How Should DFC Strengthen its Revised Environmental and Social Policies and Procedures (ESPP)?

DFC’s primary safeguards document, the ESPP, should meet and exceed the highest standards and include requirements at least as robust as what the U.S. requires of the multilateral development banks (MDBs) in which it is a member. BIC encourages DFC to broaden the coverage of safeguards within the ESPP to better address climate, the inclusion of marginalized groups, prevention of SEA/H and reprisals, and access to remedy.

On February 27, 2023, the U.S. International Development Finance Corporation (DFC) opened its revised Environmental and Social Policies and Procedures (ESPP) to public comment for 60 days. The ESPP is DFC’s primary safeguards document and outlines the environmental, social, labor, and human rights requirements for projects that DFC finances globally. On April 28, 2023, BIC joined twelve civil society organizations (CSOs) in submitting a letter detailing overarching recommendations and concerns and sharing specific redline edits on the revised ESPP.

There are several areas where DFC needs to strengthen the revised ESPP, and the joint CSO redline document contains recommendations on improving transparency, human rights alignment, climate requirements, biodiversity protections, stakeholder engagement, and preventing sexual exploitation, abuse and harassment (SEA/H), among other topics. 

In particular, BIC and other endorsing CSOs call on DFC to improve its ESPP to match what the U.S. pushes for at the multilateral development banks (MDBs) in which it is a member. As one of the largest shareholders at the MDBs and historically the most vocal advocate for high environmental, social, and accountability standards at the institutions, the U.S. should demonstrate its commitment to sustainable and inclusive development by holding its own development finance institution to the same standards it calls on the MDBs to meet. A consistent U.S. development policy across DFC and the MDBs is essential for the U.S. to preserve its credibility and leadership with the MDBs, international partners, and project-affected communities. 

We encourage DFC to consider the submitted recommendations and redline edits and hold an additional round of consultations after integrating public comments into the revised ESPP. A single-phase consultation process is inadequate for the scale of DFC's review on its ESPP and not aligned with what the U.S. pushes for on similar policy reviews at the MDBs

Finally, while having a strong ESPP is important, it is of little use without proper implementation and accountability. DFC should allocate ample budget, resources, and training to build the institutional capacity needed to strengthen its due diligence and supervision processes as the new ESPP goes into effect.