44974 - GWFP Sofitex2020

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Summary of Investment Information

Project Number

44974

Company Name

GWFP BURKINA FASO COTTON

Date SPI Disclosed

Dec 21, 2020

Country

Burkina Faso

Region

Africa

Projected Board Date

Jan 22, 2021

Environmental Category

FI-1 - Significant

Status

Completed

Last Updated Date

Mar 8, 2022

Department

Regional Industry - MAS Africa

Industry

Agribusiness and Forestry

Previous Events

Approved : Sep 21, 2010
Signed : Feb 10, 2021
Invested : Mar 9, 2021

Sector

Natural Fibers (Cotton, Sisal, Jute, etc.)

Project Description

The Project is a funded risk participation for up to EUR 15 million by IFC in a EUR 40 million one-year secured pre-export facility provided by Societe Generale to finance the purchase of seed cotton and provide working capital to Societe Burkinabe des Fibres et Textiles (SOFITEX), a cotton company in Burkina Faso (the “Obligor”).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	50.0
Loan	150.0
Equity

Development Impact

The most significant, expected project-level outcome is continued access to markets and finance for over 32,889 farmers and increases in productivity for 1,557 farmers. Beyond the project, IFC anticipates the investment will increase integration and resilience in the cotton sector in Burkina Faso, a low income/IDA country, through capacity building and demonstration and replication effects.

E&S Category Rationale / Risks and Mitigation

The project has been categorized as FI-1 in accordance with IFC’s 2012 Policy on Environmental and Social Sustainability. The project will support a single Obligor through Societe Generale and there are significant environmental and social (E&S) risks associated with the cotton sector in which the Obligor’s activities are to be found, including harmful child labor, forced labor, OHS (use of crop production products) and biodiversity loss; the project is thus considered high risk. The applicable E&S requirements for this project are the IFC Exclusion List, National Laws and the IFC Performance Standards (namely, PS1 – Assessment and Management of E&S risks and impacts; PS2 – Labor and Working Conditions; and PS6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources).

The main risks associated with this project relate to, documented occurrence of child labor issues in the cotton supply chain in Burkina Faso. Other E&S risks associated with the activities of the Obligor relate to OHS issues (use of pesticides) and biodiversity conservation.

Summary of Client Environmental and Social Management System (ESMS)

In order to identify and assess the above risks, and implement relevant corrective actions to address them, the Obligor employs an E&S officer who oversees an Environmental and Social Management System (ESMS). That ESMS outlines Societe Generale’s EHS procedures, responsibilities and tools for managing the E&S risks and impacts associated with its business activities. The Obligor also has a stakeholder engagement plan that has identified key stakeholders and provides the framework for ongoing communications with those involved in the cotton sector in the country. These and other corrective actions have been developed in response to E&S Action Plans associated with prior iterations of this facility which implementation effectiveness is continuously verified. The Obligor continues to implement those ESAP actions related to combating child labor in the cotton regions where it sources from local cooperatives For example, based on its Child Labor Procedures, it continues to undertake random monitoring visits to suppliers’ farms, especially during cotton harvesting season, to ensure harmful child labor issues are not found within the supply chain, it develops and broadcasts information regarding child labor and unacceptable practices involving children, using a variety of communication means, including SMS texts, radio broadcasts, information passed on by extensions agents to farmers and cooperatives. It works with recognized third-party certification standards (e.g. Cotton made in Africa, CmiA) and International Organizations (e.g. International Labor Organization) to further drive E&S performance and ethical sourcing; such interactions include internal audits of the Obligor’s supply chain which have shown them to be devoid of child labor. To reduce biodiversity risks, the government has designated and publicized protected areas and classified forests where no cultivation activities can be carried out. The Obligor has incorporated these regulations into its operations, adding requirements to supplier contracts that stipulate avoidance of cultivation on such land. An E&S action plan (ESAP), a summary of which can be seen below, has been developed for this renewed facility to address further improvement areas related to (i) the Obligor’s ESMS, (ii) monitoring/auditing of child labor issues in the supply chain, (iii) strengthening the implementation of the grievance mechanism. Societe Generale, as the facility agent for the transaction, and IFC will monitor the progress of the Obligor in completing these ESAP items which in turn will help the Obligor continue to evolve its management practices with respect to its cotton supply chain.

Task Title & Description	Anticipated Completion Date
Formalize procedures	11/30/2021
Third-party/independent audit conducted by a recognized cotton certification body acceptable to the lenders (Cotton Made in Africa or Better Cotton Initiative or equivalent) to verify the presence of child labor or of forced labor	11/30/2021
A summary report on the implementation of the external grievance mechanism (EGM)	11/30/2021

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring them to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities.

In addition, Affected Communities have unrestricted access to the Compliance Advisor/Ombudsman (CAO), the independent accountability mechanism for IFC. The CAO is mandated to address complaints from people affected by IFC-supported business activities in a manner that is fair, objective , and constructive, with the goal of improving environmental and social project outcomes and fostering greater public accountability of IFC.

Independent of IFC management and reporting directly to the World Bank Group President, the CAO works to resolve complaints using a flexible, problem-solving approach through its dispute resolution arm and oversees project-level audits of IFC’s environmental and social performance through its compliance arm.

Complaints may relate to any aspect of IFC-supported business activities that is within the mandate of the CAO. They can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC-financed business activity. Complaints can be submitted to the CAO in writing to the address below:

Compliance Advisor/Ombudsman
International Finance Corporation
2121 Pennsylvania Avenue NW
Room F11K-232
Washington, DC 20433 USA
Tel: 1 202 458 1973
Fax: 1 202 522 7400
E-mail: cao@worldbankgroup.org

The CAO receives and addresses complaints in accordance with the criteria set out in its Operational Guidelines which are available at: www.cao-ombudsman.org

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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