Compliance Advisor Ombudsman

Project Overview 

IFC has an active project with Alto Maipo SpA in Chile. According to IFC, the project comprises the construction of two run-of-the-river hydroelectric facilities connected in series with a combined capacity of 531 MW for the purposes of providing baseload electricity to the Chilean Central Inteconnected Grid or SIC. AES Gener is the IFC Sponsor for this project. 

CAO received a complaint filed by Sandra Atisha, a former worker with the AES Gener Foundation and resident of the Cajon del Maipo, whose work focused on the Alto Maipo project. The complaint alleges that while she was working for the company, she was sexually harassed by one of her colleagues. The complainant raises concerns with regards to the appropriateness of the company’s response to her reporting the harassment internally, and thus to the proper functioning of the company’s internal grievance mechanism.

CAO Action

CAO found the complaint eligible for further assessment in August 2017. During the assessment, there was a lack of consensus amongst the parties to engage in a CAO facilitated dispute resolution process. Hence, in accordance with CAO’s Operational Guidelines, the case was referred to CAO’s Compliance function.

CAO concluded its compliance appraisal in May 2018, and decided that an investigation was warranted in relation to the issues raised in the Alto Maipo-02 complaint. The appraisal noted that CAO has generally not initiated compliance investigations in response to individual employment related disputes. In this case, however, IFC project documentation indicates concerns regarding other allegations of sexual harassment, at the level of the company and contractors, in addition those brought by the complainant. CAO has identified questions as to IFC’s application of requirements that the “client will take measures to prevent and address harassment, intimidation, and/or exploitation, especially in regard to women” (PS2, para. 15). Given the issues raised by the complainant, CAO also has questions as to the application of PS2 requirements regarding the handling of worker grievances (para. 20).

The case was merged with the Alto Maipo-01 complaint for the purpose of the compliance investigation. CAO published the Terms of Reference for this investigation in August 2018. 

In June 2021, CAO finalized its compliance investigation in relation to the Alto Maipo complaints 01 and 02 and the investigation report was sent to IFC for formal response.

CAO's investigation found that IFC’s pre-investment review was generally consistent with the requirements of the IFC Sustainability Policy to conduct a review “appropriate to the nature and scale of the activity and commensurate with the level of E&S risks and/or impacts”.  However, in relation to specific issues raised by the complainants, IFC did not ensure the client’s compliance with the Performance Standards requirements. These include lack of consultation with affected communities during the development of the cumulative impact assessment, lack of a comprehensive project’s alternative analysis, and lack of evidence to support the conclusion that the project enjoyed broad community support. 

During supervision of the project, CAO found that the adoption of the adaptive management approach allowed IFC to identify and address several issues in accordance with good international industry practice (GIIP). These include waste rock disposal; prevention of impacts on the arriero community; preventive actions on potential impacts on protected areas and assessment of risks to avoid damages to sites of cultural heritage value during the time of IFC’s involvement in the project. However, the adaptive management was not applied systematically to all project’s aspects. Further, CAO finds that such approach should not substitute projects’ E&S impact assessment. CAO found that IFC was not in compliance with its Sustainability Policy in relation to the following issues: Infiltration of groundwater during tunneling, sediment transport, biodiversity protection, air quality, noise, tourism and recreational activities and IFC’s disclosure of information.

In relation to the second complaint, CAO found that during pre-investment IFC, and the lenders took steps to ensure themselves that the client had HR policies and a grievance mechanism in place. CAO finds that IFC’s supervision did not ensure that the client took appropriate measures to prevent and address harassment, intimidation, and/or exploitation, especially with regard to women, as required by Performance Standard 2 (para. 15). CAO further finds that IFC’s supervision did not ensure that the client had in place a grievance mechanism for workers of the company and its contractors that was sufficient to address concerns promptly, using an understandable and transparent process, including in relation to the case of sexual harassment brought by the CAO complainant.

On September 16, 2021 the IFC Board of Directors cleared CAO's investigation and IFC’s official response, including a Management Action Plan.

Status

In accordance with the CAO Policy, CAO will monitor the effective implementation of the actions set out in IFC’s Management Action Plan.  All case reports are available under "View Documents" below.

Status as of September 22, 2021