IFC has an active project with Myanma Awba Group Company Ltd., a group of companies in Myanmar focused on development in the agricultural sector. IFC is committing a USD$ 10 million Convertible C Loan for the expansion of Awba’s core business, including the construction of additional fertilizer warehouse storage facilities and fertilizer distribution stations, the acquisition of a second chemical license for Myanma Awba Group’ to construct a new agrochemical formulation plant in an industrial zone next to the existing Government Hmawbi pesticide factory,  equipment  (bottling and packaging machinery),  warehouse storage facilities and working capital (ESRS).

The complaint was submitted to CAO by a local individual on behalf of himself and a local protesting group living in the vicinity of Awba’s new agrochemical plant. The complaint raises 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 for further assessment in November 2017 and initiated its assessment. During CAO’s assessment of the complaint, the parties agreed to engage in a dialogue process to address the issues. The CAO facilitated dispute resolution process began 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 to CAO’s Compliance function for appraisal of IFC’s environmental and social performance in June 2020. 

In October 2020, CAO completed a compliance appraisal of the case and concluded that an investigation was warranted about the issues raised in the complaint. CAO’s appraisal raises questions concerning IFC’s E&S review and supervision of the project, particularly about the two pesticide plants, MPI and HAIC: 

i. whether IFC’s pre-investment E&S review of the client was commensurate with the level of E&S risk and impacts arising from its operations, particularly as relates to the MPI joint venture; 

ii. how IFC assessed and mitigated historical pollution from the MPI joint venture against PS3 requirements; 

iii. how IFC assessed and mitigated residual impacts when the client exited the MPI joint venture in 2018, given the requirements of PS1;

iv. how IFC assured itself of the environmental, health, and safety (EHS) performance of the client’s MPI and HAIC operations, including air emissions and water contamination, as well as impacts on community health against PS3 and PS4 requirements, EHS Guidelines, and Myanmar law requirements;

v. how IFC assured itself of the client’s compliance with PS1 requirements for disclosure, consultation, and grievance handling; 

vi. whether IFC disclosed relevant E&S project information, specifically, the initial 2015 EIA for the HAIC plant following Access to Information Policy requirements; and

vii. whether IFC adequately assessed and retained documentation to justify its determination that PS7 (Indigenous Peoples) did not apply to this investment and/or that PS1 requirements on vulnerable groups were properly applied given ethnic minorities in the project area. 

In reaching this decision, CAO has considered the seriousness of the concerns regarding project impacts raised in the complaint, along with the range of related compliance questions identified in this appraisal. 

The appraisal report is available in English, with the Burmese translation forthcoming.