AFD - Universal Registration Document 2020

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

2.3.1.2 AFD’s environmental and social complaints management system The AFD’s E&S complaints management 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. It is placed under the supervision of the Ethics Adviser. In 2020, the System continued to operate in a flexible way, based on a pool of experts renewed for two years, an Eligibility

Committee and the possibility of using the expertise of AFD’s internal mediator during the conciliation phases. This operating mode increased flexibility, and prepared the System for handling a larger number of claims, more diverse in nature. However, it should be noted that since September Ǿ 2020, the internal mediator has also taken on the role of Ethics Adviser. In order to retain all the independence necessary for her supervisory role, she will no longer intervene directly in the context of reconciliation missions. Three years after its creation, the AFD System saw its activity grow in 2020: fourteen new complaints were received during the year.

2

Under analysis or treatment (1)

Being monitored

Year 2017 2018 2019 2020

Received Not registered

Closed

2 8

1 8 7 7

0 0 2 6 7

0 0 3 1 4

1 0 0 0

12 14 36

TOTAL 1 (1) Claims undergoing registration analysis, eligibility review or processing, with claims deemed eligible being processed through mediation and/or a compliance audit. 24

the methodologies defined by the Corporate Governance Development Framework on corporate governance best practices, and the United Nations Guiding Principles on Business and Human Rights. It involves: (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 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. A comparison with the classification of the overall portfolio highlights an increase in FI-B projects and a decrease in B+ projects.

Of these fourteen complaints received in 2020, eight were closed after referral to the relevant departments (procurement, projects carried out by civil society organisations, allegations of fraud or corruption), to the relevant landlord or after facilitation of an amicable solution with project management. One complaint was registered and underwent an eligibility study. The expert in charge of this study recommended non-eligibility, and the Eligibility Committee ruled likewise. Five complaints received are being processed, in addition to two complaints still 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, the System will be able to draw up an initial assessment of its experience in 2021. 2.3.2 Proparco’s management of environmental and social impacts, and the procedure for managing complaints 2.3.2.1 Management of Proparco’s 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 the performance standards of the International Finance Corporation (IFC), the main fundamental conventions of the International Labour Organization (ILO),

(1) https://www.Proparco.fr/fr/responsabilite

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2020 UNIVERSAL REGISTRATION DOCUMENT