IFC Environmental and Social Standards are Meaningless in Practice

Press Release

14 October 2014

Located in Wadi al-Qamar in western Alexandria, Titan Cement, established in 1948, is financed by the International Finance Corporation (IFC). The IFC is a member of the World Bank Group, which specializes in private-sector finance.

According to its stated policies, the IFC seeks to support sustainable development by creating jobs, guaranteeing labor rights, and protecting the work environment. Nevertheless, the latest report from the Egyptian Initiative for Personal Rights (EIPR) has documented several violations against labor and the environment by Titan Cement.

The policies of international financing institutions, including the World Bank Group, have long been criticized by groups working in human rights and environmental justice around the world due to these institutions’ focus on private-sector investment regardless of the negative social and environmental impacts of its projects.

Facing mounting criticisms, international finance institutions have adopted environmental and social standards in their policies that respond to international standards as reflected in international conventions on labor rights, environmental protection, and sustainable development. Nevertheless, an examination of the application of these standards—as this study highlights—reveals that they lack mechanisms for the enforcement of these standards on the ground.

In a study titled “International Finance Institution and the Enforcement of Standards for Environmental and Social Sustainability,” EIPR looks at the performance of the IFC using the case of Titan Cement, which the IFC has financed since 2010.

The study finds that financial institutions’ failure to monitor the projects its funds renders their stated policies meaningless. The study demonstrates that Titan Cement does not comply with the IFC’s ostensibly mandatory performance standards, which raises doubts about the seriousness of these institutions about their own standards.

The report documents Titan Cement’s failure to comply with domestic laws as well as numerous violations against workers, including reductions in workers’ profits, downsizing the workforce, discrimination against laborers and the exploitation of vulnerable workers. In order to circumvent standards, the company has relied ever more heavily on labor contractors, claiming that the contracted workers are not its employees and should therefore resolve any problems they have with the labor supply companies, although the contracted labor works in Titan Cement and under its management. Perhaps the most tragic violations committed by Titan Cement is its use of direct violence against workers, dispersing a peaceful sit-in by force, which left many workers homeless and injured others. Several workers were also jailed.

The report also examines environmental violations, such as exceeding maximum limits on hazardous emissions, which has infringed the local population’s right to health and also harmed nearby industries, as well as its violations of licensing and operating procedures.

In order to uphold their stated principles and standards and ensure compliance, the study recommends that international finance institutions activate mechanisms to monitor projects they fund and intervene when any violations are discovered. The study also stresses the need for Titan to rectify its violations and compensate injured parties.

To read full version in Arabic click here