AFD Group Corporate Responsibility 2011 Report

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2011 report

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How to read through this report Interactive table of contents

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Contents Letter from the AFD Group Chief Executive

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Part 1. AFD Group’s Environmental, Social and Governance Reporting

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Part 2. Our Approach to Environmental, Social and Governance Responsibility Foreword Environmental, Social and Governance Responsibility Policy Goals Operating Risk Management Internal Organization for Environmental, Social and Governance Responsibility Part 3. Our Internal Governance, Corporate Ethics and Anti-Fraud and Corruption Controls

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Part 4. Our Stakeholders Stakeholder descriptions and interactions Stakeholder Engagement Improvement Plan for 2012-2016

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Partie 5. Our Funding Operations Corporate Responsibility in External Operations AFD Group’s Climate Strategy: An Exemplary Approach

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Partie 6. Our Work Force Our Commitment to Our People

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Avenues to Improvement 2011 Human Resources Outcomes Improvement Plan for 2012-2016 Partie 7. Environmental Responsibility in Our Internal Operations Managing AFD Group’s Environmental Footprint Avenues to Improvement Improvement Plan for 2012-2016

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Partie 8. Our Method 104 Inspired by the Global Reporting Initiative Framework Report Scope and Boundaries Reporting Period GRI Indicator Index Abbreviations

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Letter from the AFD Group Chief Executive The AFD Group strategy for 2012-2016 sets more stringent requirements for our organization – requirements that push it to be exemplary in all its work. We must be as demanding of ourselves as we are of our aid beneficiaries, particularly with regard to the environmental, social and governance responsibility issues so central to our activity.

The development of our new strategy reaffirmed our commitment to an ambitious corporate responsibility policy, one that we will soon submit for third-party validation.

Environmental, social and governance issues remain essential concerns when we consider development aid operations for funding. For example, our Group has a climate-change strategy that stipulates that 50% of our funding must combat atmospheric greenhouse gas effects.

More generally, our aid interventions successfully disseminate good practices, particularly good labor and governance practices – two of the essential components of genuinely sustainable development.

Internally, we will further formalize our protocols to enhance corporate responsibility practices. We will consolidate our

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reporting, broaden its scope, and improve its measurements. These aims drove our preparation of this first annual report dedicated to corporate responsibility, as we anticipate more rigorous reporting regulations for public institutions in years to come.

In the wake of several years’ growth and expanded hiring, AFD Group’s strengthened commitment to corporate responsibility is more essential than ever. In addition to meeting accountability obligations, corporate responsibility measures contribute to work force cohesion and shared values. In the same vein, we have also revised our code of business ethics to strengthen and adapt it to the needs of a larger organization.

I want to thank Jean-Loup Feltz, a close adviser, who died suddenly at the beginning of 2012. He championed a more evolved and aware sense of corporate responsibility for the Group, and through his technical and human gifts, he succeeded in showing us that this step was essential – a major affirmation of AFD Group’s identity.

Dov ZERAH

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Photo Ademe ©

1. AFD Group’s

Environmental, Social and Governance Reporting

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his inaugural Environmental, Social and Governance Report embodies a key commitment of the AFD Group: responding to stakeholders’ demands for transparency, responsibility and accountability. In accordance with French and European Union rules for nonfinancial reporting, this report has a dual purpose: (1) providing visibility on the Group’s internal and external operations, and (2) clearly demonstrating the Group’s ongoing progress in managing social, environmental and operational risks.

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AFD Group’s Environmenta l, S ocia l and G overnance Reportin g

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The AFD Group consists of the Agence Française de Déve-

Together, AFD and PROPARCO account for 99% of the

loppement (AFD), France’s bilateral development finance

Group’s assets and consolidated net income1. Under

agency, and the Société de Promotion et de Participation

French law, AFD is both a public industrial and commercial

pour la Coopération Economique (PROPARCO), a majo-

institution2 and a specialized financial institution subject

rity-owned (59%) subsidiary focused on private-sector

to bank regulation and risk controls. AFD Group strives

development. Both entities are based in Paris and work

to be an exemplary public entity, spreading good social,

in developing and emerging countries and France’s over-

environmental and governance practices with its develop-

seas provinces. AFD and PROPARCO use various financial

ment activities. This report adheres to the Global Repor-

and other instruments – grants, loans, general budget

ting Initiative’s G3.1 Guidelines to identify key corporate

aid, guarantees, equity participations, studies, research,

responsibility issues and indicators; these are summarized

and so forth – to meet aid beneficiaries’ needs. In the

in the index at the end of this report3.

lowest-income countries of sub-Saharan Africa, the Group’s

In conceiving and writing this report, AFD Group drew upon

funding centers on grants and highly concessional loans

France’s international commitments to human rights, as

with subsidized interest rates and terms. Middle-income

expressed in the Charter of the United Nations (UN)4,

developing and emerging countries and France’s overseas

and to rights of workers as outlined in the “fundamen-

provinces, as well as companies in foreign countries and

tal” conventions of the International Labour Organisation

the overseas provinces, benefit from loans (often unsub-

(ILO)5. The Group also draws upon the Organisation for Eco-

sidized) and other types of financing.

nomic Co-Operation and Development (OECD) guidelines

1. For financial statements, see Reference Document section of the AFD Group 2011 Annual Report.

2. Etablissement public industriel et commercial, or EPIC. 3. More information on the Global Reporting Initiative is available at www.globalreporting.org 4. The Charter of the United Nations is available at www.hrweb.org/legal/unchartr.html 5. The 8 fundamental conventions include: freedom of association and the effective recognition of the right to collective bargaining, the elimination of all forms of forced or compulsory labor, the effective abolition of child labor, and the elimination of discrimination in respect of employment and occupation. Complete texts are available on www.ilo.org/global/standards/introduction-to-international-labour-standards/ conventions-and-recommendations/lang--en/index.htm 6 | 132

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AFD Group’s Environmenta l, S ocia l and G overnance Reportin g

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for multinational enterprises6, the principles espoused by the Global Compact7, of which AFD is a member, and those embraced in the Sustainable Development Charter for French Public Institutions and Enterprises8. Finally, the report also owes its inspiration to France’s National Sustainable Development Strategy for 2010-139 and the International Organization for Standardization (ISO) 26000 10

social responsibility standard .

While this is the first report solely dedicated to social and environmental responsibility and governance, the AFD Group instituted its first five-year social and environmental responsibility policy in January 2007. That policy is currently being updated for 2012-2016, and will be

presented to AFD’s and PROPARCO’s respective board of governors in 2012. The policy’s scope and strategic framework covers both AFD and PROPARCO – not least in its labor relations aspects, since employees of both entities share a common AFD employment contract, comply with the same rules, and enjoy the same work force protections.

Because AFD Group regularly borrows in capital markets to finance its development work, it publishes full financial statements and disclosures in an annual report known as the “registration document,” as required by French banking regulations and endorsed by the French Financial Markets Authority11. Since 2006, the registration document has contained all nonfinancial information required by French

6. Full text of 2011 edition available at www.oecd.org/dataoecd/43/29/48004323.pdf 7. The United Nations Global Compact centers on 10 universally accepted principles in the areas of human rights, labor, environment and anticorruption. Full text is available at www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html 8. Charte française du développement durable des établissements publics. The charter is available in French at www.developpement-durable. gouv.fr/IMG/pdf/3_-_Charte_DD-2.pdf 9. The full text is available in English at www.developpement-durable.gouv.fr/IMG/pdf/NSDSp60.pdf 10. Additional information about the voluntary ISO standard for social responsibility is available at www.iso.org/iso/iso_catalogue/management_ and_leadership_standards/social_responsibility/sr_discovering_iso26000.htm 11. Autorité des marchés financiers, or AMF.

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AFD Group’s Environmental, Soci al an d Govern ance Re porting

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law12 about the Group’s impact on its work force, its community and society at large.

Overall, AFD Group’s approach to corporate responsibility covers two dimensions of its activity:

•Internal operations of AFD’s and PROPARCO’s headquar-

ters in Paris, their 70 field offices in foreign countries and French overseas provinces, and AFD’s corporate university, the Center for Economic, Financial and Banking Studies (or CEFEB)13, in Marseilles, France.

•External operations for development project financing

that examined cross-cutting social, environmental and governance issues. This has refined the conception and furthered the operational reach of the Group’s corporate responsibility policy, principles and goals – subjects covered in detail by this first overview. This full AFD Group 2011 Environmental, Social and Governance Report is available for download from the Internet on www.afd.fr. A summary also appears in the print version of the AFD 2011 Annual Report, available to interested parties upon request and particularly useful for those without easy access to the Internet. ■

and execution.

AFD Group’s chief executive, Dov Zerah, has long emphasized that internal and external operations require constant progress in corporate responsibility; this report is but one manifestation of that emphasis. In November 2010, he named a special report coordinator for this long-term mission, who in turn led a working Group in monthly meetings

12. The laws are known as “new economic rules” (nouvelles régulations économiques, or NRE) and “Grenelle Environment II,” which were updated in 2010.These laws aim to reduce French greenhouse gas emissions by 75% by the year 2050. In particular, they foresee a series of measures to encourage “ecological urban planning” that, rather than requiring excessive land and energy resources, uses new technologies in new buildings and more efficient heating systems in older buildings. This would entail the comprehensive application of low-energy-consumption building standards by 2012, along with the construction of energy-positive buildings that generate more energy than they consume.

13. Centre d’études économiques, financières et bancaires, or CEFEB.

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The « A Cleaner World Without Cans » operation in New Caledonia

2. Our Approach to

Environmental, Social and Governance Responsibility

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Foreword

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he AFD Group began developing its corporate responsibility approach in 2005, and formulated its guiding principles in 2007. Until now, the Group has primarily communicated its social, environmental and governance efforts to interested parties in the financial markets, where it raises funds through bond issues. The Group’s corporate responsibility

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reports were included in the registration document section of its annual financial and activity report, and published online by the French Financial Markets Authority.

This inaugural iteration of the AFD Group’s dedicated Environmental, Social and Governance Report covers the Group’s 2011 activities. It is intended for a wider range of readers than the registration document and addresses all of the AFD Group’s stakeholders – investors and regulators, but also peer institutions, nongovernmental organizations, citizen’s groups, policy makers, aid beneficiaries, employees, French citizens and those of the countries where the Group operates. This report affirms the Group’s commitment to accountability, progress and dialogue – as befits a public institution pursuing the public interest – while demonstrating that good governance must now include social and environmental imperatives.

Environmental, Social and Governance Responsibility Policy Goals AFD Group promotes sustainable and equitable development in developing and emerging countries and in France’s overseas provinces, always striving to improve how it inte-

grates these concerns in its business conduct. To this end, AFD Group created a policy for environmental and social responsibility and governance for its internal and external operations, which was validated by its board of governors and implemented in 2007.

The following precepts and goals guide AFD Group’s environmental, social and governance responsibility policy.

They draw on the values, principles and rules for responsible and equitable development that underpin major international charters and conventions, as cited in the previous section, AFD Group’s Environmental, Social and Governance Reporting.

The AFD Group’s eight guiding principles and goals are as follows:

•Focusing external and internal operations on people

– improving their living conditions and well-being, while respecting the fundamental rights and social and cultural diversity of all the Group’s collaborators.

•Affirming the three-pronged need for economic growth, wealth redistribution, and reduction of both long-term unemployment and globalization’s work force impact (as defined by the Group of Twenty in Cannes in November 201114 ).

14. A description of the G20 package of measures is available at www.g20.org/Documents2011/11/Cannes%20Action%20plan%204%20 November%202011.pdf.

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All require specific measures to achieve sustainable and equitable development that alleviates poverty and inequality.

•Preserving climate, renewable natural resources, and ecosystems crucial for economic and social development; focusing the greatest efforts on environmental remediation

and climate change mitigation and adaptation, in order to decrease the vulnerability of the poorest.

•Contributing financing for cultural heritage preserva-

tion and appreciation, in accordance with the 2002 World Summit for Sustainable Development in Johannesburg: this summit defined culture as the fourth pillar15 of sustainable development, alongside social, economic and environmental support.

•Adapting aid interventions to the needs of fragile situations in countries affected by violent conflicts, creating effective conditions for dispute resolutions that restore social cohesion and peace.

•Giving priority to partnerships and joint actions that exploit the wide range of professionals and organizations dedicated to sustainable and equitable development, while promoting good social, environmental and governance practices among these partners.

•Meeting the obligation to use public funding efficien-tly

by ensuring the quality of the Group’s practices and results, and by integrating lessons learned through regular project performance evaluations.

•Promoting transparency and stakeholder engagement

by improving public access to information about operations, while complying with confidentiality rules and data privacy laws.

AFD Group’s corporate governance policy helps its personnel integrate these principles into the Group’s strategic programs, thereby fostering other key aims: ensuring greater public information about these issues, promoting related know-how internally, reducing the Group’s ecological footprint, and strengthening oversight of these concerns in all Group-financed aid operations.

The policy spurs managers and employees in all 70 field offices and AFD’s headquarters to design and execute corporate responsibility action plans. These plans are overseen by a corporate responsibility steering committee, which includes several key positions: the Group’s chief human resources officer, responsible for labor relations; the chief administrative officer, responsible for internal

15. More information is available on http://www.un.org/esa/sustdev/documents/WSSD_POI_PD/English/POI_PD.htm.

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Our Approach to Environm ental, S ocia l a nd Govern anc e Responsibility

environmental impacts; the director of external rela-

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tionships and partnerships, responsible for transparency

Operating Risk Management

in communications; and the respective chief operating

Financial and Economic Risk Management

officers of AFD and of PROPARCO, responsible for deve-

AFD Group senior management takes many steps to ensure

lopment aid projects financed by the Group.

adequate attention and resources to the management of

AFD Group’s chief executive has emphasized environ-

financial and economic performance risks. These steps

mental, social and governance concerns and risk mana-

are detailed in the Group’s strategy for 2012-2016, and

gement by appointing a special coordinator to champion

align with the means-and-objective agreement the Group

the policy and to set up a performance evaluation system.

signed with the French government, covering AFD Group’s

This system uses key responsibility indicators that mea-

cooperation and development mandate. As a credit insti-

sure progress at two levels – management effectiveness and impacts –the better to manage environmental, social and governance risks in internal and external operations.

These indicators are explained in detail in the following parts of this report.

tution, the Group is regulated by French banking laws and oversight, both of which mirror European Union and other international directives; therefore, the Group’s capital management is subject to the Basel III Accords. The preceding Basel II Accords rested on three precepts: (1) minimum bank capital requirements, measured by a liquidity

As part of AFD Group’s 2012-2016 strategic plan, and

ratio, (2) improved tools for capital adequacy assessments

under the aegis of the special coordinator, the 2012-

by bank supervisors, and (3) more extensive disclosure

2016 corporate responsibility action plan will progressi-

requirements to help enforce market discipline. Following

vely strengthen these performance indicators, measuring

the 2007 financial crisis, Basel III16 introduced reforms,

improvements in the relevance and execution of internal

extending some Basel II rules while upgrading others to

and external actions.

strengthen the financial system. One of the reforms calls

16. The Group of Governors and Heads of Supervision announced higher global minimum capital standards in September 2010.

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for a gradual phasing-in of higher minimum capital requirements, beginning 1 January 2013. Other Basel III reforms increase capital buffer and liquidity requirements. AFD Group vigilantly follows international regulators’ changes to prudential rules, even though the Group’s lending and other activities are less sensitive to some types of credit, counterparty, model and market risks.

The Group’s management of its capital requirements includes a systematic review of all risks and regular reviews of the Group’s lending and investment portfolios, particularly at fiscal year end. AFD created an executivelevel Risk department in 2010, and PROPARCO will create a better-staffed Commitments department in 2012: both departments will use improved risk management tools and other means to secure their respective assets.

AFD Group’s board of governors analyzes financial accounts and budgets each year, paying special attention to organizational efficiency by examining its cost-income ratio. The board watches over the stability of the Group’s financial performance and gauges its outcomes in the international context, where the work of AFD and PROPARCO depends on the work of private sector entrepreneurs, suppliers and business services providers.

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The Group’s aid operations address priority issues – areas where, compared with peer entities, AFD Group is particularly well-situated to act. This attention to leveraging the Group’s strengths underpins the Group’s 2012-2016 strategy. Every three years, on average, senior managers define priority intervention frameworks for each country, working with their embassies, economic services, backgrounds and apparent needs.

As part of its risk-management exercise, AFD Group’s senior management examines the economic impact of every aid operation it finances; it also conducts post-project performance evaluations,. An additional tool for performance benchmarking arises out of strong partnerships with peer institutions. These partnerships foster an ongoing dialogue that identifies areas for improvement within the Group.

Peer reviews also foster sharing of good practices and other means to bolster internal and external operations.

Such feedback also helps the Group better target aid funding, making its interventions more effective.

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The Group manages human-resources and other risk as

These measures control access to the premises, prevent

follows:

fire and water damage, and account for seismic risk in

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buildings, with upgrading or changing of premises as requi-

Senior management has ensured containment of cer-

tain labor risks, especially those related to supplementary pensions. In 2008, AFD Group’s in-house pension system was reformed and incorporated into a collective fund managed by a French public industrial and commer17

cial entity, the National Provident Fund ; present-day

put a designated employee in charge of safety to better highlight and address these issues.

Environmental Risk Management

workers pay into this fund for benefit-drawing pensioners.

AFD and PROPARCO manage and mitigate environmen-

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tions, via project selection standards, as well as tools

Employee remuneration is adjusted on a by-country

basis using a grid that calibrates pay, benefits and working conditions to local laws. In addition, AFD Group has its own in-house benefits regime that complements the public one and enhances its employees’ pension rights, social insurance and other benefits.

•Senior management initiated a program to increase

tal risks, both internally and in development aid operathat identify projects’ impacts on climate change and natural resources. These efforts are guided by a 20122016 climate strategy and an internal environment strategy, approved by AFD’s board of directors in 2011 and by PROPARCO’s board in 2012. The climate strategy applies to external aid operations, while the internal environment

internalized expertise and skills, rather than relying on out-

strategy aims to reduce the Group’s own environmental

side consultants; this program will be pursued rigorously

footprint. The strategies promote the following environ-

under the 2012-2016 strategy.

mentally-friendly and “pro-climate” practices for external

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and internal operations:

To ensure the physical safety of staff members and

visitors, a risk-management team has established rules and tools for use at headquarters and in the field offices.

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red. At the Paris headquarters, senior management has

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•Dedicated environmental and social support units within

•Internally, AFD Group has a dedicated employee char-

•Another unit dedicated to pro-climate support works

•Senior management has defined and implemented action

AFD and PROPARCO provide technical assistance and advice to their respective development project teams.

These support units also identify financial levers that will encourage borrowers or aid beneficiaries to improve their own environmental performance.

with project teams to systematically measure the carbon footprint of funded projects, using a robust and conservative in-house emissions measurement tool.

•Senior management has committed to long-term pro-

climate project funding, aiming to invest 50% of AFD’s annual commitments in foreign countries, and 30% of PROPARCO’s, in projects with positive climate impacts that also meet poverty alleviation and economic development goals

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When reviewing projects for funding, project teams use “positive impact on the climate” as an additional selection criterion, while also considering the Group’s geographic priorities, the target countries’ economic development levels, and their climate concerns as addressed in their own national development plans and policies.

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ged with measuring the environmental impacts of AFD, PROPARCO and CEFEB internal operations. AFD Group conducts environmental audits and carbon footprint calculations to monitor the impacts and improve the reliability of measurement indicators. plans to reduce the environmental and carbon footprints of the Group’s internal operations. Priority actions include: (1) reducing business travel by using video conferencing, (2) reducing water and paper consumption, (3) developing plans to increase energy efficiency and use renewable energy sources, (4) offsetting carbon emissions by purchasing carbon credits to achieve carbon neutrality, (5) overhauling waste management systems, and (6) pursuing a responsible and environmentally-aware purchasing policy.

•Internal communication raises employee awareness

about sustainable development and encourages “green behavior” in all areas.

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Social Risk Management

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AFD Group cultivates and sustains a diverse work force; it promotes nondiscriminatory behavior and respect for human rights among its employees, its aid beneficiaries and its suppliers. The Group also works to reduce inequity in the communities in which it operates, and takes into consideration environmental, social and governance factors in both selecting projects for funding and their implementation methods. These practices align with the Group’s commitment to environmental and social stewardship, to prudent risk management, and to serving the best interests of aid beneficiaries.

Labor Initiatives

•In conjunction with an increase in project commitments, AFD Group has redoubled efforts to strengthen its human capital, in particular by sharing know-how, optimizing its field offices through new regional hubs, and increasing recruitment among skilled local nationals for permanent in-country positions.

•The Group has improved operations in field office

networks by unifying all human resources supervision and helping all employees plan and train for future career paths.

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•The Group promotes diversity through commitments to gender equality and greater opportunity for the disabled in hiring and management, as per employment agreements signed with workers in 2007 and again in 2011.

•Since 2007, the Group’s occupational safety and health office has improved working conditions through programs for alcohol-abuse prevention and workstation management. In 2012, the health and safety office will focus on preventing work-related stress and psychological problems.

•AFD’s chief executive ensures that a senior manager

attends each committee meeting of employee and union representatives, in order to encourage dialogue and maintain high quality labor relations. A Group-wide meeting in Paris provides an opportunity for senior management to meet with employee representatives from headquarters, as well as directors of field offices and employee representatives (from one-third of the field offices each year).

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Human Rights Initiatives

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•In 2011, for internal and external operations, AFD Group

•The Group’s code of business ethics will be revised

•AFD Group began modernizing its purchasing depart-

•The Group performs an internal audit of personnel

instituted the use of filters that preclude companies violating human or workers’ rights from bidding on AFD or PROPARCO contracts.

ment in 2011, and will include human rights concerns when training buyers in administrative procedures, monitoring suppliers, and so forth. The management of tenders has been automated and follows standard European Union operating procedures.

AFD Group signed a commitment to nondiscrimination on the basis of disability in 2011, and will sign further nondiscrimination pacts on the basis of disability and age in 2012. Compliance with these commitments has entailed creating an online job application that publishes all openings and serves as the single point of entry for candidates.

•Internally, AFD Group uses committees and a work

council that equally represent employees and management; these manage staff promotions and employee complaints, grievances and appeals.

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in 2012; it covers conflicts of interest and other ethical issues and describes behaviors that do not comply with laws or internal rules. management procedures in field offices and at headquarters. These procedures promote fair employment practices and address issues related to employee discipline and fraudulent behavior.

•The Group has long guaranteed freedom of associa-

tion and has negotiated a collective bargaining agreement specifically for its employees. Over time, labor relations have been professionalized; discussions about achieving union-type goals in funding, materials and policies have not reached a formal agreement but remain ongoing.

Management scrutinizes the promotions of employees who represent the trade union to ensure they are not discriminated against.

•In its external aid operations, AFD Group performs due

diligence in agreements signed with borrowers and aid beneficiaries, insuring respect for the rights of indigenous peoples and preventing child labor, forced or compulsory labor, and work in prohibited sectors.

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Community Initiatives

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•AFD Group environmental and social support units provide technical assistance, advice and support to borrowers and aid beneficiaries so that they may improve their own corporate responsibility performance. The support units also identify financial levers to encourage such improvements.

•AFD Group works to avoid corruption and misappro-

priation of funds in beneficiary countries through internal rules and operating procedures, contractual provisions agreed with funding recipients, and inspections that must be made or verified by its own agents.

•The Group avoids anti-competitive practices. For example, aid is “untied,” meaning that funding does not depend on whether recipients use it to buy goods or services from French suppliers; all tenders awarded as part of a funding agreement are formally open to competition.

•AFD Group also produces multi-purpose knowledge that

informs and shapes public policy, particularly on topics of interest to the countries and the communities it serves.

The Group shares its knowledge about shared priorities such as sustainable development, agricultural production, food security, infrastructure construction, education and health, particularly in low-income Sub-Saharan African countries. It also shares its knowledge about the climate

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and the environment, private enterprise and entrepreneurship, urban development and neighborhood renewal, focusing on middle-income and emerging countries.

•As a good corporate citizen, AFD Group complies with

all laws and regulations in France and in the countries where it carries out development projects. It ensures compliance through internal controls, internal audits, and internal and project monitoring, alongside supervision by regulatory agencies such as the French Court of Auditors, the General Inspectorate of Finance, national banking supervisors and others.

Funding Initiatives

•AFD Group ensures that the grants, subsidized or mar-

ket-rate loans it commits to foreign countries and France’s overseas provinces properly match each locality and each type of intervention. The Group achieves this by directly verifying the intervention subject and applying an interest rate grid that allows for zero, fixed, variable or capped interest rates.

•The Group further ensures the integrity of its allocations

by managing the social, environmental and governance risks of projects prior to funding approval, during implementation, and after project completion.

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Internal Organization for Environmental, Social and Governance Responsibility 2•

Corporate responsibility goals

Definition and implementation

Promote a safe, healthy, diverse, talented workforce

Human Resources Division In charge of internal social responsibility Management Board

Control environmental impacts of headquarters and field office environmental impacts

Control environmental, governance and social risks in external aid operations

Strengthen AFD Group’s brand image and acceptance among stakeholders

Contribute to internal and external discussions about and acceptance of corporate responsibility

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IT and Building Department In charge of internal environmental responsibility

Proparco Operations Division In charge of corporate responsibility for external aid operations AFD Operations Division In charge of corporate responsibility for external aid operations

AFD Communications and Partnerships Division in charge of transparency and developed-world partnerships

Chief Strategy Officer in charge of strategic plans

Informs and proposes

Corporate Responsibility Working Group Represents all divisions from AFD, Proparco and the field offices

CEO

Helps the group process advance through discussion, analysis and proposals

Management Committee Member in charge of coordinating corporate responsibility policies Leads and coordinates

Decides

Executive Board Prepares decisions

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Management Coordination

Internal Social Responsibility

In November 2010, the AFD Group’s chief executive officer appointed a special coordinator for environmental, social and governance responsibility policy to formulate a coherent corporate responsibility program. In 2011, the chief executive prioritized reporting on the subject, setting the stage for this inaugural report; the corporate responsibility program will be finalized in 2012.

The AFD Human Resources division director and her team are responsible for ensuring internal labor practices and overseeing work force relations, via two offices and three departments.

Dedicated Working Group After six months of preliminary work, on 23 June 2011 the special coordinator and the AFD Group Executive Board decided to create a dedicated corporate-responsibility working group. Since then, its fifteen members from AFD, PROPARCO divisions and some field offices have met on a monthly basis to discuss practical, cross-functional topics, and to work on issues related to the Group’s corporate responsibility approach. Each working group member relays information about this work and offers relevant training to other employees in their respective divisions and departments.

Work Force Management and Budget Office18 This office provides employee-related administrative reporting and supports the Human Resources division’s steering, budgeting and budget monitoring efforts.

Industrial Relations Office19 This office participates in meetings with work force representatives, prepares and organizes union negotiations, monitors employment law and compliance, and provides employment-related legal advice.

Department of Training, Continuing Education and Human Resources Development20 This department ensures employee skills development, implements training and education programs, and improves human resources processes.

18. Pôle Contrôle de Gestion Sociale et Budgétaire, or PGS. 19. Pôle Relations Sociales, or RSO. 20. Division Formation Continue et Développement des Ressources Humaines, or FCD.

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Career Management and Recruiting Department21

Internal Environmental Responsibility

This department analyzes internal needs for specific skills, recruits new hires, oversees employee inductions, manages careers and job mobility, and provides advice and support to managers and other employees to prevent work-related psychological risks.

An individual reporting to the AFD Group chief administrative officer and working in the Effective Professions Office acts as the point person for internal environmental responsibility issues. The cross-functional office sets up organizational systems and procedures for all Group departments.

Administration and Remuneration Department22 This department manages employee remuneration and benefits, related administrative and legal matters, work force protections, pension administration and oversight, and the Human Resources division information system.

The department maintains employee records in all operating countries and manages employee travel, pension plans, and health, life and disability insurance. It also facilitates geographic mobility through individual work contracts, provides tax advice, and manages expatriations, worker protections, benefits, and employee personal insurance and savings plans.

The head of internal environmental responsibility helps define the Group’s environmental policy and strategy and coordinates carbon emission-reduction projects for internal purchasing, waste management, power consumption, and so forth. He pursues five principal tasks:

•Using diagnostic tools to examine the environmental

and carbon footprints of AFD Group headquarters buildings and field offices, measuring the Group’s greenhouse gas (GHG) emissions and managing its ecological footprint.

•Proposing and initiating GHG emission reduction pro-

jects.

•Offsetting the Group’s emissions by purchasing carbon credits, aiming for carbon-neutral operations.

21. Division Gestion des Carrières et Recrutement, or GCR. 22. Division Administration et Rétributions, or ADM.

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Our Approach to Environm ental, S ocia l a nd Govern anc e Responsibility

•Raising awareness about the environmental aspects 2•

of sustainable development within the work force, and mobilizing concern for the environment, climate change, waste management, energy efficiency, and so on.

•Participating in working groups with national and inter-

national partners on the topic of environmental responsi-

bility, and assisting the start-up and supervision of studies on the subject.

External Environmental and Social Responsibility Within AFD

Within AFD’s Operations division, the Cross-Functional Support23 department implements environmental, social and governance risk management for external (aid) operations.

The department supports operational teams, manages and monitors cross-functional projects, performs quality controls, and keeps current on new tools and procedures.

Within the department, two offices focus on operational corporate responsibility issues.

23. Département des Appuis Transversaux, or DAT. 24. Division d’Appui Environnemental et Social, or AES. 25. Division de Changement Climatique, or CLI.

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Environmental and Social Support Office24 The Environmental and Social Support (E&SS) office provides expertise to AFD project teams, helping them manage environmental and social risks as they prepare and monitor AFD-financed development projects.

This office also conducts training and awareness exercises in environmental and social responsibility and governance issues for project managers and all other AFD employees, the better to integrate the Group’s approach.

Climate Change Office25 The Climate Change office leads, supports and consolidates AFD projects that affect the climate, whether for climate-change adaptation or mitigation.

Within PROPARCO

Within PROPARCO, the Environment, Social and Impact Unit26 reports to the deputy chief executive in charge of general administration. The unit has three main tasks: managing environmental and social risks for PROPARCOfinanced projects; improving the environmental and social

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quality of PROPARCO projects and related borrower performance; and measuring PROPARCO development projects’ impacts and results. To achieve these aims, the unit provides technical support to business managers in the Operations division27 and the Portfolio department28, and to analysts in the Risk Division29. It also works with the Legal department30 to define aid beneficiaries’ contractual environmental and social commitments. Managing these risks and commitments includes:

•Participating in the AFD Group’s definition of environ-

mental and social responsibility and governance strategies, and adapting them for PROPARCO.

•Providing support for corporate responsibility by crea-

ting tools, and by offering training and similar measures to other departments in the Group.

Transparency In 2007, the AFD Group adopted a transparency-in-communications policy, inaugurated with detailed information about its business operations and projects on the AFD website, www.afd.fr. Since the policy’s inception, an employee dedicated to the subject has explained the transparency policy internally and ensured its implementation through annual action plans.

•Helping manage environmental, social and governance risks in PROPARCO-financed projects, from initial identification through post-project evaluation.

•Promoting better environmental and social performance in projects.

•Analyzing PROPARCO borrower commitments to managing their environmental and social risks, and monitoring implementation of these commitments, as per PROPARCO’s funding contracts.

26. Unité Environnement, Social et Impact, or UESI.

29. Division des Risques, or RIS.

27. Direction des Opérations, or DOP.

30. Division Juridique, or DJU.

28. Division du Portefeuille, or PTF.

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Strategy

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The AFD Group Strategy division31 has two means of integrating environmental, social and governance concerns into its objectives: (1) it provides internal critiques, questioning the Group’s actions in the two crucial realms of intervention strategy and operations quality, and (2) it keeps abreast of international standards, rules and conventions for strategic purposes.

Within the Strategy division, the Strategic Steering and Forecasting department32 houses the Organizing and Forecasting department33 – a central but not unique place for incubating new ideas and examining new topics. Once new thinking has matured sufficiently, the Strategy division shares it with the Group’s operational departments. The Strategic Steering and Forecasting department contributed much to the corporate responsibility process, for example, and to transparency in particular.

31. Direction de la Stratégie, or STR. 32. Pilotage Stratégique et Prospective, or PSP. 33. Animation et Prospective, or APR.

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Organizationally, the Strategy division does not have specific human or other resources dedicated to corporate responsibility issues or implementation. Rather, the division’s managers and their teams are exposed to social, environmental and governance imperatives “naturally” in the course of their work and have shared their thoughts on several topics for this report: these include, among others, AFD’s corporate university, its knowledge-production activities, and the environmental financing facility34 it manages. ■

34. The French Global Environment Fund (Fonds Français pour l’Environnement Mondial, or FFEM)

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AFD’s Corporate Responsbility working group

3. Our Internal

Governance, Corporate Ethics and Anti-Fraud and Corruption Controls

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Internal Governance

A

s a public establishment and specialized financial institution, AFD Group is accountable for its activities. Its governance rests on structures that ensure transparency and good management. These structures include a strategic orientation board that oversees preparation and execution of the “means and objectives” contract between France

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and the Group, a board of governors that deliberates on

behavior, (2) help employees facing ethical dilemmas to

the Group’s strategic direction, its contract with the French

respond appropriately, and (3) foster work force and inter-

government, its financial operations and investments, its

company solidarity and strengthen Group performance by

borrowings and project financing, its asset management,

improving and unifying business practices.

and its selection of internal and external auditors. An external auditor and the internal audit committee assist the board of governors in its supervisory role. The audit committee verifies the quality of information furnished by all of the AFD Group’s divisions, and assesses the accounting methods used as well as the quality of internal controls.

The French Institute of Internal Audit and Control35 certifies the Group’s auditing methods and internal control activities in accordance with French professional internal audit procedures and international audit and internal control standards. AFD and PROPARCO each have an Executive board of senior managers that oversees their respective internal and external operations.

Group corporate code and the code of business ethics, both having supplemental instructions. The program also features an ethics advisory and support service for employees.

The corporate code sets out the Group’s mission and values statement, and expresses the Group’s goal of creating a community of professionals dedicated to development. It emphasizes essential individual and collective commitments, notably to social and environmental responsibility, compliance with laws and regulations, and the fight against money-laundering, terrorism financing and corruption. The code of business ethics describes specific ways that managers, employees and the Group (as an employer) should

Corporate Ethics

act on these commitments. A corporate ethics advisor

Since 2004, AFD Group’s corporate ethics program has

basis, and is available to offer counseling to employees. The

used codes and counselors to encourage and facilitate ethi-

ethics advisory may also ask the Group’s corporate ethics

cal business practices. The program has three objectives:

advisory committee to rule on internal matters, and make

(1) provide guidelines for expected ethical and professional

recommendations for improvements to the ethics program.

35. Institut Français de l’Audit et du Contrôle Internes, or IFACI.

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The ethics program rests on two written codes, the AFD

interprets how the code should be applied on an everyday

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Anti-Fraud and Corruption Controls

ciples in an equity participation. This background informa-

As France’s central operator for bilateral development

and also serves the know-your-customer due diligence

aid, AFD Group is particularly vigilant that all loans, gua-

required of all financial institutions. Such due diligence

rantees and subsidies that it grants are allocated to their

especially looks for “politically exposed persons,” such as

intended purposes. The Group is equally vigilant about

senior politicians and high-ranking government, judicial or

investing only in reputable and well-governed companies.

military officials and executives of state-owned corpora-

This vigilance goes hand-in-hand with the Group’s man-

tions. It also requires understanding certain things about

date to alleviate poverty, because corrupt practices, fraud

the managers and management structure of a borrowing

and other misappropriations of development-aid funding

company. The project team clarifies any suspicious infor-

hinder the Group’s mission. The same is true of any aid

mation or activity, which may, in turn, lead the team to

financing that is used – unbeknownst to the Group – to

deny funding for a project.

launder money or finance terrorism.

AFD Group is relentless in combating everything that might

•AFD Group routinely finances aid beneficiaries’ pur-

tarnish its development financing: collusion, coercion,

works and services, such as construction works, in a

corruption, graft, fraud, money laundering, terrorism financing and so forth. The Group has introduced a number of internal rules, operating procedures, contractual arrangements and inspection points that its employees must apply or verify.

•When reviewing a potential project, an AFD Group pro-

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tion fuels the project team’s extensive financial analyses

chases of a variety of goods and services for public process known as “procurement” that follows specific procedures. To fight corrupt practices – fraud, pricefixing, coercion, collusion, graft, and so forth – the Group puts selection criteria in place to prequalify bidders prior to advertising the tender. It also requires borrowers and grant recipients to deploy anti-corrupt-practices

ject manager and his/or her team must gather informa-

controls to ensure integrity, transparency, equity and effi-

tion about the potential aid beneficiary – the recipient of

ciency at various stages of the procurement process.

a grant, the borrower in a lending transaction – or a com-

The main control device is the “no objection letter” that

pany’s (or other legal entity’s) beneficial owners and prin-

the borrower or grant recipient must issue at specific

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3•

points in the bid process to assure it has performed its due diligence on bidders, in compliance with the Group’s financing agreement. Once the bidding process has ended, the Group’s project team regularly monitors the borrower or grant recipient and the financed work.

•In 2011, the Group set up an internal, online anti-money-

laundering training course. Directed toward employees who have or may hold a job where money-laundering could occur, 1300 have already completed the course.

•AFD Group also provides all employees an intranet tool

to filter lists of financial and trade sanctions, embargoes and restrictions imposed by the European Union, France, Great Britain, the United Nations and the United States against certain entities and sectors. Project teams use the filter when first reviewing a potential project, before starting a business relationship, and periodically during a project’s lifetime. They apply the filter to all sectors, suppliers (for in-house purchases and for aid beneficiaries’ purchases), aid beneficiaries including private companies, and the beneficial owner(s) and major shareholder(s), directors and managers related to that company.

•AFD Group also funds non-public works and services through direct to borrower loan financing, grants and other funding agreements contain a number of clauses that require grant recipients and borrowers, and their sub-

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contractors, to take other steps to combat corrupt practices, money laundering, and terrorism financing. These steps include swearing that they have not unduly influenced the project’s execution to the detriment of the aid beneficiary, and that nothing in the tender, negotiation or execution of any works or services could be construed as a corrupt practice, as defined by the 2003 United Nations anti-corruption convention.

Improvement Plan for 2012-2016 During 2012, AFD Group will update its online training courses for new hires, and strengthen its anti- fraud, corruption, money-laundering and terrorism-financing policy when it ratifies its third strategic orientation plan for 20122016. Two of the plan’s cornerstones rest on ensuring financial safety and combating corruption in the Group’s internal and external operations. ■

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The photo exhibition,  A New Look at Developing Countries�, in Paris

4. Our Stakeholders

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Stakeholder descriptions and interactions AFD Group Stakeholder Configuration

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External

Internal

Bilateral and multilateral development banks and funds, including FGEF NGOs, foundations, charities, nonprofits, local governments, universities academic institutions

Central governments, public services

Local governments

Public and private enterprises

NGOs, nonprofits foundations

Employees, interns, consultants

Civil society

Employees

Enterprise committee representatives

Employee delegates

Partner networks

Group AFD Proparco

Aid beneficiaries Suppliers / Subcontractors

Shareholder French government (100%) Board of Governors / Executive & Management Boards

Public authorities

Unions

Central work council

Enterprise committees

Hygiene, Security and Working Conditions committee Parliament

Supervisory ministries

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Regulators

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Proparco Stakeholder Configuration External European public development finance institutions

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Internal Civil Society

Employees

Shared Group actions

Employees

Employee representative on Board of Governors Non-European public development finance institutions

Partner network

Proparco Private sector financial institutions

Private sector non-financial companies

Shareholders, including AFD (59%)

Borrowers

Public and private directors

Suppliers / Subcontractors

Internal/external Group controls

Employee delegate

Central work council

Enterprise committees

CHSCT

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Stakeholder Engagement

investors, regulators and other national authorities. Labor

Over the past ten years, AFD Group has developed increasingly open and accessible means of communicating with internal and external stakeholders. This strategy is partly driven by regulatory requirements, but also by a desire to more fully engage the public and other stakeholders.

and work councils about employee representation, trade

Specific provisions of French law mandate and regulate

law requires communication with the Group’s national

the Group’s communications with employees, trade unions,

oversight authorities and institutions.

law requires that the Group communicate with employees union laws, labor discussions and negotiations. Banking law requires communication with investors and France’s Financial Markets Authority about internal controls, financial statements and annual activities. Public enterprise

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AFD Group has invested in these expanded means and increased the quality of its dialogue with other French and international stakeholders: aid beneficiaries, donors and peer institutions, nongovernmental organizations, civil society, private sector companies, and others. The Group makes some 130 anonymous email contact points available to facilitate stakeholder communication with headquarters and field offices, including one dedicated to transparency, transparence@afd.fr.

This active communication and reciprocal dialogue allows the Group to improve its services, funding instruments and expertise while allowing stakeholders to do likewise.

Suggestions from any stakeholder – regardless of role in the Group– can help advance its public service mission: financing development.

Accountability to Stakeholders AFD Group’s stakeholder engagement strategy addresses accountability expectations within its sphere of influence, in the spirit defined by the ISO 26000 social responsibility standard. As France’s central operator for development aid, the Group seeks to increase its credibility and

visibility through communication, bolstering civil society’s awareness and understanding of French aid policies. This attention to public accountability helps create quality dialogue and trust-filled relationships with all stakeholders over the long term.

The AFD Group’s stakeholder engagement strategy centers on three principles – visibility, dialogue and accountability36 – and four main objectives:

•Communicating about AFD Group’s public interest mission.

•Raising awareness and understanding about the Group’s aid activities.

•Explaining the Group’s vision and strategy.

•Establishing ongoing dialogue with stakeholders and

other interested parties, in a spirit of transparency and mutual understanding.

36. Visibility measures include the AFD Group website, www.afd.fr and the transparency contact point, transparence@afd.fr; examples of dialogue occur in the four “town hall meetings” conducted annually with the French public and an NGO; accountability efforts include discussions with the public and parliamentarians during the Group’s 70th anniversary events in 2011.

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Publishe

To publi

AFD Group’s Accountability and Transparency Boundaries Civil Society NGO Public Local governments Rating agencies Aid beneficiaries Companies

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only 67 communiqués remained unpublished as of 31 December 2011 (see figure below).

Transparency Influences

projects are published on the AFD Group website as soon as these receive funding approval from the Group’s board of governors and either the Project Committee or the NGO Project Committee. Of 330 projects approved for funding in 2011 (including those conducted with NGOs from developed countries), 263 were posted by September 2011.

By year end, the overall publication rate reached 81%;

Influences

Accountability

Non-NGO Projects Publishing Rate 2009-2011

Publishe

Government officials Supervisory ministries Parliamentarians Directors

To publis

% Many of AFD Group’s French and international development peers, as well as donors, civil society organizations and partners, have repeatedly asked the Group to better publicize its mission and work before approved projects actually begin. Consequently, communiqués about new

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All Proj

67

61

26

December 2009

December 2010

December 2011

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The percentage of new project communiqués published for joint AFD-NGO partner projects is relatively high because they are less expensive and less complex than projects that AFD implements directly. Excluding NGO partner projects, the publication rate falls to 61%, somewhat lower than in 2010. Grant recipients and borrowers review and approve all new project communiqués prior to their publication.

Non-NGO Projects Publication Rate 2011 Published To publish

61%

AFD Group also plans to publish post-project evaluation overviews (on qualifying projects37) to increase its accountability to stakeholders. After a pilot phase, management increased the number of projects evaluated and gradually expanded a decentralized post-project evaluation system, where the local or regional field office conducts the evaluation in the project country. In 2011, 78% of projects that qualified for evaluation were assessed. By 2013, AFD Group aims to systematically evaluate Rate 90% of such Non-NGO Projects Publishing 2009-2011 projects.

39%

All Projects Publication Rate 2011 Published To publish

81%

37. Projects that can be evaluated entail commitments greater 67 than €750,000, excluding funds for studies and capacity building, 61 fungible projects, global budgetary aid, and credit or other risk guarantees for PROPARCO’s loans and equity participations.

%

26

December 2009

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December 2010

December 2011

19%

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The Group uses evaluation criteria defined by the OECD’s Development Co-operation Directorate38, assessing each project’s relevance, effectiveness, efficiency, impact and sustainability. In general, post-project evaluations indicate

that the share of projects in foreign countries scoring “satisfactory” or better was stable from 2006 to 2011, representing 77% in 2011. This resembles the trends observed when assessing projects during execution.

4• Foreign aid post-project evaluations 2007-2011

"Satisfactory" or better foreign aid projects 2006-2011

% %

82

81

78

83

80 73

68

76

76

77

2009

2010

2011

62

2007

2008

2009

2010

2011

2006

2007

2008

38. More information about the OECD criteria is available on http://www.oecd.org/dataoecd/42/6/49756382.pdf

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Since October 2011, the Group’s IT system has been programmed to generate post-project reports and performance scores. These reports should help project teams improve performance scores improve in the future.

Stakeholder Descriptions

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Internal stakeholders: Employees, committees and CEFEB

In 2011, employees participated in designing a new fiveyear (2012-2016) strategic plan for AFD Group, stimulating additional internal dialogue. Employees debated one another about the Group’s medium-term future and contributed written observations and suggestions to a dedicated intranet site. The Group’s oversight authorities also participated in the strategic plan’s design. In 2012, the proposed five-year plan will be submitted to AFD Group’s board of governors for acceptance.

The Internal Communications department publishes a bimonthly newsletter on the Group’s intranet, the Continents’ Echo, to promote work force cohesion. Targeting all employees, the Echo provides information about projects and important events, collected from various field offices

39. Comité central d’entreprise, or CEE. 40. Comités d’Etablissements, or CE. 41. Comité d’hygiène, de sécurité et des conditions de travail, or HSCT. 36 | 132

and headquarters. In the same spirit, the chief executive regularly emails employees about his work-related trips to foreign countries and France’s overseas provinces.

Additional internal stakeholders include the following committees, each composed of employees and, in some cases, external advisors.

Central Work Council39: a legally mandated committee for work force relations and trade union negotiations.

Enterprise Committee40: a legally mandated committee in every French enterprise with 50 or more employees, whose purpose is to express employee wishes on a variety of topics. AFD Group has five enterprise committees, one in Paris for AFD and PROPARCO, and one in each of the four largest overseas provinces; see Part 5 of this report, “Our Work Force.”

Hygiene, Security and Work Conditions Committee41: a legally mandated committee focusing on workplace improvements, with an equal number of representatives from the Paris Enterprise Committee and from AFD and PROPARCO employee delegates; see Part 5 of this report, “Our Work Force.”

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Board of Governors and sub-committees42: legally mandated committees that determine the AFD Group’s strategic direction, financial operations, and borrowing: see Part 2, “Governance.”

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Audit and Internal Control Committee43: a legally mandated committee that serves the board of governors and the inspector general; see Part 2, “Governance.”

Center for Economic, Financial and Banking Studies44, or CEFEB: a corporate university and training institute; see below.

Executive Board: one each for AFD and for PROPARCO, these oversee operations and answer to the board of governors; see Part 2, “Governance.”

42. Conseil d’administration et ses comités délégués.

43. Comité d’audit et le contrôle interne.

44. Centre d’Études Financières Économiques et Bancaires, or CEFEB. 45. For more information on the OECD non-binding principles and standards for responsible business conduct in a global context, consistent with applicable laws and internationally recognized standards, see http://www.oecd.org/dataoecd/43/29/48004323.pdf

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Corporate Responsibility Training at AFD Group’s Corporate University The Center for Economic, Financial and Banking Studies, or CEFEB, is the Group’s corporate university. Based in Marseilles, it aims to build capacity and competency through professional training courses and seminars. It serves those who help implement AFD Group projects – Group employees, but also professionals and officials in beneficiary countries and provinces, and other partners in developing, emerging and developed countries.

CEFEB promotes education as a means of increasing social and environmental responsibility and good governance, in accordance with OECD guidelines for multinational enterprises45. CEFEB serves as both a meeting ground and an important internal tool for learning and engagement on these vital issues.

Since 2005, CEFEB has expanded the number of corporate responsibility courses for AFD Group aid beneficiaries and partners. It offers generalist, professional certificate and degree programs, such as a Masters in Public and Private Works, where students spend 15% of their time on corporate responsibility issues. It also offers longer or shorter courses

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specializing in the subject. In 2011, CEFEB offered more than three weeks of corporate responsibility training in its Masters in Sustainable Development program, in conjunction with the University of Auvergne’s Center for International Development Studies and Research in Clermont-Ferrand46, France. Since 2007, CEFEB has also included corporate responsibility issues in many seminars on infrastructure development (particularly for water, energy and transportation) and on capital investment financing in the poorest and emerging countries.

CEFEB regularly updates its list of seminars on www.cefeb.org.

CEFEB also promotes corporate responsibility by designing and teaching specific courses for AFD Group employees. Since 2010, CEFEB has conducted a seminar on biodiversity to highlight its protection in countries where the Group operates. In 2010, CEFEB also retrofitted its Group-owned office building in Marseilles to facilitate disability access.

The Group’s 2012-2016 strategy foresees CEFEB efforts to include corporate responsibility issues in more courses, particularly when training executives working in AFD Group field offices. ■

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External stakeholders: Civil society, NGOs, Aid Beneficiaries, Donors and Peer Institutions, Overseers and the French Parliament

For more than 10 years, AFD Group has conducted an ongoing dialogue with all its external stakeholders: French and foreign civil society, NGOs, aid beneficiaries, peer institutions, oversight authorities and the French parliament.

Since part of the Group’s aid funding comes from public resources, the French public has an interest in the Group’s activities. Inaugurated in 1941, AFD produced a number of public events and communiqués about its work on the occasion of its 70th anniversary in 2011. AFD Group headquarters and field offices also engage civil society stakeholders in the countries where the Group operates.

For example, in 2011, more than 40 field offices produced their own public events for the Group’s 70th anniversary.

The Group also published a study47 about partnering with civil society for development purposes. The study was coproduced with an NGO, and examined simple yet fundamental ideas, such as the rationale for building civil society, observations about intercultural dialogue, and explanations for the relationship between food security and peace.

46. Centre d’Etudes et de Recherches sur le Développement International, or CERDI. 47. See the AFD publication, Savoirs communs, number 11 (in French).

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AFD Group also works with NGOs from developed and developing countries to implement joint or independent operations and to incubate ideas. At the beginning of 2009, AFD Group adopted a special funding mechanism to finance the projects of French and European NGOs working independently of AFD in the Group’s regions of operation.

4•

AFD Group maintains supportive relationships with its aid beneficiaries that go beyond simple financial ties. These relationships are bolstered by the Group’s network of employees working in each country, and through systematic use of financing-contract clauses requiring regular meetings and technical support.

AFD Group’s gradually assembled network of donor partners and peer institutions has proven one of its major strengths. The Group’s partners and peers share regional and local knowledge, design joint project-financing programs, co-produce conferences and other events, and make co-lending arrangements, leveraging each other’s assets and skills. These partnerships improve the effectiveness of aid operations and help spread good social, environmental and governance practices. In particular, AFD and PROPARCO maintain increasingly close cooperative relationships with national development aid agencies in the European Union, and with the European Investment Bank (EIB) and the European Commission. For example, EIB, AFD and KfW Bankengruppe, the German development bank, belong to the Mutual Reliance Initiative network, which aims to simplify procedures for jointly-

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financed projects and increase aid effectiveness – the central topic of past development conferences in Accra, Paris and Busan. At the end of 2011, AFD Group counted 55 partnership agreements with development finance institutions and agencies, as well as foreign governments, foundations, nonprofit organizations and NGOs.

An Opportunity to Share AFD Experiences with Citizens As part of its 70th anniversary celebration, AFD Group created a traveling open-air photo exhibition, “A New Look at Developing Countries,” featuring photos and videos of real people and projects in developing countries. The Group expanded on the show and included a series of public debates about development aid, which shared the Group’s expertise and experiences with a large audience. Nearly 175,000 people had seen the exhibition by the end of 2011.

In France, public conferences on topics related to the photos attracted 3,200 attendees, while 40 AFD field offices in foreign countries produced 140 similar events. The debates and conferences proved stimulating for the audiences and Group alike, raising awareness about often-misunderstood topics and issues while illuminating the Group’s work and France’s development aid policy. ■

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AFD’s international stakeholder “ecosystem” Multilateral Donors

Bilateral Donors German Foreign Aid (KfW, GIZ) British Foreign Aid (DFID) Japanese Cooperation (JICA) American Foreign Aid (USAID, MCC)

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World Bank African Development Bank Asian Development Bank Inter-American Development Bank Islamic Development Bank

Global Funds

European Donors

UNITAID Global Aids Fund Fast-Track GAVI Global Environment Fund

European Investment Bank European Commission European Development Finance Institutions

United Nations

Emerging Donors China Brazil South Africa Arab States

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International Foundations & Charities Bill & Melinda Gates Foundation Aga Khan Development Network Prince Albert II of Monaco Foundation Conservation International

UNDP UNEP IFAD UNIDO Global Compact

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AFD’s French partners and interlocutors

Parliamentarians Private Sector France Europe Companies Foundations Networks & Platforms

Decentralized French Cooperation

4•

Regions Departments Towns Water Authorities Cités Unies France

Academics & Think-tanks

CERDI/FERDI IDDRI Collège de France

Nonprofits Nongovernmental Organizations French National Platform of International Solidarity NGOs (Coordination Sud)

The AFD Group also maintains contact daily with its French oversight authorities, given that the Group has acted as the sole authority for France’s foreign aid since 1998.

The policy’s strategic and financial implementation requires constant contact between the Group and its overseers.

In 2011, French government officials defined a new foreign aid strategy and means framework, which led to a three-year means-and-objectives contract, signed by AFD Group’s chief executive and six supervisory ministries on 29 October 2011.

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The Group must also account for its actions to members of the French Parliament, meaning the National Assembly and the Senate. The Parliament affects the Group through national budget decisions. It also affects the Group through legislation, parliamentary reports, recommendations, and related actions.

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The Relationship Between AFD Group and the French Parliament

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AFD Group and the French Parliament traditionally maintain an indirect relationship through an annual “questions for the government” session, where citizens ask questions and the Group prepares the government’s answers on development subjects.

In some years, the Group and Parliament have direct talks, as when public enterprise legislation changes (as it did in July 2010), or in response to parliamentary interest in how the Group executes French aid policy – the subject of substantial questioning in 2011. An AFD study and two parliamentary reports published in 2009 and 2011 covered bilateral and multilateral aid issues; as a result, the Group and government created four steps to enhance France’s development aid strategy: (1) simplifying the institutional architecture of French aid; (2) recognizing the complementary nature of bilateral and multilateral aid efforts; (3) aligning bilateral aid for “proximate causes” and multilateral aid for “great causes”; and (4) optimizing bilateral partnerships. ■

The French Global Environment Facility In 1994, France created the French Global Environment Facility48 (FGEF), a bilateral fund for sustainable development projects; it makes grants in addition to and in tandem with those of the Global Environment Facility (GEF). Between 1994 and 2014, the FGEF will have received €354.11 million from the French government to cover grants and operating costs. Every four years, the French government tops up the fund, providing about €20 million per year just for grants.

The FGEF follows a biannual strategy, validated by a steering committee made up of representatives from AFD and five French ministries: economy, foreign affairs, sustainable development, research and agriculture. AFD houses the FGEF secretariat, providing administrative support and governance for the fund on behalf of France. AFD also manages the fund’s assets.

As the institutional arm of the FGEF, AFD spreads exemplary environmental practices through the FGEF’s innovative, socially-oriented and

48. Fonds Français pour l’Environnement Mondial, or FFEM.

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experimental funding operations. In the past 17 years, the FGEF has funded more than 200 pilot projects and programs that reconcile economic growth with environmental protection. These innovative projects serve as models; when they succeed on a small scale, they expand France’s capacity to finance largerscale socially responsible environmental projects and policies – ones that address climate change, biodiversity preservation, international waters, desertification, persistent organic pollutants and stratospheric ozone.

AFD demonstrates its commitment to the environment by initiating, financing and carrying out FGEF projects, focusing on sectors that meet basic human needs and preserve global public goods – greater economic well-being, social justice, more secure peace, environmental sustainability, and so forth. ■

AFD Group and Stakeholders Mutual Influences

Stakeholders’ influence on AFD High

Involved External Stakeholders Public authorities, shareholders, regulators, supervisors

Internal Stakeholders Employees, boards of directors

Affected External Stakeholders Aid beneficiaries, suppliers, subcontractors, civil society, partners

Low

High

AFD Group’s influence on stakeholders

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AFD Group and Human Rights

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As befits a development finance institution dedicated to fighting poverty, AFD Group has integrated human rights into its operations and conduct since its creation. Today this effort aligns with the 10th guideline of France’s current sustainable development strategy. For example, AFD and PROPARCO work in the microfinance sector in partnership with other reputable funding agencies, and in close collaboration with the Consultative Group to Assist the Poor (CGAP), the World Bank’s fiduciary fund supporting public policy and aid agencies. In 2011, AFD and PROPARCO experts actively helped prepare for the G-20 meeting in France. The Group also leads and funds projects for the so-called “base of the pyramid” to meet the poor’s basic needs in emerging and developing countries.

AFD Group has also further integrated human rights in its external and internal operations.

Externally, project teams now target psychological and social risks when preparing projects that address traumatic situations – armed conflicts or natural catastrophes. Project teams also include resources for psychological and legal counseling within their funding arrangements. Internally, the Group has

set up a unit, comprised of management, employee representatives and delegates, to oversee working conditions, prevent psychological risks, and listen to individuals’ needs. ■

Promoting Corporate Governance in the Private Sector In recent years, AFD has organized conferences with developed-world companies to bolster their environmental and social responsibility, good governance, and investment in the developing world. In partnership with firms doing business in developing countries – especially French multinationals – the Group also funds and co-produces research on new business opportunities with positive economic and employment potential. These efforts toward corporate responsibility and development contributions draw on guidelines in France’s National Sustainable Development Strategy and the ISO 26000 social responsibility recommendations for community involvement49.

49. Community involvement and development refers to noncommercial, non-exploitative actions companies can take to benefit the locality(ies) and/or country(ies) where the company has operations.

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In 2011, AFD private-sector conferences and studies centered on three major topics. The first focused on so-called “base of the pyramid” strategies, showing companies how to make their products and services more affordable, accessible, available and appropriate for the poorest consumers50. A second conference covered so-called “fair trade” strategies to encourage equitable corporate purchasing practices; a third reviewed “local community” strategies in firms’ countries of operation, including job creation, local hiring and purchasing, and time and money donations to civic concerns51. To further encourage private-sector development initiatives, AFD also partners with national and international organizations involved in sustainable development and corporate governance, such as the United Nations and nonprofit business networks52.

50. One example of such products might be a low-cost family shampoo that works with cold water, one that can be produced, distributed and advertised efficiently through partnership with a local company 51. For more information (in French) see www.afd.fr/lang/en/ home/AFD/nospartenaires/entreprises-partenaires.

52. For more information see http://www.afd.fr/lang/en/home/AFD/ nospartenaires.

53. For more information, see AFD Group’s entry on www. globalcompact.org.

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AFD Partners to Promote Good Corporate Governance in the Private Sector United Nations Global Compact: In 2000, Kofi Annan (the then-secretary-general of the United Nations) launched the Global Compact. This strategic policy initiative addressed businesses committed to operating in line with ten universally accepted principles, covering human rights, labor, environment and the fight against corruption. In 2004, AFD was the first bilateral donor to sign onto the Global Compact. Every year, the Group reports on its operational progress on the ten principles and good corporate governance53. AFD also manages France’s financial contribution to Global Compact operations.

France Global Compact: French companies committed to the Global Compact have united in their own nonprofit group, France Global Compact.

AFD sits on the nonprofit’s management committee.

On 25-26 October 2011, AFD, France Global Compact and the French Ministry of Foreign and European Affairs jointly sponsored two conferences.

One was entitled “How Can Companies Significantly Help in Achieving the UN Millennium Development

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Goals?” and the other “What Kind of Partnerships Can Occur Between NGOs, Companies and Public Institutions?”

IMS-Entreprendre pour la Cité: The nonprofit

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organization, IMS-Entreprendre pour la Cité (Institute for Solidarity Giving-Entrepreneurs for the City), was created in 1986 by socially-responsible French business leaders. It now comprises nearly 200 French companies that improve social equity by creating value for the communities in which they operate, in France and abroad.

In 2008, AFD and the nonprofit organized a colloquium, “Do Business for Development,” where attendees discussed trends in corporate commitments to help developing countries; they also identified new avenues for partnerships between public institutions, private-sector companies and organizations, NGOs, and civil society. In 2011, AFD and IMS-Entreprendre pour la Cité signed a partnership with two goals: (1) Preparing, funding and leading a collaborative European platform for “Smart, Sustainable and Inclusive Growth at the Base of the Pyramid;” (2) Sharing governance best practices and

experiences with firms from developed and developing countries by mobilizing French companies, particularly small- and medium-sized enterprises.

Institut Véolia Environment: The Institut Véolia Environment, created by the French water, waste and energy multinational Véolia Environment S.A., provides insights into major global challenges related to the environment. On 27-28 June 2011, AFD and the Institute organized an international conference on reconciling poverty alleviation with environmental quality preservation, with a session dedicated to role of the private sector.

Plateforme pour le Commerce Equitable: The Plateforme pour le Commerce Equitable (Fair Trade Platform, or PFCE), a nonprofit organization, was created in 1997 to lobby for fair trade and French fair-trade companies. The PFCE works to ensure the autonomy and dignity of producers in developing countries, and argues for changes to conventional international trade rules. AFD has partnered with PFCE to help increase the share of fair-trade products in corporate purchases and strategies.

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Ashoka France: Ashoka is a global nonprofit

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network of social entrepreneurs engaged in innovative projects. AFD recognizes the importance and positive effects of social entrepreneurship in developing countries. It therefore joined with other donors in underwriting a summit meeting for social entrepreneurs, organized by Ashoka France in June 2011. More than 300 social entrepreneurs from all over the world participated in the summit, alongside other stakeholders – large and small companies, public-sector institutions and organizations, NGOs, and the media. Another Ashoka event brought African social entrepreneurs to Paris to meet with AFD’s chief executive.

CARE France: CARE France is a chapter of CARE, a leading humanitarian organization fighting global poverty. Over the past 15 years, CARE France has partnered with private companies to address the causes of poverty. The partnerships ally economic profit with benefits from positive social, environmental and governance performance. AFD signed an agreement in December 2011 to finance CARE France’s corporate responsibility-oriented partnerships with French companies.

54. See www.res-et-ped.info.

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These partnerships will address topics such as access to basic services for the poor, the fight against climate change, and firms’ creation of jobs and economic growth in countries where they operate.

RSE & Développement: The French nonprofit group, RSE & Développement (SER & Development) researches and reports on corporate social and environmental responsibility in developing and emerging countries. It aims to increase public awareness of these issues, and to encourage companies toward development that meets the United Nations Millennium Development Goals.

The nonprofit maintains the largest French-language Internet portal on these subjects54. The website aims to educate companies –from all nations and levels of development – in corporate responsibility issues and tools pertinent to developing countries.

It also encourages discussion of best practices and their implementation, as well as collective approaches to corporate responsibility. In 2011, AFD signed a partnership agreement with RSE & Développement to provide upgrade support for the portal, making it more professional, modern and comprehensive. ■

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Sharing Knowledge with Stakeholders

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The AFD Strategy Department contributes to operational doctrines, five-year strategic plans, and the annual report to the board of governors on the strategic value of Group efforts. The Department also creates knowledge about development aid activities, theories, issues, regions and priorities. This knowledge capitalizes on the Group’s experience and puts it into a broader perspective. Knowledge production takes the form of topical and sectoral research, evaluations, training courses, conference production, ad hoc partnership management, and so forth.

The AFD Strategy Department’s knowledge production complements other Group publications, which equally share and exploit the Group’s best thinking about its operations and outcomes. The AFD Communications department, PROPARCO, and the French Global Environment Fund also publish a variety of valuable materials to better inform and engage stakeholders. Much of the material is available for download from the Group’s website55.

The resulting knowledge takes shape in books and other publications and circulates at conferences and other events. Producing this knowledge, and sharing it with internal and external stakeholders, helps the Group (1) streamline its strategic choices, sectors and regions, (2) enhance the pertinence and effectiveness of its aid interventions, and (3) increase its presence and influence in national and international discussions, the better to serve the interests of the Group’s governmental over-seers and sponsors.

55. For an exhaustive list of 2011 publications, refer to the Publications portal at www.afd.fr.

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Improvement Plan for 2012-2016

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AFD Group plans to improve the amount and kind of information it shares with internal and external stakeholders, providing even more accountability and knowledge. Over 2012-2016, the Group will: 1. Increase the number of publications about aid interventions (both those conducted alone and with NGOs), to cover 90% of all projects.

2. Increase the number of project evaluations and monitoring reports during the project lifecycle.

3. Conduct an independent assessment of AFD Group’s external operations performance in 2012.

4. Improve identification and selection of priorities for research coverage and knowledge production, based on subjects of common interest to the Group and to stakeholders.

5. Set up a research committee internally to devise annual research plans and examine proposals. ■

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AFD funds the sustainable development policy of Curitiba, Brazil

5. Our Funding Operations

Corporate Responsibility in External Operations Aiming for Responsible Financing and Implementations

A

s France’s bilateral donor, AFD Group funds sustainable economic development projects all over the world. In Sub-Saharan countries, AFD focuses on poverty reduction; in the Mediterranean Basin region, on improving living conditions; in emerging countries, on protecting the environment;

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and in France’s overseas provinces, on promoting national solidarity. In the same regions, PROPARCO catalyzes local and foreign private-sector investments to foster economic growth, to encourage sustainable and responsible development, and to meet the UN Millennium Development Goals. PROPARCO also helps its funded companies improve their own environmental, social and governance performances. Both AFD and PROPARCO comply with the Group’s corporate responsibility policy, managing the environmental, social and governance risks inherent in their aid interventions throughout each project’s lifecycle. This also enables them to improve project quality.

In 2009, PROPARCO underscored the Group’s commitment to responsible private-sector financing and investment by signing the Declaration of Principles promulgated by the Association of European Development Finance Institutions (EDFI)56. The Declaration mirrors the precepts of the UNbacked Principles for Responsible Investment Initiative57 – a network of institutional investors practicing six principles of environmental, social and corporate governance.

56. For more information on EDFI, see http://www.edfi.be/.

57. For the entire list of six principles, see http://www.unpri.org/principles/.

58. Division d’Appui Environnemental et Social, or AES. 59. Unité Environnement Social et Impacts, or UESI.

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Two environmental and social support (E&SS) offices underpin AFD’s and PROPARCO’s respective commitments to responsible aid financing and implementation: 1. Environmental and Social Support Department58 : created within AFD in 2007, this department comprised four environmental experts and two sociologists in 2011.

2. Environmental and Social Impacts Unit59 : created within PROPARCO in 2010, this unit comprised three multidisciplinary experts in 2011.

Providing Appropriate Risk Management Support AFD Group created its environmental, social and governance policy in 2007 to improve risk management, since any development project – no matter how well-intentioned – may adversely affect populations or the environment.

To manage these risks while pursing the Group’s sustainable development mandate, both AFD and PROPARCO

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subject all “qualified”60 aid projects61 to a systematic “ex-ante” risk assessment (that is, before approving funding for a project). The AFD and PROPARCO project teams perform a preliminary environmental and social risk assessment, and their respective E&SS and project teams detail these potential risks. The teams then join with the borrower or grant recipient to monitor the actual

•Monitoring risk prevention and mitigation measures

project risks during implementation. The teams do this whether such projects are financed directly by AFD or PROPARCO, or through financial intermediaries, such as banks.

funding risk management.

Following steps similar to those that fight corruption and poor governance within and without the Group, AFD and PROPARCO project teams apply the following controls to mitigate environmental and social risks in their qualified aid operations:

•Preventively assessing each project’s social and envi-

ronmental effects – including climate change impacts – prior to funding and implementation.

•Proposing suitable measures to avert, abate or offset

anticipated negative effects.

during project execution.

AFD and PROPARCO project teams can turn to their respective environmental and social support departments for the following services:

•Assistance for pre-funding risk assessments and post•Analysis of the project team’s risk management approach and effectiveness.

•Monitoring of aid beneficiaries’ compliance with contractual commitments.

•Design and deployment of tools for environmental and

social risk assessment, risk monitoring, and post-project evaluation.

•In-house training and writing of standard risk-manage-

ment clauses for contracts.

•Contributions to knowledge production and the Group’s risk management expertise.

60. The following types of financing proposals do not qualify for ex-ante assessments: subventions and delegated funding from the French foreign ministry, refinancing for very indebted poor countries, funding for feasibility and other studies, funding from the European Union, and so forth.

61. “Projects” are all development aid interventions except those funded by so-called “comprehensive” aid. Comprehensive aid projects do not go through the review process, and/or their financing covers a wide variety of purposes within a single project.

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•Monitoring of trends in risk management practices and participation in international conferences.

•Developing partnerships with other donors and lenders, encouragement of common risk management practices, and review of joint project proposals prior to approval.

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Regarding the last point – creating common practices and procedures among peer institutions – AFD currently works with the World Bank, KfW and the European Investment Bank, while PROPARCO collaborates with EDFI and the World Bank’s private sector arm, the International Finance Corporation (IFC).

As mentioned previously, in addition to helping internal project teams, the AFD and PROPARCO environmental and social support (E&SS) departments also assist aid beneficiaries to improve the environmental and social quality of their projects and labor practices. The E&SS experts provide technical assistance, advice and consulting services, helping borrowers and grant recipients follow international standards and receive certifications. The E&SS experts also identify financial levers that motivate aid beneficiaries to improve their performances. For every qualified AFD Group project, the E&SS experts follow these procedures:

•Identifying potential environmental and social risks, and

assessing risk levels in conjunction with the AFD or PROPARCO project team (see box on risk level classifications).

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•Defining the due diligence required of the project team.

•Assisting with due diligence and project examination

for projects that present high risk levels (A-level) or that will need special support, such as for A-level financial institutions.

•Requiring the aid beneficiary to develop risk mitigation measures and ways to improve project performance.

•Formalizing the aid beneficiary’s commitments in risk mitigation and performance improvement, via a project financing contract.

•Creating an action plan with the borrower or grant reci-

pient to operationalize the commitments and track their implementation.

•Analyzing and reporting on the effectiveness of the

E&SS strategy, its measures and action plan implementation; reviewing the periodic progress reports submitted by the aid beneficiary; conducting oversight visits to the project if it presents high risk levels.

•Analyzing and reporting the completed project’s actual and residual risks, and the outcomes and performance of the E&SS procedures and plans.

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AFD Group Standards for Project Acceptance

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AFD Group has listed exclusionary criteria that it uses to deny project-funding requests on ethical, regulatory, environmental or social grounds. Boards of governors of both AFD and PROPARCO validated the list at the beginning of 2011, and codified the criteria in the Group’s July 2011 guide to financing tenders in foreign countries62.

All Group-financed foreign aid operations must comply with the target country’s national laws.

However, in cases where a country’s laws are incomplete or changing, the Group applies standards, rules and good practices for project financing, as set by multilateral peer institutions, including:

- The World Bank safeguard policies63 for public sector financing64.

- The International Finance Corporation performance standards for private sector financing.

The Group also draws on their international conventions, declarations and guidelines that it (and its aid beneficiaries) have signed, including: - The United Nations Convention on the elimination of all forms of discrimination against women65.

In addition, AFD Group and its aid-receiving countries also draw on the conventions and guidelines mentioned in the introduction to this report: the U.N. Charter for universal human rights, the ILO conventions for workers rights, and the OECD guidelines for multinational enterprises. ■

62. The AFD Group guide to financing tenders in foreign countries is available on http://www.afd.fr/webdav/site/afd/shared/PORTAILS/ SECTEURS/ENTREPRISE/pdf/Guide_Passation_Marches_AFD.pdf 63. For more information, see http://go.worldbank.org/WTA1ODE7T0.

64. For the IFC standards, see http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/pol_PerformanceStandards2006_full/$FILE/ IFC+Performance+Standards.pdf 65. For more information on the so-called CEDAW convention, see http://www.un.org/womenwatch/daw/cedaw/.

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Ex-Ante Assessment Coverage

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Over time, AFD Group has increased the number of project proposals that qualify for environmental and social risk assessments during the funding review process..

When the Group began its ex-ante assessment procedures in 2008 (after implementing its corporate responsibility policy in 2007), AFD’s E&SS team performed an ex-ante assessment on all but 12% of AFD’s qualifying financing proposals, which represented only 0.6% of AFD funding that year. The unanalyzed proposals were both low risk (C-level) and low value.

By 2011, the AFD E&SS team performed an ex-ante risk assessment on all but 6% of qualified projects, which represented only 0.3% of AFD funding that year. Since 2009, the PROPARCO E&SS team has performed an exante assessment of the environmental and social risks and impacts on 100% of its qualified financing proposals.

In 2011, the social and environmental risks allocation by value and by volume for authorized AFD and PROPARCO projects stood as follows:

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AFD Group Portfolio Risk Levels In accordance with international standards, AFD Group classifies the projects that it directly finances according to three levels of social and environmental risk: (1) A-level indicating high risk, (2) B-level indicating moderate risk, and (3) C-level indicating low or no risk. In addition, the projects that the Group finances through an intermediary financial institution are coded FI and A, B, or C, depending on the financial institution’s overall portfolio risk, as in FI-A, FI-B or FI-C. ■

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AFD Group AFD Approved Group Approved Project Portfolio Project Portfolio Environmental Environmental and Socialand Risk Social Levels Risk 2011 Levels 2011 (by volume) (by volume) AFD Group Approved Project Portfolio Environmental and Social Risk Levels 2011 (by volume) 4 4 25 25 3

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12

14

12 4

3 6

AFD Group AFD Approved Group Approved Project Portfolio Project Portfolio Environmental Environmental and Socialand Risk Social Levels Risk 2011 Levels 2011 (by value)(by value) AFD Group Approved Project Portfolio Environmental and Social Risk Levels 2011 14 14 (by value)

12

14

25

14 11 6

19

6 31

31

31

11

19 54

5

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0 Unrated

A-level: high risk A-level: high risk

Unrated FI-A-level: highFI-A-level: risk high risk

Directly Financed B-level: moderate riskProjects B-level: moderate risk

Intermediary Financial Institutionrisk FI-B-level: moderate FI-B-level: risk moderate

C-level: no risk C-level: no risk A-level: high risk

FI-C-level: no risk FI-C-level: no risk FI-A-level: high risk

Portfolio Risk Levels

B-level: moderate risk

FI-B-level: moderate risk

C-level: no risk

FI-C-level: no risk

5

11 0

1 5

Unrated 54

Directly Financed Directly Projects Financed ProjectsIntermediary Financial Intermediary Institution Financial Institution Risk Levels Risk Levels Portfolio Risk Portfolio Levels Risk Levels

Risk Levels

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0

1

1

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Five Examples of E&SS for Projects and Impacts

Bujagali Dam Hydropower Project in Uganda

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Uganda suffers from a severe shortage of electricity.

Significant power outages negatively affect the nation’s economy and citizen well-being. To remedy this situation, AFD has helped finance a 250-megawatt hydroelectric dam near Bujagali Falls on the Nile, above Lake Victoria in Uganda.

The power station will have five 50-megawatt turbines and should increase Uganda’s total electricity production capacity to a minimum of 520 megawatts, ample to meet demand and prevent outages. The total project cost is US$906 million, of which $612 million will go for construction work and $8.5 million to compensate for environmental and social costs.

A carbon footprint assessment of the Bujagali Dam hydropower station predicts that over 50 years the station will produce only 266,000 metric tons equivalent of carbon dioxide (tCO2e); that is 112 to 220 times fewer greenhouse gas emissions than the equivalent power produced by a thermal plant.

The Clean Development Mechanism certified

the project in 2011, and the aid beneficiary slated to operate the dam should be able to sell 904,000 tCO2e of carbon offset credits per year.

In all, 85 families comprising 634 people will be displaced by the dam, and relocated to a new village, Naminya. Another 1,203 families representing 4,525 individuals will be affected by the dam through total or partial expropriations of their cultivable land.

Thus a total of 1,288 families and 5,158 individuals will receive financial compensation paid by the hydropower project aid beneficiary.

When an AFD project team visited the area in 2003 to assess the project’s environmental and social impacts, it found that residents of affected villages had identified two critical problems – their lack of access to drinking water and electricity. In addition, the team saw that major erosion problems on the steep banks of the Nile could benefit from a riverbank reforestation program. AFD therefore financed an additional $2.8 million program to cover these supplementary environmental and social problems, providing a grant within a subsidized loan for works executed by the beneficiary.

By the end of 2011, more than the 400 hectares

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targeted for reforestation had been replanted, primarily because of the riverside villagers’ remarkable mobilization. They took great interest in the type of vegetation selected for the reforestation project. Their need for drinking water access was confirmed, and work on a water supply system was finished in 2011 as well. The hydropower operating company involved in the project agreed to pay each household’s cost share for connecting to the rural electrical grid. The remaining 70% of the cost was covered by Uganda’s national rural electrification agency. Because of AFD’s environmental and social management program, the citizens most directly affected by the project saw benefits over and beyond the creation of infrastructure vital for the whole country. ■

Corporate Responsibility and the Central Credit Fund in Vietnam Vietnam presently counts a population of 85 million.

The majority (75%) live in rural areas, which concentrate most of the country’s poorest residents.

In this context, lending services for rural populations take on a special importance. In 1993, a small savings and loan association, the People’s Credit Fund (PCF), opened branches in towns and villages to provide banking services to rural entrepreneurs not served by national banks.

AFD granted a refinancing loan to the PCF savings and loan network, which counts more than 1,000 branches mutually owned by their membercompanies. The network enjoys very high loyalty from its members because of its cooperative status. The savings and loans offer proximity, an understanding of customers, and a solid network of local branch offices.

In light of this, AFD also made a grant to the PCF network to take advantage of its member-based network. The grant monies helped the savings and loan association play a new role – that of sharing good social, environmental and labor practices among its member-companies. The PCF network

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set up an innovative social and environmental riskmanagement system. Its loan officers now consider these risks alongside the financial aspects of each loan application. The AFD project team assisted the PCF network via a four-step process: (1) Writing an environmental and social policy; (2) Developing a manual for loan officers to help them address environmental and social issues relevant to entrepreneurs; (3) Using the manual to train in-house trainers; (4) Training the loan officers in the PCF branches.

The environmental and social policy serves two complementary objectives: it increases PCF customer awareness of their businesses’ impact on society, workers and the environment, and it shares good practices for managing these effects.

When a PCF loan officer grants a loan to a farmer, for example, the loan officer will discuss the farmer’s business and talk about ways to improve environmental, health, safety and labor practices.

The loan officer may cover specific, farming-related subjects, such as appropriate fertilizer use, proper storage of food, or proper storage of hazardous materials in enclosed areas away from children. The discussion may touch on child labor issues or the use

of protective gear, such as masks, goggles, gloves and overalls, when using fertilizers or other toxic chemicals.

If the loan officer is working with a borrower from a farming-related activity, such as equipment or vehicle repair, he or she may suggest the best ways to manage hazardous waste, such as battery acid and oil residues from machines – residues that cause water pollution without proper disposal. The officer might also discuss the storage of hazardous waste, and how to avoid chemical reactions, explosions, fires, leaks and poisoning, while making other suggestions for safe working conditions.

This pragmatic and systematic approach allows loan officers in the PCF network to offer a new service to their customers, increasing customer loyalty while disseminating best practices for environmental and social concerns – practices that will benefit local entrepreneurs. ■

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A Responsible Line of Credit for Halk Bank in Turkey

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Commercial and retail banks are generally large companies that strongly affect a country’s economic fabric. AFD Group makes refinancing loans to banks – loans that ultimately benefit local businesses, particularly the small- and medium-size enterprises (SMEs) that create the most jobs and contribute the most to developing countries’ economies. Banks that receive AFD Group financing play a central role in the social and environmental consequences of the business activities they finance in turn.

AFD Group promotes good social and environmental practices in banking for two reasons: to strengthen banks’ own corporate responsibility policies and risk controls, and to encourage banks to educate their business customers about these concerns and practices.

For example, AFD set up a partnership agreement with Halkbank in Turkey in order to relay good social and environmental practices to the bank’s customers.

A state-owned bank created in 1938, Halkbank has a large, nationwide branch network that includes disadvantaged areas. AFD granted a first line of credit to Halkbank in 2007. This allowed AFD to raise awareness of social and environmental responsibility

issues among the bank’s 400 staff members and 30 small- and medium-size business customers. After this initial success, a second line of credit financed an ambitious corporate responsibility program for three years, from 2008 to 2011.

The second credit line’s underlying program had two main components. The first affected Halkbank directly, aiming to help the bank manage the social and environmental risks in its loan portfolio and to train bank employees on the subject. The AFD project team accomplished this by setting up specific due diligence procedures in Halbank’s loan approval process and by providing training courses for all bank staff members.

The second component helped Halkbank’s SME customers through various means, including: - Granting loans to 160 SMEs in disadvantaged and remote areas; - Producing a campaign to raise SME awareness about corporate responsibility concerns, while training SME managers and staff on issues such as workplace, environmental law compliance, and conservation of water and energy. SMEs also received free risk audits and certification assistance for ISO 14001 (environmental management) and OHSAS 18001 (a British Standard for occupational health and safety management systems). ■

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Raising Environmental Standards at an Indonesian Paper Manufacturer

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PT Fajar Surya Wisesa Tbk (FSW) is Indonesia’s second largest producer of industrial paper for cardboard and brown paper bags. FSW uses 100% recycled paper, purchased in Indonesia for the most part. The company, which received an ISO 14001 environmental management certification in June 2010, expects to reach its full paper production capacity of 1,000,000 tons in 2012.

FSW’s efforts to reduce its environmental footprint distinguish it from its competitors. These efforts include: - Recycling waste paper.

- Reducing energy consumption by co-generating electricity and steam with an on-site waste incinerator.

- Using two wastewater treatment plants and reducing water consumption by reusing the treated wastewater.

FSW called on PROPARCO to finance the purchase and installation of a new incinerator to burn all wastepaper by-products and to produce steam for the cardboard production process.

In connection with its financing, PROPARCO

commissioned an environmental and social audit of FSW to assess its compliance with IFC’s international performance standards and to determine any additional actions needed.

The audit identified the need to address waste incinerator emissions. Prior to working with PROPARCO, FSW did not have any controls on the incinerator to curb dioxin and furan emissions.

These toxic substances have important, proven health risks. However, Indonesian law does not require any air pollution controls for such emissions.

PROPARCO therefore made an agreement with FSW management: the company would curb and regularly measure the quantity of dioxin and furan emitted by the two incinerators, to ensure that levels complied with international limits.

FSW managers also agreed to improve their environmental and social risk management system within twelve months. The management team specifically promised to: - Make hazardous materials storage safer.

- Secure access to the landfill and block neighbors’ entry for safety reasons.

- Improve fire prevention and protection systems.

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- Require subcontractors to comply with FSW’s environment, health and safety management system. This extension of the system meets the intention of ISO 26000 – influencing the company’s subcontractors toward good practices, or even including subcontractors within the company’s reporting scope. ■

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Other AFD Group External Operations Having Social and Environmental Goals AFD Group promotes aid operations that further its fundamental sustainable development goal. Three projects illustrate how AFD and PROPARCO achieve this.

From 2011 through 2015, AFD has financed a project that uses satellite data to monitor changes in Central African forest cover. This method is widely recognized as essential for tracking changes, and as an indispensible tool in reducing greenhouse gas emissions arising from deforestation and environmental degradation.

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AFD’s initiated this pilot project to meet Central African countries’ need for satellite-generated data, and will invest an estimated €11.5 million in the project over five years.

In September 2011, AFD also made a €300 thousand grant to a nonprofit collective, “Ethics on the Label” (Ethique sur l’Etiquette). The project aims to improve respect for human and worker rights in the production of exports for sale in France, in line with ILO conventions and the UN Charter. The nonprofit will campaign to increase awareness about worker human rights, aiming to motivate many French consumers – about 200,000 people directly – to prefer ethicallyproduced products. The campaign will also address employers, public officials and others in producing countries, both in the developing world and in Asia, as well as in France and Europe.

In 2011, PROPARCO in turn showed its commitment to socially and environmentally responsible development by funding a €14.1 million hospital project, and nine renewable-energy credit lines and projects for a total of €193.6 million. ■

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Improvement Plan for 2012-2016 (1) Develop more environmental and social risk assessment tools to allow Group project managers, as well as borrowers and grant recipients, to take greater ownership of corporate responsibility issues.

(2) Improve aid beneficiaries’ in-house corporate responsi-

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bility skills through continuous training, particularly for in-house project managers.

(3) Improve monitoring of aid beneficiary efforts to meet their environmental and social risk control obligations.

(4) Assess how well the Group responds to project team opinions about environmental and social risks, both after project reviews and during the project cycle, from funding decisions through implementation monitoring.

(4) Improve consideration of environmental and social impacts in completed project evaluations.

(5) Improve how Group teams assess and classify services that generate environmental and social benefits, by sector and purpose.

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AFD Group’s Climate Strategy: An Exemplary Approach Although climate concerns exceed the relatively narrow focus of managing social and environmental risks in development projects, AFD Group has given its highest priority to environmental preservation and climate change mitigation. The fight against climate change is inextricably linked to economic and social development. Global warming’s acceleration will hinder economic development over the long term, just as economic development can exacerbate warming through rapid increases in natural resource and fossil fuel consumption.

As part of a 2012-2016 Climate Strategy validated by AFD’s board of governors in November 2011 and by PROPARCO’s in March 2012, AFD Group aims to become a leading financier in the international fight against climate change. It will deploy its experience, achievements and advantages to help developing and emerging countries meet the priorities and challenges posed by climate change. The Group’s assistance will improve its aid beneficiaries’ strategic integration of climate concerns and their resilience to effects of climate change, while also enhancing their economic and social development.

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AFD Group’s climate strategy rests on two main objectives: (1) Positioning AFD Group as the central actor in French funding commitments to fight climate change in developing and emerging countries;

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(2) Positioning AFD Group as a full-fledged actor in the architecture of international climate finance, through its deployment of European and other international climaterelated resources and mandates, and via its direct access to thematic funds, notably the Green Climate Fund.

AFD Group grounds its climate strategy and identity on three structural precepts, applied differentially according to each country’s regional specificities66:

(3) A policy of selecting projects according to their climate impacts, while also considering AFD’s geographic mandates, each country’s level of development, and each country’s development policy.

Measuring and Accounting for Impacts Given the increased demand for transparency within civil society and the international community, AFD Group has established a clear and publicly available classification of the climate-related projects that it finances.

(1) An ambitious and sustained objective to make climate-related financing commitments equal to 50 percent of AFD’s foreign-aid funding per year, and 30 percent of PROPARCO’s annual total.

AFD Group qualifies its standard development projects as “climate projects” when they also fight climate change or benefit the environment. This means that such projects (1) reduce total GHG emissions more than they raise the level of emissions during the project’s lifetime (mitigation), and/or (2) reduce the vulnerability of populations, goods and ecosystems to climate change impacts (adaptation).

(2) Systematic measurement of every project’s carbon footprint, using a robust and conservative internal method from AFD Group’s operations manual67. The method calls for estimating projects’ carbon footprints at the beginning of each funding proposal review.

These expected climate-change mitigations are calculated via a particularly robust method, one developed to quantify GHG emissions and reductions incurred in AFD-financed projects. AFD is one of the few donors to have reached this stage with its “Carbon Footprint Tool,” originally inspired by

66. For more information, see the “Climate” portal on www.afd.fr.

67. For more information on AFD’s climate impact measurement method, see the “Climat” portal (in French) on http://climat.afd.fr and choose “Mesure des impacts.”

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work done by France’s Environment and Energy Management Agency68. AFD leads the effort among international donors to harmonize their carbon-footprint measurement approaches.

AFD has also established classifications for projects that

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target economies adapting to climate change. The classification system identifies regional vulnerabilities and the types of action needed to reduce them. AFD has another tool in development that would estimate its own projects’ vulnerabilities to climate change; this should foster solutions to potential problems both when new projects come under review and during their lifetime.

An Internal Division Dedicated to Fighting Climate Change AFD has set up a Climate Change department to develop tools and provide operational support, monitoring, and implementation advice for of the Group’s climate strategy. The division integrates anti-climate-change diligence and objectives into AFD’s standard procedures. These procedures include the project classification and climate impacts measurement mentioned above.

68. Agence de l’environnement et de la maîtrise de l’énergie, or ADEME. 69. Fonds Français pour l’Environnement Mondial, or FFEM.

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In addition to the Climate Change department, a highlevel steering committee now guides the cross-functional aspects of the Group’s climate strategy, ensuring coordination and mobilization between various departments.

The steering committee comprises representatives from AFD and PROPARCO administrative divisions and from the French Global Environment Facility secretariat69.

2011 Climate Project Results In 2011, AFD Group committed nearly €2 billion to development projects that also fought climate change, of which €1.6 billion financed greenhouse gas (GHG) emissionsreduction (mitigation) projects, while the other €400 million financed adaptation projects, for a total of 45 projects and programs. In addition, the Group committed €48 million to financing “mixed” projects that have both adaptation and mitigation effects. Of the total 2011 commitments to climate projects, AFD authorized funding for €1.815 billion, while PROPARCO’s share reached €179 million for six climate projects.

AFD Group uses a precise accounting method to improve the transparency of communication about climate-related

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actions. Funding is classified as mitigation-related when

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the completed project’s direct and estimated carbon footprint shows that it will reduce or (in the case of renewable energy projects) avoid more than 10,000 tCO2e, compared with pre-project conditions. Mitigation projects also include those without measureable carbon footprints that are dedicated to pro-climate actions, such as budget support for a country’s national climate plan, bank credit lines dedicated to financing renewable energy or energy efficiency, and capacity-building for climate change issues. Funding is classified as adaptation-related based on a matrix that shows how the development project will lower a region’s vulnerability.

While substantial, the Group’s total commitment to climate projects in 2011 was some €71.3 million less than in 2010, although the difference may be simply due to the funding approval calendar for large projects. In 2011, climate project commitments represented 41% of all AFD commitments to foreign countries (compared with 55% in 2010) and 19% of PROPARCO’s total (compared with 27% in 2010)70.

70. AFD counts commitments to foreign countries in the year that the strategic board approves (commits) the financing, except for funding implemented on behalf of the French government or for global budgetary aid, debt-reduction contracts, credit risk guarantees for PROPARCO, and international funds and facilities, such as the Clean Technology Fund. PROPARCO counts the guarantees it receives from AFD in its annual commitments.

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AFD Group Climate Project Commitments 2005-2011 AFD Group Climate Project Commitments 2005-2011

72 72

in € Millions

70

70

in € Millions

2500

5•

2500

49

2000 2000

38

49 43

43

38

1500

1500

1000

17

17

18

18

1000 500

500 2005

2005

2006

2007

2006

2008

2007

Mitigation commitments (+ mixed) Adaptation commitments (+ mixed) Number of " Climate projects " Mitigation commitments

(+ mixed)

Adaptation commitments (+ mixed) Number of " Climate projects "

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2009

2008

2010

2009

2011

2010

2011

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AFD Group Adaptation and Mitigation Allocations 2005-2011

Year funding approved

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2005

2006

2007

2008

2009

2010

2011

Total

Mitigation and mixed projects

16

18

28

34

51

53

35

235

Mitigation commitments (€ Million)

422

568

626

1,074

1,996

2,534

1,607

8,827

Average project value (€ Million)

25

32

21

33

40

48

46

38

Adaptation and mixed projects

N/A

N/A

29

24

27

22

15

117

Adaptation commitments (€ Million)

N/A

N/A

216

309

430

422

436

1,813

“Climate Projects”

17

18

38

49

72

68

45

307

“Climate” commitments total (€ Million)

422

568

779

1,236

2,388

2,707

1,994

10,094

Commitments for Adaptation Projects AFD Group Commitments for Adaptation Projects by Sector 2011

AFD Group classifies its climate-change adaptation projects into three categories: 1. Projects that conserve water, preserving it for the future.

2. Projects that improve the preservation and conservation of other natural resources, such as forests, agricultural land and fisheries.

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3. Projects that add to knowledge about climate change impacts.

Similarly to 2010, in 2011 the vast majority (87% by value, 54% by number) of AFD commitments for adaptation projects addressed water conservation. One-third of the adaptation projects targeted agricultural land and other natural resource preservation, representing 13% of commitments by value.

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Adaptation projects by volume 2011

Adaptation projects by value 2011 (â‚Ź million) 5 33%

5• 43 10%

2 8

11 382

54%

3%

87%

Water Agriculture and natural resources Knowledge creation

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13%

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AFD Group Commitments for Adaptation Projects by Region 2011

Geographically, the African continent – most vulnerable to climate change – drew the majority of commitments for adaptation projects. The sum was equally split between the Sub-Saharan Africa (35%) and the North Africa (35%)

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regions. In 2011, the Group made significant new commitments to adaptation projects in Latin America, primarily for a comprehensive water management project in Colombia.

However, adaptation commitments to Asia fell sharply, from a 46% share in 2010 to 5% in 2011.

Adaptation projects by value 2011 (€ million) 152 35%

Adaptation projects by volume 2011 1 7%

150 34%

1 7%

3 20% 21 5% 114 26%

10 66% Sub-saharian Africa Latin America and Caribbean North Africa and Middle East Asia and Pacific

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Commitments for Mitigation Projects

bank credit lines for projects promoting renewable energy and energy efficiency. Commitments for low-carbon urban transportation projects decreased compared with 2010; the transportation sector received 11% by value and 3% by project volume, as several proposals under review were pushed into 2012. Mitigation project commitments for the agricultural land and forestry sectors declined from €120 million for six projects in 2010 to €11 million for four projects in 2011. Budget support for national climate plans or policies declined from €545 million in 2010 to €174 million in 2010.

AFD group commitments for mitigation projects by sector 2011

An analysis of carbon footprints for AFD’s 2011 mitigation project commitments shows that they should help avoid or reduce 3.8 million tCO2e of emissions per year over their lifetime. Since 2005, in cumulative terms, AFD Group

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funding for mitigation projects should help avoid or reduce emissions by more than 24 million tCO2e annually.

The energy sector received the largest share of directlyfunded mitigation project commitments (56%), and also those funded through financial intermediaries (17%), via

Mitigation projects by value 2011 (€ million) 265 16%

Mitigation projects by volume 2011 Renewables

610 38%

Financial intermediation Budgetary aid

174 11%

1 3%

2 6%

4 11%

2 6%

4 11%

Energy efficiency 3 9%

Fuel switch Urban transportation

171 11%

Carbon funds

4 11%

Waste management 167 10%

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1 3%

Carbon sequestration 159 10%

30 2%

21 1%

11 1%

14 40%

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AFD group commitments for mitigation projects by region 2011

North Africa remained nearly the same, despite the uphea-

Compared with 2010, regional allocation of 2011 commitments changed more for mitigation than for adaptation.

Contributions to Sub-Saharan Africa and Asia declined.

However, this decrease may have arisen because some project proposal reviews shifted into 2012, and because terms and conditions for Asian interventions are being renegotiated. Conversely, mitigation commitments for

vals in the region. Mitigation commitments to Latin America and the Caribbean also show few changes. Mitigation commitments for France’s overseas provinces remained modest at €17 million. That sum does not reflect some localities’ steps toward implementing new French energy and climate adaptation policies, those that emerged from the so-called Grenelle Environment roundtables.

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Mitigation projects by value 2011 (€ million)

Mitigation projects by volume 2011

399 25%

8 23%

5 14%

297 18%

3 9%

7 20%

17 1%

583 37%

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311 19%

12 34%

Sub-saharian Africa

Asia and Pacific

Latin America and Caribbean

North Africa and Middle East

French overseas provinces

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Carbon Footprints for Bank Credit Lines

Climate Project Examples

The Group indirectly funds climate projects by providing local and regional banks with dedicated credit lines. The Group estimates the carbon impacts of these credit lines in two ways, as commitments and as disbursements: (1) Commitments in 2011 totaled €150 million for two

Among the 45 climate projects AFD Group committed to funding in 2011 – either directly or indirectly through bank credit lines – those dedicated to mitigation included clean energy projects, such as a solar thermal power plant in Morocco, a hydropower dam in Panama, and energy-

credit lines, one for energy efficiency and the other for renewables; these are projected to reduce or avoid 230 thousand metric tons of carbon dioxide equivalent emissions per year.

efficient new building construction in China; sustainable urban transportation projects, such as a second metro line in Santo Domingo; and a carbon sequestration project that featured “agroforestry” farming in rural Madagascar.

(2) Disbursements in 2011 totaled €176 million (out of

Projects dedicated to adaptation mainly focused on better management of water and other natural resources, such as repairing and upgrading water systems in Mozambique, bolstering water infrastructure in Vietnam, and restoring mangroves along Guinea’s coastline. Adaptation projects also fostered knowledge about climate change impacts, such as a climate change database developed in Ethiopia.

In addition, AFD approved two programs to provide general budget support for national climate plans and policies in Turkey and in Vietnam.

€545 million committed in previous years) for seven energy-efficiency or renewables credit lines in five countries – China, India, Mauritius, Tunisia and Turkey; these are projected to reduce or avoid 1.8 million metric tons of carbon dioxide equivalent emissions per year.

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Improvement Plan for 2012-2016 For the 2012-2016 period, AFD Group has committed to achieving three objectives, by combining its ambitious poverty alleviation and social development projects with those benefitting climate: (1) Raising annual funding for climate-related projects to these levels:

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- 50 percent of AFD’s annual foreign aid funding.

- 30 percent of PROPARCO’s annual foreign aid funding.

To achieve these commitments, oversight of the Group’s climate-related activities will take place before and during project planning and implementation.

(2) Systematically measuring and monitoring each project’s carbon footprint.

AFD Group set up a procedure for measuring projects’ carbon footprints in 2011; it aims to gradually increase the percentage of monitored projects from 70% in 2012 to 100% by 2016.

(3) Selecting projects according to their carbon footprint and their contribution to fighting climate change.

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Beginning in 2012, the Group will determine the carbon footprint and climate contribution for every proposed project during the project review phase (prior to funding approval); highly GHG-emissive projects may be rejected in some cases, depending on the target country, its level of development, and its policy for fighting climate change. This criterion combines with others in AFD’s standard impacts analyses, such as poverty reduction, local employment, and other social or environmental criteria. ■

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AFD « 2011 World Meeting » participants

6. Our Work Force

Our Commitment to Our People

A

FD Group’s human resources strategy articulates the organization’s central values: commitment, integrity, openness and mobility. These values find their expression in the Group’s employment policies:

•Providing good working conditions to attract and retain talented people.

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•Ensuring consistency and transparency in career-building and support, encouraging high-quality and ongoing communications with employees and trade union representatives.

•Promoting diversity through special recruiting efforts

that extend equal opportunities to women, older workers and the disabled.

•Promoting internal parity and equality, particularly 6•

foreign nationals working as managers in AFD field offices. This actively-promoted effort to create favorable working conditions fosters strong employee loyalty: 121 or fewer employees (6%) leave the company each year.

In accordance with its commitment to exemplary social responsibility, the Group aims to consolidate its human resources capital in 2012, following a period of expansion and increased hiring.

through an increased presence of women in management positions and by improved hiring, training and integration of foreign nationals in the AFD field offices.

The Group has formalized these policies in “enterprise agreements.” These agreements and other labor agreements are further described in the AFD 2011 annual report.

At the end of 2011, AFD Group counted 2,048 employees71 worldwide, 55 (3%) more than in 2010. Over the last 10 years, the employee roster for AFD, PROPARCO and CEFEB has expanded by 23%. In that time, employees’ average age has declined; their average skill level has increased, as have the percentages of women and of

71. This total includes nearly all employees who have transferred to work in French reserve banks in the overseas provinces.

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AFD Group Employee Distribution 2009-2011 Group Employee

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EMPLOYEE HEADCOUNT

End 2009

End 2010

End 2011

France (mainland)*

851

914

955

Field offices

152

159

151

Technical assistants

7

7

6

Transferees

28

23

22

AFD Group Local and Foreign Employees**

1038

1103

1134

French overseas provinces

102

106

108

Foreign countries**

393

416

439

AFD Group Local and Foreign Employees**

495

522

547

TOTAL AFD GROUP EMPLOYEES

1533

1625

1681

Reserve bank France employees*

103

104

105

Reserve bank local and foreign employees**

263

264

262

TOTAL RESERVE BANK EMPLOYEES

366

368

367

Total employees managed by AFD Group

1899

1993

2048

AFD Group international volunteers

84

90

75

Reserve bank international volunteers

6

6

3

Total international volunteers

90

96

78

* Not including apprentices and interns ** Since 2007, this number includes local and foreign hires and foreign consultants

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Distribution by Geographic Region 2011 (Not including France)

17% 17%

6%6% Sub-saharan Africa Sub-saharan Africa 15% 15%

North Africa & Middle East North Africa & Middle East Asia & Pacific Asia & Pacific Latin America & Caribbean Latin America & Caribbean

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49% 49%

French expatriates

Local foreign hires

International volunteers

Sub-Saharan Africa

69

267

44

380

49%

North Africa & Middle East

23

67

7

97

13%

Asia & Pacific

28

77

14

119

15%

Latin America & Caribbean

10

28

8

46

6%

French Overseas Provinces

21

108

1

130

17%

151

547

74

772

100%

Â

TOTAL

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French Overseas Provinces French Overseas Provinces

13% 13%

Total AFD Group

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Avenues to Improvement

Group Employee Turnover 2011

Reasons for leaving AFD Group 2011

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Total

Employee turnover rate

Retirement

45

2.2%

Quit

38

1.9%

End of transferee contract

7

0.3%

Working conditions

End of short-term contract

17

0.8%

Performance Evaluation

Departure after trial period

7

0.3%

Dismissal*

4

0.2%

Death

3

0.1%

TOTAL

121

5.9%

Of which the overseas reserve banks

17

*Dismissals usually occur because of physical inability to do job

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AFD Group’s greatest asset is its highly-qualified work force. The human resources department strives to offer the most favorable working conditions possible in order to attract, retain and motivate talented employees. This strategy centers on six essential efforts: performance evaluation, remuneration, benefits, flextime, health and safety, and equality and diversity.

Several years ago, the Group instituted an annual performance review program for all employees. The direct supervisor interviews each employee and writes an evaluation based on explicit criteria, assessing the employee’s performance over the year. The performance review allows managers to recognize employee contributions based on job descriptions and jointly defined objectives. The evaluation also determines training priorities and each employee’s potential for professional growth.

Remuneration

The AFD Human Resources division ensures fair and highincentive remuneration for all employees worldwide. It regularly reviews salary practices in each market, adjusting a common baseline to fit each country. All employees are included in the Group’s profit-sharing plan.

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Benefits

Health and Safety

In 2011, all employees received national health, disability, life and pension insurance coverage. All employees also receive supplemental private insurance, provided where needed by the Group. In particular, locally-recruited staff members in foreign countries receive the same benefits as employees working at the Paris headquarters. The Group pays 100% of the premiums for disability and life insurance, which covers active and retired employees and their spouses.

AFD Group takes the health and safety of all of its employees seriously, wherever they are located. A committee dedicated to overall occupational health and safety issues meets at least four times per year. An occupational safety unit, comprising some of these committee members along with health and safety office experts and human resources staff, also meets regularly to prevent or resolve individual problems. Monthly human resources meetings permit employee representatives to identify workers who need medical or psychological attention; the relevant supervisors are also involved in this procedure.

Flextime

AFD Group offers various ways for employees at the Paris headquarters and CEFEB to modify their working hours and find a better work-life balance. For example, employees may choose to work part-time or use a “vacation-days savings account,” and they also benefit from France’s 35-hour workweek. They may also work from home occasionally if their colleagues and manager agree to that. In AFD field offices in foreign countries, locally-hired employees enjoy a “French” employment status that allows them to work 35 hours per week rather than the local legal limit, which usually averages 37.5. All the Group’s rules about working hours comply with ILO guidelines.

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All employees undergo annual medical and psychological exams. The Group’s occupational physician prepares an annual report on health issues that arise during the year, which is then included in the occupational health and safety committee’s report. The occupational safety unit prepares and maintains standards and procedures used in all locations to protect workers from a variety of risks, such as terrorism, earthquakes, bird flu and other epidemics. If an event occurs that could jeopardize overseas employee safety, a crisis unit and repatriation protocols stand at the ready. Additional measures are provided on a case-by-case basis for local in-country staff members. For further preventive health care, the Group covers the cost of vaccinations for employees working and traveling abroad.

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AFD Group General Safety Measures for Employees and Materiel

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Many AFD Group employees travel the world, working with information stored on computers and online. This makes employee safety and the security of company data, materials and assets a high priority for business continuity.

AFD Group’s chief executive regularly emphasizes the importance of employee safety. In 2010, he signed a Code of Safety that formalized this for employees who work in AFD field offices, located in more than 60 countries. The chief executive works with senior managers from headquarters and the field offices to review safety measures and security risks. He also makes a safety guide available to all permanent staff members via the Group’s intranet; the guide details procedures for the protection of people, data, and other assets in specific situations.

Whenever senior management identifies an unacceptable risk, it immediately responds with the appropriate measures to reduce or eliminate it. Risks are ranked by four levels, from low to major. The occupational safety unit working at the Paris headquarters constantly monitors risks for headquarters and all offices. It proposes suitable

responses and actions, especially during major crises such as armed conflicts, natural catastrophes and political upheavals. The administrative, human resources and field office directors help initiate security procedures and measures as needed. ■

Equality, Parity and Diversity

AFD Group endeavors to give all equally-skilled job candidates equal access to employment, while paying extra attention to its commitments to gender parity and diversity. Discrimination is illegal in France, and AFD Group has never faced judicial action on the subject.

In 2007, after signing a specific labor agreement with employee trade union representatives, the Group instituted a policy to actively hire and retain people with disabilities.

This agreement will be renegotiated in 2012; it will aim to increase hires by outsourcing positions to specialized job centers that subcontract to the disabled.

As the number of field offices has grown in recent years, the Group has hired more foreign nationals as managers and permanent staff members in those offices. The Group has also hired more young people through socalled “youth training apprenticeship” or “alternating”

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contracts; the latter allow youth to pursue schooling while interning with the company during alternating weeks, months or years. In 2011, five young employees were hired on youth training contracts and one as an intern.

In 2007, AFD Group signed a preliminary labor agreement to promote employment parity between women and men. In June 2011, a new agreement reiterated and updated this commitment. It sets targets to promote the

AFD Group Employee Distribution by Age and Gender 2011 (as of 31 December 2011) Men 60 and +

71

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Women

151

39

55 à 59

155

50 à 54

157

45 à 49

155

40 à 44 141

116 163 143 130

35 à 39 112

162

30 à 34 50

192

25 à 29 2

- 25

104 5

Total: 2,048 (Men = 994 or 48.5% / Women: 1,054 or 51.5%) Average age: 44 (Men: 45.5 / Women: 42.5)

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professional development of women throughout their careers, and applies to women employed as “managers” under French law.

The Group’s target for December 31, 2013 would increase representation of women at all levels of the company:

•Managers: 50%, up from 43.4% in 2011.

•Senior management (departments and divisions): 33%, up from 25.4% in 2011.

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•Field offices: 28%, up from 22.4% in 2011.

The Group also aims to promote women at the same rate as men and in proportion to the targeted gender mix at each level.

In 2012, the Group’s human resources department will continue efforts to equalize pay between men and women working in similar jobs. In cases where employees move to overseas offices, the department will aim to make it easier for their spouses to work in the country of transfer; such a policy would overcome the main obstacle to employee geographical mobility.

Good Labor Relations AFD Group management considers good relationships and dialogue with employee and trade union representatives a central tenet of internal social responsibility. AFD Group employees are covered by a special collective bargaining agreement that applies to them alone. In addition, their rights are protected by trade unions and French labor law.

Foreign nationals working in AFD field offices abroad may also be covered by their countries’ collective bargaining agreements for bank and financial institution workers.

The human resources director negotiates major changes to employment practices or working conditions with the trade unions and/or through formal consultation with employee representatives. Major changes – those affecting working conditions, training, employment, or the running of the organization – can only come into effect after employee representatives have had thirty days of information and/ or consultation. These representatives may come from AFD, PROPARCO, CEFEB, or the overseas reserve banks72 and field offices, because all these Group employees work

72. Institut d’Emission des Départements d’Outre-mer, or IEDOM and Institut d’Emission d’Outre-mer, or IEOM.

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under AFD contracts, as noted above. The representatives sit on eight committees, with delegates as follows:

•Five Enterprise Committees, one for AFD and PRO-

PARCO at the Paris headquarters and four for the larger overseas field offices with more than 50 employees.

These committee representatives express the wishes of

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employees concerning the Group’s management, finances, economics, organization, working conditions, professional training, and social welfare benefits. They also manage social and cultural activities for employees and their families, underwritten by the Group.

•One Central Work Council. This committee unites repre-

sentatives from the five committees above to review economic and financial plans affecting employees covered by French labor law.

•One AFD Group Committee. This committee unites all the employee representatives from AFD, PROPARCO, CEFEB and the overseas reserve banks.

•One AFD Group Occupational Health and Safety Com-

mittee. As mentioned previously, this committee works to maintain or improve safety, security and working conditions at AFD and PROPARCO headquarters in Paris, CEFEB in Marseilles and in the field offices.

•In addition to the above representatives, employee

delegates from AFD Group headquarters, the field offices,

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CEFEB and the reserve banks collect individual and collective grievances about applications of labor law, rules, and representation; they present these issues to managers in the human resources department.

Four principles underpin AFD Group’s good labor relations: (1) Constructive dialogue between senior management and employee representatives propels the Group’s progress as a whole, since both sides seek to benefit the collective interest.

(2) Respect for each side’s prerogatives and complementary roles informs discussions between senior management and employee representatives.

(3) Professional negotiations, underpinned by the information, training and external support that allow representatives to exercise their mandate.

(4) Anticipation and quick resolution of problems, via the Group’s tracking of labor-related changes and mediumterm trends..

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Building Sustainable Career Paths Internal and geographic mobility

To retain the talented employees needed to execute AFD Group’s development aid strategy, the human resources department encourages internal and geographic mobility; this helps employees create inspiring careers and gain new

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skills. Human resources experts manage each individual’s career path rather than applying a standard model. This personalized attention creates better matches between each employee’s skill set and the organization’s needs.

In 2011, 181 employees at AFD headquarters in Paris changed jobs within the company, received promotions and/or took posts abroad. In the field offices, five employees were promoted internally or stationed elsewhere; in the future, the Group intends to increase mobility opportunities for foreign nationals working in the field offices.

Professional Training

AFD Group develops employees’ skills by investing in professional training programs above the legally-mandated level, spending more than 4% of its gross payroll expense on training, rather than the 1.6% minimum. The Group’s training policy focuses on the induction of new hires. They go through several weeks of seminars and activities to become familiar with the Group’s operations and culture.

The induction process allows new hires to fully understand

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the Group’s strategy, mission and concerns as well as the work environment, so that they emerge well-prepared for the organization’s present and future challenges. In addition, employees promoted to management positions receive management training and coaching.

The Group training policy dedicates substantial resources to teaching and enhancement of foreign language skills.

It also focuses on specific technical skills related to the Group’s many businesses – banking, finance, economics, and project management. All employees follow a study course that teaches core skills related to development aid and to AFD Group’s role in the French cooperation system.

This “Development Business” track has gradually evolved a more practical, project-oriented focus through a seminar dedicated to fieldwork. In 2011 (the third year the seminar was offered), three groups of employees visited projects in Benin, Gabon and Réunion.

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The Group “World Reunion” Meeting

6•

In 2009, AFD Group created a new way to forge work force cohesion and promote inter-employee communication: the first “World Reunion” meeting.

The event’s goal is to increase cohesion between employees working at headquarters in Paris and those in the field offices. Between 2009 and 2011, all field offices have seen one of their local national employees attend the four-day seminar in Paris.

These employees share development experiences from their countries, and in turn hear from headquarters employees who present the Group’s strategy and work in other regions. ■

2011 Human Resources Outcomes To summarize the efforts outlined above, in 2011, the AFD Group human resources department achieved the following:

•Improved working conditions for employees hired abroad

by giving them a raise commensurate with France-based employee salaries. The raise is worth one month’s wages, known as the “13th month” in France.

•Extended labor relations and dialogue to employee

representatives from all the field offices through the World Reunion meeting.

86 | 132

•Increased the Group’s commitment to gender parity in

hiring by signing a second labor equality agreement in June.

Improvement Plan for 2012-2016 (1) Continued enhancement of the talent and diversity of the Group’s human capital through a recruitment policy that will:

•Anticipate the skills that needed as aid intervention strategies evolve.

•Aim for diversity and complementarity among employees.

(2) Continued building of sustainable individual career paths through the following means:

•Assistance for internal and geographic mobility.

•Easier transfers between AFD, PROPARCO, CEFEB and

the reserve banks.

•Expertise transfers from senior to younger staff mem-

bers through mentoring.

•Strategic planning for work force skills training and responsibilities.

(3) Additional training and coaching for managers.

(4) Completed redefinition of job descriptions, levels and salary tables for employees hired in foreign countries. ■

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Videoconference between headquarters and field offices

7. Environmental

Responsibility in our Internal Operations

87 | 132

Managing AFD Group’s Environmental Footprint

A

s part of its corporate responsibility initiatives, AFD Group has strategized ways to reduce the environmental impact of its internal operations, similar to the “climate strategy” that governs its external work. The resulting policies and action plans both manage and reduce the effects of the Group’s

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greenhouse gas (GHG) emissions, fossil fuel consumption, and waste production. The action plans largely rest on carbon footprint measurements, energy audits, and

AFD Group HQ GHG emissions ranked by source 2011 (tCO2e)

other environmental impact assessments. Other actions

14489

include raising employees’ awareness about the importance of sustainable development and environmentally responsible behavior.

Managing GHG Emissions AFD Group has conducted annual carbon footprint measurements at headquarters since 2006, and for its entire office network since 2009. The Group aims to reduce the

7•

4266

greenhouse gas (GHG) emissions generated by all its sites

3031

to one-quarter the current amount by 2050, in accordance with France’s so-called “Grenelle Factor 4” initiative.

The Group measures and ranks its GHG emissions with a

730

tCO2 e

457

36

dashboard-type Carbon Footprint Tool, originally created by the French Environment and Energy Management Agency73.

The ranking, from least to most significant source of emissions, helps the Group target and reduce the GHG emissions of both buildings and internal operations. Over time, the Group has improved the original tool by collecting and using real-life data, testing the data output’s applicability,

Sources Travel

Energy

Freight

Servers

Purchases

Waste

Buildings

73.The original tool is known as the Bilan Carbone®, created by the Agence de l’environnement et de la maîtrise de l’énergie, or ADEME.

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63

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AFD Group GHG Emissions 2006 to 2011 (tCO2e) (not including field offices)

25000

24588

tCO2 e

23072 24163

19171 21102

7• 17304 15000 2006

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2007

2008

2009

2010

2011

GHG Emissions

Measure

2009

2010

2011

Variation 2010-2011

AFD Group HQ

TeqCO2

24,588

24,163

23,072

-5%

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refining the measures and making them more reliable.

Instead of outsourcing the calculation process to the energy agency, AFD Group now performs its own assessments; this task falls within the remit of the Group’s head of internal environment. Since 2009, the Group has also conducted an annual energy audit of its headquarters.

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The carbon footprint assessments and energy audits have quantified the Group’s opportunities to reduce GHG emissions and fight climate change. The primary avenues for improvement include reduced business travel, increased energy efficiency and renewables use in Group buildings, and more carbon offset purchases. The graph below shows the Group’s GHG emission sources ranked by magnitude.

The timeline shows that GHG emissions grew from 2006 to 2009 as the Group expanded its activities, until it initiated steps (described below) to reduce and offset emissions in 2009. From 2010 to 2011, overall GHG emissions declined by 5% from 24,163 tCO2e to 23,069 tCO2e, as shown below.

A development finance institution will obviously generate the greatest single share of its GHG emissions via travel, as employees move between Paris and other AFD offices, or travel to and in aid-receiving countries to monitor projects. In 2011, business travel generated 14,889 tCO2e of GHG emissions, followed by 4,266 tCO2e generated by freight and 3,031 tCO2e generated by purchases.

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Purchases appear a more challenging area for direct action, as the Group cannot fully control suppliers’ manufacturing or shipping processes.

Avenues to improvement Managing Business Travel Although it increased travel by opening field offices in Mexico and Colombia in 2010, the Group installed videoconference facilities at headquarters and every field office in order to reduce intercompany and inter-office travel by car, train and plane. Employees can remain at their desks while collaborating with others on the projects they oversee, participating in steering committee meetings and roundtables, taking part in training courses, and watching conferences and debates.

From 2010 to 2011, employees tripled their use of videoconferencing from 233 to 705 videoconferences.

Employees and management appreciate not only the GHG reductions videoconferencing offers, but its time-saving aspects, too. The following table provides a monthly detail of the 2011 videoconferences initiated at AFD Group headquarters and in field offices.

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AFD Group Videoconferencing Activity by Month and Location 2011 2011

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Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Total

HQ (AFD + PROPARCO)

49

64

75

56

75

59

60

22

72

58

59

43

692

Field Offices

1

2

2

0

3

3

0

0

0

2

0

0

13

TOTAL

50

66

77

56

78

62

60

22

72

60

59

43

705

AFD field offices may also take steps to make environmentally-friendly changes. For example, after seeing the results of its carbon footprint assessment, the office in Nouméa, New Caledonia began using shared minivans to ferry employees between the office and the airport, instead of using individual cars. However, even with videoconferencing and other steps, the average distance traveled by a Group employee was 49,946 kilometers in 2011, generating 13.12 tCO2e – mostly from plane travel, as seen in the chart and graph below.

AFD Group Travel Emissions

by Tranportation Mode 2011 12638

Commute Employee Car Employee Other Employee Train Employee Plane Employee Boat Visitor, All modes

tCO2 e

1836 9

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0

6

0

0

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Business Travel GHG

Measure

2009

2010

2011

Variation 2010-2011 %

HQ and Field Offices

Number

66

68

N/A

N/A

tCO2e / year

N/A

13,312

14,489

9%

Total Distance

1,000 km

N/A

51,062

55,160

8%

Total Distance via Airplanes

1,000 km

20,501

22,421

N/A

N/A

tCO2e / employee

N/A

12.72

13.12

3%

1,000 km

N/A

48,802

49,946

2%

Total Emissions

Emissions / employee Distance / employee

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N/A = not available

Managing Buildings and Computer Servers As seen above, energy consumption in AFD Group headquarters buildings ranks fifth among the Paris GHG emission sources; the Group therefore launched a major energy-efficiency drive in 2009 for its headquarters and field offices.

The effort centered on (1) optimizing temperature controls for heating, cooling and ventilation, (2) replacing fossil fuels with renewables, and (3) construction to high environmental standards for new offices and employee housing.

92 | 132

This efficiency drive lowered energy consumption from 590 tCO2e in 2010, or 26% of all headquarters emissions, to 457 tCO2e in 2011, or 20% of the total. The primary areas of focus included computer servers, building temperatures, alternative energies, and more environmentallyfriendly building practices. All of these efforts paid off in 2011 as shown below, as Group headquarters achieved a 17% decrease in total energy consumption, including a 21% decrease per employee.

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AFD Group HQ Building Energy, Electricity and Steam Consumption 2009-2011

Energy Consumption

Total Energy/m²

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2009

2010

2011

Variation 2010-2011 (%)

kWh/m²/year (Useable surface*)

N/A

208

172

-17%

Kw/H/m²/year (Total surface)

N/A

245

202

-17%

Measure

Total Energy

MWh/year

5,312

5,506

4,555

-17%

Total Energy/Employee

Kw/H/employee/year

5,896

5,811

4,595

-21%

Total Electricity

MWh/year

N/A

3,629

3,443

-5%

Total Steam

MWh/year

1,743

1,876

1,112

-41% N/A = not available

1. Useable surface does not include utility areas and wall space.

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Consolidating Computer Servers

more applications simultaneously while significantly redu-

Between 2009 and 2010 – as part of its 2007-2011 strategy to reduce its environmental footprint, energy dependence and electricity bill – AFD Group reorganized and consolidated its information technology services. It increased the power of its Windows and Unix servers, thereby increasing their capacity to manage data and run

cing each server’s energy consumption. This lowered the amount of electricity consumed by Group computer servers from 114,075 Kw/H in the second quarter of 2010 to 89,109 Kw/H by the first quarter of 2011. In all, server electricity consumption declined 24%, from 406,822 Kw/H in 2010 to 306,415 in 2011.

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7•

Improving Lighting and Temperature Controls

Using More Renewable Energy

The Group also took steps to better control building temperatures in the headquarters and field office buildings.

At headquarters, LED light bulbs replaced conventional ones in the washrooms, offices and meeting rooms; these were connected to motion detectors that automatically turn off lights when no one is present. Window blind installation on the southern side of the building reduced the need for air conditioning in the summer. In the field offices, the Group’s building and logistics team ran audits to find sources of wasted energy, and retrofitted buildings for increased energy efficiency – for example, by adding insulation, window blinds, awnings or air ventilation, and changing conventional light bulbs to LED-type ones.

In accordance with France’s “Grenelle Environment II” directive to improve energy efficiency in public buildings, AFD Group has also increased the share of renewables in its energy mix, via a specific contract with EDF, the leading energy provider. This effort will include installing solar water heaters and photovoltaic panels, studying other renewables options, and constructing or buying more energy-efficient and environmentally-friendly buildings.

The building and logistics team also brought 1,305 air conditioning units to desirable standards, replacing those using ozone-depleting refrigerants outlawed as of 2014 (such as chlorofluorocarbons (CFCs) and hydro-chlorofluorocarbons (HCFCs)) with units using non-chlorine refrigerants (such as R407C and R410); these units should be safer for the ozone layer. The Group also instructed employees in better air conditioner use – leaving them off when ambient internal temperatures are below 26 degrees Centigrade, and by keeping interior and exterior temperatures within 5-7 degrees Centigrade, as per the recommendations of the French energy agency.

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Solar Water Heaters

The Group has launched a program in field offices to replace 215 inefficient electric water heaters with solar water heaters as the former units depreciate. Almost all of the Group’s hot water needs could be met by solar energy, which would reduce the relevant electricity use by 80% or more.

Photovoltaic Panels and Cells

In 2005, the Group began studying a project to install a photovoltaic (PV) power generation system at its headquarters, with the first installation phase occurring in November and December 2011. A grid of PV panels covering almost 170 square meters was overlaid on the buildings’ four gables. A second phase in summer 2012 will integrate semitransparent PV cells in double-paned windows covering one of the building’s exterior walls. At the same

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time, the Group will improve the building’s insulation by applying new solar panels on the outside. The PV installations should reduce or prevent 1,685 kilograms of carbon dioxide emissions each year, while producing more than 16,850 Kw/H of electricity annually.

Renewable Energy Study

In 2012, AFD Group plans to study where and how to install renewable energy sources and equipment in the field offices, such as small wind turbines, PV panels, hydropower or biogas generators, and geothermal heat pumps.

The study will analyze technical proposals for their cost

7•

benefits and GHG emission impacts, and will define a plan for pilot projects to begin in several agencies in 2013.

The Group has already started experimenting with solar powered lamps and lights in some courtyards and gardens.

Green Buildings

In addition to upgrading to more environmentally-friendly equipment, AFD Group plans to buy an energy-efficient office building in Paris and will build two low-carbon homes for employees in Martinique. In 2012, the Group will advance-purchase an office building in Paris, the “Mistral,” currently in energy-efficient retrofit according

74. Certification Qualité Logement, or Housing Quality Certification.

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to AFD’s low-impact “High Environmental Quality” (HEQ) specifications. Work is due to be finished at the end of 2012, when the building will be audited to receive its HEQ certification. Special internal task forces will oversee the building’s outfitting to ensure it meets AFD’s standards and recommendations for environmental responsibility.

In 2012-2013, the Group will build two bioclimatic villas for employees working in the Fort-de-France office, replacing two existing homes. The two residences aim to be low-carbon with net-zero emissions. Studies now underway will examine how to best adapt the homes to their ecosystem, particularly for natural cooling and ventilation. The Group would like to have both buildings certified HEQ. Since the end of 2011, it has worked with two organizations, CERQUAL74 and Qualitel, to create and validate the equivalent of HEQ criteria for use in the region; this will allow HEQ technical requirements for building materials and construction to conform to local standards.

Carbon Credit Offsets

As an environmentally responsible company, AFD Group aims to exceed required standards and ultimately achieve carbon neutrality. Beyond its steps to reduce its environmental footprint, since 2007 the Group has purchased

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7•

carbon credit offsets for the GHG emissions generated

by AFD, PROPARCO and CEFEB buildings (excluding other internal operations) in Paris and Marseilles. From 2007 to 2009, the Group offset 60,000 tCO2e of GHG emissions, or 20,000 annually, by funding distribution of energy-efficient charcoal cooking stoves in Cambodian cities, in cooperation with GERES75, a sustainable development NGO. AFD, through GERES, contributes to economic and social development and also fights deforestation with this project. The GERES charcoal project sold more than 364,000 units from 2003 to 2007, stoves used by than 1.4 million Cambodians daily.

This carbon offset purchase supports the Group’s geographical mandate for emerging Asia, adds value environmentally, and offers interesting potential for social and economic development.

At the end of 2011, AFD Group purchased carbon offsets

AFD Group has also made a special effort to make its Paris company cafeteria more environmentally friendly. In July 2011, the Group signed a three-year contract, including specific environment-oriented clauses, with Eurest, a foodservice company. These clauses oblige Eurest to keep its GHG emissions low, give priority to local suppliers and direct purchases from producers, consume less energy, and ensure the provenance of food and equipment. Eurest must also serve certified organic foods and help protect biodiversity and fisheries by avoiding the use of palm oil and not serving protected or endangered species, such as blue fin tuna, blue lingcod or Nile perch.

covering 2010-12 for its Paris headquarters, based on estimates that the buildings will generate 24,000 tCO2e of GHG emissions per year, or 72,000 tCO2e over the three years. This time the Group supported a new project, “SD Biosupply,” run by EcoAct, a company specializing in carbon finance and offset mechanisms that follow the verified carbon standard. SD Biosupply will produce biogas (methane) by installing an anaerobic wastewater treatment plant for a tapioca processor in Thailand. The factory will use this biogas for manufacturing energy, thus avoiding fossil fuels and reducing its carbon footprint.

Water Conservation

AFD Group has not yet taken active steps to conserve water. From 2010 to 2011, water consumption dipped slightly because less was used to cool the headquarters during a cool summer season.

Food Service

75. Groupe Energies Renouvelables, Environnement et Solidarités, or Renewable Energy, Environment and Solidarity Group.

96 | 132

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AFD Group HQ Water Consumption by Employee and Overall 2009-2010

Water

Water consumption per employee

Consommation totale d’eau

Measure

2009

2010

2011

Variation 2010-2011 (en %)

m3 /employee/year

13

12

11

-8%

Liter/employee/day

63

58

53

-8%

11,458

11,317

10,787

-5%

m3 /year

7• Managing Waste

Ordinary trash and wastepaper

For the past several years, AFD Group has worked to reco-

- Sorting: The Group makes double-compartment wastebaskets available to all headquarters employees for sorting their wastepaper and other trash as they discard it.

Maintenance workers appropriately dispose of the sorted trash in city facilities.

ver and recycle paper and its other waste products. It must further reduce waste production and increase recycling to comply with the Grenelle Environment II guidelines. For comparison, the French produce more than 390 kilograms (kg) of waste per person annually, at home and work; an AFD Group employee generates 201 kg of waste at work in 2011. The Group has reduced waste production by 6.7% from 2009 to 2011 – despite an increase of activity – via the following steps:

97 | 132

- Reducing paper consumption: The Group keeps track of the amount of paper each employee uses for printing and photocopying, combining this amount with nine other factors used to calculate annual bonus payments. To help employees reduce their paper consumption, all photocopiers and printers are set to print two sides automatically.

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AFD Group HQ Paper Consumption by Type, Ton and Employee 2010-2011

7•

Paper

Measure

2010

2011

Variation 2010-2011 (%)

Total Consumption (all paper) 1

Ton/year

65

68

5%

Total consumption all paper / employee2

Kg/employee/year

62

62

0%

Consumption ream and white paper /employee

Kg/employee/year

45

44

-1%

White paper

Ton/year

37

40

8%

Ream white paper/employee

Ream/employee/year

16

16

0%

White paper/employee

Kg/employee/year

39

41

5%

Printed matter

Ton/year

22

24

9%

Percent recycled/employee

%

39

no change

N/A

1. Consumption of first-use white paper, other paper and printed matter (publications) 2. Consumption of white paper and other types, not including printed matter

98 | 132

N/A = not available

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In 2011, employees also received larger computer screens to make it easier to read documents onscreen. A French worker consumes between 70 and 85 kg of paper per year, while AFD Group employees in 2011 averaged less than that – 62 kg per person of paper and printed matter.

- Paper recycling: At PROPARCO, a company specializing in shredding and recycling confidential papers (Shred-It) collects such waste separately. In 2011, PROPARCO recycled 2120 kg of paper, saving 53 trees. The Group’s firstuse paper is 75-gram recycled, as certified by the Forest Stewardship Council.

- Food composting: Several field offices have set up com-

7•

posting units for food waste, following the example of the Accra office in Ghana, whose director put such a unit in his home.

- Operation “clean house”: In 2011, AFD cleaned out fifteen years’ accumulation from its basement storage with help from APR2, a specialist in electrical and electronics disposal. The Group ensured the recovery, recycling and refurbishing of equipment and papers retrieved from a 32,000 kg pile of used furniture, archives, and obsolete electrical and electronic equipment.

99 | 132

Electronics and Hazardous Waste

- Computer hardware: As computer equipment depreciates, the AFD Group IT, Buildings and Logistics department will donate some working components from headquarters and field offices; these units go to charities and schools who respond to a call for takers. Other electrical and electronic equipment goes to a company that hires French disabled workers to refurbish and disassemble electronics; this contributes to both waste reduction and social inclusion.

- Collection and treatment of batteries and CDs: At Group headquarters, two convenient collection points permit AFD and PROPARCO employees to dispose of their batteries and compact discs. Two organizations collect these materials – ATF Gaia, 80% of whose employees have disabilities, and a manufacturers’ recycling service, SCRELEC, whose specialty is collecting and processing used batteries. The companies ship the materials to specialized waste processing centers for sorting, recycling and recovery.

- Recycling ink and toner cartridges: AFD Group also recovers ink and toner cartridges used at its headquarters and sends them for recycling, mailing them to the manufacturer in preaddressed boxes. The manufacturer is a member of the French Conibi consortium of computer and printer manufacturers, which manages the return and recycling program.

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AFD Group HQ Waste and Trash Production by Type, by Employee and Overall 2009-2010

Measure

2009

2010

2011

Variation 2010-2011

Total Volume

Ton/year

201

197

199

1%

Household-type trash*

Ton/year

N/A

169

171

1%

Production/employee

Kg/employee

N/A

201

201

0%

Waste

7•

* Includes food waste

Waste Management Overhaul

In 2011, waste management took a central place in the Group’s internal discussions. Although the Group had launched many waste reduction and recycling initiatives, individual departments managed several of them and no one had an overview of all the efforts. In the second half of 2011, the Group held discussions with those departments to centralize information and develop an overview of the situation.

100 | 132

N/A = not available

The overview is the first step in an audit of the Group’s waste management practices. This audit will ensure the tracking of all Group inputs through the entire product lifecycle, from the source through recovery and recycling. The audit will also serve as the basis for the next step: a 2012 redesign of existing waste management systems, including new multi-level sorting systems at AFD and PROPARCO headquarters in Paris. The third step will expand the sorting system to the field offices, adapting it to local conditions.

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Responsible Purchasing Acting on the truism that the best waste is that which we never produce, AFD Group attacks the source of the problem: its office-supply vendors reduce excess paper, plastic

Raise Awareness About “Green” Behavior

and cardboard packaging by delivering only bulk-wrapped

In addition to the steps described above, AFD and PROPARCO work to raise awareness – both among employees and the public – about issues central to sustainable development. In particular, the Group steers employees to reduce their environmental impacts in the ways mentioned above – managing waste and reducing paper consumption; it also educates employees about organic farming, protecting forests, and other current environmental issues.

The Group also organizes and participates in national and international events, such as France’s Sustainable Development Week in April and the European Week for Waste Reduction in November (see below). These efforts follow France’s national sustainable development strategy, along with the “exemplary state” action plan that the Grenelle Environment II recommended for public institutions and administrators.

products to the Paris headquarters. Similarly, rational and sustainable management of forests informs the Group’s office-supply purchasing policy. Thus 59% of the paper that the Group purchased for headquarters in 2011 was chlorine-free recycled ream paper, certified by the Forest Stewardship Council as originating in sustainably-managed forests. In addition, the Group requires all its electrical

7•

procedures manual, (3) integrating consistent environmental and social clauses in updated tenders, and (4) adequately monitoring suppliers’ compliance with these clauses.

and electronic equipment to carry an Energy Star label.

In 2011 and continuing into the first quarter of 2012, AFD Group began upgrading its purchasing department practices. Under the supervision of the Group head of internal environment, the new program extends the scope and systematizes procurement of sustainably and responsibly produced products, following guidelines set by France’s so-called “exemplary state” position paper of 200876.

The program covers four areas: (1) training buyers in the latest procurement standards and regulatory requirements, (2) updating the purchasing department’s administrative

Beyond raising internal awareness about waste, energy and natural resource management, AFD Group organizes conferences and debates about corporate responsibility

76. See full text of the circular (in French) on http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000020243534

101 | 132

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and sustainable development77. In 2011, it pursued partnerships with the French Club of Public Institutions for Sustainable Development; it also discussed environmental responsibility strategies in France’s overseas provinces, with property management companies in which the Group holds an equity interest.

7•

77. In French, Club des établissements publics pour le développement durable.

78. French Law No. 2010-788 of 12 July 2010.

102 | 132

The 2011 European Week for Waste Reduction During the 2011 European Week for Waste Reduction (EWWR), 21 November to 2 December, AFD and PROPARCO joined the French Environment and Energy Management Agency (ADEME) in a campaign to foster national and internal waste prevention awareness. Across Europe, the European Commission supports the EWWR campaign with its LIFE + program, a financing facility dedicated to protecting the environment.

The Group’s participation in the campaign is a response to France’s stringent “Grenelle Environment II”78 law, which emphasizes the broader responsibilities of waste producers. The law uses the so-called “polluter-pays” principle to increase consumer and corporate control of environmental and health risks at the end of a product’s life. During the EWWR week, the Group organized a first-of-itskind test project within AFD and PROPARCO; this aimed to focus employee attention on waste issues and to gauge their interest in environmental concerns and actions, such as the April 2012 Sustainable Development Week in France. ■

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Improvement Plan for 2012-2016 (1) Increase energy efficiency and use of renewables in Group buildings in 2012-2013.

•Increased use of PV panels and equipment at Group

headquarters.

•Completed upgrade of insulation at Group headquar-

ters.

•Studies on use of renewables for field offices.

•Use of high-efficiency and high environmental quality

7•

specifications in buildings purchased or renovated by the Group.

(2) Waste management in 2012-2013.

•Assessment of headquarters waste management, matching products with sources for recovery and recycling.

•Establishing guidelines for a multi-channel waste sor-

ting and management system at headquarters.

(3) Increase responsible purchasing in 2012-2013.

•Educating the Group purchasing unit about sustainable procurement.

103 | 132

•Updated procurement procedures and inclusion of corporate responsibility clauses in standard supplier contracts.

•Monitoring of supplier contracts with high environmental impacts.

•Developing means for micro- and small-size businesses to respond to Group tenders.

(4) Expansion of environmentally responsible projects in the field offices in 2012-2013.

•Improvement in field office ownership of environmental

stewardship issues; bolstering their performance (according to each national context) through more responsible purchasing, recycling, energy efficiency, renewable energy use, and carpooling.

(5) Communicate about internal environmental responsibility in 2012-2013.

•Raising employee awareness during France’s Sustainable Development Week and the European Week for Waste Reduction. ■

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â‚Ź

43

49 38

17

18

8. Our Method 2005

2006

2007

2008

Inspired by the Global Reporting Initiative Framework

T

2009

2010

o create the indicators for corporate responsibility actions presented in this inaugural report, AFD Group drew on guidelines set

out by the Global Reporting Initiative (GRI). All the information presented reflects the Group’s continuing commitment to improve transparency and, consequently, 104 | 132

2011

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Our method

stakeholders’ grasp of its environmental, social and governance responsibility practices. This report was first presented in early 2012 to three committees: the AFD Group Executive Board, the Management Board and Central Works Council. It was then relayed to all employees during the annual Group meeting, attended by field office directors as well as management and executives from AFD, PROPARCO, CEFEB and the reserve banks at the Group’s Paris headquarters.

The qualitative and quantitative data in this report was

8•

collected and consolidated as per the Group’s administrative procedures. According to the evaluation methodology recommended in the GRI guidelines, this self-declared assessment with no outside, third-party verification rates as a B-level application. AFD Group will use third-party verification for this 2011 corporate responsibility report in 2012.

All information in this report complies with French regulations, including provisions relating to the so-call Law on New Economic Regulations78, described in the introduction to this report and in the AFD Group registration document.

79. Nouvelles Régulations Economiques, or NRE.

105 | 132

For more information on the method used to create this report, please contact Jean-Louis Lecouffe on lecouffejl@ afd.fr or telephone France +331-53-44-30-46, or write him care of AFD, 5 Rue Roland Barthes, 75598 Paris CEDEX 12, France.

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Our method

Report Scope and Boundaries The economic and governance data contained in this report covers the following boundaries (parameters):

•French government officials.

•Direct and indirect beneficiaries of AFD and PROPARCO funding and other works;

•Suppliers for internal and external operations.

•Group employees.

The social and labor data cover these boundaries:

•Group employees, including international volunteers 8•

and those working for the overseas reserve banks (but not youth contract workers).

•Suppliers and business services providers.

The environmental data covers:

•Buildings in Paris and Marseilles occupied by AFD, PROPARCO and CEFEB.

•Buildings in France’s overseas provinces and in emer-

ging and developing countries occupied by the field offices or their employees.

106 | 132

In this report, whenever a measure or indicator did not cover the report boundary or scope for social or environmental data, the substitute boundary or scope was noted and the reason for a partial or different measure or indicator explained. For example, when 2011 quantitative data were not available at report publication time, 2010 data were used instead (and identified as such).

Reporting Period This report covers the period from January 1 to December 31, 2011, as well as some data and events from previous years that are useful for understanding AFD Group’s operating context and trends. This report also includes discussion of some important actions from early 2012.

contents

Our method

GRI Indicator Index

N°GRI

Performance Indicator

Reference

Boundary

1.1.

Statement from the most senior decision maker of the organization about the relevance of sustainability to the organization and its strategy.

Letter from the AFD Group CEO

Group

1.2.

Description of key impacts, risks, and opportunities.

Letter from the AFD Group CEO – and in each subject in Part 1 / Governance

Group

1. STRATEGY AND ANALYSIS

2. ORGANIZATIONAL PROFILE

2.1.

Name of the organization.

Annual reports

Group

2.2.

Primary brands, products, and/or services.

Annual reports

Group

2.3.

Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures.

Annual reports

Group

2.4.

Location of organization’s headquarters.

Annual reports

Group

2.5.

Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

Annual reports

Group

2.6.

Nature of ownership and legal form.

Annual reports

Group

8•

107 | 132

Comment

contents

Our method

GRI Indicator Index

8•

108 | 132

N°GRI

Performance Indicator

Reference

Boundary

2.7.

Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).

Annual reports

Group

2.8.

Scale of the reporting organization, including: • Number of employees; • Number of operations; • Net sales (for private sector organizations) or net revenues (for public sector organizations); • Total capitalization broken down in terms of debt and equity (for private sector organizations); and • Quantity of products or services provided.

• Total assets; • Beneficial ownership (including identity and percentage of ownership of largest shareholders); and • Breakdowns by country/region of the following: • Sales/revenues by countries/regions that make up 5 percent or more of total revenues; • Costs by countries/regions that make up 5 percent or more of total revenues; and • Employees.

Annual reports Registration document

Group

Comment

contents

Our method

GRI Indicator Index

N°GRI

Performance Indicator

Reference

Boundary

2.9.

Significant changes during the reporting period regarding size, structure, or ownership including: • The location of, or changes in operations, including facility openings, closings, and expansions; and • Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organizations).

Annual reports Registration document

Group

2.10

Awards received in the reporting period.

Annual reports

Group

3. REPORT PARAMETERS

8•

109 | 132

3.1.

Reporting period for information provided.

Part 7 / Method

Group

3.2.

Date of most recent previous report (if any).

Not applicable

Group

3.3.

Reporting cycle (annual, biennial, etc.)

Part 7 / Method

Group

3.4.

Contact point for questions regarding the report or its contents.

Part 7 / Method

Group

Comment

contents

Our method

GRI Indicator Index

N°GRI

Performance Indicator

Reference

Boundary

3.5.

Process for defining report content, including: • Determining materiality; • Prioritizing topics within the report; and • Identifying stakeholders the organization expects to use the report.

Include an explanation of how the organization has applied the ‘Guidance on Defining Report Content’, the associated Principles and the Technical Protocol – Applying the Report Content Principles.

Part 7 / Method

Group

3.6.

Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers).

See GRI Boundary Protocol for further guidance.

Part 7 / Method

Group

3.7.

State any specific limitations on the scope or boundary of the report. If boundary and scope do not address the full range of material economic, environmental, and social impacts of the organization, state the strategy and projected timeline for providing complete coverage.

Introduction to ESG reporting Part 7 / Method

Group

8•

110 | 132

Comment

contents

Our method

GRI Indicator Index

8•

111 | 132

N°GRI

Performance Indicator

Reference

Boundary

3.8.

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.

Not applicable

Group

3.9.

Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report.

In each subject

Group

3.10.

Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/ periods, nature of business, measurement methods).

Not applicable.

Group

3.11.

Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

Not applicable.

Group

Comment

The data measurement technique is indicated in each table or graph.

contents

Our method

GRI Indicator Index

8•

112 | 132

N°GRI

Performance Indicator

Reference

Boundary

3.12.

Table identifying the location of the Standard Disclosures in the report.

Identify the page numbers or web links where the following can be found: • Organizational Profile 2.1 – 2.10; • Report Parameters 3.1 – 3.13; • Governance, Commitments, and Engagement 4.1 – 4.17; • Disclosure of Management Approach, per category; • Core Performance Indicators; • Any GRI Additional Indicators that were included; and • Any GRI Sector Supplement Indicators included in the report.

Part 7 / Method / GRI Indicator Index

Group

Comment

contents

Our method

GRI Indicator Index

N°GRI

Performance Indicator

Reference

Boundary

3.13.

Policy and current practice with regard to seeking external assurance for the report. If not included in the assurance report accompanying the sustainability report, explain the scope and basis of any external assurance provided. Also explain the relationship between the reporting organization and the assurance provider(s).

Part 7 / Method / Third-party Validation

Group

Comment

4. GOVERNANCE, COMMITMENTS AND ENGAGEMENTS

8•

113 | 132

4.1.

Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight.

4.2.

Indicate whether the Chair of the highest governance body is also an executive officer (and, if so, their function within the organization’s management and the reasons for this arrangement).

Annual reports Registration document / Governance

Annual reports Registration document / Governance

Group

Also available online on the Légifrance website / Article R516.13 of the French Financial and Monetary Code.

Group

The presidents of AFD and PROPARCO do not have an executive function.

contents

Our method

GRI Indicator Index

N°GRI

Performance Indicator

Reference

Boundary

4.3.

For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.

Annual reports Registration document/ Governance

Group

4.4.

Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

Include reference to processes regarding: • The use of shareholder resolutions or other mechanisms for enabling minority shareholders to express opinions to the highest governance body; and • Informing and consulting employees about the working relationships with formal representation bodies such as organization level ‘work councils’, and representation of employees in the highest governance body.

Identify topics related to economic, environmental, and social performance raised through these mechanisms during the reporting period.

Registration document / Governance

Group

8•

114 | 132

Comment

contents

Our method

GRI Indicator Index

N°GRI

4.5.

Performance Indicator

Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance).

Reference

Registration document / Governance

Boundary

Comment

Group

Nonexecutive directors are unpaid government appointees, except for the chairman of the board of governors who receives compensation unrelated to the organization’s financial performance.

Incentive schemes for all AFD and PROPARCO employees, including senior managers and executives; scheme takes paper consumption into account.

Group

Details for AFD are also available from: State Council/ Commission for the transparency of political life; and the auditors’ report on regulated agreements.

Details for PROPARCO are available in an internal document: the Code for nonexecutive directors and members of the Advisory Investment Committee and Audit Committee which is signed by the directors

8•

4.6.

115 | 132

Processes in place for the highest governance body to ensure conflicts of interest are avoided.

Registration document / Governance

contents

Our method

GRI Indicator Index

N°GRI

Reference

4.7.

Process for determining the composition, qualifications, and expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity.

Registration document / Governance

4.8.

Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

Explain the degree to which these: • Are applied across the organization in different regions and department/units; and • Relate to internationally agreed standards.

Part 2 / Anti-fraud and Corruption Part 1 / ESG Policy Goals / Code of Business Ethics

8•

116 | 132

Performance Indicator

Boundary

Comment

Group

Nonexecutive directors are appointed by the French government.

Prudential supervisors require this information, including information directors’ backgrounds. If needed the French Court of Auditors verifies the information.

Internal Document: “Directors’ Code” PROPARCO applies corporate banking law in this process.

Group

Internal document: “IT Code” (And Code of Business Ethics, and Code of Conduct)

contents

Our method

GRI Indicator Index

N°GRI

4.9.

4.10.

8•

Performance Indicator

Reference

Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles. Include frequency with which the highest governance body assesses sustainability performance.

Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance.

Registration document / Governance

Boundary

Comment

Group

AFD publishes an annual communiqué for the board of governors. PROPARCO will do so in the near future.

Group

Some directors hold highlyqualified positions leading environmentally or socially oriented organizations, such as France Nature Environnement.

Commitments to external engagements

4.11.

117 | 132

Explanation of whether and how the precautionary approach or principle is addressed by the organization.

Article 15 of the Rio Principles introduced the precautionary approach. A response to 4.11 could address the organization’s approach to risk management in operational planning or the development and introduction of new products.

Annual report / Risk management

Group

AFD is certified by the French institute of independent internal It follows banking rules and regulations during project review and implementation.

PROPARCO has an audit committee to review internal controls.

Internal and portfolio risks are separated.

AFD Group created a Risk division.

contents

Our method

GRI Indicator Index

8•

118 | 132

N°GRI

Performance Indicator

4.12.

Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses. Include date of adoption, countries/operations where applied, and the range of stakeholders involved in the development and governance of these initiatives (e.g., multi-stakeholder, etc.).

Differentiate between non-binding, voluntary initiatives and those with which the organization has an obligation to comply.

Reference

Part 1 / Introduction to ESG Reporting Part 3Â /Stakeholder Engagement/ Promoting Corporate Governance in the Private Sector / Box

Boundary

Group

Comment

contents

Our method

GRI Indicator Index

N°GRI

Performance Indicator

Reference

Boundary

4.13.

Memberships in associations (such as industry associations) and/or national/ international advocacy organizations in which the organization: • Has positions in governance bodies; • Participates in projects or committees; • Provides substantive funding beyond routine membership dues; or • Views membership as strategic. This refers primarily to member-ships maintained at the organizational level

Part 3 / Stakeholder Engagement / Promoting Corporate Governance in the Private Sector/ Encadré

Group

Part 3 / Stakeholder Interactions Part 3 / Stakeholder Engagement / Stakeholder Identification

Group

Stakeholder engagement

8•

4.14.

119 | 132

List of stakeholder groups engaged by the organization, e.g.

• Civil society; • Customers; • Employees, other workers, and their trade unions; • Local communities; • Shareholders and providers of capital; and • Suppliers.

Comment

contents

Our method

GRI Indicator Index

N°GRI

Performance Indicator

Reference

Boundary

4.15.

Basis for identification and selection of stakeholders with whom to engage. This includes the organization’s process for defining its stakeholder groups, and for determining the groups with which to engage and not to engage.

Part 3 / Stakeholder Engagement

Group

4.16.

Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

This could include surveys, focus groups, community panels, corporate advisory panels, written communication, management/union structures, and other vehicles. The organization should indicate whether any of the engagement was undertaken specifically as part of the report preparation process.

Part 3 / Stakeholder Engagement / Accountability

Group

4.17.

Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.

Part 3 / Stakeholder Engagement

Group

8•

120 | 132

Comment

Engagement with the NGO, Coordination Sud, is a notable example.

contents

Our method

GRI Indicator Index | Economic performance

N°GRI

Performance Indicator

Reference

Boundary

EC2

Financial implications and other risks and opportunities for the organization’s activities due to climate change.

Part 6 / Managing AFD Group’s Environmental Footprint / Carbon Credit Offsets

Group

EC3

Coverage of the organization’s defined benefit plan obligations.

Part 5 / Our Work Force/ Working Conditions

Group

Comment

Disclosure on Management Approach – Economic p. 10

8•

EC4

Significant financial assistance received from the government.

Annual reports Registration document

Group

Annual report / Our Business Activity / Potential impacts of our financing decisions

Group

Direct and indirect economic impacts

EC9*

121 | 132

Understanding and describing significant indirect economic impacts, including the extent of impacts.

The French government gave €650 million to AFD Group in 2011 to subsidize external aid operations, not internal operations.

AFD carefully assesses all grant project applications when distributing these funds, particularly with regard to the purpose of a project.

contents

Our method

GRI Indicator Index | Environnemental performance N°GRI

Performance Indicator

Reference

Boundary

AFD and PROPARCO headquarters

Disclosure on Management Approach – Environment p. 12 Materials

EN1

Materials used by weight or volume.

Part 6 / Managing AFD Group’s Environmental Footprint/ Waste Management Overhaul

EN2

Percentage of materials used that are recycled input materials.

Part 6 / Paper Consumption table

AFD and PROPARCO headquarters

EN3

Direct energy consumption by primary energy source.

Part 6 / Using More Renewable Energy

AFD and PROPARCO headquarters

EN5

Energy saved due to conservation and efficiency improvements.

Part 6 / Using More Renewable Energy

AFD and PROPARCO headquarters

EN6*

Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.

Part 6 / Using More Renewable Energy

Group

EN7*

Initiatives to reduce indirect energy consumption and reductions achieved.

Part 6 / Using More Renewable Energy

Group

Energy

8•

122 | 132

Comment

contents

Our method

GRI Indicator Index | Environnemental performance N°GRI

Performance Indicator

Reference

Boundary

Total water withdrawal by source.

Part 6 / Measures

AFD and PROPARCO headquarters

Strategies, current actions, and future plans for managing impacts on biodiversity.

Part 6 / Using More Renewable Energy/ HQ Operations

Group

Water

EN8

Biodiversity

EN14

Emissions, effluents and waste

8•

123 | 132

Part 6 / Business Travel and Measures

Group

EN16

Total direct and indirect greenhouse gas emissions by weight. (tCO2e)

EN18

Initiatives to reduce greenhouse gas emissions and reductions achieved.

Part 6 / Carbon Credit Offsets

Group

EN22

Total weight of waste by type and disposal method.

Part 6 / Waste Management Overhaul and Measures

AFD and PROPARCO headquarters

EN26

Initiatives to mitigate environmental impactsof products and services, and extent of impact mitigation.

Part 6

Group

EN29*

Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the work force.

Part 6

Group

Comment

contents

Our method

GRI Indicator Index | Labor practices and decent work N°GRI

Performance Indicator

Reference

Boundary

Disclosure on Management Approach – Practices and decent work p. 13 employment

LA1

Total work force by employment type, employment contract, and region.

Part 5 / ESG Scope and Objectives

Group

LA2

Total number and rate of new employee hires and employee turnover by age group, gender, and region.

Part 5 / Employee turnover

Group

LA3*

Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation.

Part 5 / Remuneration

Group

labor / management relations

8• LA4

Percentage of employees covered by collective bargaining agreements.

Part 5 / Employee representatives

Group

LA5

Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements.

Part 5 / Employee representatives

Group

Part 5 / Health and Safety

Group

Occupational health and safety

LA8

124 | 132

Education, training, counseling, prevention, and risk-control programs in place to assist work force members, their families, or community members regarding serious diseases.

Comment

contents

Our method

GRI Indicator Index | Employment N°GRI

Performance Indicator

Reference

Boundary

LA9

Health and safety topics covered in formal agreements with trade unions.

Part 5 / Health and Safety

Group

LA11*

Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

Part 5 / Professional training

Group

LA12*

Percentage of employees receiving regular performance and career development reviews.

Part 5 / Building Sustainable Career Paths

Group

Training and education

8•

125 | 132

Comment

contents

Our method

GRI Indicator Index | Human rights

N°GRI

Performance Indicator

Reference

Boundary

Comment

Part 2 / Anti-fraud and corruption

Group

NA

Group

No incidents.

NA

Group

No incidents.

Group

Updating of procurement procedures is planned for 2012, following a responsible purchasing policy.

Disclosure on Management Approach – Human Rights p. 14 Procurement and investment practices

HR1

Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening.

Non-discrimination

HR4

8•

Total number of incidents of discrimination and corrective actions taken.

Freedom of association and collective bargaining

HR5

Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights.

Child labor prohibition

HR6

126 | 132

Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor.

Part 2 / Ethics Code Charte Ethique

contents

Our method

GRI Indicator Index | Human rights

N°GRI

Performance Indicator

Reference

Boundary

HR2

Percentage of significant suppliers, contractors, and other business partners that have undergone human rights screening, and actions taken.

Part 6 / Responsible Purchasing Policy

Group

HR7

Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor.

Part 6 / Responsible Purchasing Policy

Group

Comment

Forced or compulsory labor abolition

Security practices

Part 5 / Managing AFD Group’s Environmental Footprint/ Security

Group

In 2010, security procedures were implemented in the field offices. Headquarters has a security procedure that involves 65 director, 34 employees in the employee health and safety department, and contractors for building security.

NA

Group

No incidents.

8• HR8*

Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations.

Indigenous rights

HR9*

127 | 132

Total number of incidents of violations involving rights of indigenous people and actions taken.

contents

Our method

GRI Indicator Index | Society

N°GRI

Performance Indicator

Reference

Boundary

Part 4 /

Group

Comment

Disclosure on Management Approach – Society p. 15 Communities

SO1

Percentage of operations with implemented local community engagement, impact assessments, and development programs.

Corruption

8•

S02

Percentage and total number of business units analyzed for risks related to corruption.

Part 2 /

Group

S03

Percentage of employees trained in organization’s anti-corruption policies and procedures.

Part 2 / Anti-corruption / Online learning

Group

S04

Actions taken in response to incidents of corruption..

All projects are subject to funding agreements that contain strict anticorruption clauses, politically exposed persons checks, anti-terrorism financing and money-laundering controls.

Group

No corruption incidents.

Group

Contribution to debates and progress through knowledge production, particularly conferences and debates about sustainable development.

Public policies

S05

128 | 132

Public policy positions and participation in public policy development and lobbying.

Part 3 / Stakeholder Engagement / Knowledge production

contents

Our method

GRI Indicator Index | Society N°GRI

Performance Indicator

Reference

Boundary

Comment

S06*

Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.

RAS

Group

No contributions.

Internal controls and audits ensure none.

Anti-competitive behavior

S07

8•

NA

Group

No legal actions.

Systematic application of European Union rules for tenders.

Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations.

NA

Group

No sanctions or fines.

Compliance

S08

129 | 132

Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes.

contents

Our method

GRI Indicator Index | Product Responsibility Performance

N°ISO

N°GRI

Performance Indicator

Reference

Boundary

Comment

Part 4 / Project performance evaluation

Group

The health and safety aspects of external aid operations are included in ex-ante evaluations.

Disclosure on Management Approach – Product Responsibility p. 16 Consumer health and safety

PR1

8•

130 | 132

Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.

contents

Our method

GRI Indicator Index | Financial services performance supplement N°GRI

Performance Indicator

Reference

Boundary

Comment

Product portfolio

8•

131 | 132

FS2

Procedures for assessing and screening environmental and social risks in business lines.

Part 4 / Project performance evaluation

Group

FS4

Process(es) for improving staff competency to implement the environmental and social policies and procedures as applied to business lines.

Part 4 / Environmental & Social Support

Group

FS5

Interactions with clients/investees/ business partners regarding environmental and social risks and opportunities.

Part 4 / Environmental & Social Support

Group

FS6

Percentage of the portfolio for business lines by specific region, size (e.g. micro/ SME / large) and by sector.

Annual reports

Group

Broken down by region.

FS7

Monetary value of products and services designed to deliver a specific social benefit for each business line broken down by purpose.

Group

Plans underway to categorize all aid operations following these criteria.

FS8

Monetary value of products and services designed to deliver a specific environmental benefit for each business line broken down by purpose.

Group

Plans underway to categorize all aid operations following these criteria.

Part 4 / Examples

Part 4 / Examples

contents

Our method

Abbreviations ADEME: Agence de l’Environnement et de la Maîtrise de l’Energie / Environment and Energy Management Agency (France)

LED: Light Emitting Diode NGO: Nongovernmental Organization OECD Organisation for Economic Co-operation and Development

CEFEB: Centre d’Etudes Financières, Economiques et Bancaires / Center for Financial, Economic and Banking Studies

OHSAS: Occupation Health and Safety Assessment Series

EDFI: European Development Finance Institutions

PFCE: Plateforme pour le Commerce Equitable / Fair Trade Platform

E&SS: Environmental and Social Support FGEF: French Global Environment Facility GERES: Groupe Energies Renouvelables, Environnement et Solidarités / Renewable Energy, Environment and Solidarity Group GHG: Greenhouse gas GRI: Global Reporting Initiative HEQ: High Environmental Quality ILO: International Labour Organisation IMS: Institut du Mécénat de Solidarité / Institute for Solidarity Giving

132 | 132

KfW: Kreditanstalt für Wiederaufbau Bankengruppe

AFD: Agence Française de Développement / French Development Agency

EIB: European Investment Bank

8•

ISO: International Organization for Standardization

PCF: People’s Credit Fund

PROPARCO: Société de Promotion et de Participation pour la Coopération Economique / Investment and Promotions Company for Economic Cooperation SER: Social and Environmental Responsibility UN: United Nations