CORPORATE SOCIAL RESPONSIBILITY COMMITMENTS INFORM - MEASURE - TAKE ACTION by Agence Française de Développement

CORPORATE SOCIAL RESPONSIBILITY COMMITMENTS INFORM - MEASURE - TAKE ACTION

2014 2016 Agence Française de Développement ACTION PLAN

Cover: ÂŠ Kirsten Hinte - Fotolia.com

CONTENTS

KEY POINTS

I. Be accountable, inform, dialogue: Prerequisites for a relationship of trust with its stakeholders

Accessible, clear and transparent information

Enhanced dialogue with its stakeholders

II. Ensure and promote sustainable development in operations: Corporate Social Responsibility at the centre of development activities

Prevent, detect and remedy negative project impacts

Measure the contribution to sustainable development

III. Promote a responsible organisation of its in-house operations

Promote an ethical commitment

21 22

Support for career paths for all and meaningful working environment

Responsible procurement

Reduce the environmental footprint of in-house operations

Governance reflects the Group’s socially responsible commitments

APPENDICES

29 The texts and standards that form the basis and framework for the Corporate Social Responsibility approach 30 Glossary 31 History of Corporate Social Responsibility at Agence Française de Développement 33

KEY POINTS

Agence Française de Développement, as a public financial institution, has been implementing the development assistance policy defined by the French Government for over 70 years. It has a mandate to promote sustainable development from an economic, social and environmental point of view, in the mutual interest of countries in the South and North. It also achieves this objective by relying on its subsidiary PROPARCO, which finances private investments for the development of countries in the South. Since the Group became a member of the Global Compact, it has made Corporate Social Responsibility central to its action. It has become an essential and structuring approach for the organisation.

AFD Group is implementing this approach at a time when the theme of Corporate Social Responsibility is becoming increasingly important in reflection on models for governance and sustainable and equitable growth. The concept of “Corporate Social Responsibility” (CSR) took off in the 1990s and is defined as “the responsibility of enterprises for their impacts on society”.1 In France, a series of both political initiatives and efforts contribute to promoting the subject. The decisions of the Interministerial Committee on International Cooperation and Development (CICID) of July 2013 and the Orientation and Programming Law on France’s Development and International Solidarity Policy have strengthened the requirements that AFD must meet in its relations with both public and private actors. International banks and development agencies, for their part, have all developed Corporate Social Responsibility policies, particularly in the context of their operations. The World Bank’s Corporate Social Responsibility policies and the Performance Standards of the International Finance Corporation (IFC) are both examples of the involvement of the sector in this respect.

AFD Group, through its Corporate Social Responsibility approach, which it applies in both its activity and in-house operations, seeks to question, prevent, remedy and rectify the impacts that its activity can have. It also aims to catalyse good practices in this field and thus make a positive contribution to sustainable development: control over the impacts of its activity, dialogue and work in partnership, monitoring and evaluation of the results of its action, application of controls and prevention of corruption and misappropriation are examples of this. 1 - According to the European Commission definition (2011).

AFD Group also seeks to take account of the expectations of the actors who are concerned by its activity. The dialogue with its “stakeholders” is one of the pillars of its Corporate Social Responsibility approach, which is considered as a shared responsibility in respect of the impacts of its action. The effectiveness of its action depends on its ability to work in a network and in partnership with all the development actors (other donors, European Union, companies, regional and local authorities, NGOs…). AFD Group works to enhance transparency over its activities in order to build a relationship of trust and a high-quality dialogue with these actors. Finally, because staff members are the first contributors to its activity and working procedures, AFD ensures that a high-quality dialogue is maintained within its teams.

In addition to the national legislation in force in France and in the countries of operation, AFD Group has chosen the main declarations, conventions and standards for equitable and responsible development as the reference framework for its action: UN Charter on Human Rights, International Labour Organization’s Fundamental Conventions, standards of the World Bank Group and IFC, the three Rio conventions (on climate change, biological diversity, and the fight against desertification), the Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises, the OECD and UN anti-corruption conventions, and the international anti-money laundering rules. In-house, the Professional Ethics Charter sets out the references for the conduct of the Group’s officers, in accordance with the principles on which AFD’s mandate is based.

The Corporate Social Responsibility approach is also a source of innovation for AFD Group, as it is a practice that covers and examines the various facets of the activity. The Group has conducted a host of activities since the first Social and Environmental Responsibility policy was introduced in January 2007. The environmental and social risk management mechanism for operations, climate strategy, financial security mechanism, transparency policy, dialogues with stakeholders on strategies, environmental management of goods and human resources management are all achievements that have gradually been structured in the past period. Following on from the progress already achieved and an independent audit of the 2007-2011 SER policy conducted in 2012, the Corporate Social Responsibility approach will be reinforced. This is the

purpose of the Group’s Corporate Social Responsibility policy, which was adopted in early 2014. It involves taking this policy further, promoting its dissemination and appropriation by all, and strengthening its governance, management and supervision. A dialogue with all in-house and external stakeholders, based on an in-house “Group” project giving priority to feedback on expectations and concrete proposals, led to the definition of an action plan, which serves as a reference for 2014-2016. This plan is in line with the ISO 26000 standard to guarantee the transparency and effectiveness of actions. With this policy and action plan, AFD has made Corporate Social Responsibility central to its activities and is meeting the objective of more effectively informing, measuring and taking action. In practice, this policy is applied through six commitments: • Develop the dialogue approach with stakeholders by mainstreaming the obligation of accountability, the concern for effectiveness and the commitment to transparency. • Ensure and promote sustainable development in Group operations. • Conduct all actions in accordance with its ethical commitment and ensure fair operating practices. • Ensure a socially responsible management of all staff members. • Take action on all the environmental impacts of its in-house operations. • Reinforce Corporate Social Responsibility governance and strengthen the responsibility of all AFD Group structures.

1 BE ACCOUNTABLE, INFORM, DIALOGUE:

PREREQUISITES FOR A RELATIONSHIP OF TRUST WITH ITS STAKEHOLDERS

1 BE ACCOUNTABLE, INFORM, DIALOGUE:

PREREQUISITES FOR A RELATIONSHIP OF TRUST WITH ITS STAKEHOLDERS ACCESSIBLE, CLEAR AND TRANSPARENT INFORMATION AFD Group’s transparency and dialogue with its stakeholders are one of the pillars of its Corporate Social Responsibility approach.

Promote awareness of its vision and actions in order to establish a high-quality dialogue By adopting a transparency policy, AFD aims to meet growing demand from the general public and civil society actors to be more informed about the strategy, objectives and results of France’s Official Development Assistance. As an institution with a mandate to serve the general interest, AFD is committed to being accountable for its activities by making institutional, strategic and operational information available on its website.2 For AFD, this also involves promoting awareness and understanding of its vision, missions and actions in order to establish an enhanced dialogue with its stakeholders. Stakeholder refers to any person or entity concerned by the decisions or activities of an organization. In the case of AFD Group, this includes shareholders, staff members, beneficiaries of financing, non-governmental organisations (NGOs), suppliers, but also peer organisations, local communities and neighbouring residents, national and international public authorities, the financial and banking world, etc.

Stakeholders may at any time send AFD requests for information, explanations or observations on projects via the e-mail

transparence@afd.fr

Once projects to finance development actions abroad and actions led by French civil society organisations have been approved by AFD’s decision-making bodies, a Public Communication Brief is drafted.3 It sets out the context of the operation, the goals, objectives, processes and means implemented for each project.4 Other information may be released upon written request. This specifically concerns: • the summary of the feasibility study for the operation; • the environmental and social study on the operation, where relevant; • the summary of the final evaluations of operations; • the summary of evaluations at project completion, where relevant. 2 - www.afd.fr 3 - Publications for sovereign loans – loans subject to a guarantee from the beneficiary State – and with the exception of information covered by banking regulations and their provisions relating to the confidentiality of transactions, or for which the counterpart has refused the dissemination. 4 - http://www.afd.fr/base-projets/listerProjets.action

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A process has been initiated to enhance this transparency, in accordance with banking regulations â&#x20AC;&#x201C; and provisions relating to the confidentiality of transactions â&#x20AC;&#x201C; and with the agreement of the beneficiary of the financing. This enhanced transparency of information on projects, expected by all AFDâ&#x20AC;&#x2122;s interlocutors, will be achieved by formalising rules on the publication of information, the systematic publication of final project evaluations, and an extension of publications, particularly to projects to finance the private sector.

Website for information and dialogue on projects in Sub-Saharan Africa A government website dedicated to aid provides comprehensive information about 16 priority poor countries located in Sub-Saharan Africa on the projects financed by France in the countries in question (geolocation and fact sheet on projects). The website also has a space for dialogue with citizens where everyone can comment on a project or ask questions about it. http://transparence.ambafrance-ml.org

Accountability and evaluation tools AFD is held accountable to a range of stakeholders defined by regulations. For example, this accountability is exercised within the Board of Directors, whose members comprise line ministries, parliamentarians, NGO representatives and staff representatives, but also with social structures and via institutional documents and regulatory reporting (parliamentary reports, Group Registration Document, social report, economic and social database, etc.). AFD also takes a proactive approach to the publication of non-financial information in the framework of international reference standards. For example, in 2012, AFD decided to establish its non-financial reporting within the technical framework of the Global Reporting Initiative (GRI) and was rated A+ in 2013. Non-financial reporting measures the performance of an organisation not only on the basis of its economic and financial results, but also on its conduct towards the environment and society, and on its governance. More specifically, in terms of communication on the operational activity, AFD uses standards such as the guidelines of the OECD Development Assistance Committee (DAC), the standards of the International Aid Transparency Initiative (IATI)5, and the principles of the Aarhus Convention6, World Bank, IFC and European Investment Bank (EIB). Raise awareness of development issues AFD actively communicates on development issues and international cooperation. The aim is to allow French citizens to express their expectations, their vision and their concerns over the subject. AFD achieves this by organising a host of events that invite people 5 - The International Aid Transparency Initiative standard defines a framework for the publication of data by donors, which subsequently allows these data to be more easily compared and analysed. 6 - International agreement, with 33 signatory countries. It aims to improve the international information provided by public authorities, promote public participation in decision-making that has an impact on the environment, and extend access conditions to justice in terms of environmental legislation and access to information.

to discuss and share ideas: the “Ideas for Development” conferences, public debates, exchanges on the “Objectif Développement” photography exhibition and dialogues with citizens are all examples of this commitment to dialogue and communication.

Mapping of AFD Group stakeholders EXTERNAL

Supervisory ministries

Development banks and bilateral and multilateral funds, incl. French GEF Associations, NGOs, foundations, regional and local authorities, academic institutions Governments, public services

Parliament

IN-HOUSE

Control authorities

Public authorities

Staff

Employees

Civil society Partnership network Clients and beneficiaries

Staff representatives French citizen Beneficiary communities

Shareholder: State 100%

Local authorities Public and private enterprises

Board of Directors and committees

Suppliers/subcontractors

NGOs, associations, foundations AFD’s sphere of influence

Stakeholders in social dialogue

ENHANCED DIALOGUE WITH ITS STAKEHOLDERS Development requires a greater involvement of the various actors.

Each decision taken must be analysed with regard to the impacts it may have on the entire society.

Provide appropriate responses Development requires a greater involvement of the various actors, from the North and South alike. Differentiated and concerted responses are needed to manage the impacts of their actions. This requires creating forums for debate and dialogue. In this respect, taking account of the points of view of local authorities, affected populations or local NGOs on the impacts of the projects submitted for financing, particularly when they have a high environmental and social (E&S) risk, takes on all its meaning. During the appraisal and implementation of its projects, AFD ensures, through clauses and support, that the contracting authority consults the various project stakeholders (local communities in particular). Their interests and points of view are also integrated during project evaluations. Operational dialogue on AFD’s strategies to develop and structure The strategic intervention frameworks7, which structure the areas of AFD’s action, are systematically subject to a dialogue with stakeholders and development actors (NGOs, academic representatives or the private sector, etc.). The preparation of intervention frameworks in the countries also provides valuable opportunities for dialogue with the 7 - http://www.afd.fr/home/AFD/redevabilite-dialogues/dialogues/Dialogue-autour-de-nos-cadres-d-intervention-strategiques.

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Responding to grievances from stakeholders For projects with the most significant E&S risks that are cofinanced with multilateral donors, the contracting authority is requested to set up a grievance mechanism. It allows populations to express their grievances and concerns about the impacts of a project. AFD is exploring the possibility of applying this due diligence to other types of projects in the context of the definition of its E&S reference standards. At the same time, AFD has begun studying methods for the implementation of a mechanism to manage E&S disputes from third parties. Once the legal and technical feasibility of this type of mechanism has been pre-determined, the procedures may be published in the course of 2015.

beneficiaries of financing (State, counterparties, civil society, etc.). It is planned to systematise this dialogue. The AFD network, which comprises 71 agencies and representation offices, will be a major asset in this respect. AFD intends to ensure that these exchanges with its stakeholders are a relevant source of information by organising more targeted debates with stakeholder panels, i.e. groups of interlocutors identified to discuss subjects on which they provide a specific “interest”.

Dialogue involves concerted reflection with development institutions and partnership relations with other development actors.

The opening up to stakeholders is also reflected in the institution’s governance. For example, AFD’s Board of Directors is composed of State representatives, but also NGOs, directors of research and training institutes, parliamentary representatives, private sector representatives, two staff representatives, as well as several qualified individuals. A member is also appointed for their knowledge of ecology and sustainable development. At PROPARCO, in addition to AFD and government members, the Board of Directors is composed of representatives from companies, banks – from both the North and South –, as well as a staff representative. This consultation ensures the sustainability, consistency, harmonisation and effectiveness of Official Development Assistance policies. For example, AFD, KfW and EIB have concluded an agreement on the mutual recognition of procedures, the Mutual Reliance Initiative (MRI), which aims to simplify cofinancing procedures between these three institutions. On the subject of Corporate Social Responsibility in particular, AFD takes part in discussions in the context of inter-donor working groups, which aim to harmonise procedures and tools to measure the carbon footprint and analyse vulnerability to climate change. In 2012, at the Doha Conference of the Parties (COP), AFD signed a charter that promotes a harmonised approach to carbon footprint measurement. Similar exchanges take place over the “sustainable development” opinion and the integration of SER clauses in the bidding documents issued by the beneficiaries of financing. PROPARCO works with the European Development Financial Institutions (EDFIs) on the harmonisation of E&S processes and results measurement, but also with multilateral institutions that finance the private sector (such as IFC), with the United Nations Environment Program Finance Initiative (UNEP-FI) on promoting good environmental and social practices for banks and, finally, with all the

DFIs on harmonising approaches to assess the governance of the companies that are financed. Furthermore, UN agencies, foundations, French regional and local authorities, think tanks, the academic world, private sector organisations, etc. contribute to providing informed support to public policies or to promoting networking between specialised structures in emerging and developing countries and their French counterparts (decentralised cooperation, twinning programmes, initiatives, NGOs, etc.).

2 ENSURE AND PROMOTE SUSTAINABLE DEVELOPMENT IN OPERATIONS: CORPORATE SOCIAL RESPONSIBILITY AT THE CENTRE OF DEVELOPMENT ACTIVITIES

2 ENSURE AND PROMOTE SUSTAINABLE DEVELOPMENT IN OPERATIONS:

CORPORATE SOCIAL RESPONSIBILITY AT THE CENTRE OF DEVELOPMENT ACTIVITIES Corporate Social Responsibility has become an issue for the definition of new models for development and the promotion of fundamental rights, or even certain forms of democracy. Corporate Social Responsibility practices have a whole host of impacts: • by encouraging respect for local social and environmental legislation, relating to human rights and corruption, they contribute to establishing the rule of law and promoting it in a pragmatic manner; • by promoting respect for international law in all the fields of Corporate Social Responsibility, they help to universalise democratic values; • by building universally respected international standards in the economic field, they encourage all the global economic players to respect common rules that reduce distortions of competition; • finally, they contribute to the production of goods and services that contribute to economic, social and societal progress, especially for the poorest. The beneficiaries of AFD Group financing are vectors for sustainable development and act as a catalyst for good practices in Southern countries. The role of development finance institutions is to support and promote this movement, by disseminating the highest international standards, and to enhance the positive impacts that projects have on development.

PREVENT, DETECT AND REMEDY NEGATIVE PROJECT IMPACTS The assessment of risks and their impacts is of crucial importance prior to any decision to allocate financing.

Control the environmental and social impacts of projects: abandon, offset or support Many development operations comprise risks for the environment and the communities in question. The assessment of these risks and their impacts is of crucial importance prior to any decision to allocate financing. Consequently, AFD does not finance certain projects due to ethical, environmental and social criteria. These criteria are set out in an exclusion list, which is published on AFD’s website.

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The progress achieved in the Corporate Social Responsibility approach depends on the management and supervision capacity of the beneficiaries themselves.

The approach adopted by AFD Group involves: • assessing the environmental and social risks and impacts of each project submitted to the decision-making bodies; • proposing appropriate measures with the aim of limiting the exposure to these risks, or offsetting their impacts; • monitoring the implementation of these measures during the execution phase of the operation; • managing the unexpected; and • enhancing the quality of projects and the environmental and social performance of the beneficiaries of its financing. There is a type of risk for each sector, to which AFD Group provides an appropriate response via its environmental and social risk management approach. A set of ex ante E&S assessment and monitoring tools has been put in place. In the context of the most risky projects, the contracting authority, with support from specialised consultants, conducts specific studies, such as an impact assessment or an E&S audit, describing the E&S risks and negative impacts and proposing the mitigation measures that need to be implemented, which are generally set out in an Environmental and Social Management Plan (ESMP). In the case of companies and financial institutions, AFD Group can conduct additional studies or audits in order to assess the compliance of their environmental and social practices. Following these procedures, specific E&S clauses and action plans are included in the contractual documentation: loan, grant or equity agreements. Their implementation is subject to regular supervision. The support provided to beneficiaries of financing in taking E&S issues into account is essential for AFD. It is through the capacity of beneficiaries to manage and supervise E&S

Capacity building for contracting authorities: the example of the Lom Pangar Dam in Cameroon AFD is cofinancing the construction of the Lom Pangar Dam in eastern Cameroon. The project is located in an extremely sensitive natural environment, close to habitats of large primates and with a particularly rich flora and fauna. Consequently, the compensatory measures implemented provide for the establishment of Deng-Deng National Park and support for its creation and development, which will offset the project’s direct environmental impacts and contribute to the viability of the population of gorillas and chimpanzees in Deng-Deng. Support measures have also been planned to ensure that the project’s economic and social benefits do not only go to the urban communities downstream, but also to the communities who are directly affected by the project. Finally, the construction company must respect E&S specifications in accordance with internationally recognised standards. To do so, the company benefits from support from consultants financed by AFD.

risks that real progress can be achieved. Certain projects are thus subject to specific support, or technical or financial assistance, in this field. The needs in terms of support for contracting authorities will be identified more systematically in order to mobilise the capacity building tools that AFD can offer them (Study and Capacity Building Fund (FERC), Support Fund for Governance Capacity Building (FRCG), and other grants, innovative tools, training systems, etc.).

Scaling up training on the subject for project managers also contributes to this objective.

Taking account of the E&S risks of funded projects also involves AFD staff members and they therefore need to be given the training required for the due diligence they are required to conduct. The monitoring of the implementation of E&S commitments will be strengthened and, at AFD, an ex post analysis will gradually be developed. Furthermore, attention will be paid to the E&S dimension being taken into account by the beneficiary in the bidding documents in order to give priority to responsible companies in the award of works contracts, particularly for works that have a significant impact. AFD has thus developed model bidding documents, with reinforced E&S clauses, which are proposed to contracting authorities for the execution of works with high risks. AFD also undertakes to specify the reference international standards on which the implementation of its E&S due diligence is based. PROPARCO applies IFC’s Performance Standards.

Addressing different types of risks In terms of the environment, projects can cause ecological risks (damage to natural environments and biodiversity), pollution (of water, air, soil) and nuisances (noise, waste, etc.), hygiene and safety risks (accidents at work), natural, technological and health risks, and have an impact on the health and safety of communities, natural resources (water resources, surface and subsurface resources, land resources), on the living conditions of communities, and on the archaeological and/or cultural heritage. The social risks mainly concern the respect for fundamental human rights, which are addressed by internationally recognised standards, texts and conventions: trafficking in human beings, sex tourism, population displacement, forced labour, working conditions, equity for disadvantaged or excluded social groups (particularly women), failure to respect cultural diversity, damage to the environment, etc.

Reduce gender inequalities The benefits of mainstreaming gender into development are now recognised8. With regard to AFD’s gender strategy9, all projects are examined in terms of the contribution they make to the objective of reducing gender inequalities. AFD has made the commitment for at least 50% of standard projects financed in foreign countries to have the promotion of gender equality as the primary or secondary objectives. This policy will be supported by an extensive training and awareness-raising campaign on gender. 8 - “Gender inequality means not only foregoing the important contributions that women make to the economy, but also wasting years of investment in educating girls and young women.” in Closing the Gender Gap: Act Now, OECD, 2012. 9 - Crosscutting Intervention Framework for Gender, approved by the Board of Directors in March 2014. AFD’s CIF for gender can be consulted on its website.

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Take climate change into account

Measuring the carbon footprint and commitments that have “climate co-benefits” are the pillars of AFD’s strategy.

Climate change complicates poverty reduction efforts by causing increasingly frequent and serious damage in economically precarious areas, and by introducing the need for a low-carbon development trajectory. The mainstreaming of climate change issues into AFD’s strategy is reflected in two objectives: 1. A chieve and maintain an annual production of commitment approvals that have “climate co-benefits” of 50% of AFD’s total approvals in developing countries, and of 30% for PROPARCO’s annual allocations. For the Asia and Latin America regions, the commitment is 70%, 50% for the Mediterranean, and 30% for Sub-Saharan Africa; 2. Systematically assess the carbon footprint of directly financed projects that have a significant impact in terms of greenhouse gas emissions (positive or negative).

Principles of responsible financing In 2009, PROPARCO signed the “Principles of Responsible Financing”, which are common to the various European Development Finance Institutions. PROPARCO implements IFC’s Performance Standards for high-risk projects. These standards concern various areas, such as the environmental and social management of companies, labour law, safety at work, pollution and nuisances, the impacts on neighbouring communities, biodiversity, the displacement of populations and activities, the cultural and heritage aspects, or the rights of indigenous populations.

Prevent, detect, monitor.

Control the risks of the misappropriation of aid, corruption, fraud, money laundering and terrorist financing AFD Group must ensure that the loans and guarantees it provides, the equity investments it makes, and the grants it extends are allocated properly. It must also be vigilant with respect to the reputation and good governance of the companies to which this financing is allocated. As a credit institution and key actor in Official Development Assistance, these concerns are intrinsic to the Group’s mandate, its strategic orientations, and its core mission to fight against poverty and promote growth in the countries of its area of operation. Corruption, fraud, as well as any form of misappropriation of public and private aid, cause lasting damage to its mandates. This is also the case for any financing which, without AFD and PROPARCO’s knowledge, would lead to an involvement in a money laundering or terrorist financing mechanism. AFD Group has adopted a general policy10 to ensure that it is not, without its knowledge, involved in either of these offences. It takes the form of operational procedures that set out the controls to be conducted by AFD officers at the various stages of the project cycle. During the project appraisal process, due diligence is conducted on the counterparty and, where relevant, on its shareholder structure, as well as on politically exposed persons and right up to the beneficial owner. At the project implementation phase, AFD Group also 10 -AFD’s anti-corruption policy can be consulted on its website.

pays particular attention to operations that may reveal fraudulent practices or money laundering, which warrant a specific analysis. Foreign public procurement financed by AFD Group is subject to a specific control. It ensures that the various stages of the procurement process take place in the required conditions of integrity, transparency, equity and efficiency. AFD Group officers must also report any suspicion of irregular practices concerning projects via a reporting mechanism through their line managers. AFD Group’s financing agreements also comprise a number of clauses that impose undertakings on the counterparty in terms of the fight against corruption, cartels, money laundering and terrorist financing. These clauses allow for the suspension of its payments, the cancellation of the portion of its financing allocated to a contract for which irregular or non-compliant practices have come to light, and a request for the prepayment of all or part of the loan or grant it has disbursed. Finally, AFD Group is committed to participating in French policies to fight against tax havens and has adopted a rigorous and specific policy with regard to the operations it conducts and the projects it finances in a Non-Cooperative Jurisdiction (NCJ).11 This policy is based on two areas: • the first imposes specific and reinforced due diligence when the legal arrangements of the project involve an NCJ; • the second aims to specify the scope of authorised operations and projects which AFD Group may finance in these territories.

MEASURE THE CONTRIBUTION TO SUSTAINABLE DEVELOPMENT The assessments determine the viability and effectiveness of projects, and the opportunity for AFD to finance them.

Assess the results and impacts of activity The assessments conducted prior to and during the project make it possible to determine the viability and effectiveness (economic, financial, environmental, societal, etc.) of projects, and the opportunity for AFD Group to finance them. The ex post evaluations of projects aim to improve future projects thanks to the lessons learned from past operations. Measuring the quality of operations and evaluating their results is a democratic requirement with regard to both French citizens and the populations and authorities in beneficiary countries. During the appraisal and monitoring of the implementation, AFD measures each funded project according to specific criteria.12 Furthermore, AFD has adopted indicators that make it possible to report on development achievements and results. For example, the “number of people connected to an electricity distribution network” or the “number of residents in deprived neighbourhoods with improved or secured housing” etc. are measured. 11 - Non-Cooperative Jurisdiction pursuant to the French General Tax Code and the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. AFD Group’s policy towards Non-Cooperative Jurisdictions can be consulted on its website. 12 - Ȁ The criteria are as follows: local ownership, coordination with the other development banks, the integration of the project into the local policy, compliance with the strategies of AFD and French aid, the economic, social and environmental impacts for the territory and country, risks: technical, institutional, economic and financial (profitability of project, solvency of the beneficiary, macroeconomic context of the country), environmental and social, of money laundering, terrorist financing and corruption related to the contracting authority and its shareholder structure.

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Evaluations comply with OECD-DAC standards and examine achievements, their viability and their economic, social and environmental impact.

Its subsidiary PROPARCO measures the results of funded projects, prior to financing decisions and also during the supervision of the portfolio. The impacts in terms of public revenues, employment, transfers of know-how, governance, and the accessibility of products and services at local level are systematically measured. AFD conducts final evaluations of most of the projects it finances in order to ensure that they have been properly implemented. These evaluations are managed by AFD’s agencies in the field. They are conducted by independent consulting firms – local consulting firms, based in the countries where the projects have been implemented, in order to benefit from sound knowledge of the context – and with feedback at local level. An independent evaluation committee monitors the quality of this evaluation mechanism. In order to ensure the evaluability of projects, enhance the quality of work and, more generally, its utility and its use, AFD ensures that relevant objectives and indicators are formulated right from the project design stage.

Measuring achievements and results The achievements and results of funded projects are measured using evaluation indicators and tools.12 For example, for the achievements, the “number of health structures built” or the “number of schools built” are measured; for the results, the “number of beneficiaries of health structures” or the “number of children in school”. Consequently, they are a tangible object, which is monitored at AFD and PROPARCO throughout the project cycle: during the appraisal, execution and at project completion.

In view of its mandate, AFD acts as a catalyst for good E&S practices in emerging and developing countries.

Maximising the contribution made by projects to sustainable development

The Corporate Social Responsibility approach provides a concrete response to the objective of sustainable development.

PROPARCO integrates these sustainable development issues via its strategy for 2014-2019. In the latter, it underscores its commitment to promoting low carbon and environmentally friendly economies, supporting growth models that create decent jobs, and providing access to essential goods and services for the greatest number of people.

Sustainable development is central to AFD Group’s strategy. The priorities for operations meet the need to take E&S concerns into account: support sustainable urban development in Sub-Saharan Africa, limit the environmental footprint of rapid growth in Asia, and reconcile development and the fight against climate change, particularly in emerging countries. These issues are translated into crosscutting, regional or sectoral intervention strategies13.

In early 2013, a “sustainable development” opinion, formulated in a synthetic manner, was introduced for all projects submitted for AFD financing. It leads to an assessment of 12 - The criteria are as follows: local ownership, coordination with the other development banks, the integration of the project into the local policy, compliance with the strategies of AFD and French aid, the economic, social and environmental impacts for the territory and country, risks: technical, institutional, economic and financial (profitability of project, solvency of the beneficiary, macroeconomic context of the country), environmental and social, of money laundering, terrorist financing and corruption related to the contracting authority and its shareholder structure. 13 - Examples of crosscutting strategies: strategies for gender equality or biodiversity; regional strategies: intervention strategies in Africa or the Caribbean; sectoral strategies: strategies for sustainable cities or education.

Six criteria to measure the contribution made by projects to sustainable development.

the project’s contribution to sustainable development on the basis of six operational aspects14: economic development; social welfare and reduction of social imbalances; gender equality; biodiversity conservation, management of natural environments and resources; fight against climate change and its impacts; sustainability of the project’s impacts and governance framework.

Protecting, restoring, managing and developing ecosystems The regions where AFD operates, including the French overseas territories, host remarkable biodiversity, the importance of which can be measured locally and regionally, but also globally. Through its crosscutting intervention framework on biodiversity for 2013-2016, AFD intends to increase the number of its operations in this sector: the average annual volume of AFD’s weighted financial commitments will be increased to a minimum of EUR 160m, with the aim of protecting, restoring, managing and developing ecosystems, mainstreaming biodiversity into development policies, and strengthening biodiversity partnerships between France and developing countries. Biodiversity will be more effectively mainstreamed into the intervention strategies and funded programmes by using tools such as the financing exclusion list or ex ante analyses of their environmental impacts.

Supporting social business, inclusive business and impact investing initiatives L’AFD finances development projects implemented by organisations from the social and solidarity economy (SSE) sector, such as associations and NGOs involved in education, health, agriculture and fair trade, as well as mutual and cooperative banks, or social enterprises working in the field of microfinance and micro-insurance. AFD supports the SSE sector in the French overseas territories thanks to its position as a long-standing actor in financing social housing, and its assistance to the Association for the Right to Economic Initiative (ADIE) for microfinance. PROPARCO, for its part, has initiated reflection on support for social business, inclusive business and impact investing initiatives and has financed some social business projects.

14 - The aspects given in the “Sustainable Development” appendix during the pilot phase have been modified. Two new aspects have been introduced: gender equality, and the sustainability of the project’s impacts and governance framework.

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3 PROMOTE A RESPONSIBLE ORGANISATION OF ITS IN-HOUSE OPERATIONS

3 PROMOTE A RESPONSIBLE ORGANISATION

OF ITS IN-HOUSE OPERATIONS

PROMOTE AN ETHICAL COMMITMENT As a public institution, AFD conducts a mandate to serve the general interest, mainly at international level. This position requires and leads AFD, and all of its officers, to adopt an exemplary conduct. This objective of exemplarity is in line with strong demand or expectations from society for shared values and references. This is the aim and purpose of AFD Groupâ&#x20AC;&#x2122;s Professional Ethics Charter.15 It sets out the mandate, core values and shared ambition, as well as the undertakings of AFD Group and its officers in terms of compliance, fraud, partnership relations, fair practices and social responsibility. The action of the Ethics Advisor, with support from a dedicated structure, the Professional Ethics Council, aims to ensure that the Charter is effectively applied and exercise vigilance over issues that are shown to be sensitive. In this respect, particular attention is paid to identifying and preventing conflicts of interest.

Answering questions on professional ethics The Ethics Advisor offers Group officers an individual listening and counselling service, respecting anonymity, to answer any concerns in terms of understanding or applying the principles of the Charter. Information and awareness-raising activities on professional ethics issues are conducted regularly.

15 - AFD Groupâ&#x20AC;&#x2122;s Professional Ethics Charter can be consulted on the website afd.fr.

C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y C O M M I T M E N T S

SUPPORT FOR CAREER PATHS FOR ALL AND MEANINGFUL WORKING ENVIRONMENT The aim of AFD Group’s social responsibility of the employer is to offer the most favourable working conditions possible, encourage a continuous and high-quality social dialogue, foster the building of career paths, promote diversity within AFD Group, and strengthen in-house cohesion.

Lifelong support for career paths is one of the focuses of AFD’s social responsibility of the employer.

Career paths: Source of professional and personal development AFD seeks to address issues such as staff renewal, the mobility of officers, the increasing proportion of local recruitments, and the development of activities and missions, by strengthening its human capital. The social responsibility of the employer policy is one of the mainsprings for this objective. Due to AFD’s mandate and the diversity of its activities, operational and geographical mobility is central to the Group’s human resources management policy. AFD Group provides clear and strong principles (transparency in the publication of positions, mobility rules on the length of assignments and alternation between the headquarters and network) and appropriate management tools (forward-looking skills management, appraisals, professional assessments) to help build career paths and ensure that both geographical and operational mobility contribute to skills development. AFD, via its human resources management policy, works to implement a practical approach to forward-looking job and skills management (GPEC) for all staff members, identify managerial skills, and develop a network of expertise that allows everyone to benefit from motivating career paths tailored to their competencies. In-service training is also a key element of this career management. By opting for an ambitious training policy, with financing that goes beyond legal requirements, AFD’s training and skills development policy allows everyone, at both the headquarters and in the agencies, to be part of AFD’s project for the long term and renew their competencies at the various stages of their career. Respect for persons and promotion of all diversities Diversity within the institution is promoted via the conclusion of diversity agreements. The framework agreement on professional gender equality, concluded for 2014-2016, sets a target of 35% of women managers and 33% in the network by the end of 2016. Measures are implemented to develop employment for disabled persons: awarenessraising activities for staff and assistance to managers, use of work-based assistance organisations and services (ESAT) and adapted companies (EA), with recruitment targets and retention in employment for the persons concerned. In the context of the action plan for the generation contract, AFD Group is committed to strengthening the inter-generational link by creating a TransCap mechanism, which aims to contribute to knowledge transfers and capitalisation between generations. Finally, attention is paid to promoting social diversity by diversifying sources of recruitment and, more specifically, training profiles.

AFD is vigilant concerning the quality of life at work, the respect for persons and their safety in carrying out their mission.

Appropriate working environment for the health and safety of all Group staff members AFD Group is attentive to the working conditions it provides. This attention is reflected in the social protection systems which all Group officers benefit from. All AFD officers, including officers recruited locally in foreign countries, are covered by a comprehensive social protection system (health costs, insurance and pension scheme). It covers not only active officers and their dependants, but also retired officers and their dependants. Under a charter on chronic diseases signed in 2008, AFD Group provides 100% coverage via the Group insurance for people who have had or have a chronic disease, whatever the country’s medical system. AFD is vigilant concerning the quality of life at work, the respect for persons and their safety in carrying out their mission. Policies and tools are implemented to work on “living better together” and be as reactive as possible to the concerns of staff members. A suitable working environment, with provisions for working time arrangements, creates a better balance between professional and private life. A policy to prevent and effectively manage psychosocial risks is subject to comprehensive exchanges with social partners, particularly with the Hygiene, Safety and Working Conditions Committee (CHSCT). A unit that monitors suffering at work, operating on the basis of parity between the employer and unions, has already been resolving a number of difficult situations for several years now. The safety of staff members is a major concern for AFD. In view of the geographical areas of operation, which may pose various types of risk (climate, social, political, health, etc.), AFD seeks to be responsive, in an effective and humane manner, to the security problems encountered by officers and their families through a prevention policy and responses tailored to each situation (logistics, listening, advice, insurance, etc.).

Safety of staff members Country guides are available to officers and their families on AFD’s Intranet site in order to give them information prior to their expatriation. An operational crisis management unit is set up as soon as a security crisis occurs. Security standards and monitoring procedures are active for all entities on issues related to the safety of officers (terrorism, earthquake risks, avian flu, Ebola virus). In the event of an external threat that may endanger the safety of officers, there is a mechanism which provides for the mobilisation of this crisis unit and the implementation of a repatriation procedure, where required.

C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y C O M M I T M E N T S

RESPONSIBLE PROCUREMENT AFD Group’s approach to responsible procurement is in line with the national action plan for sustainable public procurement.

AFD Group needs to control the societal,

environmental and social impacts of its procurement, as well as in terms of corruption.

Sustainable public procurement • includes provisions for the protection or development of the environment, social progress and the promotion of economic development; • takes into account the interest of all the stakeholders concerned by the procurement; • allows “intelligent” savings that are tailored to requirements and encourage a low consumption of energy and resources; • integrates all the stages of the contract and the life cycle of the product or service. AFD Group procures, on its own behalf, studies and expert reports (60%), IT and telecommunications services (14 %), services and material for its communication and publishing activity (13%) and for general services (8%). It ensures that the bidding procedures for suppliers, service providers or intermediaries for the contracts it awards are properly applied. The contracts include clauses against corruption and for compliance with environmental and social standards. Contracts that have significant environmental and social impacts, such as cleaning, catering, caretaking, security and reception contracts, are subject to specific attention. For example, providers of supplies to AFD’s headquarters are required to limit the quantity of paper, plastic and boxes and to only deliver the unpackaged products to AFD. For the sake of transparency towards its service providers, the procurement procedure and code of conduct for buyers are available on AFD’s website.

REDUCE THE ENVIRONMENTAL FOOTPRINT OF IN-HOUSE OPERATIONS AFD Group’s in-house activities are in line with a European and international regulatory and incentive framework: the Grenelle Environment Forum (Laws I and II), national sustainable development strategy, exemplary administration plans, Kyoto Protocol, and the European climate-energy package plans are some of the texts which structure the approach. Since 2006, AFD Group has been establishing environmental diagnostics and carbon footprints for its headquarters. Over the years, data collection and processing have been refined and made more reliable, and the scope of analysis has gradually been extended to the entire network. The assessment includes all the direct and indirect emissions related to the activities of the headquarters and the network of agencies.

Since 2007, AFD has

been offsetting all the greenhouse gas emissions from its establishments in mainland France.

AFD’s environmental commitments AFD Group and its staff have pledged to reduce their paper consumption. The objective for waste management is to reduce waste production at the source by reinforcing the responsible procurement policy, and optimising the sorting system by targeting paper and biowaste recycling as a priority. Work-related travel is a major issue for the Group as it is the main source of greenhouse gas emissions. The increase in this source should be compared with the extension of the network and AFD’s area of operation. The introduction of a videoconferencing system in October 2010 has reduced work-related travel. Reflection on a policy for responsible travel will be initiated with the aim of reducing the impacts of work-related and home-work travel. Since 2007, AFD has been offsetting all the greenhouse gas emissions from its establishments in mainland France by purchasing carbon credits. Over a three-year period (2010-2012), it has offset 72,000 tons equivalent (teq) CO2. AFD launched a programme to reduce energy consumption a few years ago. The actions carried out at headquarters targeted the introduction of a technical management of the building, including optimised thermal regulation and the use of renewable energies by installing photovoltaic generators at headquarters. The Mistral building was fitted out in accordance with the “High Environmental Quality” (HEQ) standard. This classification was obtained when the premises were delivered for the construction works. AFD is also committed to improving energy efficiency in its agency properties. It regularly conducts energy audits of the agencies.

GOVERNANCE REFLECTS THE GROUP’S SOCIALLY RESPONSIBLE COMMITMENTS AFD Group endeavours to reflect sustainable development issues in its governance. AFD Group’s Senior Management and Executive Committee ensure that Corporate Social Responsibility and sustainable development are mainstreamed into strategies and establish the conditions for this to be appropriated by everyone in the institution. The Group’s organisation chart reflects this commitment, with entities dedicated to these subjects, for example, the divisions in charge of human development operations (education, vocational training, health) or transport and sustainable energies. One division is more specifically in charge of supporting operations on the analysis of E&S risks and the impacts that projects have on sustainable development. Finally, a team, which reports to the Strategy, Partnerships and Communication Department, leads the Corporate Social Responsibility approach for all the AFD Group. The Group’s Corporate Social Responsibility approach is formalised by a policy, which has been defined for 2014-2016 and was adopted by the Board of Directors on 27 March 2014. Through this policy, AFD underscores its resolve, via six commitments covering its operations and in-house policy, to make sustainable development the objective for its action.

C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y C O M M I T M E N T S

Corporate Social Responsibility action plan: monitor, measure, be accountable The action plan provides a tool for dialogue with AFDâ&#x20AC;&#x2122;s various entities and aims to advance the mainstreaming of the Corporate Social Responsibility commitments via a series of targeted activities. An annual review analyses the progress, difficulties or anticipated barriers, and identifies drivers for action. Particular attention is paid to crosscutting projects, which mobilise a number of actors. Structured reporting: a tool for dialogue with stakeholders AFDâ&#x20AC;&#x2122;s non-financial communication is in line with national and international reference standards, such as the Global Compact or Global Reporting Initiative (GRI). By applying this demanding and recognised reporting framework, AFD demonstrates its will to be accountable for its commitments. It acts as a leveraging tool in terms of maintaining its Corporate Social Responsibility and sustainable development objectives. The annual Corporate Social Responsibility Report informs and reports on results, scope for progress, and exemplary initiatives or action. It is intended for a broad public, both within AFD Group and with its stakeholders. It also provides reference material for non-financial rating agencies. Raise awareness of Corporate Social Responsibility Training is also an important tool in terms of appropriating the approach. This involves dedicated training themes (fight against corruption, ethics, gender, etc.) and the main messages being mainstreamed into the basic courses (integration course, managerial training)16.

The six commitments for 2014-2016 EXTERNAL

Transparency and dialogue with stakeholders 1

CSR appropriation and governance

Sustainable development in operations

Ethics and exemplarity in financial transactions

The six commitments for 2014-2016

Management of our environmental impacts

IN-HOUSE

5 4

Socially responsible and equitable staff management

16 - The page on the Groupâ&#x20AC;&#x2122;s Corporate Social Responsibility can be consulted at afd.fr

APPENDICES

THE TEXTS AND STANDARDS THAT FORM THE BASIS AND FRAMEWORK FOR THE CORPORATE SOCIAL RESPONSIBILITY APPROACH

United Nations Charter on Human Rights: • Universal Declaration of Human Rights – December 1948 • International Covenant on Civil and Political Rights – December 1966 • International Covenant on Economic, Social and Cultural Rights – December 1966 The International Labour Organization’s Fundamental Conventions – May 2004 The three Rio conventions – June 1992: • Convention on Biological Diversity (CBD) • United Nations Framework Convention on Climate Change (UNFCCC) • United Nations Convention to Combat Desertification (CCD) Standards of the IFC (International Finance Corporation) – January 2010 OECD Guidelines for Multinational Enterprises – May 2011 United Nations Convention against Corruption – October 2003 OECD Anti-Bribery Convention – February 1999 United Nations Global Compact – July 2000 Law on New Economic Regulations – May 2001 The Grenelle environment laws: • Grenelle 1 – July 2009 • Grenelle 2 – July 2010 Aarhus Convention – June 1998 Orientation and Programming Law on France’s Development and International Solidarity Policy – July 2014 Green Paper – Promoting a European framework for Corporate Social Responsibility – July 2001

GLOSSARY

ACCOUNTABILITY: In the case of AFD, it involves the obligation to be accountable to a group of stakeholders defined by French regulations, such as employees and their representatives (social law), internal control and the Financial Markets Authority â&#x20AC;&#x201C; AMF (banking law) and external control institutions, line authorities and parliamentarians (public law).

CONFERENCE OF THE PARTIES (COP): Created with the adoption of the UN Framework Convention on Climate Change in 1992. It is the supreme body of the convention. Every year, it gathers all the parties to the convention (the 194 countries that have ratified and the European Union).

CONFLICTS OF INTEREST: Situation in which a person must decide between the requirements of their position and their personal interests.

CONTRACTING AUTHORITY: The contracting authority is the entity that has the need, defines the objective of the project, its schedule and the budget devoted to this project. The contracting authority is the project sponsor and bears the financial cost.

ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN (ESMP): It aims to allow the different intervenors (contracting authority, enterprises, technical assistance) to know the extent of their responsibilities and identify all the activities that need to be implemented to improve the environmental and social quality of operations.

GLOBAL COMPACT: Compact established by the UN by which enterprises and organisations pledge to align their operations and strategies with ten universally accepted principles relating to human rights, labour standards, the environment and the fight against corruption.

GLOBAL REPORTING INITIATIVE (GRI): Established in 1997, it has a mandate to develop globally applicable guidelines for sustainable development and to report on economic, environmental and social performance, initially for companies and subsequently for any governmental or non-governmental organisation.

GLOSSARY

IMPACT: Economic, environmental and social repercussions that are positive, negative, real, potential, direct or indirect, short- or long-term, voluntary or involuntary (GRI guidelines).

ISO 26000: Reference that sets out the guidelines for all types of organisation seeking to assume responsibility for the impacts of its decisions and activities and be accountable for them.

NON-FINANCIAL REPORTING: Evidence approach, based on specific data, which measures the social, environmental and societal progress of organisations with regard to standard benchmarks (Institut RSE).

STAKEHOLDER: Any person or structure that has an interest in the decisions or activities of an organisation.

TEQ COÂ˛: Greenhouse gas measurement unit. It is common to all gases and takes account of their characteristics, such as their lifespan or their capacity to warm the planet.

HISTORY OF CORPORATE SOCIAL RESPONSIBILITY AT AGENCE FRANÇAISE DE DÉVELOPPEMENT

2004

AFD membership of Global Compact.

2007 Introduction of first social and environmental responsibility policy 2007-2011. 2011

Preparation of first SER report.

2011-2012 External evaluation of the 2011 SER report and SER policy 2007-2011. 2012-2013 Preparation of the new SER policy and its action plan for 2013-2016. 2013

A+ evaluation of SER report by the Global Reporting Initiative.

2014 AFD Group’s Corporate Social Responsibility policy approved by the Boards of Directors of AFD and PROPARCO. 2014-2016 Implementation and supervision of action plan.

AFD, the Agence Française de Développement, is a public development-finance institution that has worked for seventy years to alleviate poverty and foster sustainable development in the developing world and in the French Overseas Provinces. AFD executes the French government’s development aid policies. Working on four continents, AFD has seventy-one field offices and bureaus, including nine in France’s overseas provinces and one in Brussels. The Agency provides financing and support for projects that improve living conditions, promote economic growth, and protect the planet. In 2013, AFD committed €7.8 billion to projects in developing and emerging countries and in the French Overseas Provinces. These AFD-financed projects will provide schooling for children, improve maternal health, promote equality between men and women, support farmers and small businesses, and bolster access to drinking water, transportation and energy. These newly-funded projects will also help mitigate climate disruption by abating nearly 3.3 million metric tons of carbon dioxide-equivalent annually.

Agence Française de Développement (AFD) 5, rue Roland Barthes - 75598 Paris cedex 12 FRANCE Tél. : + 33 1 53 44 31 31

www.afd.fr December 2014 - Creation Garance Guiraud Credit photo : fotolia.com