2. Screening and category classification
JBIC Guidelines for Confirmation of Environmental and Social Considerations

Here are JBIC's answers to Frequently Asked Questions (FAQs) about the Environmental Guidelines.


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2.1Q. With regard to category classification, what is meant by "JBIC's share"?
2.2Q. When projects are classified into different categories, "SDR 10 million" was used as one criterion. What exchange rate is applied for converting the yen to SDR?
2.3Q. In classifying projects into different categories under the Environmental Guidelines, on what criteria do you judge "involvement in the project of … JBIC is minor"?
2.4Q. Regarding "sensitive areas" considered in category classification, Section 3. of Part 2 of the Environmental Guidelines stipulates in "Natural Environment" under "Sensitive Areas" "Habitats of rare species requiring protection under domestic legislation, international treaties, etc." Are standards set forth by international organizations included in "international treaties, etc."?
2.5Q. Does JBIC automatically classify projects with "acquisition of rights and interests without additional capital investment" as "Category C"?
2.6Q. What is Category FI?
2.7Q. In the case the project to be financed is specified, is it classified as Category FI if the loan is provided by way of a financial institution?
2.8Q. The Environmental Guidelines set forth that "JBIC conducts screening and environmental reviews of projects for which it intends to provide funding before making a decision." Once a project has undergone screening and environmental reviews, will it be subject to the same procedure when it receives additional funding?
2.9Q. After the screening information has been made public, is it possible for the category classification of the project to be changed based on additional information from borrowers, stakeholders and third parties? In that case, how will such information be disclosed?
2.10Q. If, for example, concerns emerge for a serious environmental impact, and project classification has been changed from category B to A, should the project meet requirements set under Category A in the Environmental Guidelines?
2.11Q. When JBIC provides credit in cooperation with NEXI, will it result in the same project being classified in a different category?

 

2.1Q. With regard to category classification, what is meant by "JBIC's share"?

A. JBIC's share means the amount financed by JBIC, excluding the portion co-financed by other financial institutions. The term "JBIC's share" has come to be used because JBIC applies a variety of financial tools.

2.2Q. When projects are classified into different categories, "SDR 10 million" was used as one criterion. What exchange rate is applied for converting the yen to SDR?

A. SDR 10 million is approximately 1.69 billion yen (as of March 2, 2015). Please see the IMF website for details on SDR exchange rates.

2.3Q. In classifying projects into different categories under the Environmental Guidelines, on what criteria do you judge "involvement in the project of … JBIC is minor"?

A. It is defined as such a low level of commitment that JBIC can hardly have a say in how the project proponent should make environmental considerations for the project. For example, if JBIC's financing share is equal or less than 5% of the total project cost, JBIC may regard its involvement in such a project as "minor."

2.4Q. Regarding "sensitive areas" considered in category classification, Section 3. of Part 2 of the Environmental Guidelines stipulates in "Natural Environment" under "Sensitive Areas" "Habitats of rare species requiring protection under domestic legislation, international treaties, etc." Are standards set forth by international organizations included in "international treaties, etc."?

A. "international treaties, etc." stipulated under "Sensitive Areas" do not necessarily include all the standards set forth by international organizations. However, in category classification, JBIC considers standards referred to by the World Bank and IFC such as the Red List of Threatened Species of IUCN.

2.5Q. Does JBIC automatically classify projects with "acquisition of rights and interests without additional capital investment" as "Category C"?

A. No. Through the screening form and a hearing with the borrower, JBIC confirms that the projects in question are not "projects with sensitive characteristics" nor "projects located in sensitive areas", and that there is no strong claim from local residents to executing projects (a "negative check"). After this has been confirmed, judging that projects with "acquisition of rights and interests without additional capital investment" have the nature causing no additional adverse environmental impact (or minimal adverse environmental impact), they will be classified as "Category C".
Furthermore, if in general, an existing project falls under a sensitive sector (as illustrated in Section 3-(1) of Part 2 of the Environmental Guidelines), JBIC confirms the reputation regarding its environmental and social considerations with the utmost attention by checking into the contents of local media reports and gathering relevant information through our representative offices, to the extent possible, and then categorizes it.
The reason why a project with "acquisition of rights and interests without additional capital investment" is exemplified as "Category C" is not only because it will generally cause no additional adverse environmental impact (or minimal adverse environmental impact), but also because JBIC is putting across the message that it is also prepared to handle such fast-track projects, to the best of its ability since JBIC is often requested to make a decision on financing the project faster than other projects by both the project owner who needs the funding and the fund provider who seeks the acquisition of rights and interests such as Japanese companies (furthermore, a case of competition over the project with other companies can be also envisioned).

2.6Q. What is Category FI?

A. A proposed project is classified as category FI if subprojects to be financed are not specified at the time of the signing of a financing agreement, and therefore it is a category for which JBIC cannot confirm environmental and social considerations for prior to the financing agreement.

2.7Q. In the case the project to be financed is specified, is it classified as Category FI if the loan is provided by way of a financial institution?

A. Category FI is only applied to cases where projects to be financed are not specified prior to the signing of a financing agreement. If the project is specified prior to the signing of a financing agreement, the project is not classified as Category FI even if financing is provided by way of a financial intermediary. The project will then be classified as Category A, B, or C.

2.8Q. The Environmental Guidelines set forth that "JBIC conducts screening and environmental reviews of projects for which it intends to provide funding before making a decision." Once a project has undergone screening and environmental reviews, will it be subject to the same procedure when it receives additional funding?

A. We do not think it is necessary for a project that has undergone screening and environmental reviews to repeat them, if the impacts the project has on the environment and the basis for its category of classification do not differ significantly from those foreseen by the first screening and review.

2.9Q. After the screening information has been made public, is it possible for the category classification of the project to be changed based on additional information from borrowers, stakeholders and third parties? In that case, how will such information be disclosed?

A. The category designated to a project and made available to the public before the signing of the financing agreement is a tentative designation and should not be considered definitive. Therefore, as new information is obtained, it is possible to change category designation after making public the screening information. On such occasions, JBIC aims to promptly release the change and its reasons on its website.

2.10Q. If, for example, concerns emerge for a serious environmental impact, and project classification has been changed from category B to A, should the project meet requirements set under Category A in the Environmental Guidelines?

A. In this kind of situation, JBIC will encourage the borrower to meet requirements set under the newly designated category. However, when the project is being implemented, JBIC considers it is more important to take measures to resolve the problem arisen rather than meeting the requirements under the new category. JBIC will engage the borrower to this end, if deemed necessary after consideration of the situation.

2.11Q. When JBIC provides credit in cooperation with NEXI, will it result in the same project being classified in a different category?

A. That is theoretically possible. In reality though, JBIC and NEXI possess Environmental Guidelines which are broadly the same, and we cooperate as much as possible in designating a category for the project. Working in this way is to the convenience of the borrowers.