AFD - 2019 Universal registration document

STATEMENT OF NON-FINANCIAL PERFORMANCE 2 Managing the risks and impacts of our action

2.3 Managing the risks and impacts of our action

international World Bank standards), the nature and scope of ex-ante E&S assessments to be produced by the recipients of AFD funding, the level of involvement of AFD’s Environmental and Social Support Division, and the robustness of the E&S monitoring system. In order to determine ex-ante the means to be engaged within this framework, by AFD and recipients of funding, the E&S risks of the operations are categorised, distinguishing between four levels of risk for direct financing projects: High risks (category A), Important risks (category B+), Moderate risks (category B), or Low risks (category C) - and three risk levels for projects financed via financial intermediaries (IF): IF portfolio with High risks (FI-A), Moderate risks (FI-B) or Low risks (FI-C). Accordingly, for 2019, the environmental and social risks of AFD’s portfolio are broken down as follows, in terms of number of projects and amounts granted, respectively: ❙ Environmental and social risks of AFD’s portfolio in 2019, in number of projects granted (foreign States)

AFD Group incorporates corporate social responsibility into its governance system and its activities. As such, it takes measures to assess and manage the environmental and social risks (E&S) of the operations it funds. It implements procedures to identify, prevent or mitigate environmental and social damages, as well as any human rights violations that may arise from these activities. The environmental and social assessment applies to all stages of the project cycle, from identification to approval of funding, and ex post monitoring and assessments. This approach is completed by two systems for handling environmental and social complaints, respectively for AFD and for Proparco (see below). They contribute to management of an operational risk. These systems make it possible to envisage reparation when it has not been possible to avoid, reduce or compensate for harmful or unexpected environmental and social impacts by means of the provisions of the E&S management plans for projects the funding of which is implemented by AFD or by Proparco. Generally, they strengthen the Agency’s transparency and accountability practices by relying on the experience of other sponsors through discussions within the international network IAMnet (Independent Accountability Mechanism Network). 2.3.1 AFD’s management of AFD has adopted a policy to control the social and environmental risks of the operations it finances (1) . This policy defines the framework and guiding principles applicable to E&S risk management. AFD also has a procedural corpus enabling it to roll out this policy operationally. The E&S risk management approach implemented under development operations financed by AFD is an ongoing, differentiated and proportionate process: P it is ongoing in the sense that various actions must be carried out at every stage of the project cycle (identification, feasibility, assessment, decision-making, contractualisation and supervision) and these actions form part of a continuum; P moreover, it is differentiated and proportionate insofar as the nature and scope of the actions to be implemented under the process are adapted to the significance of the E&S risks to be managed. This proportionality principle is rolled out at the different stages of the project cycle and concerns in particular the choice of the applicable E&S regulatory framework (national regulations, environmental and social impacts, and the procedure for b managing b complaints 2.3.1.1 Management of AFD E&S impacts

E&S risk

Number of projects

%

A

17 35 87 99 18

6.34

B+

13.06 32.46 36.94

B C

IF-A IF-B IF-C

6.72 2.24 2.24

6 6

TOTAL

268

100.00

❙ Environmental and social risks of AFD’s portfolio in 2019, in amounts granted (foreign States)

Amounts granted (€M)

E&S risk

%

A

1110.47 2166.10 2727.93 1372.82 1999.56

11.45 22.34 28.13 14.16 20.62

B+

B C

IF-A IF-B IF-C

278.40

2.87 0.43 100

41.91

TOTAL

9697.19

(1) This policy was adopted by the AFD Board of Directors in July Ǿ 2017. It is available on the AFD website: https://www.afd.fr/en/ressources/ environmental-and-social-risk-management-policy-afd-funded-operations.

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UNIVERSAL REGISTRATION DOCUMENT 2019

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