Wednesday, 2 October 2013

Questions (19, 76)

Brian Stanley


19. Deputy Brian Stanley asked the Tánaiste and Minister for Foreign Affairs and Trade if his attention has been drawn to the independent audit by the Compliance Advisor Ombudsman published in February 2013 of the World Bank’s International Finance Corporation's lending to the financial sector, in particular its concerns over the IFC’s use of financial intermediaries and lack of adequate social and environmental safeguards; his view on the audit’s findings; and if the findings change the way Irish Aid engages with the IFC. [41170/13]

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Pearse Doherty


76. Deputy Pearse Doherty asked the Tánaiste and Minister for Foreign Affairs and Trade in view of the concerns about the World Bank’s International Finance Corporation’s lending to the financial sector through intermediaries, if Irish Aid has a clear set of criteria on ethical investment which guide its engagement with the Irish private sector and its investment in the global south, or if it plans to develop one. [41171/13]

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Written answers (Question to Foreign)

I propose to take Questions Nos. 19 and 76 together.

The International Finance Corporation (IFC), is a member of the World Bank Group, and is the largest global development institution focused exclusively on the private sector in developing countries. The private sector, as an engine of growth, innovation and investment to developing countries, has a major role to play in development. Ireland’s membership of the IFC is led by the Minister for Finance as Governor of the World Bank. Ireland has been a member of the IFC since 1958. Through Irish Aid in the Department of Foreign Affairs and Trade, Ireland partners with the IFC to support technical assistance and advisory services to the private sector for investment climate reform activities in Sub-Saharan Africa and for fragile and conflict affected states in Africa. The aim of this support is to reduce poverty through inclusive private sector growth. Irish Aid has provided €900,000 to the IFC for this technical and advisory support in 2013. Ireland does not provide financial resources for investments through IFC.

Officials in my Department have taken note of the “Compliance Audit of IFC's Financial Sector Investments” by the Compliance Advisor Ombudsman (CAO) as well as the management response by the International Finance Cooperation. This compliance audit was the first sector wide analysis undertaken by the CAO and provided an independent and fresh perspective on the investment work of IFC. It identified areas for improvements in relation to environmental and social standards by IFC financial Intermediary clients, particularly at a sub-client level.

IFC management have expressed in their management response their openness to further enhance and improve their environmental and social standards and to enhance their engagement with external experts, civil society and other stakeholders. Ireland, through the Minister of Finance, will continue to engage with the IMF and the World Bank to ensure that their structures and processes better reflect the modern world.

With regard to ethical investments by the Irish private sector, Irish Aid has guidelines in place for the Africa Agrifood Development Fund (AADF) which is the only example where Irish Aid funds are used to directly support Irish business. The Fund has adopted internationally validated principles for responsible international investment in agriculture that respect rights, livelihoods and resources. Recipients of AADF funding must undertake to follow these guidelines in their investments and must confirm this in their application for funding.