepared anEnvironmental Management Plan (EMP) which draws on the conclusions of the EA. The EMP has addressed mitigation, action plans,monitoring, management of risk and schedules.5. For all Category A projects and, as considered appropriate for Category B projects, we are satisfied that the borrower or third party experthas consulted, in a structured and culturally appropriate way, with project affected groups, including indigenous peoples and local NGOs.The EA, or a summary thereof, has been made available to the public for a reasonable minimum period in local language and in a culturallyappropriate manner. The EA and the EMP will take account of such consultations, and for Category A Projects, will be subject toindependent expert review.6. The borrower has covenanted to: a) comply with the EMP in the construction and operation of the project; b) provide regular reports,prepared by in-house staff or third party experts, on compliance with the EMP and c) where applicable, decommission the facilities inaccordance with an agreed Decommissioning Plan”7. As necessary, lenders have appointed an independent environmental expert to provide additional monitoring and reporting services.8. In circumstances where a borrower is not in compliance with its environmental and social covenants, such that any debt financing wouldbe in default, we will engage the borrower in its efforts to seek solutions to bring it back into compliance with its covenants.9. These principles apply to projects with a total capital cost of $50 million or more.31
Page 2 and 3: Learning from AMEC’s Oil and GasA
Page 5 and 6: CONTENTSPageEXECUTIVE SUMMARY 11. I
Page 7 and 8: EXECUTIVE SUMMARY“We’re totally
Page 9 and 10: services 1 . Although focused on AM
Page 11 and 12: 8. Contractors are advised to devel
Page 13 and 14: performance objectives in the regio
Page 15 and 16: In Indonesia, AMEC isworking underc
Page 17 and 18: 3. GLOBAL AND REGIONAL TRENDSMany o
Page 19 and 20: The main instruments can be summari
Page 21 and 22: measurements of poverty reduction a
Page 23 and 24: 4. DRIVERS OF ENHANCED SOCIAL PERFO
Page 25 and 26: Table 2 indicates that, in terms of
Page 27 and 28: 4.1.2 Maximising Local Socio-Econom
Page 29 and 30: There is also a potential for linka
Page 31 and 32: Box 4Sub-Contractor Support: The Pr
Page 33 and 34: Some companies question this second
Page 35: • Begin requiring disclosure of r
Page 39 and 40: 5.2 Drivers of Social PerformanceAs
Page 41 and 42: gas and 15% from oil. Locals remain
Page 43 and 44: The TALIM has played a pivotal role
Page 45 and 46: 5.3.1 Supply Chain DevelopmentThe S
Page 47 and 48: standards. In practice, this may in
Page 49 and 50: 5.3.3 Institutional Support for Rev
Page 51 and 52: immediate project as the main marke
Page 53 and 54: Table 6 Recommendations to Fluor-AM
Page 55: Engineers Against Poverty3 Birdcage

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