AFD - 2019 Universal registration document

STATEMENT OF NON-FINANCIAL PERFORMANCE

Managing the risks and impacts of our action

2.3.1.2 AFD environmental and social complaints system The AFD environmental and social (E&S) complaints system is an extra-judicial system allowing any person or group of persons attached from an environmental or social point of view by a project financed by AFD to submit a complaint. It promotes a constructive approach, based on seeking solutions out-of- court. Its functioning (eligibility criteria, methods for processing

eligible complaints by reconciliation and/or a compliance audit) is described in the System regulations, available on the AFD website. Two years after it was created, the AFD System has seen its activity increase in 2019. Twelve new complaints were received during the year, of which four are being processed and one is being monitored. All complaints received in 2018 have been closed.

2

❙ Number of complaints

Year

Received

Closed Being processed Being monitored

2017 2018 2019

2 8

1 8 7

0 0 4 4

1 0 1 2

12 22

TOTAL

16

defined by the Corporate Governance Development Framework concerning corporate governance best practices, and also United Nations guiding principles relating to enterprises and

In 2019, the System tested a more adaptable operating mode, involving simultaneous use of a renewed pool of experts, a newly created Eligibility Committee and the possibility of having access to the expertise of the AFD internal mediator in the reconciliation phases. This operating mode increased flexibility, and prepared the System for handling a larger number of claims, more diverse in nature. Of the twelve claims received in 2019, seven were closed after being transferred to the relevant departments (contract awards, allegations of fraud or corruption), to the competent sponsor or after facilitation with an out-of-court settlement with the project management. Four complaints are being processed in respect of 2019. For one complaint, received in 2017, the Secretariat continues to monitor the AFD action plan and mediation agreement, resulting from the compliance audit performed in 2018. After three years of activity, and several cases to its credit, in 2020 the System will be in a position to draw up an initial assessment of its experience and the results achieved thanks to its action. 2.3.2 PROPARCO’s management of environmental and social impacts, and the procedure for managing complaints 2.3.2.1 Management of Proparco E&S impacts Proparco operates a system to manage environmental, social and governance risks (1) , using a system similar to the AFD system, aligned with best practices in international financial institutions. Its approach is based on IFC performance standards, the principal fundamental conventions of ILO, methodologies

human rights. It consists of:

(i) assessing the environmental and social impacts and risks of each project submitted to Proparco’s decision- making bodies, and the countermeasures envisaged by the beneficiaries of the financing; (ii) proposing additional measures to implement by customers aiming to avoid or limit these risks, or compensate for their effects; (iii) monitoring proper implementation of these measures during the operation execution phase; (iv) ensuring satisfactory management by the project of contingencies that have negative environmental and/or social impacts; and (v) supporting the customer, where necessary, to strengthen their capacities to manage and implement their environmental, social and governance performance. The implementation of environmental, social and/or governance recommendations is monitored by the calculation of indicators that are regularly produced and managed by Proparco teams. The following tables illustrate the monitoring of these indicators. The two tables below present the potential risk classification of a project. It is determined in the initial analysis phase, and does not subsequently change. The classification ranges from A (high risk) to C (low risk), to which the IF prefix is added, for financial intermediaries. Projects rated IF-A, A, B+ as well as investment funds rated IF-B undergo detailed due diligence. A comparison with the classification of the overall portfolio highlights an increase in IF-B projects and a decrease in B+ projects.

(1) https://www.Proparco.fr/en/institution-commited-promoting-responsible-private-sector-south.

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UNIVERSAL REGISTRATION DOCUMENT 2019