AFD // 2021 Universal Registration Document

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

In 2021, the System continued its work by operating in the same way as it did in 2020. It relies on a pool of experts and an eligibility committee to process claims. This structure has made it possible to process a growing number of complaints of diverse nature. After four years of existence, 2021 was a timely moment to launch a review phase. Claims, which offered an unprecedented number of test cases for settlement by the

System, also led to it being clarified, especially as it organises and makes available to the public the System’s operation. It will be published at the end of the review, in the first half of 2022. It features changes that will contribute to maintaining the efficiency of the System and establishes stringent requirements in the processing of complaints.

Four years after its creation, the AFD System saw its activity grow in 2021: 21 new complaints were received during the year.

Under analysis or being processed (1)

Being monitored

Year 2017 2018 2019 2020 2021

Received Not registered

Closed

2 8

1 8 7 9

0 0 1 3 6

0 0 4 2 2 8

1 0 0 0 0

12 14 22 57

13 38

TOTAL 1 (1) Claims undergoing registration analysis, eligibility review or processing (claims deemed as eligible are processed through mediation and/or a compliance audit). Of the 21 ɸ complaints received in 2021, 13 could not be recorded 10

on the main fundamental conventions of the International Labour Organization (ILO), on the methodologies defined by the Corporate Governance Development Framework on corporate governance best practices, and on the United Nations Guiding Principles on Business and Human Rights. It involves: (i) assessing the environmental and social (E&S) impacts and risks of each project submitted to Proparco’s decision-making bodies, and the countermeasures foreseen 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 the due management by the project of unforeseen events with 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 FI prefix is added, for financial intermediaries. Projects rated FI-A, A, B+ as well as investment funds rated FI-B undergo detailed due diligence. The first table shows figures in relation to a number of different projects (one project may be linked to several loans, for example). The second presents the E&S classification in relation to amounts. The comparison made in the first table shows an increase in the fraction of projects classified as FI-C and B/B+ in 2021 and a decrease in those classified as FI-A and A in relation to the total Proparco portfolio (and the trend observed in 2020).

and were therefore closed for the following reasons: P the projects in question were not financed by AFD;

P they were off-scope (complaints are then redirected to the relevant departments: procurement, projects led by civil society organisations, allegation of fraud or corruption); P the complaint was beyond the time limit or without merit; P the claimants did not pursue the exchanges initiated in the System. One complaint was registered and underwent an eligibility study. The expert in charge of this study recommended a conciliation procedure and a compliance audit, which are currently being carried out. Six complaints received are being processed, in addition to four complaints in respect of 2019 and 2020. 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. 2.3.2 Proparco’s management of environmental and social risks, and the procedure for managing complaints 2.3.2.1 Proparco’s management of environmental and social risks 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 the performance standards of the International Finance Corporation (IFC) of the World Bank group,

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

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2021 UNIVERSAL REGISTRATION DOCUMENT