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Lao People’s Democratic Republic
Peace Independence Democracy Unity Prosperity
LAO PDR - SMALL AND MEDIUM ENTERPRISE ACCESS TO FINANCE
PROJECT (P131201)
ENVIRONMENTAL AND SOCIAL
MANAGEMENT FRAMEWORK (ESMF)
Final Version March 11, 2014
IPP708 REV P
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PREFACE
This Environmental and Social Management Framework (ESMF or Framework) is prepared in
accordance with the International Finance Corporation (IFC) Policy on E&S Sustainability (SP)
and the World Bank Safeguard Policies. The ESMF lays out the environment and social risk
assessment requirements for each transaction seeking financing under the Small and Medium
Enterprises Access to Finance Project (SMEAFP) in Lao PDR, actions to mitigate risks and
potential negative impacts on local people and environment where transactions are deemed
eligible for project financing, and the institutional arrangements to execute the ESMF during
project implementation.
The Project is assessed as EA category Financial Intermediary (FI). It is anticipated that most
transactions will be category B or C. Category A transactions are not foreseen because of the
type of activities and the limited size and capacity of Financial Intermediaries and Banks. In the
unlikely case that the results of project screening or assessment determine that a transaction to be
supported under the project is a Category A, the FI will contact IFC or the World Bank to
determine whether such a transaction is eligible based upon significance of potential impacts,
risks and the capacity of the counterpart.
The Department of Small and Medium Enterprise Promotion (DOSMEP) and the National
Implementation Unit (NIU) of the Department of Planning and Cooperation (DOPC) of the
Ministry of Industry and Commerce (MOIC), the Participating Financial Intermediaries (PFIs)
and Small and Medium Enterprises (SMEs) will have responsibilities to ensure that the
provisions of the ESMF are followed and complied with during implementation.
This Environmental and Social Management Framework (ESMF or Framework) will be
implemented through an Operational Manual that will specify how the International Finance
Corporation (IFC) SP and the World Bank safeguards policies may be applied to meet both
requirements while being responsive to the Private Sector which will be the main counter-parts
of the project.
This document is considered a living document and could be modified and revised in line with
the changing the type of the project activities. When situations make it appropriate that ESMF
be revised, IFC and the World Bank will be consulted prior to its revision and any changes or
revisions to the ESMF shall require IFC and World Bank approval.
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Table of Contents 1 Introduction ........................................................................................................................ 6
1.1 Background ...................................................................................................................... 6
1.2 Project Components ......................................................................................................... 6
1.3 Legal and Institutional Framework .................................................................................. 8
1.4 Potential Environment and Social Impacts of the Project .............................................. 11
1.5 Objectives of Environmental and Social Screening and Assessment of Proposed
Transactions .............................................................................................................................. 12
1.6 Implementation Arrangements ....................................................................................... 13
2: Environmental and Social Screening Process of Transactions/sub-projects .........................17 2.1 Loan Application ................................................................................................................ 17
2.2 Screening and Categorization of environmental and social risk ......................................... 17
2.3 Principles and Methods of Screening for Risk Review ...................................................... 19
2.4 Principles and Methods of Categorization .......................................................................... 19
2.5 List of Transactions that are not Eligible for Financing ..................................................... 20
3 Environmental and Social Review and Assessment ...............................................................21 3.1 Environmental and Social Review and Assessment for Category C Transactions ............. 21
3.2 Environmental and Social Review and Assessment for Category B Transactions ............. 21
3.4 Transactions with Civil Works ........................................................................................... 23
3.5 Transactions where Ethnic Minorities are present in the Project area ................................ 23
3.5 Technical Assistance and Safeguard Capacity Building .................................................... 24
4 : Monitoring and Supervision ................................................................................................25 4.1 Monitoring and Supervision of the Portfolio by the Financial Institution/PFIs ................. 25
4.2 Financial Intermediary Reporting ...................................................................................... 25
4.3 Grievance Mechanisms ...................................................................................................... 26
5 Public Consultation and Dissemination Process for ESMF ....................................................27 Annex A: Environmental and Social Management System (ESMS) .................................... 28
Annex B: Environmental, Health & Safety Guidelines ........................................................ 29
Annex C: IFC Performance Standards and World Bank Safeguard Policies ...................... 30
Annex D: Environmental Legislation and Institution in Lao PDR ...................................... 31
Annex E. Simplified Environmental Code of Practice (ECOP) ........................................... 35
Annex F: Safeguard Screening and EMP Content ................................................................ 38
Annex G. List of Projects Requiring EIA and IEE (in Lao) ................................................. 48
Annex H: Ethnic Groups Planning Framework ................................................................... 61
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Abbreviations and Acronyms
BFL Bank Franco Lao
BOL Bank of Lao
CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora
DESIA Department of Environment and Social Impact Assessment
DOSMEP Department of Small and Medium Enterprises Promotion
DOPC Department of Planning and Cooperation
EIA Environment Impact Assessment
EHSGs Environmental, Health, and Safety Guidelines
EGDP Ethnic Group Development Plan
EGPF Ethnical Group Planning Framework
EMP Environmental Management Plan
EMMP Environment and Monitoring Plan
ESMF Environment and Social Management Framework
ESMS Environment and Social Management System
FI Financial Institution
GOL Government of Lao PDR
IDA International Development Association
IEE Initial Environmental Evaluation
IFC International Finance Cooperation
LOC Line of Credit
MONRE Ministry of Natural Resources and Environment
MOIC Ministry of Industry and Commerce
PAD Project appraisal document
PFI Participating Financial Intermediary
NIU National Implementation Unit
POPs Persistent Organic Pollutants
PS Performance Standards
RSF Risk Sharing Facility
SME Small and medium enterprise
SMMP Social Management and Monitoring Plan
SMEAF Small and Medium Enterprise Access to Finance
SPI Summary of Proposed Investment
TA Technical Assistance
US$ United State Dollar
WB World Bank
WBG World Bank Group
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1 Introduction
1.1 Background
1. The Government of Lao PDR (GOL) has requested the World Bank Group, specifically
the International Development Association (IDA or World Bank) and the International Finance
Corporation (IFC), to support its efforts to remove the bottlenecks that constrain access to
finance by small- and medium scale enterprises (SMEs) through the Small and Medium
Enterprises Access to Finance (SMEAF) Project in Lao PDR (or the Project). The Project
development objective is to address the lack of long-term funding sources for banks to support
long-term credit to SMEs. The Project will support the growth of privately-owned small and
medium enterprises by increasing the supply of long-term finance provided by commercial banks
and by strengthening the capability of the Department of Small and Medium Enterprises
Promotion (DOSMEP) of the Ministry of Industry and Commerce (MOIC) to formulate and
implement public policies that promote access to finance for SMEs.
2. Given that the specific transactions will only be identified during implementation, an
Environmental and Social Management Framework (ESMF) was developed to ensure that these
transactions and project activities are properly assessed for and will not create adverse impacts
on local environment and local communities. The ESMF includes (a) environmental and social
screening of transactions, including a list of transactions which will not be funded under the
Project because the impacts of these transactions outweigh their costs and benefits; (b)
clarification on environmental assessment categorization of proposed transactions (c)
environmental and social review and assessment process; (d) general impacts and relevant
mitigation measures (e) subproject monitoring, supervision, and grievance redress mechanisms.,
and (f) public consultation and dissemination process.
1.2 Project Components
3. The proposed Project is composed of three components:
1) Line of credit to commercial banks to support SME lending (IDA $12 million)
2) Risk sharing facility for SME finance (IDA $3 million, IFC $12 million, and participating
financial institutions $15 million)
3) Technical Assistance (IDA $5 million)
Components 1 and 3 will be fully funded by IDA and implemented by the Department of Small
and Medium Enterprise Promotion (DOSMEP) of Laos and the PFIs. Component 2 will be
executed by IFC on behalf of DOSMEP. IFC will only support and participate in Component 2
of this operation.
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Component 1: Line of credit to commercial banks to support SME loans (IDA US$12
million):
4. To alleviate the lack of long term sources of funding that prevents banks from providing
long term credit (more than 3 years) to SMEs, DOSMEP will administer $12 million dollars
from this operation. With these resources, DOSMEP will provide long-term sources of funding
to participating financial intermediary/commercial banks so that they can then extend long term
credit also in local currency to SMEs in the private sector. SMEs will thus be able to carry out
long term capital investments, such as acquisition of machines and equipment, construction or
expansion of warehouses, modernization of transportation and communications equipment, and
any other investments in fixed assets that increases their business operations and enhances their
productivity (See Box 1 of potentially eligible transactions/activities). In principle, SMEs will be
able to borrow from commercial banks, provided that their proposed transactions are not
included in the list of ineligible activities under the Project (section 2.5. of the ESMF).
Component 2. Risk-sharing facility
5. DOSMEP plans to set up a Risk Sharing Facility (RSF) to provide a partial credit
guarantee to local PFIs to support SME finance in Laos. It is a RSF with an underlying portfolio
consisting of eligible SME loans originated by two PFIs of the project. The total lending amount
to be partially covered by the facility is expected to reach USD 30 million (where IDA covers
USD 3 million, IFC covers USD 12 million, and participating banks cover the remaining USD
15 million).
6. PFIs will originate the loans, in accordance with the loan eligibility criteria approved by
IFC and IDA, and will take credit decisions on and administer/service the loans. At this time, it is
expected that one private bank will join the RSF (Bank Franco Laos) once the project is
implemented. The IFC will serve as the agent to manage the RSF and will share relevant
information with DOSMEP. Moreover, IFC and DOSMEP will jointly monitor and evaluate the
performance of the risk-sharing facility.
Component 3: Technical Assistance (US$ 5 million)
7. This component will provide technical assistance to DOSMEP, participating commercial
banks, and SMEs. Moreover, it will assist DOSMEP and participating banks to comply with the
IFC SP and the World Bank Operational Policies.
8. Under Components 1 and 2, the LoC and RSF are open to all commercial banks and
financial institutions that meet the eligibility criteria, provided that they have interest in the
LoC’s and/or RSF’s objectives and agree to screening, assessing and addressing environmental
and social risks of transactions in accordance with this Environment and Social Management
Framework (ESMF or Framework) and other relevant Project documents. It is anticipated that 6
commercial banks will participate in the LoC and that 2 commercial banks in the RSF. To be
able to participate in either of the schemes, PFIs will have to demonstrate to be financially-sound
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and well administered1. The maximum foreseen amount a single SME will be able to borrow will
be the equivalent of $50,000 dollars for small firms and $200,000 dollars for medium-sized
firms2.
9. Technical Assistance (TA): Financing support will be provided to (i) PFI to manage
SME loans in a sustainable manner; (ii) beneficiary SMEs on business administration, financial
management and other relevant skills for their business development; and (iii) DOSMEP and key
agencies on SME policy implementation. The TA will also include the capacity development of
PFIs, beneficiary SMEs and DOSMEP on policies, procedures and principles under this ESMF.
Budget is earmarked under the project for the safeguard capacity development of key
stakeholders under the project.
1.3 Legal and Institutional Framework
10. In Lao PDR, there is no specific legislation specifically covering the SME sector – SMEs
are covered by the laws applicable to all commercial entities, and are required to follow the same
environmental and social requirements. The Environmental Protection Law (revised in 2012)
requires effective management and control of pollution, waste, and toxic substance from various
sources and key agencies such of the Pollution Control Department (PCD) and the
Environmental Quality Promotion (DEQP) of the Ministry of Natural Resources and
Environment (MONRE) are tasked to manage and facilitate achievement of this objective. The
Environmental Protection Law also requires all development projects that potentially cause
environmental and social impacts to undertake an Initial Environmental Examination (IEE) and
Environmental Impact Assessment (EIA) as relevant (see Annex D) and the Department of
Environmental and Social Impact Assessment (DESIA) of MONRE is responsible for review,
approval and compliance monitoring of EIA while the provincial MONRE (PONRE) is
responsible for those related to IEE projects3. The project developers are also required to deploy
appropriate project design, mitigation measures and monitoring plan and resources to address
possible impacts. Guidelines for Public Involvement in ESIA were also approved in February
2013. The Ministry of Industry and Commerce (MOIC) will be responsible to ensure that
industries and SMEs under it supervision are in compliance with the EPL and other related GOL
regulations. Details on environmental legislation in Lao PDR are provided in Annex D.
11. On social safeguards, the Compensation and Resettlement (CAR) Decree (2005) requires
that developers compensate for loss of land and other assets at replacement cost and a technical
guideline to support the implementation of the Decree has also been developed. The CAR
Decree is being reviewed by DESIA in the context of the revised EPL (2012). There are 49
ethnic groups under four linguistic groups that meet the eligibility criteria of the OP 4.10 as
1 In particular, banks will have to comply with the following four conditions: (a) Disclose and make available to the
public their audited financial statements for the past three years; (b) report a non-performing loan ratio below 4%
during the past 3 years, (c) report compliance with the minimum capital adequacy ratio of BOL for the past three
years, and (d) demonstrate profitability for the past 3 years through positive returns on assets and equity. 2 As defined by the GOL regulations
3 According to MONRE regulations on EIA and IEE issued on 17 December 2013.
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indigenous peoples. Constitutionally, Laos is recognized as a multi-ethnic society, and Article
Eight of the 1991 Constitution states, “All ethnic groups have the right to preserve their own
traditions and culture, and those of the Nation. Discrimination between ethnic groups is
forbidden. National guidelines for consultation with the ethnic groups were developed that
provide detailed steps that should be taken when consulting ethnic groups for policy issues or
development projects.
12. For more details on the applicable national legal and institutional framework, please
consult Annex D of the ESMF.
13. For this Project, both the IFC Sustainability Policy and the World Bank Safeguards
policies apply. For IFC Performance Standards to be fully applied the SME activities must be
project based and/or related to corporate expansion covered by a 36 month loan with a 10 million
overall investment which may be the case for medium sized companies. If not, only the
Performance Standards PS 1 Social and Environmental Management Systems, PS 2 on Labor
and Working Conditions and the World Bank Group Environmental Health and Safety
Guidelines.
14. Guidance on the specific application and combined use of these policies will be provided
in the Operational Manual. It is anticipated that for the majority of the loans IFC PS1 on Social
and Environment Management Systems and PS2 on labor and Working Conditions and World
Bank OP 4.01 on Environment Assessment and the WBG EHS Guidelines will apply. In some
cases, the World Bank policies OP 4.36 on Forestry, OP 4.04 Natural Habitats and Op 4.10
Indigenous Peoples may also apply and in some cases where IFC Performances Standards apply
as indicated in paragraph 13 for medium sized companies PS 6 on Biodiverdity Conservation and
Sustainable NRM and PS7 on Indigenous Peoples may apply.
15. Therefore the following IFC Performance Standards and World Bank Safeguard policies
may potentially apply and be considered in the ESMF in cases specifically indicated in the
Operational Manual:
Social and Environmental Management Systems PS 1. IFC Performance Standard 1
establishes the importance of (i) integrated assessment to identify the environmental and social
impacts, risks, and opportunities of projects; (ii) effective community engagement through
disclosure of project-related information and consultation with local communities on matters that
directly affect them; and (iii) the management of environmental and social performance
throughout the life of the project. PFIs participating in the RSF, in coordination with other
responsible government agencies and third parties as appropriate, will conduct a process of
environmental and social assessment, and establish and maintain an ESMS appropriate to the
nature and scale of the project and commensurate with the level of its environmental and social
risks and impacts. The ESMS will incorporate the following elements: (i) policy; (ii)
identification of risks and impacts; (iii) management programs; (iv) organizational capacity and
competency; (v) emergency preparedness and response; (vi) stakeholder engagement; and (vii)
monitoring and review.
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Labor and Working Conditions PS 2. IFC Performance Standard 2 recognizes that the pursuit
of economic growth through employment creation and income generation should be
accompanied by protection of the fundamental rights of workers. For any business, the
workforce is a valuable asset, and a sound worker-management relationship is a key ingredient in
the sustainability of a company. Failure to establish and foster a sound worker-management
relationship can undermine worker commitment and retention, and can jeopardize a project.
Conversely, through a constructive worker-management relationship, and by treating the workers
fairly and providing them with safe and healthy working conditions, they may create tangible
benefits, such as enhancement of the efficiency and productivity of their operations. The
applicability of this Performance Standard is established during the environmental and social
risks and impacts identification process. The implementation of the actions necessary to meet the
requirements of this Performance Standard is managed through the client’s Environmental and
Social Management System (ESMS), the elements of which are outlined in Performance
Standard 1. The scope of application of this Performance Standard depends on the type of
employment relationship between client and the worker. It applies to workers directly engaged
by the client (direct workers), workers engaged through third parties to perform work related to
core business processes of the project for a substantial duration (contracted workers), as well as
workers engaged by the client’s primary suppliers (supply chain workers).4
Biodiversity Conservation and Sustainable NRM PS 6. IFC Performance Standard 6
recognizes that protecting and conserving biodiversity, maintaining ecosystem services, and
sustainably managing living natural resources are fundamental to sustainable development. The
applicability of this Performance Standard is established during the environmental and social
risks and impacts identification process. The implementation of the actions necessary to meet the
requirements of this Performance Standard is managed through the client’s Environmental and
Social Management System (ESMS)
Indigenous Peoples PS 7. IFC Performance Standard 7 recognizes that Indigenous Peoples, as
social groups with identities that are distinct from mainstream groups in national societies, are
often among the most marginalized and vulnerable segments of the population. In many cases,
their economic, social, and legal status limits their capacity to defend their rights to, and interests
in, lands and natural and cultural resources, and may restrict their ability to participate in and
benefit from development. Indigenous Peoples are particularly vulnerable if their lands and
resources are transformed, encroached upon, or significantly degraded. Their languages, cultures,
religions, spiritual beliefs, and institutions may also come under threat. As a consequence,
Indigenous Peoples may be more vulnerable to the adverse impacts associated with project
development than non-indigenous communities. This vulnerability may include loss of identity,
culture, and natural resource-based livelihoods, as well as exposure to impoverishment and
diseases. Private sector projects can create opportunities for Indigenous Peoples to participate in,
and benefit from project-related activities that may help them fulfill their aspiration for economic
and social development. Furthermore, Indigenous Peoples may play a role in sustainable
development by promoting and managing activities and enterprises as partners in development.
Government often plays a central role in the management of Indigenous Peoples’ issues, and
clients should collaborate with the responsible authorities in managing the risks and impacts of
their activities. The applicability of this Performance Standard is established during the
environmental and social risks and impacts identification process. The implementation of the
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actions necessary to meet the requirements of this Performance Standard is managed through the
client’s Environmental and Social Management System.
Environmental Assessment OP/BP 4.01. Beneficiary SMEs of line of credit (Component 1)
and Risk Sharing Facility (Component 2) are expected to engage in diverse types of activities,
some of which may have some negative environmental and/or social impacts and risks. The
exact location, nature, scale and scope of environmental and social impacts can only be known
during implementation when PFIs receive applications from eligible SMEs. Given the nature and
size of credit to be provided to each SME however, the potential negative impacts are likely to be
minor, localized, and reversible and can be mitigated with simple measures and environmental
good practice.
Natural Habitats OP/BP 4.04. The project activities are not envisaged to create significant
negative impacts on natural habitats. Nevertheless, there could be transactions that may impact
on natural habitats. Transactions that will have adverse impacts or will cause significant
degradation of critical natural habitats will not be supported in line with the policy. Transactions
that will cause adverse impacts or degradation of non-critical natural habitats may be supported
provided that the benefits of the transaction outweigh the negative impacts and that measures are
devised and implemented to address negative impacts.
Forests OP/BP 4.36. The project will not support transactions that may significantly affect or
degrade critical natural forests. However, production and distribution of construction materials is
one of the eligible activities under the project, which will likely involve wood/lumber
production.
Indigenous Peoples OP/BP 4.10. While the project will only finance transactions that take place
within urban areas defined as cities and towns of more than 10,000 people, some transactions
may entail sourcing of materials from areas that have the presence of indigenous peoples (e.g.,
production and distribution of construction materials) or some transactions may involve IP
businesses.
1.4 Potential Environment and Social Impacts of the Project
16. The Project will provide support to eligible SMEs to carry out small scale commercial
transactions through LOC and RSF. The exact location, nature, scale and scope of the potential
impacts can only be known during implementation. However, as shown in Box 1, it is anticipated
that the majority of transactions will be in the services or light manufacturing sectors and occur
in or near urban areas where PFIs have branches. Beneficiary SMEs are expected to engage in
diverse types of activities, some of which may have negative environmental and/or social
impacts and risks. However, these negative impacts are likely to be minor, localized, and
reversible and can be mitigated through proper environment and social screening, application of
simple measures and environmental good practices, especially given the nature and size of the
transactions and the limited funding to be made available to respective SMEs is small ($20,000-
40,000). Also, land acquisition will not occur because the maturity of SME loans to be made
available under the project will not be more than 8 years and is too short to finance land purchase
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which normally requires a longer maturity period over 20 – 30 years. Environmental and/or
social risks associated with them can therefore be readily identified and addressed through
mitigation measures.
17. Minor, reversible and site-specific environment and social impacts may occur that require
commensurate assessment and management, including civil works impacts in areas/lands owned
by the SMEs such as air and water quality deterioration, noise, occupational health and safety,
solid waste generation and disposal. Other transactions may require sourcing of raw materials
from forests or natural habitats, e.g., production and distribution of construction materials, or
maybe in areas with indigenous peoples. It is expected that most of the beneficiary SMEs will
not have adequate capacity in managing even minor environmental or social impacts. This
ESMF is therefore developed to ensure that such impacts are identified, avoided, minimized and
adequately mitigated. ESMF also includes the list of those transactions that are not eligible for
project support (Section 2.5). PFIs will be required to screen transactions with SMEs for
environment and social impacts and integrate into their lending program the requirements of
environmentally and socially sound and sustainable development in line with this ESMF.
1.5 Objectives of Environmental and Social Screening and Assessment of Proposed
Transactions
18. The objectives of screening are to: (i) screen each transaction for eligibility; (ii) assess
environment and social issues; (iii) determine applicable E&S requirements; (iv) assign
environment category of the transaction based on risks and potential impacts; and, (v) put
forward specific instrument/plan for each transaction, if needed, to address environment and
social impacts. Specific environmental and social assessment process will be carried out for all
transactions proposed for funding under the project through the following main steps:
Screening: If the proposed activity is likely to cause environmental or social impacts,
what are the likely consequences of these impacts?
Scoping: What are the main issues for assessment? What is the project’s geographic
area of influence? At what stage of activity are the impacts likely to occur? Are
there directly affected people or local communities that may be impacted by the
project and whose views and concerns therefore should be considered in project
design and implementation?
Assessment and development of mitigation measures: Analyze the scope and nature
of the impacts, the need for permits, public perceptions of the impacts, and develop
measures to avoid or mitigate those impacts as well as mechanisms to monitor how
well the risks are being managed.
Consultation and disclosure: Share information on the project and its expected
impacts with directly affected people, local communities, or other stakeholders; and
seek their views and concerns about project design and implementation.
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19. It is anticipated that most transactions will be category B or C. Category A transactions
are not foreseen because of the type of activities and the limited size and capacity of Financial
Intermediaries and Banks. In the unlikely case that the results of project screening or assessment
determine that a transaction to be supported under the project is a Category A, the FI will contact
IFC or the World Bank to determine whether such a transaction is eligible based upon
significance of potential impacts, risks and the capacity of the counterpart.
20. Depending on the nature of the transaction and the associated environmental and social
risks, a range of instruments (e.g., Initial Environmental Evaluation [IEE], Environmental
Management Plan [EMP], Environmental Code of Practice [ECOP], Check Lists, etc.) can be
used to assess and mitigate the risks and impacts. First, companies should follow what is
required by national law before any determination is made whether additional instruments are
needed. For example, existing operations with moderate risks or impacts that require new/revised
investments may best be assessed with an environmental audit of the operations in addition to
other requirement such as preparation of a simple EMP and/or ECoP. In some circumstances,
the EMP or ECoP may be no more complex than a list of good practices in managing and/or
treatment of liquid and solid wastes and/or toxic substance. If such transactions are to be
supported, an EMP will be developed in line with this ESMF (Section 3.2).
21. Regarding ethnic minorities, although most of the transactions are expected to take place
in urban areas defined as cities and town more than 10,000 peoples, some transactions may
involve sourcing of materials from areas where ethnic groups are present and/or involve ethnic
groups businesses. Screening will be carried out by SME loan applicants to identify if ethnic
groups are present in the zone of influence of the proposed transactions and if it is the case, free,
prior and informed consultation (or consent if applicable) will be carried out with the affected
ethnic groups to ascertain their broad community support to the proposed transactions. The
results will be compiled in a simplified Social Assessment (SA) following this ESMF and will be
the basis to develop, if needed, a simplified Ethnic Group Development Plan which may take the
form of a table.
22. Transactions that are likely to have significant adverse impacts that requires a full EIA
will not be eligible for financing from the Project due to longer preparation time for the EA, the
lack of capacity of the SME to manage these type of environmental and social impacts and the
costs involved, which would outweigh the benefits.
1.6 Implementation Arrangements
Component 1 and 3
23. The Department of Small and Medium Enterprise Promotion (DOSMEP) will be the
implementing agency for Components 1 (Line of Credit) and 3 (Technical Assistance).
DOSMEP is under the Ministry of Industry and Commerce (MOIC) and will take on an overall
responsibility for project implementation, including implementation of this ESMF. It will be
supported by the National Implementation Unit (NIP) which is also under MOIC. Although the
day to day implementation of ESMF is delegated to PFIs and the roles of DOSMEP will
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primarily be on compliance monitoring and reporting to the World Bank Group, DOSMEP
assumes an overall responsibility under the project to ensure that PFIs and SMEs implement the
ESMF. In doing so, DOSMEP will work closely with the relevant agencies under the Ministry
of Natural Resources and Environment (MoNRE). An Environment Consultant will be hired by
DOSMEP to assist in its safeguards work.
24. Participating Financing Intermediaries (PFIs) will administer/on lend the line of credit to
SMEs to finance their eligible transactions. As such, PFIs will be responsible for screening
individual transaction for eligibility under the project against eligibility criteria, including the list
of ineligible activities; screening of transactions to determine environment and social issues and
impacts, categories, policies triggered and the transaction-specific instruments and measures that
need to be put in place by the SMEs to manage these impacts. PFIs will also monitor
implementation of the measures committed by the SMEs and regularly report compliance to
DOSMEP and the World Bank.
Specifically, the PFIs will:
Comply with the List of Ineligible Activities under the Project (Section 2.5). This list
includes activities prohibited by international environmental agreements or where the
World Bank Group considers financing inappropriate because of the significance of
associated environmental and social risks that outweigh the benefits.
Take measures as deemed necessary including site visits if necessary to validate that
the SME loan applicant has appropriately identified in its loan application (Section
2.1) the environmental and social risks and measures needed to manage them in
project implementation.
Monitor compliance of SME beneficiaries in line with this ESMF and the related
action plans developed (e.g. EMP, ECoP, EMDP).
Develop, and maintain, grievance redress mechanisms as provided in this ESMF to
ensure that those with grievances to the transactions supported under the project have
avenues for redress.
Submit to the NIU and DOSMEP periodic reports on the implementation of the
ESMF. The NIU and DOSMEP will report to IFC or the World Bank Team Leaders
(to be agreed within World Bank Group) as part of the project progress report.
Within five business days of becoming aware, notify the World Bank Group Team
Leaders of any significant social, labor, health and safety, security or environmental
incident, accident, issue, or circumstance with respect to any financing activities
covered by the LOC and the RSF.
Ensure that the proposed activity covered by the loan complies with all national
environmental legislation and regulations. If an applicant states that the necessary
permits or licenses have not yet been issued, PFIs will advise the applicant to obtain
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the licenses and permits before loans can be approved. During supervision, NIU and
DOSMEP will ensure that all the transactions for SME comply with government
regulations.
Ensure that where applicable all project affected people are aware of the respective
investments and were consulted before approval of the investment. Disclosure of
respective instruments (environmental audit, EMP, IEE, etc) should be done in local
language before the loan is approved.
25. Small and Medium Enterprises (SMEs) will be responsible for ensuring that their
transactions meet the eligibility criteria, manage environment and social impacts through the
preparation and implementation of measures, including consultations and disclosures of specific
safeguard instruments, e.g., IEE or EMP, EMDP.
26. IFC and/or World Bank will provide implementation support to the project through
regular supervision and follow up works, monitor the implementation of the ESMF. The IFC
and/or World Bank Team will include qualified Environment and Social Development
Specialists, who will also assist in the capacity building of DOSMEP and the PFIs.
The IFC and/or World Bank will require that the first year transactions will be reviewed prior to
implementation, from a safeguards perspective, until such time that capacity is built at DOSMEP
and the PFIs.
Component 2
27. International Finance Corporation (IFC) will administer the Risk Sharing Facility
(Component 2) on behalf of DOSMEP. IFC will assume the overall responsibility for ensuring
that Bank Franco Lao (BFL) has implemented an Action Plan and Environmental and Social
Management System (ESMS) in accordance with the IFC Sustainability Policy.
28. Bank Franco Lao will ensure that the ESMF, its agreed action plans, including
establishing an ESMS, are established, strengthened and implemented in compliance with the
IFC Sustainability Policy and applicable World Bank Safeguard Policies. The ESMS describes
key features such as: social and environment policies and procedures; current organization
structure and staffing for managing environmental and social risk; skills and competencies in
social and environmental areas; training and awareness of the institution’s investment, legal, and
credit officers on the organization’s ESMS; reporting systems to managers; and performance
monitoring procedures. This Framework is a tool for staff4 of the PFI to accompany other
guidance tools for risk management that have been developed and implemented by the institution
or its corporate parent. PFIs will also monitor implementation of the measures committed by the
SMEs and regularly report compliance to DOSMEP and the World Bank.
4 Including any expert consultants that may be hired or retained by the financial institution/PFI to fully implement
the procedures outlined in this document
16
29. DOSMEP, most PFIs in the line of credit (Component 1), and eligible SMEs do not have
knowledge or experience in environmental and social standards or basic knowledge on waste
management and pollution control (water, air, noise), and will receive technical assistance and
training under the project. The technical assistance will provide training to support the
implementation of the ESMF and ESMS as well as develop practical guidelines for waste
management and pollution control for the target type of SMEs that may have impacts on the
local environmental and local people. The technical assistance will also be extended to build
capacity of key agencies in MOIC and MONRE to address waste management and pollution
issues from SMEs including forging effective coordination and cooperation among key agencies
both at central and provincial levels.
30. Key MONRE agencies at national level include PCD (responsible for issuance of
environmental control regulations and standards, DEQP (responsible for promotion of clean
technology and secretariat to the National Environmental Committee), and the Natural Resources
and Environment Research Institute (NREI) responsible for monitoring compliance with
emission and ambient standards. At provincial and district level, provincial and district offices
(PONRE and DONRE) are responsible for overseeing and monitoring of SMEs activities related
to waste management and pollution control, including approval of an initial environmental
evaluation (IEE). Capacity of these agencies and province, districts is also limited.
Box 1. Implementation arrangement of the project
DOSMEP with support of NIU
(monitor/report ESMF implementaiton)
LOC
(DOSMEP
with support of NIU)
PFIs (Prepare ESMS and monitor
mitigation actions)
SMEs (implement mitigation actions)
RSF
(IFC/PFIs)
PFIs (Prepare ESMS and monitor
mitigation actions)
SMEs (implement mitigation actions)
TA
(DOSMEP/NIU)
DOSMEP with support of NIU prepare TOR for TA and supervise TA implementation)
MONRE (PCD, DEQP, PONRE) (assits SMEs)
17
2: Environmental and Social Screening Process of Transactions/sub-
projects
2.1 Loan Application
31. The transaction must satisfy national, IFC, and World Bank environmental and social
requirements as well as this ESMF. The SME applicant for a loan will present to PFIs a brief
description of the transaction and what the applicant considers are likely to be environmental or
social risks and issues of concern with respect to the transaction (see form in Annex F). This
information will be used by PFIs in the initial screening and categorization process.
2.2 Screening and Categorization of environmental and social risk
32. The PFI will categorize the environmental and social risk of each proposed transaction
(i.e., the activity which is the subject of the loan application) in accordance with the ESMF. The
choice of categorization will have the following implications (see more details in Section 2.4):
Category A transaction: These are transactions that are likely to have significant
adverse environmental and social impacts that are sensitive, diverse or unprecedented,
or transactions whose impacts affect an area broader than the sites or facilities subject
to physical works.
It is highly unlikely that Category A transactions will be proposed by eligible SMEs.
Also, the cost and time associated with assessing such impacts and developing
mitigation measures will likely exceed the benefits of the small size of loans
($20,000-40,000) that will be made available to SMEs under the project. In the
unlikely case that the results of project screening or assessment determine that a
transaction to be supported under the project is a Category A, the FI will contact IFC
or the World Bank to determine whether such a transaction is eligible based upon
significance of potential impacts, risks and the capacity of the counterpart
Category B transaction: The transaction may have environmental or social risks that
are less adverse and more limited than category A level, their impacts are site-specific
and largely reversible, which could be readily identified and reliably mitigated
through recognized good practices including those described in World Bank Group
Environmental, Health and Safety Guidelines (EHSGs). PFIs will verify that: (1)
supported activities comply with applicable national environmental and social laws
and regulations, and applicable IFC E&S requirements and World Bank safeguard
policies; (2) appropriate environmental permits are obtained prior to lending; and (3)
investments do not contravene the List of Ineligible Activities presented in Section
18
2.5 of this Framework. Section 2.4 provides the characteristics of transactions that
typically trigger Category B categorization.
Category C transaction: The transaction is likely to have minimal, low-risk or no
environmental or social risks associated with it. No further environmental and social
assessment work is required after screening, but there is need to verify compliance
with national regulations and relevant permit requirements as well as to monitor
implementation of transactions ; any environmental and/ or social impacts that may
occur will be addressed as per this ESMF.
Category C transactions are expected to be the bulk of SME activities given the
limited size of the loans and eligibility criteria especially in the services sector such
as light equipment leasing activities, provision of temporary personnel or office
support such as data processing, or trade and export/import services.
Transactions not eligible for financing under the Project:
Besides transactions Ok Owith significant adverse impacts, some transactions are not allowed
under the Project for financing because of higher costs and time associated with preparation of
impact assessment and development of mitigation measures, and given the limited capacity of
PFIs in managing such impacts in line with IFC Performance Standards and World Bank
safeguard policies. The list of these transactions is provided in Section 2.5,and include those
transactions typically prohibited by international environmental agreements or where the World
Bank Group considers direct financing inappropriate because of the significance of associated
environmental and social risks. It also includes:
Transactions that will require the acquisition of private land or physical relocation of
households;
Activities based on or directly linked to land/ natural resource based productions
such as food productions and processing, and other transactions of which the scale of
impact exceeds the cost and time to address them given the scale of project benefits
and the capacity of project stakeholders.
Activities involving child labor and activities involving forced labor;
Industrial-scale activities involving significant conversion or degradation of natural
and/or critical habitats and/ or any activities in legally protected or internationally
recognized areas;
Industrial-scale activities involving production, harvesting, or trade in wood or other
forestry products from plantation and natural forests other than from legal and
sustainable origin;
Industrial-scale activities involving harvesting of wild fish populations or other
aquatic species other than from legal and sustainable origin;
19
Activities, including relocation, that have adverse impacts on the lands, natural
resources, or critical cultural heritage subject to traditional ownership or under
customary use by Indigenous Peoples;
Activities involving significant alteration, damage, or removal of any critical cultural
heritage.
2.3 Principles and Methods of Screening for Risk Review
33. Screening is the first step in the environmental assessment process, which will assign the
transaction in question to one of the three categories (, B or C). This categorization will decide
the nature of further environmental and social assessment and identify transactions to be
excluded at an early stage to avoid or reduce significant adverse impacts and save costly and
time-consuming procedures and analysis. The significance of impacts may be described in
different ways. The simplest approach is the presence or absence of impacts and qualification of
degree of impact as minimal, moderate, significant, or highly significant. In assessing degree of
impact or risk, it is appropriate to take into consideration type, scale, location, timing, and
sensitivity of the impact. A key factor to consider is whether the impact is reversible, and if so,
the rate of recovery.
2.4 Principles and Methods of Categorization
Category B Transactions
34. Transactions that may have some environmental or social risks that are less adverse and
more limited than category A level, site-specific and largely reversible, and readily addressed
through mitigation measures are normally classified as Category B. The following
characteristics fro example indicate a likely Category B transaction.
Labor and working conditions are unlikely to include harmful child labor, involuntary or
compulsory labor, or significant occupational health and safety issues;
Those transactions that will not cause adverse impacts on non critical natural habitat or non
critical natural forests including the production and distribution of wood/ lumber.
Most small-scale in-situ rehabilitation or repair of infrastructure such as rural health clinics,
rural water supply and sanitation, small schools, etc.
Category C Transactions
35. Transactions that do not have the characteristics described above as characteristics of
Category A and B transactions and are perceived to have minimal or no adverse environmental
or social impacts are classified as Category C, and no further environmental or social assessment
work needs to be done after initial screening and categorization. PFIs are nonetheless required to
20
verify compliance with national regulations/ permit requirements, to monitor the implementation
of such transactions and address any environmental and/ or social that arises as per this ESMF.
Examples of Category C transactions include purchase and supply of goods and services and
capacity building.
2.5 List of Transactions that are not Eligible for Financing
36. Following transactions are not eligible for financing given the significant adverse
impacts that will likely require more resources to mitigate than the scale of benefit and the
limited capacity of PFIs in managing impacts in line with the IFC SP and World Bank safeguard
policies> All financial intermediaries (FIs) must apply the following exclusions:
Production or trade in any product or activity deemed illegal under host country laws
or regulations or international conventions and agreements, or subject to international
bans, such as pharmaceuticals, pesticides/herbicides, ozone depleting substances,
PCB’s, wildlife or products regulated under CITES.
Production or trade in weapons and munitions
Production or trade in alcoholic beverages (excluding beer and wine)
Production or trade in tobacco¹.
Gambling, casinos and equivalent enterprises¹.
Production or trade in radioactive materials. This does not apply to the purchase of
medical equipment, quality control (measurement) equipment and any equipment
where IFC considers the radioactive source to be trivial and/or adequately shielded.
Production or trade in unbonded asbestos fibers. This does not apply to purchase and
use of bonded asbestos cement sheeting where the asbestos content is less than 20%.
Drift net fishing in the marine environment using nets in excess of 2.5 km. in length.
Production or activities involving harmful or exploitative forms of forced
labor1/harmful child labor
1.
Commercial logging operations for use in primary tropical moist forest Production or
trade in wood or other forestry products other than from sustainably managed forests.
Production or trade in unbonded asbestos fibers or use of asbestos-containing
materials.
Transactions involving major construction and civil works that would cause
significant adverse impact and require a full EIA report according to the national EIA
regulation (Annex D) and in line with the IFC Performances Standards and WB
21
safeguard policies (e.g., category A), which would be beyond the capacity of the
SMEs to manage.
Transactions involving logging or those that that would significantly degrade or
convert forest, critical natural habitats. However, transactions that may cause adverse
impacts or degradation of non-critical natural habitats may be supported provided that
the benefits of the subproject outweigh the negative impacts including the cost to
devise and implement specific measures to mitigate them. Production and distribution
of construction materials is one of the eligible activities provided that wood/lumber
production are sourced legally and further due diligence of the sources will be
pursued as part of processing and approval of the transaction.
Transactions that will require acquisition of private land or displacement of people
from their livelihoods.
3 Environmental and Social Review and Assessment
3.1 Environmental and Social Review and Assessment for Category C Transactions
37. If the likely environmental and social risks and impacts are determined through the
screening process to be very low or negligible, the transaction is a Category C and no further
environmental review and assessment is required. However results of the safeguard screening
should be attached to the transaction documents. Also, PFIs should ensure that the transaction
meets the national requirements including permitting and monitor implementation of such
transactions to address any environmental and/ or social impacts that may result.
3.2 Environmental and Social Review and Assessment for Category B Transactions
38. For Category B transactions, the environmental and social risks and impacts are
perceived to be manageable, site specific, reversible and with established remedial and good
practice measures as described in the appropriate WBG Environmental Health and Safety
Guidelines.
39. If the activity is one that is subject to preparation of an IEE report under Lao PDR
legislation, the PFI may proceed to process the loan application, but will not disburse the loan
until the IEE is reviewed and approved by the IFC and/or World Bank (as agreed with applicant)
and the applicant provides a notice of approval from the GOL agencies responsible for review
and approval of the IEE (see Annex D).
40. An environmental and social impact audit may be carried out on proposed transactions as
well as on existing facilities which focuses on two elements: (a) compliance of existing facilities
and operations with relevant environmental (including occupational health and safety) and social
laws, regulations, and applicable IFC and World Bank policies’ requirements (Section 1.3); and
22
(b) the nature and extent of environmental and/or social impacts, including contamination to
soils, groundwater, and structures, as a result of past/ on-going activities and proposed
transactions. The scope and depth of the audit or review should be commensurate to potential
impacts and type of transactions.
41. A corrective Action Plan will be developed if the environmental and social impact audit
or review finds that negative but manageable impacts may occur as a result of continuing
implementation of on-going activities or new implementation of proposed transactions. The
Action Plan may call for preparation and implementation of an EIA, an IEE, an Environmental
Management Plan (EMP) or Environmental Code of Practice (ECoP), as relevant, to address the
impacts that are identified based on the audit. The Action Plan should also include measures to
inform potentially affected people of the nature of transactions, potential impacts, mitigations
measures and grievance mechanisms. The Action Plan should be attached to the loan proposal
and the assessment and verification for compliance with the proposed actions, the ESMS of
relevant PFIs, and this ESMF is a condition of loan/transaction approval. Annex F provides
sample for EMP content and form for screening.
42. It is recognized that SMEs may have limited capacity for assessing environmental and
social risks or carrying out necessary studies, such as environmental and/or social impact audits
or reviews. In such cases, flexibility will be applied and efforts will be made to find the best and
sustainable instruments and procedures for the transaction in question. In accordance with its
ESMS, PFIs will ensure that the environmental and social risks and impacts have been
adequately identified and appropriately managed in a manner commensurate to the risk review as
well as ccorrective Action Plan, which if developed, in line with ESMS, is a condition of loan
approval. In some instances, PFIs may opt to arrange for an appropriate environmental review
on its own behalf using outside expertise. At minimum, for all Category B transactions, PFIs
will prepare for the record a brief summary report or memorandum identifying sources of
information and relevant facts and findings that allow a determination that the transaction is
consistent with applicable environmental and social requirements.
43. In the event that the applicant has already prepared an IEE in accordance with Lao PDR
regulations and processes, the IFC or World Bank as agreed and the PFI must review the report
and make a determination whether: it is adequate and accurate in identification of environmental
and social impacts; that appropriate measures have been identified to avoid, minimize, or
mitigate those impacts; that the applicant has the commitment and the capability to manage the
impacts as proposed. Moreover, PFIs will assure itself that the records show that timely and
appropriate consultation with directly affected people, local communities, and interested
stakeholders has taken place on the findings and recommendations of the IEE before loan
approval. In Lao PDR a guideline for public involvement in the EIA process and a guideline on
consultation with ethnic groups have been developed and they should be applied (see Annex D).
These guidelines should be complemented by the IFC or WB disclosure policy requirements.
44. It is expected that most PFIs do not have capacity to manage environmental or social
impacts.. The IFC and World Bank will retain rights to prior review the results of environmental
and social screening, audits and ccorrective Action Plans, if developed, until PFIs are considered
to have developed adequate capacity to review them independently. Once PFIs are evaluated by
23
the environment and social specialists to have developed sufficient capacity, the IFC or World
Bank will review randomly selected environmental and social audits or reviews and ccorrective
Action Plans on a post review basis.
3.3 Transactions Requiring Land Acquisition or Change in Land Use
45. The subproject involving physical relocation of households or land acquisition is not
eligible (Section 2.5). PFIs will verify that the transactions proposed for financing will be
carried out within the land to which applicants have legal tiles and no competing claims or
legacy exists. PFIs will file the result of verification for record and review by the IFC or the
World Bank before loan approval.
3.4 Transactions with Civil Works
46. Transactions involving major civil works that have adverse impacts will not be eligible
for Project support as their costs may outweigh the benefits and capacity of the SME to handle
impacts may not be available and/or adequate. Transactions involving minor works and repairs
may be supported. To mitigate the potential negative impacts of small-scale civil works, a
simplified environmental code of practice (ECOP) including a clause on “chance finds” has been
prepared (Annex E). The financial institution will ensure that all the subprojects involving
small-scale civil works will incorporate the ECOP into the civil works contract and that the
contractor performance is monitored by the subproject owner and the results/including any
complaints from local communities are included the subproject progress report.
3.5 Transactions where Ethnic Minorities are present in the Project area
47. The PFIs will carry out screening, as part of the loan application process, to determine
whether ethnic minorities are present in the project area. If ethnic groups are found to be present
in the area of influence of proposed transactions, the FI will conduct free, prior and informed
consultations with representatives of affected ethnic groups ). Consultations will be carried out
with ethnic groups without regard to the nature or scale of negative impacts, if ethnic groups are
present in the transactions’ area of influence. It is to be noted that the area of influence of
respective transactions may go beyond the immediate geographical boundaries of the
transactions and affect other areas through value chains.
48. The result of consultations will be reflected in the loan applications, which should include
a simple Ethnic Group Development Plan. If the consultations find that the proposed transactions
will cause significant negative impacts on ethnic groups or that ethnic groups do not provide
broad community support even with the mitigations measures proposed by SMEs, such
transactions will not be supported under the project. PFIs as part of loan appraisal and due
diligence visit areas where transactions will be carried out and verify that consultations are
carried out adequately, and the results are incorporated in the loan applications.
24
49. Details of procedures to be followed with ethnic groups are provided in the Ethnic Group
Planning Framework (EGPF) that is attached to this ESMF (Annex H). The PFI will develop the
ESMS (Annex A) which will provide detailed steps to be followed at the portfolio level by
respective PFIs. DOSMEP will monitor the implementation of ESMS and report the compliance
performance to the World Bank Group, and seeks for guidance if any gaps are found to exist.
3.5 Technical Assistance and Safeguard Capacity Building
(a) Existing Capacity of Key Institutions
50. Discussion with key MONRE agencies (PCD, DEQP, and NERI) suggested that they are
aware of potential impacts of SMEs and willing to work closely with MOIC to assist the SMEs
to improve their environmental practices. It is considered that improving environmental practices
of SMEs will be more effective through promotion of knowledge and awareness on good
practices related to the application of appropriate technology and waste management and there
are many good examples within the country as well as in neighboring countries such as Thailand
that could be applied. However, technical assistance and financial support will be necessary for
capacity building both at agency and SME levels. Some activities have been initiated but all of
them are at preliminary stage and need additional assistance. PCD prepared some technical
guidance on ways to handle ozone depleting substances (ODS) chemical, solid wastes, and toxic
chemicals while NERI is building its capacity to conduct laboratory analysis for water samples
and building similar capacity at provincial level5. DEQP is promoting knowledge on waste
management at local level while the Environment Protection Fund (EPF)6, with assistance from
WB through the Lao Environmental and Social (LENS) project7, begin to build capacity of key
unit at local level. Moreover, recognizing the need for financial support for SME, EPF also
begins to provide small loan to small investor on a pilot basis.
51. Discussions with DOSMEP suggested that although they have limited knowledge and
capacity on f appropriate technology and good environmental and social practices, they have a
unit responsible for promotion of SMEs activities.
52. To facilitate effective implementation of the ESMF and capacity building of key agencies
and SMEs the technical assistance to be provided to DOSMEP ($0.5 million) will be designed to
ensure that training and capacity building will be provided to (a) DOSMEP/NIU on the ESMF
and screening and monitoring, (b) PFI on ESMS and subprojects appraisal and monitoring, and
(c) DOSMEP and MONRE agencies on development of guidelines and/or appropriate
technology/practices for key SMEs. Details will be prepared through close discussion among
key agencies during implementation.
5 With technical assistance from Government of Finland
6 The EPF has been established since 2005 to promote conservation and environmental management
7 The first phase focus in Bolikhamxay, Khammouane, and Savannakhet and the second phase is under preparation
25
4 : Monitoring and Supervision
4.1 Monitoring and Supervision of the Portfolio by the Financial Institution/PFIs
53. For all Category B transactions in the portfolio, PFIs will implement and monitor the
management of environmental and social impacts in a manner consistent with this ESMF and
PFI’s ESMS, including the development and implementation of Corrective Action Plans, EMP/
ECOP and EGDP . The first year transactions will be prior reviewed by the IFC and/or World
Bankas agreed or until such time that capacity is built within the PFIs. For Category C
transactions (e.g., TA activities), PFIs will carry out random check to verify absence of impacts
and compliance with national legislation including permitting.
54. In addition, PFIs will screen for any negative media/ NGO coverage/ reports on
environmental and social aspects of its portfolio clients on a monthly basis, and retain records of
all findings.
55. PFIs agree to make its monitoring and supervision reports available on a business
confidential basis to WB counterparts upon request.
4.2 Financial Intermediary Reporting
56. PFIs will prepare an annual report for the IFC and/or World Bank as agreed on
environmental and social performance of the portfolio as follows:
Listing of all transactions approved during the reporting period, listing environmental
category (B or C) and the name and location of SME receiving the loan;
For Category B subprojects approved during the reporting period, a copy of the
summary report including environmental and social assessment process findings or
memorandum;
A brief listing of anticipated Category B subprojects that are being processed or with
a pending loan application;
A brief summary regarding how this Framework and/or the participating financial
institution’s ESMS has been implemented in transactions covered by the LOC and
the RSF, including any material changes (e.g., to staffing, procedure); and
Details of any negative media/NGO coverage and reports on portfolio clients
regarding environmental and social aspects that have come to the attention of the
financial institution and are deemed to produce reputational or credit risk to the
26
participating financial institutions, including the World Bank Group participation in
the LOC and/or the RSF.
4.3 Grievance Mechanisms
57. SME beneficiaries, in loan applications, will clearly describe the mechanisms through
which people who may be affected by transactions can inform PFIs of their concerns or
grievances. PFIs will also develop, and describe in ESMS, mechanisms through which their
branch offices receive and address concerns or grievances. If local communities or directly
affected stakeholders approach the financial institution with reasonable and responsible claims
that an activity by an SME funded by a loan from the financial institution as part of the LOC
and/or the RSF has caused harm to them, their livelihoods, or their environment, PFIs will work
with beneficiary SME to try to address the concerns in a reasonable and responsible manner.
PFIs will report as soon as possible such complaints to the IFC/WB. In addition, PFis shall
inform the aggrieved parties that if efforts by the borrower (SME) to resolve the issue are
unsatisfactory, the aggrieved parties have the right to bring their complaints to staff in the
country IFC or World Bank offices, at the address below:
IFC Office
Address: 90 Phonexay Road; P.O. Box 9690; Vientiane, Lao PDR
Web: www.ifc.org
Telephone: +856.21.266.313
Fax: +856.21.266.329
The World Bank Office, Vientiane, Lao PDR
Address: Patouxay, Nehru Road
Telephone: (856-21) 450010 Ext 6228
Facsimile: (856-21) 414210
27
5 Public Consultation and Dissemination Process for ESMF
58. DOSMEP conducted a public consultation on the ESMF at the Lao Plaza Hotel in
Vientiane on March 11 2014. The workshop was attended by 30 people, including
representatives from the following organizations:
• Bank of Lao
• Ministry of Finance
• Ministry of Planning and Investment
• Ministry of Natural Resources and Environment
• National Implementation Unit of the Ministry of Industry and Commerce
• Lao Development Bank
• Agriculture Promotion Bank
• ACLEDA Bank
• SME’s Young Entrepreneurs Association
• Coffee Producers Association
• DOSMEP
59. The ESMF will be translated into Lao language and both Lao and English versions of the
ESMF will be made available in DOSMEP website and also made available for public access at
WB and IFC Office in Vientiane.
28
Annex A: Environmental and Social Management System (ESMS)
1.1. In order to effectively use this Framework8 as guidance to staff for managing environmental and
social risk, each PFI shall develop its own internal Environmental and Social Management System
(ESMS). In addition to a policy outlining the commitment to meet the requirements of this
Framework and other standards the institution may wish to follow, the ESMS shall describe key
features including: social and environment policies and procedures; organization structure and
staffing for managing environmental and social risk; skills and competencies in social and
environmental areas; training and awareness of the institution’s investment, legal, and credit
officers on the organization’s ESMS; reporting systems to managers; performance monitoring
procedures and grievance mechanisms. The ESMS will also include supporting tools such as
checklists, templates and guidance notes to assist the loan/credit officers and other relevant staff to
assess and manage environmental and social risks.
1.2. To be in line with the World Bank safeguard policy on indigenous peoples (OP4.10) the ESMS
will also identify a plan to encourage ethnic groups to benefit from the Project and ensure that the
SMEs transactions will not adversely affected them. During the preparation of the ESMS a quick
social assessment will be carried out to determine (a) if ethnic groups are present in the Project
areas and (b) if yes, identify opportunity for the ethnic groups to benefit from the Project and/or
likely to be adversely affected by the subprojects. The policy and assessment will be carried out in
line with the Ethnic Group Planning Framework developed for the Project (Annex H).
1.3. Upon application by a commercial bank or financial institution to participate in the LOC and/or
the RSF, environmental and social specialists from IFC and WB will engage with the institution
and convey WB and IFC’s social and environmental requirements as required in this Framework.
The applying institution will be responsible for developing the ESMS and integrating it into the
institution’s lending operations to screen loan applications and mange environmental and social
risks in a manner consistent with this Framework. Once the ESMS is developed, the applying
institution will send it to IFC and WB for review. A satisfactory ESMS, approved by the applying
institution’s own management and accepted by IFC and WB, will be a condition of effectiveness
for the LOC and/or RSF agreement between the World Bank and PFIs.
8 Environmental and Social Management Framework (ESMF) for the Lao PDR-SME Access to Finance project
(P131201)
29
Annex B: Environmental, Health & Safety Guidelines
1. As of August 2010, the World Bank Group has produced 64 Environmental, Health & Safety
Guidelines (EHSGs) for various industrial sectors, as well as General Environmental, Health &
Safety Guidelines which covers a wide range of issues and is applicable to all industrial in addition to
the sector-specific guidelines. The full set of Industry Sector EHSGs and the General EHSGs can be
most readily accessed on IFC’s website:
(www.ifc.org/ifcext/sustainability.nsf/Content/EnvSocStandards).
2. The IFC website is also the location where updates of the EHSGs will be posted, as new examples of
good practice are identified, or as new guidelines are prepared. These EHSGs are also part of the
Equator Principles. As required by the Equator Principles, the most recent version of the respective
applicable guidelines should be used in the screening and review of new transactions.
3. For most investments in the services industry, the General Environmental, Health & Safety Guideline
is most likely the only applicable EHSG. However, for some investments possible under the Risk
Sharing Facility, there are specific industry sector guidelines that also would apply in addition to the
General EHSG. A few examples of some of these are:
Tourism and Hospitality Development
Telecommunications
Mammalian Livestock Production
Poultry Production
Plantation Crop Production
Annual Crop Production
Aquaculture
Fish Processing
Meat Processing
Poultry Processing
Food and Beverage Processing.
4. It should be noted that these Industry Sector EHSGs and the General EHSG are intended to identify
recognized good practice, particularly in the absence of comparable national or local legislation.
Moreover, they are designed to cover a wide range of topics, especially in the case of the General
EHSG, some or many of which specific topics may not be relevant or applicable to the project
enterprise seeking a loan under the LOC and/or the RSF. The EHSGs will be used by the financial
institution as useful tools in the screening and review process to determine whether environmental
and social risks associated with the project enterprise have been appropriately identified and
managed.
30
Annex C: IFC Performance Standards and World Bank Safeguard Policies
1. The IFC has produced eight Performance Standards which cover a wide range of The eight
Performance Standards are also considered part of the Equator Principles. The eight Performance
Standards can be most readily accessed on IFC’s website, and are listed below:
(www.ifc.org/ifcext/sustainability.nsf/Content/EnvSocStandards).
Performance Standard 1: Social and Environmental Management Systems
Performance Standard 2: Labor and Working Conditions
Performance Standard 3: Pollution Prevention and Abatement
Performance Standard 4: Community Health, Safety and Security
Performance Standard 5: Land Acquisition and Involuntary Resettlement
Performance Standard 6: Biodiversity Conservation and Sustainable Natural Resources
Management
Performance Standard 7: Indigenous Peoples
Performance Standard 8: Cultural Heritage
2. The World Bank has ten Safeguard Policies (Operational Policies [OPs]) that in most environmental
and social matters are similar in coverage to the IFC Performance Standards:
OP 4.01: Environmental Assessment
OP 4.04: Natural Habitats
OP 4.09: Pest Management
OP 4.10: Indigenous Peoples
OP 4.11: Physical Cultural Resources
OP 4.12: Involuntary Resettlement
OP 4.36: Forests
OP 4.37: Safety of Dams
OP 7.50: Projects on International Waterways
OP 7.60: Projects in Disputed Areas.
3. Of these 10 policies, only OP4.01, OP 4.04, OP4.36, and OP4.10 apply to this Project. Annexes D-G
provide background on the national environmental regulations and Project specific environmental
requirements while Annex H provides requirements with respect to ethnic groups.
4. These policies can be found on the World Bank website:
(www.worldbank.org/wbsite/external/projects/extpolicies/extsafepol).
5. In the context of this Project, any Category A transactions or projects, as defined by World Bank or
those subject to EIA requirement according to government EIA regulations, are considered ineligible,
application of IFC performance standard is unlikely. For the Category B transactions that are
envisioned to becovered under the LOC and the RSF, it is expected that screening and determination
of consistency with relevant government requirements (i.e. for IEE as a maximum) and good
environmental and social practices will be applied. However, there may be differences between the
GOL requirements related to EIA process and/or other related decrees and/or regulations,
consultation with IFC E&S specialists is highly recommended.
31
Annex D: Environmental Legislation and Institution in Lao PDR
Note: This summary is provided for information purposes only, and is not necessarily an exhaustive nor
a World Bank Group approved list of all relevant environmental legislation and institution framework.
Natural Resources and Environmental
1. In Lao PDR, the National Constitution (1st edition 1991 and 2nd 2003) gives clear policy on the
environment, including biodiversity9. Key laws, decrees, and regulations related to natural
resources and environment are as follows:
The Environment Protection Law (1999, revised in 2013); the Environmental Impact
Assessment Decree (EIA 2010, being revised);
The Water and Water Resources Law (1996, being revised); The Forestry Law (1996, revised
2007); The Decree (164/PM in 1993) on National Biodiversity Conservation Areas (NBCAs);
The Aquatic Animal and Wildlife Law (2007); The Land Law (amended 2003, being
revised); The Law on Preservation of Cultural, Historical, and Natural Heritage (June 20,
1997)
The Agriculture Law; The Law on Industrial Manufacturing (1999); The Electricity Law
(1997, amended 2012); The Mining Law (1997), amended 2012); The Road Law (1997,
1999); the Agriculture Law (1999); The Urban Planning Law (1999); and The Law on
Hygiene, Decease prevention and Health Promotion (2001). Decree on the Environment
Protection Fund (2005); Decree on Compensation and Resettlement of People Affected by
Development Projects (2005);
2. There are also related sectors policy and strategy related to natural resources and environment and
the key ones are:
The Forestry Strategy to the year 2020
The National Biodiversity Strategy 2020 and Action Plan 2010
The National Policy on Environment and Social Sustainability of the Hydropower Sector in
Lao PDR (2005)
The Policy on Water and Water Resources
The Water Sector Strategy and Action Plan
3. The overall management of natural resources and environment is under the responsibility of the
Ministry of Natural Resources and Environment (MONRE) which was created in mid 2011.
Under MONRE there are 17 departments, offices, and research centers responsible for subsector
management (environment and social impacts assessment, water, land, forest resources
conservation, minerals, hydrometeorology, pollution control, natural disaster and climate change,
river basins etc.)
4. At the provincial and district levels10
, there are corresponding provincial/city environment
departments. These local departments have the responsibility of enforcing the natural resources
9 As stated in Article 17: “All organizations and citizens must protect the environment and natural resources: land,
underground, forests, fauna, water sources and atmosphere.” 10
Including Vientiane Capital
32
and environmental legislation under MONRE responsibility. However, the daily operation
functions of these departments would normally be under the direct management of the provincial
authorities.
Environmental Impact Assessment Decree
5. The Environmental Protection Law was enacted in 1999 and amended in 2013. The 1999 law
required all development projects to prepare an environmental impacts assessment (EIA) and
secure approval of an Environmental Compliance Certificate (ECC) before construction and/or
operation of development activities and an EIA regulation was promulgated in 2003.
6. To strengthen effectiveness of the EIA process in light of rapid development in the country, the
EIA decree was promulgated in 2010 and the revision of the EPL was completed in early 2013.
However in light of MONRE operation, many laws, decree, and regulations, including those
related to the EIA decree are being reviewed and revised. During the preparation of this project
(2013), two MONRE ministerial orders were issued on 17 December 2013 on the EIA process
and the IEE process. MONRE is responsible for the administration and monitoring of the EIA
process, issuance of the ECC, and its compliance while the provincial MONRE offices
(PONREs) is responsible for administration of the IEE process including the ECC issuance and
monitoring of the IEE process. The EIA regulation requires EIA study for the following type of
projects: Energy Sector; Agriculture and Forestry Sector; Industrial Sector; Infrastructure Sector;
and Mining Sector. Details on the MONRE regulations and list of project requiring EIA or IEE is
available in Lao language (see Annex G). Preparation of an environmental management plan
(EMP) or an environmental management and monitoring plan (EMMP) is required. Table of
content for the EMP should be in line with the guideline for preparation of the IEE issued by
MONRE.
7. To guide the impacts assessment and preparation of IEE and/or EIA report, there are a number of
technical guidelines prepared by MONRE and other agencies with assistance of many
development partners. Efforts have been made to develop and apply standard documents for
environment and social obligations (SESO) and standard Environmental Compliance Certificate
(ECC) to clarify/enhance commitment of the project owners in the private sector. Some of these
guidelines will have to be revised in the near future in line with the current organization structure
and the effectiveness of the revised decrees and regulations. However, most of these regulations
and guidelines are designed to address large projects and the key ones include:
The EIA guidelines (October 2012, English)11
The IEE guidelines (2013)
Guideline on public involvement (2012, Lao and English)
Guideline on consultation with ethnic group12
Manual for Monitoring of ESMMP of EIA Project in Lao PDR13
Guidelines on Protection Forest Management Planning14
11
Supported by the Ministry For Foreign Affairs of Government of Finland through the Environmental Management
Support Programme (EMSP). 12
This is developed by the Lao Front for National Construction in 2013. 13
Joint UNEP and UNDP Poverty–Environment Initiative, Environmental Management Support Programme
(EMSP), ESIA Component Lao PDR 14
Technical Assistance Provided by the Government of Japan Grant Aid through the Forest Preservation
Programme, February 2013
33
Pollution Control Decree (draft)
8. MONRE is drafting a Pollution Control Decree to be used for management of pollution from
various sources. According to the draft, the decree defines types, areas, and nature of pollution
control from point sources and non-point sources as well as from emergency situations, including
environmental standards (effluent and ambient). The project developments will be required to
obtain the pollution control permit as described in the ministerial regulations which will be
established by MONRE. Scope will include toxic/hazardous chemical and wastes (including
radioactive). There are also draft Environment Ambient Standard (2009) and draft Pollution
Emission Standards (2009). The Pollution Control Department (PCD) of MONRE and the
respective unit at the provincial and district levels will be responsible for overseeing the
implementation and monitoring of the decree. The Department of Environmental Quality
Promotion (DEQP) is promoting green, clean technology and well as good environmental control
and management practices while the Natural Resources and Environment Research Institute
(NERI) provides services on water analysis. However, effective application of regulations and
promotion activities and services remains a major challenge given limited capacity of key
agencies and lack of human and financial resources.
9. Under MOIC, the Department of Industry and Handicraft is responsible for ensuring compliance
with emission standards. However, in line with the current institutional reform in the natural
resources and environmental sector, roles and responsibility of central agencies and provinces as
well as between MONRE and MOIC are being discussed.
Agriculture chemicals
10. In Lao PDR, Ministry of Agriculture and Forestry (MAF) is responsible for control and
management and agriculture chemical uses. With the support of JICA and FAO, MAF has
produced in March 2000 the Regulation number 0886/MAF and recently updated in June 11,
2010 (regulation number 2860/MAF) on Pest Management in Lao PDR based on the WHO
recommended Classification of Pesticide by Hazard and Guideline to Classification 1994-1995.
In January 2010, MAF begin to register the companies who import pesticides, fertilizers and
seeds into Lao PDR. Registered pesticide has been adjusted in May 2010 based on the new
regulation. The Department Agriculture under MAF is mandated to oversight all the usage of
pesticide.
Protection of forests, wildlife, and biodiversity
11. The Protection Forest Decree (2010) aims to ensure effective and sustainable management and
protection of forest area designated as “Protection Forest” according to the Forestry Law. The
decree define the principles, procedures, and management measures on protection, conservation,
development, and sustainable use for protection forests and its land including criteria for
designating protection forest and the need for engagement with local communities and collection
of revenue from hydropower projects. There are regulations on Management of the National
Biodiversity Conservation Areas (NBCAs) and Aquatic and Wild Animals (June 7, 2001). Effort
has been made to promulgate a decree on Protection Areas15
and the final draft has been
submitted for Government approval. The law assigns the responsibility to MAF, however, after
15
This is include the area referred to as the National Biodiversity Conservation Area or NBCA
34
the establishment of MONRE, the responsibility has been transferred to the Department of Forest
Resources Management (DFRM) of MONRE and the respective unit at the provincial and district
levels will be responsible for overseeing the implementation and monitoring of the decree
implementation.
12. Protection of animals and wildlife is under the responsibility of the Department of Agriculture
(DOA), the Department of Forest (DOF), and the Department of Wildlife Control (DOFI) of
Ministry of Agriculture and Forest (MAF) and the respective unit at the provincial and district
levels will be responsible for overseeing the implementation and monitoring of the laws and
regulations.
International Conventions
13. Lao PDR is a signatory member of many international conventions related to environment,
forestry, and biodiversity conservation and the key one include:
The Convention Concerning the Protection of the World Cultural and Natural Heritage
(WHC), 1972; the Montreal Protocol on Substances that Deplete the Ozone Layer, 1987; the
UN Framework Convention on Climate Change (UNFCC), 1992; the UN Convention to
Combat Desertification (CCD, 1994; the UN Convention on Biological Diversity (CBD)
1996; the Agreement on the Co-operation for the Sustainable Development of the Mekong
River (1995); the Stockholm Convention on Persistence Organic Pollutants (POPs) 2002; the
Convention on Illegal Trade in Endangered Species of Wild Fauna and Flora (CITES) in
2003; the Convention on Wetlands of International Importance Especially as Waterfowl
Habitat (Ramsar Convention).
14. Laos is one of the member countries of the ASEAN Wildlife Enforcement Network
WEN), formally launched in 2005, and in the Lao Wildlife Enforcement Network was
launched in May 2011. Through ASEAN WEN and Lao WEN, the government has been
coordinating within the region, and particularly with Viet Nam on wildlife trade control
cooperation. There are also decrees and regulations include Decree on the Control of
Import, Export and Use of Ozone Depleting Substances (2004); Regulation on Control of
Import, Export and Consumption of Ozone Depleting Substances (2004). Key agencies
include those of MONRE, MAF, or MOIC.
35
Annex E. Simplified Environmental Code of Practice (ECOP)
1. The requirements in this annex will be incorporated into all contracts related to civil works. It
comprises 2 parts: (1) good housekeeping involves proper storage, use, cleanup, and disposal of
the various materials used during construction for human and environmental safety and (2) a
standard clause for “chance find” procedures.
Part (1) Good housekeeping practices:
2. DO:
- Limited working hour during the day time, especially in residential areas, and control driving
speed;
- Minimize earth excavation and appropriate disposal of spoil;
- Minimize opening of new borrow pits and ensure proper closure;
- Minimize traffic congestion, dust and noise generation;
- Proper maintenance of construction equipment and vehicles;
- Provide appropriate safety sign (day and night) and closely inform local residents;
- Avoid spill of used oil and other toxic materials, including safe transportation and
storage;
- Ensure access to clean water and latrines by workers and provide mosquito net;
- Avoid social/cultural conflict between workers and local population; and
- Apply good housekeeping in the construction and/or storage sites to ensure safety of workers and
peoples (Gather up and remove debris to keep the work site orderly and safe; Plan and implement
adequate disposal of scrap, waste and surplus materials; Keep the work area and all equipment
tidy. Designate areas for waste materials and provide containers; Keep stairways, passageways
and ladders free of material, supplies and obstructions; Secure loose or light material that is stores
on roofs or open floors; Keep materials at least 2m (5ft) from openings, roof edges, excavations
or trenches; Remove or bend over nails protruding from lumber; Keep hoses, power cords,
welding leads, etc from laying in heavily traveled walkways or areas; Ensure structural openings
are covered/protected adequately; Provide the appropriate fire extinguishers for the materials
found on-site. Keep fire extinguisher stations clear and accessible; etc.)
3. DO NOT:
- Do not permit rubbish to fall freely from any locations of the project and/or access by animals
(dogs, cats, pigs, etc.). Use appropriate containers.
- Do not throw tools or other materials.
36
- Do not raise or lower any tool or equipment by its own cable or supply hose.
- Use grounding straps equipped with clamps on containers to prevent static electricity buildup.
- Do not allow hunting of animals by workers in protected areas.
4. SPECIAL NOTE ON FLAMMABLE/EXPLOSIVE MATERIALS:
- Store flammable or explosive materials such as gasoline, oil and cleaning agents apart from other
materials.
- Keep flammable and explosive materials in proper containers with contents clearly marked.
- Dispose of greasy, oily rags and other flammable materials in approved containers.
- Store full barrels in an upright position.
- Store empty barrels separately.
- Post signs prohibiting smoking, open flames and other ignition sources in areas where flammable
and explosive materials are stored or used.
- Store and chain all compressed gas cylinders in an upright position.
- Mark empty cylinders and store them separately from full or partially full cylinders.
- Ventilate all storage areas properly.
- Ensure that all electric fixtures and switches are explosion proof where flammable materials are
stored.
Part (2) The “chance find” procedures:
- If the Contractor discovers archeological sites, historical sites, remains and objects, including
graveyards and/or individual graves during excavation or construction, the Contractor shall:
- Stop the construction activities in the area of the chance find;
- Delineate the discovered site or area;
- Secure the site to prevent any damage or loss of removable objects. In cases of removable
antiquities or sensitive remains, a night guard shall be arranged until the responsible local
authorities or the National Culture Administration take over;
- Notify the supervisory Project Environmental Officer and Project Engineer who in turn will notify
the responsible local authorities and the Culture Department of Province immediately (within 24
hours or less);
- Responsible local authorities and the Culture Department of Province would be in charge of
protecting and preserving the site before deciding on subsequent appropriate procedures. This
37
would require a preliminary evaluation of the findings to be performed by the archeologists of
National Culture Administration. The significance and importance of the findings should be
assessed according to the various criteria relevant to cultural heritage; those include the aesthetic,
historic, scientific or research, social and economic values;
- Decisions on how to handle the finding shall be taken by the responsible authorities and Culture
Department of Province. This could include changes in the layout (such as when finding an
irremovable remain of cultural or archeological importance) conservation, preservation, restoration
and salvage;
- Implementation for the authority decision concerning the management of the finding shall be
communicated in writing by relevant local authorities; and
- Construction work could resume only after permission is given from the responsible local
authorities or Culture Department of Province concerning safeguard of the heritage.
38
Annex F: Safeguard Screening and EMP Content
1. This annex clarifies schematic process for safeguard screening and forms (F1 and F2) and sample
EMP content (F3).
F1 Schematic Safeguard Review Process
Identification and Initial Screening for Excluded and
Cat A Transaction (by PFI)
Larger subprojects with identified
E&S issues and/or require IEE
approval:
PFI fill out E&S Assessment
Checklist with support of the
NIU/DOSMEP staff
consultant
Does the subproject have significant E&S risks and
impacts
Yes:
prepare an EMP/IEE
or mitigation measures
No:
Proceed with
preparation of Sub-
project application
Attach E&S Assessment Checklist, and/or related E&S
Documents to Subproject Agreement
Pass:
Proceed with Preparation of Sub-projects details.
PFI assess the potential Sub-Projects for potential risks and impacts and E&S requirements
(ESMF/ESMS)
Sub-project Implementation and E&S Compliance Monitoring
PFI record the E&S implementation progress and included it in project
progress report to be submit to WBG for
clearance
Smaller subprojects with no or limited potential E&S
issues
Fail:
Discard the Application
SME prepare mitigation measures
and submitted to PFI
PFI appraise the transaction
including safeguard measures and if acceptable sign the loan agreement.
If not assist the SME to improve it
plan
39
F2. E&S Assessment Form (sample)
Name of project and subproject
Subproject E&S Assessment Form A (form #) –with no impacts
Applicant:
Proposal name:
Proposal number:
Loan type:
LOC □ RSF □
Amount requested:
I certified that this subproject does not involve land acquisition, ethnic group, or
civil works, and therefore does not require neither safeguard measures nor ESMF
clearance
Screen by: ……………………………………………………………………..
Date:
Remarks:
Provide more details on the nature of the subproject
General Instructions:
This checklist is to be completed to support the verification of a Subprojects Application. It is to be
attached to the Subproject Agreement that is to be prepared and submitted to the Department of
SME Promotion and/or the National Implementing Unit (NIU).
Subproject E&S Assessment Form B (form #) –with limited impacts
Applicant:
Proposal name:
Proposal number:
Loan type:
LOC □ RSF □
Amount requested:
Screened by:
E&S Applicable Requirements: □ Mitigation Plan Required
□ No Mitigation Required
□ No ESMF Clearance
Date:
Number……………….
Local Number……………….
40
PFI recommendations for proposal improvement before submitting to DOSMEP/NIU for review:
Remarks:
General Instructions:
This checklist is to be completed to support the verification of a Subproject Application. It is to be
attached to the Subproject Agreement that is to be prepared and submitted to the NIU/DOSTEP.
This checklist focuses on Environmental and Social issues and concerns to ensure that social
dimensions are adequately considered in subproject evaluation.
The purpose is to identify its feasibility and potential environmental and social impacts of the sub-
project activities. If applicable please use the “remarks” section to discuss any suggested mitigation
measures.
This form is to be used by the PFI to screen for project category and potential environmental and
social issues of a sub project, determine the instruments to be prepared for the sub project
Subproject Name
Subproject Location
Subproject Proponent
Subproject Type/Sector
Estimated Investment
Start/Completion Date
Questions Answer
If Yes
Document
s
requireme
nt if Yes
yes no
Is the proposed project likely to have
minimal or no adverse environmental
impacts? Please provide brief justification:
Category C No action
needed
beyond
screening
Is the proposed project impacts limited, site
specific and readily mitigated with known
mitigation measures? Please provide brief
justification:
Category B
Limited
ESIA or
ESMP
Will the project involve the conversion or
degradation of non-critical natural habitats?
Please provide brief justification:
PS 6 /
OP 4.04
Addressed
in ESIA
41
Are there any ethnic minority communities
present in the project area?
PS 7/
OP 4.10
Simplified
EMDP
Will the project have the potential to have
impacts on the health and quality of forests
or the rights and welfare of people and their
level of dependence upon or interaction
with forests; or aims to bring about changes
in the management, protection or utilization
of natural forests or plantations?
PS 6/
OP4.36
Addressed
in ESIA
The sub project is classified as a Category ________ project, and the following safeguards
instruments will be prepared:
1. _______________________________________________________________________
2. _______________________________________________________________________
3. _______________________________________________________________________
4. _______________________________________________________________________
SCREENING QUESTIONS No Unkno
wn
Yes MITIGATION MEASURES
REQUIRED?
A. NEGATIVE LIST REVIEW:
If Yes, proposal must be rejected
Land acquisition funded by the proposed
subproject?16
Involuntary resettlement?*
□ □ □ If Yes, proposal must be rejected. If
Unknown, additional information is
required before proposal can be
considered.
Do the proposed activities or budget include
any of the Project negative list (see Section
2.5 of the ESMF) :
□ □ □ If Yes, proposal must be rejected. If
Unknown, additional information is
required before proposal can be
considered.
B. ENVIRONMENTAL TRIGGERS: DOES THE SUB-PROJECT INVOLVE ALTERATIONS OR
CONSTRUCTION IN AREAS ADJACENT TO OR WITHIN ANY
OF THE FOLLOWING ENVIRONMENTALLY SENSITIVE
AREAS?
Mitigation: must comply with local
regulations; EIA is required. If
unknown, additional information is
required before proposal can be
considered. DOCUMENTATION
REQUIRED.
Protected Area, Wildlife Reserve, Buffer Zone, or other conservation area
□ □ □
42
SCREENING QUESTIONS No Unkno
wn
Yes MITIGATION MEASURES
REQUIRED?
Wetland □ □ □
Other: □ □ □
C. POTENTIAL ENVIRONMENTAL IMPACTS WILL THE SUBPROJECT CAUSE: Mitigation: must comply with local
regulations. EMP is required. If
unknown, additional information is
required before proposal can be
considered. DOCUMENTATION
REQUIRED.
Impairment of downstream water quality and
therefore, impairment of downstream
beneficial uses of water?
□ □ □
Noise or dust from construction equipment? □ □ □
Are there risks of soil erosion? □ □ □
Are there any pollution and/or public health
risks □ □ □
Other: □ □ □
D. REQUIRED E&S DOCUMENTS:
Simple Environmental Management Plan
(EMP)?
□ □
Full Environmental Assessment (IEE)? □ □
Other? ………………………………………. □ □
E. OTHER REMARKS:
F. CONCLUSIONS/RECOMMENDATIONS:
G. SIGNING OFF: PROPONENT
DOSTE/NIU COORDINATOR:
43
SCREENING QUESTIONS No Unkno
wn
Yes MITIGATION MEASURES
REQUIRED?
NAME: …………………………………. POSITION:…………………………….. DATE: ………………………………..
NAME: …………………………….. POSITION:………..………………….. DATE: ……………………………..
COMPLIANCE TO NATIONAL LAW AND REGULATIONS AND ACCIDENTS/INCIDENCES
(to be added to questionnaire above in same format).
YES NO
Has the site / company had any environmental incidents in the last 2 years that require notification to the regulator?
Has the site /company been issued with, in the last 2 years, any violation of environmental permits, licences or improvement notices by the regulator?
Has the site/Company has all the relevant permits/approval from government
authorities and key environmental operating permits, for example Consent to Operate and Hazardous Waste Authorization if applicable?
Has the site/company had any health and safety incidents or accidents, including fatalities, in the last 2 years (e.g. oil spills, fires) involving death or multiple serious injuries and/or significant environmental damage?
QUESTIONS ON THE APPLICATION OF PS 1 AND PS2
(To be included as part of list or a different list).
PS 1: Assessment and Management of Environmental and Social Risks and Impacts
Policy
Does the company have an overarching Policy (statement) defining the environmental and
social objectives and principles guiding the company’s E&S performance?
Is this Policy backed by the top management of the company?
Does this Policy specify who within the company is responsible for Policy implementation?
Was this Policy communicated to all employs of the company?
Identification of Risks and Impacts
44
Does the company have a system/procedure to screen, identify, analyze, and access the
potential risks and impacts related to its business activities/projects?
Is an emergency preparedness and response system and integrated part of the company’s risk
management system?
Has the company conducted Environmental and Social Impact Assessment (green field
projects) or any other type of E&S assessments (limited or focused E&S assessments, E&S
audits) for the project financed?
Organizational Capacity and Competency
Has the company designated specific in-house personnel, including management
representative, with clear lines of responsibility and authority for E&S issues?
Do the delegated personnel possess the knowledge, skills, and experience to implement the
E&S policy and to follow established procedures?
Has the company allocated resources to support its E&S functions?
Has the company allocated resources to support capacity building of relevant staff on E&S
issues?
Does the company have relevant training programs in place for the E&S personnel?
Does the company outsource E&S functions to a qualified third party(ies)?
Monitoring and Review
Does the company have procedures in place to track and evaluate E&S performance of its
operations?
Is appropriate environmental and social performance information periodically reported
internally to senior management, investors and stakeholders (as relevant)?
Does the company have a procedure to evaluate and record results of its monitoring
activities?
Stakeholder Engagement
Does the company have a mechanism for identify its stakeholders (affected communities and
other interested stakeholders in the company’s activities)?
Has the company developed and implemented a Stakeholder Engagement Plan that is scaled
to the project risks and impacts and development stage?
In case company’s activities have negative impacts on local communities does the company
established a community engagement process for affected communities?
Does the process of informed consultation and participation took place (when applicable)?
External Communications and Grievance Mechanism
Does the company have a procedure to receive and process communications from external
stakeholders?
Does the company have a grievance mechanism – a procedure for receiving, addressing, and
recording/documenting complaints and communication from affected communities?
45
Does the grievance mechanism ensure that the confidentiality of a person rising the complain
is protected?
Does the company ensure that the grievance mechanism is easily accessible, understandable
and its availability was communicated to affected communities?
PS 2: Labor and Working Conditions
Human Resources Policy and Management
Does the company have an HR policy that is consistent with requirements of the national law
and PS2 requirements?
Is this Policy clearly understandable and easily accessible to all employees?
Does the company have policies and procedures for managing and monitoring the
performance of third party employers in terms of labor and working conditions?
Has the company established a grievance mechanism for workers to review and address
employee complaints?
Has the company ensured that contracted workers by third parties, if any, also have access to
the grievance mechanism?
Is there a person responsible to review complaints and follow up on them in a timely and
transparent manner?
Working Conditions and Terms of Engagement
Has the company documented and communicated in understandable way working conditions
and terms of employment to all workers directly contracted (including information on
working hours, rest days, overtime procedures, wages, frequency of payments and sick and
maternity leave, vacations)?
Are the terms and working conditions in accordance with any collective agreement (if
applicable)?
Does the company identify migrant workers and ensure that the migrant workers are engaged
on substantially equivalent terms and conditions to non-migrant workers?
Does the company provide accommodation to its workers?
If so, does the company put in place and implement policies on the quality and management
of the accommodation and provision of basic services?
Worker’s Organization
Does the company allow workers to form and join workers’ organizations and bargain
collectively?
Non-Discrimination and Equal Opportunity
Does the company have documented transparent procedures to ensure that employment
decisions are not made on the basis of personal characteristics unrelated to job requirements?
46
Does the company have any preferential employment policies in place?
Retrenchment
Does the company anticipate retrenchment of a significant number of employees?
If yes, has the company assessed any alternatives to retrenchment?
If there are no viable alternatives, is there a retrenchment plan in place?
If retrenchment has taken place, have workers received notice of dismissal and relevant
severance payments mandated by law and collective agreements in a timely manner?
Protecting the Work Force
Does the company ensure child or forced labor, including trafficked persons, is not used in its
operations, including through contractors or in the primary supply chain?
Does the company check the age of all employees?
Does the company ensure that young workers (under the age of 18) are not employed in
dangerous work and regularly monitor their health, working conditions, and hours of work?
Occupational Health and Safety
Does the company provide its workers with a safe and healthy work environment?
Where applicable does the company provide workers with and mandating that workers use
personal protective equipment (PPE)?
Has the company established and implemented occupational health and safety procedures in
line with good international industry practices to prevent accidents, injury, and disease?
Does the company track and report on rates of injury, occupational diseases, lost days, and
absenteeism and number of work-related fatalities?
Does the company have training programs in place for workers on occupational health and
safety?
Does the company have a fire, life and safety plan?
Supply Chain
Where there is a high risk of significant safety issues related to supply chain workers, has the
company requested its primary supply chain to introduce corrective measures to address life-
threatening situations?
Where remedy is not possible, does the company have a plan to shift the primary supply
chain?
47
F3. EMP Content (sample)
Executive summary
1. Introduction - provide brief but concise information on objective of the EMP and
its connection with the ESMF of the Project and/or ESMS of the PFI.
2. Policy, regulations, and institutional frameworks
2.1 GOV’s regulations - provide brief description of GOV regulations related to
IEE and standards applied for the subproject
2.2 ESMF requirements
3. Project description – provide description of the subproject including location
maps showing location in the project area as well as details at the subproject
level. This is to provide reader who is not familiar with the area to understand the
issue clearer.
4. Environmental background – provide key information on the environmental
background of the subproject as well as its connection with the project area,
including maps (if possible). Focus should be given to identify area/community
that may be affected by the subproject.
5. Potential impacts and mitigation measures – provide results of the safeguard
screening following the criteria in the ESMF, identify potential impacts (positive
and negative) and mitigation measures; the impacts should be described for pre-
construction, construction, and operation phases; using a matrix format could
help understanding connection between the impacts and mitigation better.
6. Actions to be carried out under the subproject – explain the mitigation measures
and agencies responsible for the implementation during preconstruction,
construction, and operation stages of the subproject, including incorporating
ECOP (annex E) into the subproject involving civil works.
7. Implementation arrangement – explain responsible agencies (including their
capacity to carry out the activities identified in the EMP and the need for
training), implementation schedule, cost estimate, and how the EMP will be
integrated into the subproject, including state explicitly that the ECOP will be
included in the bidding documents of contractors.
8. Consultation and information disclosure – provide summary on consultation
activities and stakeholders on the EMP at subproject level (This can be combined
with RAP) and concerns raised and responses. Locations and dates of EMP to be
disclosed should be provided (see guidelines below).
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Annex G. List of Projects Requiring EIA and IEE (in Lao)
49
50
51
52
53
54
55
56
57
58
59
60
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Annex H: Ethnic Groups Planning Framework
H1. IFC PS and WB policy on Indigenous Peoples
For the purpose of this project the IFC Performance Standard 7 on Indigenous peoples and World
Bank Policy on Indigenous Peoples (OP/BP 4.10) apply he World Bank Policy on Indigenous
Peoples (OP/BP 4.10) applies to this project. The Participatory Financial Intermediary (PFI) will be
required to ensure their consistent application based upon the Operational Manual that will be
developed for the project implementation.
H2. National Legislation regarding Ethnic Groups17
1. In Lao PDR the term Ethnic Groups (EG) is used to characterize a variety of cultural groups. The
Lao Front for National Construction (LFNC) introduced an official ethnic classification into forty
nine main groups comprising four ethno-linguistic facilities, namely the Tai-Kadai, the Mon-Khmer,
the Tibeto-Burmese, and Hmong-Mien which are distributed from the north to the south of the
country. Out of the four regions the north has the highest number of districts with ethnic groups
comprising about 87% of the region population while the east has the second highest number of 69%
and followed by the southern and central regions, each of which have ethnic populations of about
50%18
.
2. Table 1 below summarizes the main characteristics associated with the four ethno-linguistic groups
in Lao PDR.19
Ethno-
Linguistic
Language
Family Summary Characteristics
Tai Kadai Lao Phoutai 65% of the population, living mostly along the economically vibrant
Mekong corridor along the Thai border or in Northern lowlands;
settled cultivators or urban dwellers; migrated into Lao PDR since
the 13th century ; Buddhists.
Austroasiatic Mon Khmer 24% of the population, living mainly in highland areas in the North
and Central South, smaller groups (Khmou) live also in the Northern
lowlands; the most diverse ethnic group and the first one to inhabit
large areas of Lao PDR; animist and shifting cultivators; fairly
assimilated due to hundreds of years of interaction with Lao-Tai,
single communities live in isolation as hunter-gatherers.
Hmong - lu
Mien
Hmong Yao 8% of the population, living mainly in mid- and upland areas in the
North; Hmong is the largest subgroup; animist with strong ancestor
cults, although many converted to Christianity; typically shifting
cultivators, migrated to Lao PDR in the 19th century.
Chine –
Tibetan
Tibeto
Burman
3% of the population, living mainly in poorly-connected upland areas
in the North; animist and shifting cultivators; migrated to Lao PDR in
17 The official terminology for describing the diverse population of Lao PDR which was introduced with the 1991 Constitution,
and it is considered equivalent to the definition described as the Indigenous Peoples according to OP4.10. 18 National Biodiversity Strategy to 2020 and Action Plan to 2010, 2004. 19 Lao People’s Democratic Republic: Northern Region Sustainable Livelihoods Development Project, Indigenous Peoples
Development Plan, Document Stage: Final Project Number: 35297, August 2006, Prepared by the Government of Lao People’s
Democratic Republic for the Asian Development Bank (ADB), page 5 and NSC/CPI, ADB, SIDA and the World Bank, 2006
62
the 19th century.
3. Ethnic poverty in Lao PDR still remains concentrated in upland areas inhabited largely by remote
ethnic communities. Moreover, the cultural and linguistic differences are greater among many of
these upland communities. Actually, often due to their remote location, the ethnic groups have
comparatively less access to government services. As such, this higher incidence of poverty makes
them more vulnerable socially and economically. Furthermore, even though the quantitative analysis
of the Lao Expenditure and Consumption Surveys (LECS) shows that poverty fell from 39 per cent
in 1997-98 to 27.6 percent in 2007-08, there still exist wide regional and ethnic discrepancies. Rural
poverty at 38 percent is far higher than urban poverty at 20 percent, and the majority Lao Tai group
has a 19 percent poverty incidence while for the Mon Khmer the figure is more than twice as high at
47 percent20
.
Table 2: Ethnic Group Poverty Patterns in Lao PDR, 2007/8
% of National Population
Incidence of Poverty
Headcount Index (% of
pop.)
Total Lao PDR 100.0 27.6
By Geographic Area
Urban 31.0 19.7
Rural 69.0 37.6
Rural with all-season road 53.4
Rural without all-season road 46.6
By Ethnic Group
Lao-Tai 65 19
Mon-Khmer 24 47
Hmong-lu Mien 8
43
42
Chine-Tibet 3
Source: World Bank 2008 based on LECS4
H3. Policy Requirements and Basic Principles Related to Ethnic Groups
4. The primary objectives is to ensure that such groups are afforded meaningful opportunities to
participate in planning that affects them; (b) to ensure that opportunities to provide such groups with
culturally appropriate benefits are considered; and (c) to ensure that any project impacts that
adversely affect them are avoided or otherwise minimized and mitigated.
5. Since the Project activities may support SMEs across the whole country, they are likely to affect
ethnic groups in different regions. The EGPF therefore provides some general principles and
procedures that will be applied during the transaction preparation and implementation, if ethnic
groups are to be affected and/or could benefit from the Project. To be in line with OP 4.10, the
following principles will be applied during the implementation of the Project:
20
LECS4, 2007/2008
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PFI will provide equal opportunity to ethnic groups to have access to finance and this policy will
be clearly identified in the Environment and Social Management System (ESMS) which will be
prepared by the PFI applicant to be eligible for Project support.
As part of the ESMS preparation, PFI will conduct an ethnic group consultation following the
process described in Section C below.
As part of the subproject screening, the ESMS will require the SME applicants to determine if
ethnic groups reside in the subproject area through a preliminary identification process which
may include a rapid social assessment and/or consultation with local authorities and local
communities. If the ethnic groups are present in the subproject areas the SME applicants will
conduct a “free, prior and informed consultations” with the potentially affected ethnic groups and
establish a pattern of broad community support for the subproject (see Section D). In situations
of disagreements or controversy the PFI should seek guidance from the World Bank Group Team
as needed.
If the subproject has potential to create adverse impact to ethnic groups and/or there are concerns
expressed regarding the proposed subproject, before appraisal of the subproject PFI will ensure
that free, prior and informed consultations are undertaken, in a language spoken by, and location
convenient for, potentially affected ethnic groups. The views of ethnic groups are to be taken into
account during preparation and implementation of the subproject, while respecting their current
practices, beliefs and cultural preferences. The outcome of the consultations will be documented
into the project documents.
PFI will be responsible for monitoring, reporting, and documentations as described in Sections E
and F below.
H4. Consultation Framework for Ethnic Minority Issues
6. The consultation framework aims to ensure that ethnic groups are well informed, consulted and
mobilized to participate in the Project. Their participation can either provide them benefits with more
certainty, or protect them from any potential adverse impacts of subprojects to be financed by the
Project. The main features/process of the consultation framework includes a preliminary screening
process, then a social impact assessment to determine the degree and nature of impact of each
subproject to be supported by the Project, and an action plan will be developed if warranted.
Consultations with and participation of ethnic groups, their leaders and local government officials
will be an integral part of the overall Ethnic Group Development Plan (EGDP), which should be
prepared along with the subproject feasibility report.
7. A national guideline for consultation with the ethnic groups has been developed by the Lao Front for
National Construction (LFNC) and it will be observed during the consultation of the Project as
appropriate.
(a) Screening
8. All subproject areas which have ethnic group communities and are candidates for Project support
will be visited (at the time of first consultation with communities) by project sponsor/PFI and
relevant local authorities, including personnel with appropriate social science training or experience.
Prior to the visit, respective project sponsor/PFI will send notice to the communities informing them
64
that they will be visited by the respective project sponsor/PFI and local authorities and consultation
will be conducted on the subproject.
9. At this visit, personnel with social science training or experience will undertake a screening for
ethnic group population with the help of ethnic group leaders and local authorities. The screening
will check for the following: (a) names of ethnic groups in the affected village; (b) total number of
ethnic groups in the affected villages; (c) percentage of ethnic people in affected villages; and (d)
number and percentage of ethnic households within a described zone of influence of the proposed
sub-grant. (The zone of influence should include all areas in which subproject-related benefits and
adverse impacts are likely to be relevant.)
10. If the results show that there are ethnic group communities in the zone of influence of the proposed
subproject, a social assessment will be planned for those areas.
(b) Simplified Social Assessment
11. The social assessment (SA) will gather relevant information on the following: demographic data;
social, cultural and economic situation; and social, cultural and economic impacts - positive and
negative. .
12. For small scale subprojects with no direct impacts on indigenous communities, the report is short and
includes a brief overview of the ethnic communities affected by the subproject, subproject activities
as they relate to the local communities, how the subproject implementation will address the particular
circumstances of ethnic groups, and how they will participate and be consulted during
implementation.
13. Although this is not foreseen in this Project, for more complex subprojects a more elaborate report is
required and should include the following elements, as needed:
A description, on a scale appropriate to the project, of the legal and institutional framework
applicable to the ethnic groups;
Baseline information on the demographic, social, cultural and political characteristics of the
affected indigenous communities, and the land and territories which they traditionally owned,
or customarily used or occupied and the natural resources in which they depend;
Description of key project stakeholders and the elaboration of a culturally appropriate process
for consultation and participation during implementation;
Assessment, based on free, prior, and informed consultation or consent with the affected
ethnic groups, of the potential adverse and positive effects of the project. Critical to the
determination of potential adverse impacts is an analysis of the relative vulnerability of, and
risks to, the affected indigenous communities given their distinct circumstances, close ties to
land, and dependence on natural resources, as well as their lack of opportunities relative to
other social groups in the communities, regions, or national societies they live in;
Identification and evaluation based on free, prior, and informed consultation or consent with
the affected ethnic groups, of measures to ensure that the ethnic groups receive culturally
appropriate benefits under the project and measures necessary to avoid adverse effects, or if
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such measures are not feasible, identification of measures to minimize, mitigate, or
compensate for such effects.
(c) Ethnic Groups Development Plan (EGDP)
14. The EGDP will describe consultation processes and results, and subsequent design considerations to
ensure that ethnic groups benefit from subproject activities, and that measures are provided to
mitigate any adverse impacts on them.
15. TheEGDP should be prepared in a flexible and pragmatic manner, and its level of detail should be
commensurate to issues and vary depending on the specific project and the nature of effects to be
addressed. If appropriate, the EGDP should include the following elements:
A summary of the legal and institutional framework applicable to Indigenous Peoples in the area
and a brief description of the demographic, social, cultural, and political characteristics of the
affected Indigenous Peoples’ communities, the land and territories that they have traditionally
owned or customarily used or occupied, and the natural resources on which they depend.
A summary of the social assessment.
A summary of results of the free, prior, and informed consultation or consent with the affected
Indigenous Peoples’ communities that was carried out during project preparation and that led to
broad community support for the project.
A framework for ensuring free, prior, and informed consultation with the affected Indigenous
Peoples’ communities during project implementation.
An action plan of measures to ensure that the Indigenous Peoples receive social and economic
benefits that are culturally appropriate, including, if necessary, measures to enhance the capacity
of the project implementing agencies.
When potential adverse effects on Indigenous Peoples are identified, an appropriate action plan of
measures to avoid, minimize, mitigate, or compensate for these adverse effects.
The cost estimates and financing plan for the EGDP.
Accessible procedures appropriate to the project to address grievances by the affected ethnic
groups arising from project implementation. When designing the grievance procedures, the
Applicant takes into account the availability of judicial recourse and customary dispute settlement
mechanisms among the ethnic groups.
Mechanisms and benchmarks appropriate to the project for monitoring, evaluating, and reporting
on the implementation of the EGDP. The monitoring and evaluation mechanisms should include
arrangements for the free, prior, and informed consultation with the affected Indigenous Peoples’
communities.
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16. The subproject owner will prepare and submit the EGDP to PFI and the World Bank Group. The
World Bank Group clearance will be required before subproject implementation begins.
H5. Free, Prior, and Informed Consultation or Consent
17. Although Performance Standard 7 is typically not applicable for this project (refer to Operational
Manual) free, prior and informed consultation or consent will be sought as deemed applicable under
Performance Standard 7 on Indigenous Peoples. This may be conducted through a series of meetings,
including separate group meetings: ethnic village chiefs; ethnic men; and ethnic women, especially
those who live in the zone of influence of the proposed work under subproject. Discussions should
focus on subproject impacts, positive and negative; and recommendations for design of subprojects.
If the SA indicates that the potential impact of the proposed subproject will be significantly adverse
or that the ethnic community rejects the proposal, the subproject will not be approved (and therefore
no further action is needed). If the ethnic group supports the subproject implementation an EGDP
will be developed to ensure that the ethnic groups receive culturally appropriate opportunities to
benefit from the subproject activities, and to address any concerns or negative impacts associated
with the subproject.
18. In most cases, this process is best done as part of the social assessment although consultations are
likely to continue after its completion. The extent of consultations depends on the subproject
activities, their impacts on local communities and the circumstances of affected ethnic groups. At a
minimum (for the subprojects with no impacts or direct interventions with the ethnic groups), local
communities are informed about the subproject, asked for their views on the subproject, and assured
that they will not be affected during the subproject implementation. For the subprojects affecting
ethnic groups, whether positively or adversely, a more elaborate consultation process is required.
This may include, as appropriate:
Inform affected indigenous communities about project objectives and activities.
Discuss and assess possible adverse impacts and ways to avoid or mitigate them.
Discuss and assess potential project benefits and how these can be enhanced.
Discuss and assess land and natural resource use and how management of these resources may be
enhanced.
Identify customary rights to land and natural resource use and possible ways of enhancing these.
Identify and discuss (potential) conflicts with other communities and how these might be avoided.
Discuss and assess food security and how it might be enhanced through project interventions.
Elicit and incorporate indigenous knowledge into project design.
Facilitate and ascertain the affected communities’ broad support to the project.
Develop a strategy for indigenous participation and consultation during project implementation,
including monitoring and evaluation.
19. The SME applicant is responsible for the consultation process. All the subproject information
provided to ethnic groups should be in a form appropriate to local needs. Local languages must
always be used and efforts should be made to include all community members, including women and
members of different generations and social groups (e.g. clans and socioeconomic background).
20. When seeking “broad community support” for the subproject, it should be ensured that all relevant
social groups of the community have been adequately consulted. When this is the case and the
“broad” majority is overall positive about the subproject, it would be appropriate to conclude that
broad community support has been achieved. Consensus building approaches are often the norm, but
67
“broad community support" does not mean that everyone has to agree to a given project. The
agreements or special design features providing the basis for broad community support should be
described in the Ethnic Groups Development Plan (EGDP); any disagreements should also be
documented. It is important to keep this in mind during the consultation process, and in some cases
it may be more appropriate to consider the needs and priorities of sub-communities rather than those
of a whole village.21
21. If the ethnic groups conclude that the subproject will be beneficial to them, and that any adverse
impacts can be mitigated, a plan to assist them may be developed if deemed necessary or measures
based on consultation with ethnic groups and local Lao Front for National Construction (LFNC)
representatives. The community should also be consulted to ensure that their rights and culture are
respected. The assistance may also include institutional strengthening and capacity building of ethnic
villages and community groups working with the subproject.
H6. Implementation Arrangement and Monitoring
22. PFI will be responsible for training respective subproject owner or local authorities to undertake the
work of consultation, screening, social impact assessment, analyses and preparing EGDPs.
23. The owner of individual subproject and local authorities are responsible for implementing EGDP
(arrange adequate staff and budget).
24. Implementation of the EGDPs will be regularly supervised and monitored by PFI. The findings and
recommendations will be recorded in quarterly reports and to be furnished to the World Bank Group.
H7. Reporting and Documentation
25. The proposed screening, social assessment, and consultation process will provide comprehensive
baseline data on social, economic and technical aspects of each subproject. If the social assessment
confirms that no ethnic group communities exist in the project areas, no further action is necessary.
If the social assessment indicates that there are potential social issues because of ethnic group
populations in a subproject area, it will be ensured that the responsible project sponsor will undertake
specific measures to consult with, and give opportunity for ethnic group populations in participating
decision making related to the subproject, should they so desire. The social assessment process itself
is often the method by which such consultations are undertaken however they can be undertaken as a
separate exercise.
26. Besides specific attention to ethnic group issues in supervision and monitoring, PFI will include
these matters in their progress reporting. The IFC/WB supervision missions will periodically pay
special attention to ensure that that the sub-grants affecting ethnic groups afford benefits to, and
mitigate any adverse impacts on, them
21 There may also be non-indigenous neighborhoods or communities affected by the project. In such cases, all vulnerable people
may be included in the consultation process and development of project design based on the requirements of OP 4.10 and the
interests of the various social groups affected. It is important, though, to ensure that any customary rights or other entitlements or
claims of particular social groups such as Indigenous Peoples are identified.
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