In 2013, IFC supported the expansion of Axzon in Ukraine, a pig farming and meat processing group also operating in Poland and Russia. Through its Ukrainian subsidiary Danosha, the company managed at the time approximately 10 pig production farms, a biogas plant, and more than 11,000 hectares of agricultural land in the Ivano-Frankivsk region of western Ukraine. IFC exited the project in 2021.

In February 2014, members of communities from Deliyevo, Sivka-Voynylivska, and Lany in the Halych and Kalush districts of Ukraine’s Ivano-Frankivsk region, filed a complaint to CAO, with support from the National Ecological Centre of Ukraine (NECU). The complainants raised concerns about odors and land and water pollution linked to the project’s manure management, as well as improper land use and compensation. They also cited insufficient information disclosure and consultation, impacts on road infrastructure, and environmental effects on natural parks and surrounding areas. Additionally, they alleged that the project violated national law and IFC Performance Standards (PS).

In March 2014, CAO found the complaint eligible and completed an assessment in August 2014. During CAO’s assessment, the parties agreed to engage in a CAO-led voluntary dispute resolution process to address the issues raised in the complaint. The Assessment Report is available in English and Ukrainian. 

During the dispute resolution process, complainants from the villages of Dovge, Poberezhia and Strygansty were able to address their concerns directly with Danosha without further CAO involvement. The remaining issues were addressed through three simultaneous mediation processes: one with an individual large landowner, another with representatives from Sivka-Voynylivska and Moshkivtsi, and a third with representatives from Deliyeve, Lany and Vodnyky. The first process, the landowner dispute, was resolved in November 2014 through a confidential signed agreement.

In August 2016, the remaining two mediation processes concluded without an agreement. In October 2016, CAO held separate final closure meetings with the parties to solicit feedback and questions, and to explain next steps in the CAO complaint process. In March 2017, CAO issued a Conclusion Report (available in English and Ukrainian) summarizing the dispute resolution process. As the two remaining parties were unable to reach an agreement, in accordance with CAO’s Operational Guidelines, the case was transferred to CAO’s Compliance function for appraisal of IFC’s environmental and social performance.

In April 2018, CAO completed its compliance appraisal and determined that a compliance investigation was warranted. The appraisal identified concerns regarding IFC’s review and supervision of the client’s Environmental and Social Management System (ESMS), including measures to detect and mitigate environmental pollutants. It also raised questions about IFC’s assessment of Environmental and Social Impact Assessment (ESIA) documentation, specifically around water extraction, carrying capacity and manure management, as well as related consultation and disclosure practices. The Appraisal Report is available in English and Ukrainian.

In July 2025, CAO finalized its investigation (available in English and Ukrainian) and submitted its report to the IFC Board. During the investigation, CAO found that IFC’s pre-investment environmental and social (E&S) due diligence was not commensurate with the project’s risks and impacts, particularly, there is no indication of the review of ESIAs for new developments or environmental audits for existing farms. CAO also found that IFC did not adequately address community health risks related to manure and wastewater management, potential air and water pollution, or ensure that sufficient opportunities for consultation and access to information were provided by the client.

Furthermore, CAO concluded that IFC’s supervision, particularly during the first five years of implementation, reinforced early gaps in appraisal, with weak monitoring of the client’s practices and limited follow-up on pollution prevention and community concerns. The investigation identified indications of harm to local residents, including excessive odor and potential groundwater impacts. While CAO noted some supervisory improvements over time, it found that IFC did not adequately verify that the client’s practices met Performance Standards (PS) or good international industry practice (GIIP).

In response to CAO’s investigation and the recommendations included in the report, IFC developed a Management Action Plan (Available in English and Ukrainian) which was approved by the IFC Board in October 2025. At the project level, IFC offered advisory services to its former client to address the concerns raised, although the company declined further engagement. At the systemic level, IFC updated its Environmental and Social Review Procedures (ESRP) and staff guidance to strengthen due diligence and supervision for similar corporate investments involving multiple assets.

CAO and IFC issued a joint press release following Board approval of the MAP.