IFC Board Approves Action Plan for CAO Investigation Related to IFC’s Investment in Awba in Myanmar

​Washington, June 17, 2024 — The IFC Board of Executive Directors approved IFC's Management Action Plan in response to an investigation of IFC's investment in Myanma Awba Group Company Ltd (Awba) in Myanmar conducted by the Compliance Advisor Ombudsman (CAO), IFC's independent accountability mechanism.

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 2019 an existing pesticide plant that allegedly caused harm was closed. 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.

CAO received a complaint in 2017 from a local resident and other villagers living near the existing pesticide plant and agrochemical facility under construction. The complainants cited environmental and social concerns including contamination of local water sources, air pollution, lack of consultation, inadequate grievance procedures, and impacts on livelihoods. 

CAO's investigation found that, contrary to IFC's Sustainability Policy requirements, IFC's environmental and social due diligence prior to investing in Awba was not commensurate with the level of risks and impacts arising from the company's operations. IFC did not have sufficient information to accurately identify E&S risks, impacts, and mitigation measures regarding the two plants, identify local stakeholders who might be affected by their construction and operation, or determine whether the client could meet IFC's Performance Standards over a reasonable period of time. During supervision, IFC did not ensure its client's compliance with Performance Standards requirements on environmental, health and safety (EHS) or stakeholder engagement related to project risks and impacts, including with vulnerable groups. CAO's report provides recommendations for IFC to address shortcomings in stakeholder engagement and disclosure of E&S information. CAO also makes institutional-level recommendations to help IFC prevent and appropriately manage environmental and social risks in future operations.

IFC developed the Board-approved Management Action Plan (MAP) without being able to to consult the complainants, given the security situation in Myanmar. In this context, the MAP does not include any project-specific actions at this time. The MAP outlines one systemic area for improvement in response to CAO's recommendations: to develop and deliver 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.

"CAO appreciates IFC's recognition of systemic improvements needed to manage investment risk. Environmental and social project risks and impacts should be carefully scrutinized and communicated to the Board before IFC invests and monitored closely afterwards. We also hope that future stakeholder engagement on project-level actions is possible once the situation in Myanmar improves," said Janine Ferretti, CAO's Director General.

 Due to security and contextual 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.   

More information about this case, including the CAO Investigation Report and IFC Management Action Plan, are available here. Note, all reports related to this case have been redacted to remove personally identifying information due to the security situation and reprisal risk in Myanmar. 

More information about this case is available here: 

• Case Webpage
• Compliance Investigation Report
• Management Response and Management Action Plan

About CAO

The Compliance Advisor Ombudsman (CAO) is the independent accountability mechanism of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), members of the World Bank Group. CAO's mandate is to address complaints from people affected by IFC and MIGA projects in a manner that is fair, objective, and constructive, improve environmental and social outcomes, and foster accountability and learning to reduce the risk of harm to people and the environment. For more information, visit www.cao-ombudsman.org.

About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org