Philippines: Rizal Commercial Banking Corporation (RCBC)-01

Date Filed
11 Oct 2017
Status
Open
Phase
Compliance
Country
Philippines

Case Tracker

Eligibility
Eligibility
Assessment
Assessment
Dispute Resolution
Compliance
Appraisal
Investigation
CURRENT Status
Investi3gation (COMPLIANCE)

Complaint Overview

Complainant

Local community members (the complainants) supported by PMCJ, IDI and BIC (NGOs)

Concerns

Climate change, inadequate compensation, health harms, loss of livelihoods, environmental and social management system

Cross-Cutting Issues
Risk Management Resource Efficiency Community Health and Safety Land Resettlement Biodiversity Indigenous Peoples Air Land Water Climate Change Impacts Children Women Loss of Life Loss of Livelihoods Access to Information Policy

Project Information

Region
East Asia & the Pacific
Institution
IFC
Name & Number
Rizal Commercial Banking Corporation (RCBC) 30235, 32853, 34115, 37489
Company
Rizal Commercial Banking Corporation (RCBC)
Sector
Financial Markets
Department
Finance and Markets
Category
FI
Commitment

$30m C loan; $149m equity; $75m bond

Synopsis

Project Overview

Rizal Commercial Banking Corporation (RCBC or “the client”) is a large universal bank in the Philippines, providing a wide range of banking and other financial products and services, including commercial and retail banking, credit cards, asset management, and treasury and investment banking products and services. IFC has made multiple equity and loan investments to support RCBC. IFC states that its investments aim at supporting RCBC’s growth in the areas of microfinance, small and medium-sized enterprises, and retail banking, as part of IFC’s strategy to support the Philippine financial markets through investments in local financial institutions that play a key role in providing access to finance to underserved sectors.

Complaint

In October 2017, the national NGO Philippine Movement for Climate Justice (PMCJ), in collaboration with Inclusive Development International (IDI) and Bank Information Center Europe (BIC Europe), submitted a complaint on behalf of several communities living in the proximity of 19 active or proposed coal-fired power plants, located in different parts of the country. The complaint alleges that RCBC has provided financial support to the plants, either directly or through companies that own or operate them. The complaint raises several concerns related to the development and operation of the plants, in the form of localized environmental and social issues, such as impacts on biodiversity, health harms caused by air pollution, inadequate compensation for physical displacement, loss of livelihoods, and violation of indigenous peoples’ rights. Further, the complaint raises issues about climate change impacts on the Philippines and its residents, including the complaint signatories, as well as issues related to RCBC’s environmental and social risk management system, lack of consultation and information about the projects and their impacts, and absence of grievance mechanisms for the affected communities. Finally, the complaint raises issues about IFC, asserting that there is a lack of transparency regarding IFC’s financial intermediary portfolio, and IFC’s monitoring and supervision of RCBC’s environmental and social performance.

CAO Action

CAO determined the complaint eligible in relation to RCBC’s support to 11 coal-fired power plants. Between November 2017 and April 2019, CAO conducted an assessment of the complaint to further understand the issues raised, the client’s response, and whether there was interest between the parties for a CAO-facilitated dispute resolution process. None of the complainant groups reached agreement to engage in a dispute resolution process with the owners of the respective affected coal-fired power plants. Therefore, in accordance with CAO’s Operational Guidelines, the complaint was transferred to CAO’s compliance function.

CAO completed a compliance appraisal of the complaint in October 2019. Following a review of IFC’s documentation, CAO has questions related to application of IFC’s E&S standards to this investment, in particular: (a) whether IFC’s pre-investment E&S review of the client was commensurate to risk and established a realistic expectation that the client would meet IFC’s E&S requirements within agreed timeframes; (b) whether IFC’s supervision of the client, including IFC’s processing of additional investments, included adequate consideration of client implementation of IFC’s E&S requirements and the developing E&S risk profile of the client’s lending; (c) whether IFC responded adequately to project-level E&S concerns raised in the complaint to CAO; and, (d) whether IFC’s approach to its investment was consistent with Sustainability Policy commitments to work with the private sector to address climate change.

Accordingly, CAO has decided to conduct a compliance investigation in response to this complaint.  The scope of the investigation is further defined in terms of reference, which are available at the link below.

Status

CAO will conduct a compliance investigation in response to this complaint.  Terms of reference for the investigation are available at the link below.

Updated as of November 19, 2019

Case Documents

  • Dispute Resolution

    Complaint
    Letter of Complaint
    Oct 11, 2017
    English
    Letter of Complaint
    Assessment Report(s)
    CAO Assessment Report - Philippines/ RCBC-01
    Apr 01, 2019
    English
    CAO Assessment Report - Philippines/ RCBC-01
    CAO Assessment Report - Philippines/ RCBC-01
    Apr 01, 2019
    Filipino
    CAO Assessment Report - Philippines/ RCBC-01
    IFC Response to CAO Assessment Report - Philippines/ RCBC-01
    Apr 17, 0219
    English
    IFC Response to CAO Assessment Report - Philippines/ RCBC-01
  • Appraisal Report(s)
    CAO Appraisal Report - Philippines/ RCBC-01
    Oct 02, 2019
    English
    CAO Appraisal Report - Philippines/ RCBC-01
    CAO Appraisal Report - Philippines/ RCBC-01
    Sep 27, 2019
    Filipino
    CAO Appraisal Report - Philippines/ RCBC-01
    Audit Report(s)
    ToR for Philippines/ RCBC-01 Investigation
    Nov 19, 2019
    English
    ToR for Philippines/ RCBC-01 Investigation