AFD // 2021 Universal Registration Document

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

P the quality of the project’s environmental and social management and compliance with the E&S commitments made by the beneficiary through the financing agreement; P the sensitivity of the context; P the occurrence of major E&S events. It makes it possible to classify projects according to four levels, based on the importance of their residual E&S risks: P project on alert requiring specific monitoring; P sensitive project requiring increased monitoring; P project requiring ongoing monitoring; P project requiring basic monitoring (or no monitoring). This analysis not only makes it possible to have an overview of the quality of the portfolio at a given time, but also to define specific and proportionate E&S monitoring programmes for each level of risk, and thus to focus on the most risky projects. An analysis of the portfolio’s residual E&S risks, carried out in 2021, addressed projects classified as A and B+, granted between 2016 and 2020, and in progress (projects not cancelled, for which an agreement has been signed but not completed), which amounted to a total of 164 projects.

The E&S classifications established at the identification stage, as described previously, are based on an analysis of the significance of the potential negative E&S impacts of the projects, i.e. the impacts that would occur if no mitigation measures were put in place. Mitigation measures (avoidance, reduction or offsetting measures of the so-called “ARO” sequence to “Avoid Reduce Offset”) are defined as part of the ex-ante E&S assessments in order to control the potential E&S risks of projects. During project implementation and after establishing mitigation measures, residual negative E&S impacts may remain, the nature and magnitude of which may vary depending on the different phases of the project (preparation, construction, operation, ɸ etc.) and which it is therefore important to monitor. Also, to strengthen the E&S monitoring of projects during implementation, AFD developed, in 2020, a method to assess the residual E&S risks of projects that are considered to be the most risky (those classified as A or B+ at the identification stage). This residual E&S risk assessment method is based on four criteria: P the magnitude of the E&S impacts, taking into account the progress of the project;

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The level of E&S monitoring to be implemented was thus determined for each of these 164 ɸ projects. The level of monitoring, respectively in terms of the number of projects and the amounts involved, breaks down as follows: ❙ Breakdown of environmental and social monitoring levels, by number of projects

Level of E&S monitoring

Number of projects

%

Project on alert requiring specific monitoring Sensitive project requiring increased monitoring

5

3%

62 76 21

38% 46% 13%

Project requiring ongoing monitoring

Project requiring basic monitoring (or no monitoring)

TOTAL

164

100%

❙ Breakdown of environmental and social monitoring levels, by amount

Level of E&S monitoring

Amounts (in €M)

%

Project on alert requiring specific monitoring Sensitive project requiring increased monitoring

202

2%

3,485 3,910 1,221 8,818

40% 44% 14%

Project requiring ongoing monitoring

Project requiring basic monitoring (or no monitoring)

TOTAL

100%

2.3.1.2 AFD’s environmental and social complaints management system The AFD’s environmental and social (E&S) complaints management system is an extra-judicial system allowing any individual or group of individuals attached froman 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. It is placed under the supervision of the Ethics Adviser.

In 2021, AFD also structured a new training programme on the management of environmental and social risks in operations. This programme, consisting of thirteen modules offered as asynchronous e-learning or in the form of virtual classes, will be gradually made available in 2022 (five modules were already available in 2021). Twelve modules are intended for AFD’s operational staff at the head office and in the network, and one module is intended for project managers of development projects. All modules will be accessible remotely in order to increase their accessibility for employees working overseas and to avoid any constraints related to the health context.

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2021 UNIVERSAL REGISTRATION DOCUMENT