A development screen would be based on clear development objectives, provide criteria for evaluating whether or not projects will contribute positively to development, and provide more clarity for staff and clients on the types of projects that meet the World Bank Group's development goals. A screen would clarify the kinds of results IFC aims to achieve from its investments, elaborate for staff and clients how it measures development impact and reduce the time and resources spent on projects that do not match the organization's development priorities. Use of a development screen would enable IFC to be more selective in the projects it supports. The screen would be used in addition to IFC's standard financial and performance criteria, and could apply to both projects and company sponsors.

The concept for a development screen draws from the experience of the socially responsible, or ethical, investment community. This type of investing considers a potential investment's social and environmental impact in addition to expected financial performance. An investment screen is a set of non-financial criteria that must be met by all companies in an investment portfolio. The IFC may find the socially responsible investment community's technique of negative and positive screening particularly helpful:

• Negative screens are a set of criteria delineating what characteristics companies and projects in the portfolio should not have (such as production of nuclear weapons, employment of child labor, toxic waste sites, etc)
• Positive screens are a set of criteria delineating characteristics companies should have (such as minorities represented on the board, proactive environmental policy, strong community relations, etc).

Screens can be applied in numerous ways, with most socially responsible investors employing a combination of absolute screens that completely bar investment in certain activities, and relative screens which recognize that a company with a strong record in one area may not have superior record in another. A development screen would have to be developed to fit IFC's role, niche, and status as a public development bank. The point is not that every project would meet each requirement, but that the criteria would provide guidance for evaluating both projects and project sponsors.

The criteria for a screen should be developed through a consultative and participatory process that seeks input from a variety of stakeholders and civil society, and should be applied in an open and transparent manner. For each project, IFC should explain its reasons for financing the project to the Board and the public before a decision is made. This explanation should include the expected development results and the assumptions on which the projection is based. To contribute to a dialogue on the development screen concept, Friends of the Earth has prepared the following recommendations for development criteria for projects and companies.

• Project development process is open, transparent and participatory. Process allows affected community and stakeholders to understand full information and provide input that has an impact on the project's development, including the possibility of no project.
• Project includes adequate risk-mitigation schemes, such as emergency response notification and consultation, to decrease the vulnerability of communities.

2. Promotes Local Employment, Benefits, and Protection

• Generates long-term local employment.
• Favors local ownership.
• Investment has strong multiplier effects and linkages to local economy, such as sourcing of local materials from local suppliers.
• Supports micro-, small- and medium-sized enterprises, including those owned by women.
• Broadens access to small scale financing.
• Focuses on human resource development, including training and skills development.
• Uses and transfers technologies that emphasize expanding employment opportunities.
• Investment includes community-benefit sharing, employee profit-sharing, or employee ownership-sharing arrangement for host country stakeholders.
• Provides a "living wage," as determined by local economy.
• Complies with or exceeds ILO standards, including worker rights to organize and bargain collectively.
• Addresses possible displacement of local or small-scale producers, investors, and savers.
• Addresses possible negative social impacts of investment, such as increase in HIV/AIDS, alcohol abuse, or ethnic tension.
• Provides adequate compensation for resettlement, economic displacement or impairment, environmental damage, etc.

3. Enhances the Ability of the Poor to Participate Productively in the Economy

• Creates jobs appropriate to the type of labor available in the surrounding community to maximize employment benefit.
• Provides access to capital, land, markets, information and technical assistance for the poor.

4. Promotes Gender Equity

• Project and/or project components target women for employment and income-earning opportunities and for enhancing their status.
• Project provides capital to women entrepreneurs.

5. Promotes Human and Ethnic Rights Protections

• Security arrangements are disclosed and abide by international human rights norms, including contracting and training security personnel.
• Local land rights, including the rights of indigenous communities, are recognized and protected.
• Proposed project is accepted by local communities and provides for adequate and appropriate consultation, participation and compensation of potentially affected populations, including indigenous groups in accordance with international law.

6. Delivery of Services to the Poor

• Project expands access to safe drinking water and basic sanitation services.
• Social services are provided at a reasonable cost for the poor and are within easy reach.
• Water supply, electricity and sanitation projects should adopt technologies and facilities that are affordable, accessible and appropriate to the management and organization capacities of communities.

• Raises environmental standards and improves environmental practice in long-term by adopting good or best practices.
• Provides training on environmental due diligence and management.
• Follows the precautionary principle in project development and practice.

2. Conservation of Protected Areas or Habitat

• Protected areas and other sensitive ecosystems will not be negatively impacted.
• Maintains or increases biologically significant or biologically diverse habitat.
• Does not threaten endangered species or frontier or primary tropical, temperate or boreal forests.

3. Prevention of Natural Resource Degradation and Promotion of Conservation

• Employs techniques that reduce potential for destruction of natural habitat, such as watershed management.
• Uses depleted or developed areas or increases efficiency and sustainable use of land or resources already in production.
• Conserves natural resources through reduced consumption of virgin materials or use of recycled/reused products.
• Promotes sustainable use of natural resources, including value-added production that reduces natural resource use.
• Includes a plan (which is financed) for reclamation and restoration of land and resources.

4. Clean Energy/Pollution Abatement

• Promotes development of renewable energy technologies.
• Significantly reduces or eliminates pollution or hazardous materials.
• Does not involve the production or use of persistent organic pollutants.
• Incorporates energy and materials efficiency technologies into the building/production process.
• Facilitates the transfer of clean technologies.
• Replaces the use of fossil fuels with alternative energy forms, reducing greenhouse gas emissions.
• Does not involve large dams with significant environmental/social impact or large-scale resettlement.

5. Promotes Investment in Environmentally Sustainable Businesses

• Generates environmentally sustainable production, such as certified wood or organic produce.
• Provides environmental services such as remediation and water or sewage treatment facilities.

6. International Environmental Agreements

• Project is consistent with the spirit and intent of multilateral environmental agreements (including the Convention on Biodiversity, Montreal Protocol, CITES, the Climate Change Convention).

A corporate screen could include the following criteria:

1. Commitment to Sustainable Development

• The company has a publicly available, CEO- or Board-generated vision of sustainable development and systems to implement that vision.
• Company has a high-level executive(s) that has responsibility for sustainable development matters and Board-level oversight.
• Company performance is measured by a range of non-financial indicators, in additional to traditional economic measures. These would, for example, include comparisons of waste production levels and total greenhouse gas emissions.

2. Proactive Social/Community Development Record

• The company has demonstrated a willingness to engage in cooperative and consultative dialogue with community groups, local NGOs and affected parties (e.g., Community Advisory Panels or Good Neighbor agreements).
• The company has developed and disclosed emergency response plans with local communities.
• The company purchases or procures local and/or sustainable products to the fullest extent possible.

3. Proactive Environmental Record

• The company is not in violation of environmental laws and abides by multilateral environmental agreements.
• The company supports regulation that protects the environment or people from the impacts of its business.
• The company has demonstrated a willingness to engage in cooperative and consultative dialogue with environmental groups or environmental regulators.
• The company's practices reflect ecological constraints/limits in its production processes.
• Energy efficiency, waste minimization and pollution prevention are company policy.
• Independent environmental audits are permitted for Category A projects, and are publicly available.

4. Upholds Worker and Human Rights

• The company has employment policies that fully recognize worker rights and the right to organize, and provides a wide range of family, training and job security benefits.
• The company recognizes human rights as described in the Universal Declaration of Human Rights.
• The company ensures that any security arrangements will protect human rights and are consistent with international standards for law enforcement.
• The company ensures that their policies and practices prevent discrimination based on ethnic origin, sex, color, language, national or social origin, economic status, religion, political or other conscientiously held beliefs, birth or other status.
• The company ensures that their policies and practices prohibit the use of chattel slaves, forced labor, bonded child laborers or coerced prison labor.
• The company ensures that their policies and practices provide for safe and healthy working conditions and products.
• The company ensures just and favorable conditions of work, reasonable job security and fair and adequate remuneration and benefits.
• The company does not engage in or support the use of child labor as defined by applicable national laws and relevant international standards.
• The company has established mechanisms to monitor effectively all their operations' compliance with codes of conduct and international human rights standards and makes that information publicly available.

5. Commitment to Transparency, Consultation and Disclosure

• The company publishes annual social and environmental reports using a recognized and standardized format (e.g., per Global Reporting Initiative guidelines).
• The company is open with information. The concept of "confidential business information" would not be used as an excuse for secrecy.
• The company is committed to consulting openly with affected communities and responding to and addressing concerns raised by affected communities and NGOs.
• The company has a policy of transparency with regard to project-related payments made to host country governments.
• The project company can ensure effective management of and equitable distribution of project revenues, particularly for adversely affected communities (may apply to project companies with host country government involvement).

² See www.ifc.org.

³ Ibid.

⁴ IFC Press Release No. 00/24. "IFC Announces Profit in Year Marked by Crisis Response and Investments in New Markets."

⁵ Newsweek International, September 10, 1995, p. 41.

⁶ Between 1996 and 1999, IFC's lending has increased by an average of 9% a year.

⁷ World Bank Annual Report, 1999.

⁸ IFC Press Release No. 00/77. "World Bank Group Boosts Private Sector Development."

⁹ "World Bank's IFC Asks Rich Nations for Billions for Cash-Poor Countries," Wall Street Journal, January 8, 1999.

¹⁰ "IFC's Role and Demand for IFC's Services." September 9, 1999.

¹¹ Personal conversations with Executive Director's offices of IFC.

¹² "Pangue Hydroelectric Project: An Independent Review of the International Finance Corporation's Compliance with Applicable World Bank Group Environmental and Social Requirements." April 4, 1997.

¹³ After the expert review determined how the environmental and social convenants could be enforced, the borrower, the Chilean Electric Company Endesa, pre-paid its loan to IFC preventing IFC from imposing any requirements on the company.

¹⁴ Information provided by IFC.

¹⁵ World Bank, IDA in Action 1994-1996, The Pursuit of Sustained Poverty Reduction, 1997.

¹⁶ Presentation by Vinod Thomas, Vice President, World Bank Institute before the Environment Forum 2000, March 20,2000.

¹⁷ IFC Strategic Directions , April 2000, p. 36.

¹⁸ IFC Policy on Disclosure of Information, p. 5.

¹⁹ Backgrounder at www.ems.org.

²⁰ OEG Review, "Implementation of the 1991 Forest Strategy in IFC Projects," p. 12, para 3.15.

²¹ IFC Annual Report, p. 69.

²² IFC provides loans to financial intermediaries, or other banks, which then use the loan for sub-projects.

²³ OEU Findings. April 1999. Annual Review of IFC's Evaluation Findings: FY 98, Number 6.

²⁴ Annual Reports, 1995-1999.

²⁵ IFC 1999 Annual Report Annex. There were no timber projects in this region in 1999.

²⁶ Ibid.

²⁷ Ibid.

²⁸ Ibid.

²⁹ IFC 1997 and 1998 Annual Reports.

³⁰ Press release dated May 31, 2000. On the web at www.ciel.org.

³¹ World Bank Conference presentation by Hans Joergen Koch of the International Energy Agency, March 7, 2000.

³² IFC Annual Report, 1999, P. 70.

³³ The Food and Agriculture Organization's estimate in 1995 was that half of the world's grain production went to the livestock industry. That number has likely increased.

³⁴ Reuters. June 16, 2000. " IFC Seeks Broader Social Role."

³⁵ IFC 1999 Annual Report. In The Gambia, IFC provided funds to equip and build additional facilities at the Middle and High School. In Senegal, funds were provided to increase enrollment in the secondary school. In Guinea funds went to building a new secondary school and in Cote d'Ivoire funds were provided to build facilities at the college level.

³⁶ Reuters, June 16, 2000.

³⁷ IFC 1999 Annual Report.

³⁸ Public Services International. 1998. PSI Worldwide Policy Programme for the Health and Social Services, France.

³⁹ Anderson, S., J. Cavanagh and Thea Lee. Field Guide to the Global Economy. The New Press: New York.

⁴⁰ http://www.worldbank.org/pics/pid/ug63834.txt, p. 4.

⁴¹ http://www.psiru.org/companyindex.htm, November 18, 1999.

⁴² Oweyegha-Afunaduula, M. Musumba and F. Muramuzi. April 3, 2000. "Elephant-Sized Lies in World Bank/ IFC Project Information Documents: The Case of Bujagali."

⁴³ PSIRU Company Profile, November 18, 1999.

⁴⁴ Greenwire, June 26, 1992. "AES: Criminal Charges Possible as EPA Begins Probe."

⁴⁵ "Puerto Rican Activists Fight AES Coal Plant." Drillbits & Tailings, August 21, 1998.

⁴⁶ "AES: Dirty Deals for Dirty Energy." Greenpeace Report.

⁴⁷ Information released by CERES official.

⁴⁸ New Vision, September 6, 1999, p. 6.

⁴⁹ It should be kept in mind that these projects are only those that have been released to the public. There may be more AES projects in the pipeline being discussed with the IFC and the World Bank Group.

⁵⁰ Project Underground. May 2000. Newmont: Why are people around the world so mad at this company?

⁵¹ IFC staff have confirmed that this company shows a disregard for local communities.

⁵² Summary of Project Information for AEF-Boundary Hill in Tanzania (www.ifc.org).

⁵³ IFC. October 1998. "The Evolution of the Solar Development Corporation Concept in Relation to World Bank Group/GEF Financing of Solar Photovoltaic Technology and Related Experiences."

⁵⁴ IFC Press Release, March 24, 2000.

⁵⁵ Biomass is a term that broadly encompasses plant matter used for energy production. Geothermal energy is the natural heat energy of the earth contained in underground rocks and fluids that can be tapped for heat or electric generation. In general, wind energy resources are best along coastlines, at elevated sites in hilly terrain and on the plains. Cogeneration refers to combined heat and power services. Small hydro harnesses the energy of falling water in a generator to produce electricity.

⁵⁶ World Bank Group, Small and Medium Enterprise Department. Spring 2000. SME Focus.

⁵⁷ Conversation with IFC staff member.

⁵⁸ In April 2000, more than 200 NGOs from 55 countries proposed that the World Bank Group should phase out financing oil, mining and gas projects. The first step in that process is to stop financing projects in intact and sensitive ecosystems. Then the World Bank Group should gradually phase out its support of these projects, and increase its support of renewable energy investments. The World Bank Group, including IFC and MIGA, should measure and set a goal of annually reducing the greenhouse gas emissions that result from its projects by 5 percent a year based on investments in the oil, gas, mining development, power plants, transportation and refining sectors.