Exploring the adoption-implementation disconnect

Adopting the Performance Standards (PS) of the International Finance Corporation (IFC) is a condition of project financing arrangements with Equator Principles Financial Institutions. Auditing compliance with these standards has highlighted a disconnect between corporate commitments and operational implementation.

Much of SRK’s auditing experience throughout Africa is based on regular loan agreement audits for financial institutions, with these results:
• Clients take longer to comply than considered reasonable by the financial institutions. The gap between complying with in-country legal standards and the IFC PS often requires additional human and financial resources to complete action plans within reasonable timeframes.
• If organisations do not internalise IFC PS requirements, their action plans do not cover the full spectrum of activities required across line functions. IFC PS responsibilities normally fall on Health Safety Environmental and Community (HSEC) staff but the work exceeds their mandate to facilitate implementation. Given the broad nature of the standards, implementation should apply across all line functions.
• HSEC and line function staff often learn of IFC PS commitments only at the first performance audit, where the importance of the employee’s role as an internal stakeholder is downplayed. Commitments are rarely communicated or incorporated into policies, procedures and systems until two to three audits have been completed.

The following actions can strengthen implementation of IFC PS commitments and bridge the adoption-implementation gap. The first audit should focus on corporate strategy and top management’s adoption of the IFC PS. Detailed action plans should be developed with personnel to develop buy in. Action plans should be practical and achievable and developed with resourcing, responsibilities, and timeframes in mind. Early on, companies should provide training for affected staff to facilitate an understanding of the commitments, as well as to identify the gaps between legal and IFC PS compliance, the business imperative for adopting IFC PS, and resources vital to implementing the action plan.

Governance and change management are often as important as technical advice. Vital to successful implementation of the IFC PS requirements is strong organisational leadership to communicate and carry out the commitments made at the top, through the hierarchy for integrated implementation at all levels and across all line functions.

Briony Liber: bliber@srk.co.za

You can download a PDF of the entire Environmental & Social Services newsletter	PDF A4	PDF Letter

Our newsletters focus on specific areas of interest to earth resource professionals and clients. Each is available as an Adobe Acrobat PDF file. If you don't already have Adobe's PDF reader, you can download it free.