“International Finance Corporation (IFC) clients often rely on contractors for the implementation of their financed projects. Many clients, however, find it challenging to ensure their contractors implement the necessary environmental and social (E&S) requirements for their projects. As established in Performance Standard (PS) 1: Assessment and Management of Environmental and Social Risks and Impacts, paragraphs 2 and 14, IFC clients are responsible for managing their contractors’ E&S performance: “Contractors retained by, or acting on behalf of the client(s), are considered to be under direct control of the client and not considered third parties. . .” and the E&S management “. . . programs may apply broadly across the client’s organization, including contractors and primary suppliers over which the organization has control or influence . . .” It is the client’s responsibility to comply with IFC Performance Standards on Environmental and Social Sustainability (PSs); relevant World Bank Group (WBG) Environmental, Health, and Safety (EHS) Guidelines requirements; loan agreement commitments; Environmental and Social Impact Assessment (ESIA) requirements; local laws and regulations; and permits and standards; and to ensure that all contractors providing any type of services to the client duly follow these requirements throughout the duration of the contract. Clients are aware of this responsibility. However, it can be challenging for them to manage the E&S performance of contractors and subcontractors who are often perceived as “separate entities” or “third parties” not related to the client or to their organization. This Good Practice Note (GPN) is aimed at helping clients implement sound, consistent, and effective approaches in compliance with IFC requirements, to manage the E&S performance of their contractors, subcontractors, and other third parties working for the project. This GPN provides practical guidance to clients and contractors on the process of prequalification, solicitation, evaluation, contracting, and procurement to ensure adequate E&S management during construction, operation, and demobilization activities. Finally, it provides recommendations on how to manage project performance during the different phases of the services being provided by contractors
(i.e., from mobilization to construction, operations, and maintenance) and how to monitor and report on contractor
performance effectively.”