In 2016, IFC invested US$10 million in Awba, a leading producer and distributor of herbicides, fungicides, insecticides, and fertilizers in Myanmar. Awba used IFC’s loan to construct a new agrochemical formulation plant and fertilizer distribution stations, as well as provide for warehouses, equipment, and working capital. In March 2021, following the military coup in Myanmar, Awba fully prepaid the loan to IFC, ending IFC’s direct involvement with the project. IFC maintains minor indirect exposure to Awba through its microfinance subsidiary. Currently the World Bank Group has paused all disbursements to Myanmar.

In October 2017, CAO received a complaint from a local resident and other villagers living near Awba’s operations citing concerns about the project's impact on local water sources, including creeks and artisanal wells; lack of consultation with local communities prior to and during the construction of the factory; and lack of information disclosure regarding the project. Additionally, the complaint questions the project permitting process and compliance with IFC policies and standards. The complaint also raises concerns regarding health impacts on local community members who worked in the existing government pesticide factory adjacent to the company’s newly constructed plant.

CAO found the complaint eligible in November 2017 and initiated an assessment. During the assessment, the parties agreed to engage in a dispute resolution process to address the issues, which commenced in March 2018. However, the dialogue process broke down as there was no longer a clear and unanimous mandate from any of the communities to proceed with dispute resolution. In accordance with CAO’s Operational Guidelines, the case was referred in June 2020 to CAO’s Compliance function for appraisal of IFC’s environmental and social performance.

In October 2020, CAO completed its compliance appraisal, which raised questions concerning IFC’s environmental and social review and supervision of the project, particularly in relation to the two pesticide plants, the existing plant, Myanmar Pesticide Industry (MPI) and the proposed facility, Hmawbi Agricultural Inputs Complex (HAIC). CAO concluded that an investigation was warranted. CAO’s appraisal report is available in English and Burmese, and includes the Terms of Reference defining the scope of the investigation.

In September 2023, CAO completed its compliance investigation and submitted its report to the Board. The report identified shortcomings in IFC's pre-investment due diligence and supervision of Awba’s agribusiness, finding them materially non-compliant with IFC’s Sustainability Framework. The due diligence was found lacking in comprehensively assessing the environmental and social (E&S) risks and impacts of Awba's operations. Specifically, it failed to properly evaluate the E&S impacts of the MPI plant and the proposed HAIC agrochemical manufacturing facility, identify communities that may be adversely impacted, including vulnerable populations, and determine Awba's ability to meet IFC Performance Standards (PS).

During project supervision, IFC did not ensure Awba's compliance with the PS related to environmental, health, and safety (EHS) and stakeholder engagement. This includes inadequate oversight of air and water pollutants and community health and safety measures. Additionally, IFC did not adequately assess or engage with vulnerable groups or Indigenous Peoples potentially affected by the project.

The investigation also found noncompliance with the application of IFC’s Access to Information Policy, as it failed to disclose key environmental impact assessments and update the implementation status of the Environmental and Social Action Plan (ESAP).

Regarding the assessment of harm, the investigation found that due to the IFC's non-compliance, there is a lack of data to fully verify the allegations of harm from Awba's operations. However, CAO did find harm was caused to complainants due to the non-disclosure of information and lack of engagement, as it disempowered communities by hindering community understanding and involvement in the project's design and development stages. CAO acknowledges possible harm related to water and air pollution, road access issues, and the impacts on the livelihoods of ethnic groups. 

On June 13, 2024, IFC’s Board approved IFC’s Management Action Plan (MAP) in response to CAO’s investigation. The MAP outlines one systemic area for improvement in response to CAO's recommendations, related to the development and execution of a training module to guide IFC staff in managing changes to investment scope or client assets that occur between E&S due diligence and disbursement. 

IFC developed the MAP without being able to consult the complainants, given the security situation in Myanmar.

Due to contextual and reprisal risks, CAO will maintain the monitoring process open for five years to allow for the possibility of engagement with complainants and potential implementation of project-level actions once the security situation improves. This is documented in a joint press release issued by IFC and CAO on June 17, 2024.

CAO's Investigation Report is available in English and Burmese; and IFC's Management Action Plan is available in English and Burmese. 

Note: All reports related to this case have been redacted to remove personally identifying information due to the security situation and the risk of reprisal in Myanmar.