Attachment J.2 - DRC Economic Growth IEE Amendment 1_ Investment Facility -.pdf

AFR/DRC/EG IEE AMEND.#1 INVESTMENT FACILITY

IEE TEMPLATE VERSION 3.1

INITIAL ENVIRONMENTAL EXAMINATION

AMENDMENT #1

PROJECT/ACTIVITY DATA

Project/Activity Name: Agricultural Investment Facilitation Platform Activity Geographic Location(s) (Country/Region): Democratic Republic of the Congo (DRC) Amendment (Yes/No), if Yes indicate # (1, 2...): Yes # (1) Implementation Start/End Date (FY or M/D/Y): FY2020 – FY 2021 If Amended, specify New End Date: FY2021 Solicitation/Contract/Award Number(s): TBD Implementing Partner(s): TBD Bureau Tracking ID: DRC Economic Growth IEE Amendment 1:

Investment Facility https://ecd.usaid.gov/document.php?doc_id=52431

Tracking ID of Related RCE/IEE (if any): DRC-Economic Growth IEE (https://ecd.usaid.gov/repository/pdf/49001.pdf

Tracking ID of Other, Related Analyses:

ORGANIZATIONAL/ADMINISTRATIVE DATA

Implementing Operating Unit(s):

(e.g. Mission or Bureau or Office)

USAID/DRC

Other Affected Operating Unit(s): NA Lead BEO Bureau: AFR Funding Account(s) (if available):

Original Funding Amount: $ 64,000,000 If Amended, specify funding amount: $12,000,000 If Amended, specify new funding total: $ 78,000,000 Prepared by: Carter Hemphill, Agriculture Development Officer and Diane Mbanzidi, Mission Environment Compliance Officer

Date Prepared: 9/29/2019

ENVIRONMENTAL COMPLIANCE REVIEW DATA

Analysis Type: ☒ IEE ☒ Deferral Environmental Determination(s): ☐Categorical Exclusion(s)

☒Negative ☐Positive ☐Deferred (per 22 CFR 216.3(a)(7)(iv))

IEE Expiration Date (if applicable): October 2025 Additional Analyses/Reporting Required: EMMPs/EMMRs.

Climate Risks Identified (#): Low ___X__ Moderate ___#___ High ___#___ Climate Risks Addressed (#): Low ___#___ Moderate ___#___ High ___#___ https://ecd.usaid.gov/document.php?doc_id=52431 https://ecd.usaid.gov/repository/pdf/49001.pdf about:blank about:blank about:blank about:blank

IEE TEMPLATE VERSION 3.1

THRESHOLD DETERMINATION AND SUMMARY OF FINDINGS

PURPOSE AND SCOPE OF THE INITIAL ENVIRONMENTAL EXAMINATION

This amendment #1 addresses the new planned Investment facilitation platform activity not included under the current “DRC Economic Growth IEE”. This amendment reviews reasonably foreseeable environmental effects of the planned activities as required under Reg. 216.

PROJECT/ACTIVITY SUMMARY

The investment facilitation platform activity seeks a transactions-focused, market-led approach to developing key sectors and value chains, deepening DRC’s nascent financial markets, and improving the business and investment ecosystem, including corporate environmental and social responsibility standards. The platform will focus on increasing investment in businesses that lead to positive development impacts. Initially, the platform will focus only on facilitating investments in sustainable agriculture in the DRC. Current USAID activities in these sectors are focused in the eastern DRC. If USAID/DRC decides to broaden the platform’s focus to include other sectors, an amendment of this RCE will be prepared and cleared prior to such a scope expansion.

ENVIRONMENTAL DETERMINATIONS

Upon approval of this document, the determinations become affirmed, per Agency regulations (22

CFR 216).

The Agricultural Investment Facilitation Platform activity as a whole is found to justify a Negative Determination, with Conditions. Although the activity will not directly fund agricultural investments, the investments themselves that will be funded by private sector partners have the potential for unpredictable, and potentially significant impacts on the environment. Due diligence screening of potential investors and potential recipients of investment will be important. Mitigating conditions to that effect are listed in Section 5.

CLIMATE RISK MANAGEMENT

The Investment facilitation platform design team used USAID's “Climate Risk Screening Tool” to assess potential climate risks. The tool is essentially a matrix that systematically identifies the relevant sectors, regions, and timeframes for analysis, and assesses the potential climate change impacts, adaptive capacity and potential options to address those impacts. The climate related risks (Rising temperatures; increased frequency of intense rainfall and prolonged dry spell) have been ranked low for the activity. However, the interested company shall have a climate risk management plan that ensures that their activities are resilient to the climate risk mentioned at the right.

BEO SPECIFIED CONDITIONS OF APPROVAL

The Agency expects Corporate Environmental and Social Responsibility (CESR) to be applied on the part of the private sector. Environmental, Social and Governance ESG) criteria are commonly taken as core to the way today’s responsible businesses operate, esp. for major investments (see, IEE TEMPLATE VERSION 3.1 e.g., http://datatopics.worldbank.org/esg/). Corporate environmental and social responsible investing is expected in mainstreaming Private Sector Engagement, and sound micro- and small enterprise (see Sections 5 & 6 below). These ESG practices occur within the framework of host country and regional regulatory frameworks.

The DRC Investment Facility Platform’s IP should be prepared to build capacity on pertinent environmental guidelines and social soundness practices, e.g., land tenure, ethical trade and human rights. Specifically, the IP should develop and apply, and/or refer to the Investment Facility’s CESR Standards and Operating Procedures and applicable Micro and Small Enterprise Environmental Guidelines.

Emerging practice is that specific and appropriate environmental, social and governance policies and procedures be developed and ingrained into overall credit policy and practice. Thus, USAID will advance proactive principles for providing inclusive and affordable financial and business development services, for growth in micro- and small enterprises, even in fragile contexts like Eastern DRC

IMPLEMENTATION

In accordance with 22 CFR 216 and Agency policy, the conditions and requirements of this document become mandatory upon approval. This includes the relevant limitations, conditions and requirements in this document as stated in Sections 3, 4, and 5 of the IEE and any BEO Specified Conditions of Approval.

http://datatopics.worldbank.org/esg/

For David Kinyua 12/20/2019

12/20/2019

Bureau Tracking ID: https://ecd.usaid.gov/document.php?doc_id=52431 https://ecd.usaid.gov/document.php?doc_id=52431

IEE TEMPLATE VERSION 3.1

INITIAL ENVIRONMENTAL EXAMINATION

CONTENTS

1.0 PROJECT/ACTIVITY DESCRIPTION 5

1.1 PURPOSE OF THE IEE 5

1.2 PROJECT/ACTIVITY OVERVIEW 5

1.3 PROJECT/ACTIVITY DESCRIPTION 5

2.0 BASELINE ENVIRONMENTAL INFORMATION 6

2.1 LOCATIONS AFFECTED AND ENVIRONMENTAL CONTEXT (ENVIRONMENT,

PHYSICAL, CLIMATE, SOCIAL, THREATENED AND ENDANGERED SPECIES) 6

2.2 APPLICABLE AND APPROPRIATE PARTNER COUNTRY AND OTHER INTERNATIONAL

STANDARDS (E.G. WHO), ENVIRONMENTAL AND SOCIAL LAWS, POLICIES, AND

REGULATIONS 6

2.3 COUNTRY/MINISTRY/MUNICIPALITY ENVIRONMENTAL CAPACITY ANALYSIS (AS

APPROPRIATE) 6

3.0 ANALYSIS OF POTENTIAL ENVIRONMENTAL RISK 7

4.0 ENVIRONMENTAL DETERMINATIONS 7

4.1 RECOMMENDED ENVIRONMENTAL DETERMINATIONS 7

4.2 CLIMATE RISK MANAGEMENT 7

5.0 CONDITIONS AND MITIGATION MEASURES 8

5.1 CONDITIONS 8

5.2 AGENCY CONDITIONS 9

5.3 MITIGATION MEASURES 10

6.0 15

7.0 16

ATTACHMENTS: 12

IEE TEMPLATE VERSION 3.1

1.0 PROJECT/ACTIVITY DESCRIPTION

1.1 PURPOSE OF THE IEE

This IEE addresses the environmental impacts of all activities anticipated under the new Investment Facilitation Platform Activity

The purpose of this document, in accordance with Title 22, Code of Federal Regulations, Part 216 (22 CFR 216), is to provide a preliminary review of the reasonably foreseeable effects on the environment of the USAID intervention described herein and recommend determinations and, as appropriate, conditions, for these activities. Upon approval, these determinations become affirmed, and specified conditions become mandatory obligations of implementation.

This IEE also documents the results of the Climate Risk Management process in accordance with USAID policy (specifically, ADS 201mal).

This IEE is a critical element of USAID’s mandatory environmental review and compliance process meant to achieve environmentally sound design and implementation. Potential environmental impacts should be addressed through formal environmental mitigation and monitoring plans (EMMPs) and/or Environmental Assessments (EAs), if needed.

1.2 PROJECT/ACTIVITY OVERVIEW

Through the establishment of an investment facilitation platform, USAID/DRC seeks a transactions-focused, market-led approach to developing key sectors and value chains, deepening DRC’s nascent financial markets, and improving the business and investment ecosystem. The platform will focus on increasing investment in businesses that lead to positive development impacts, with a focus on sustainable agriculture, under the Economic Growth portfolio in the DRC. It is possible that other offices may buy into this mechanism to support their sector objectives without any change in the scope of the Invest activity. Current USAID activities in these sectors are focused in the eastern DRC’ provinces. Additional categories of activities for support under the EG Investment Facility will be subjected to analysis. Activities outside of the scope of the IEE cannot be implemented until the IEE is amended (See this IEE Section 5.1.2).

1.3 PROJECT/ACTIVITY DESCRIPTION

The Investment facilitation platform is an investment facilitation platform that aims to provide targeted, firm-level and finance assistance to reduce transaction costs and/or information asymmetries to catalyze developmentally beneficial investments. The support provided by such a platform improves the ability of local companies to grow their operating capacity and raise critical growth capital for sustainable development. For investors, the platform acts as a neutral intermediary and directly addresses barriers such as information asymmetries and high transaction costs by improving finance providers’ understanding of the market and decreasing the cost of due diligence. Each platform is designed to provide appropriate support for the local context and constraints, including but not limited to the capital and technical assistance needed by target companies; risks and transaction costs faced by investors; and, characteristics of the https://www.usaid.gov/our_work/environment/compliance/22cfr216 https://www.usaid.gov/ads/policy/200/201mal

IEE TEMPLATE VERSION 3.1

local financial market. Corporate environmental and social standards and performance criteria will be emphasized (e.g., http://datatopics.worldbank.org/esg/) by the Investment Facility(ies).

The envisioned investment facilitation platform will serve the following functions to companies and finance providers:

1. Build a pipeline of investible companies aligned with USAID/DRC target sectors and regions (as identified above);

2. Engage and develop relationships with a range of finance providers demonstrating appetite for investment in target sectors/regions (e.g. banks/lenders, microfinance impact investors, private equity firms, development finance institutions (DFIs), etc.).

3. Support for finance providers and investors through:

a. Detailed due diligence, including evaluation of market position, business case, and risks (e.g. internal, market, reputational)

b. Financial analysis, including building financial models, performing valuations, etc.

4. Support for companies through:

a. Fundraising support, including business plan and pitch deck preparation support and sourcing of equity, debt, and investment-enabling products (e.g., guarantees, grants, insurance, etc.)

b. Deal structuring, including guidance on optimal debt-equity mix, appropriate partnering/joint venture arrangements, domiciling, etc.

c. Due diligence preparation by supporting the preparation of documents requested by potential investors.

d. Providing assistance in developing and/or applying environmental and social governance standards and procedures, incl. reinforcement of appropriate state and regional regulatory processes.

In addition to providing direct technical assistance, it is envisioned that the investment facilitation platform may draw upon guarantees (from the Development Credit Authority or other public and private providers of guarantees), as well as grant capital to provide additional technical assistance outside the capabilities of the investment facilitation platform staff (e.g.

legal support, niche feasibility studies, CESR capacity etc.). Both guarantees and grants should be deployed with consideration to minimizing market distortions.

Will this project/activity involve construction1 as defined by ADS 201 and 303? Yes ☐ No ☒

2.0 BASELINE ENVIRONMENTAL INFORMATION

Please refer to Section 2.0 of the DRC Economic Growth IEE:

https://ecd.usaid.gov/repository/pdf/49001.pdf to view the country’s location description and environmental situation characteristics.

1 Construction, as defined by ADS 201 and 303, includes: construction, alteration, or repair (including dredging and excavation) of buildings, structures, or other real property and includes, without limitation, improvements, renovation, alteration and refurbishment. The term includes, without limitation, roads, power plants, buildings, bridges, water treatment facilities, and vertical structures. In the box below, describe any construction planned for this project/activity. Refer to ADS 201maw for required Construction Risk Management procedures.

If yes, describe in the space below:

Any potential support to construction related to renewable energy infrastructure shall not proceed without an approved Environmental Assessment.

http://datatopics.worldbank.org/esg/ https://ecd.usaid.gov/repository/pdf/49001.pdf https://www.usaid.gov/sites/default/files/documents/1865/201maw.pdf

IEE TEMPLATE VERSION 3.1

3.0 ANALYSIS OF POTENTIAL ENVIRONMENTAL RISK

PROJECT/ACTIVITY 1: INVESTMENT FACILITATION PLATFORM

TABLE 3A. POTENTIAL IMPACTS – PROJECT/ACTIVITY 1

Project/Activity Potential environmental and social impacts Build a pipeline of investible companies aligned with USAID/DRC target sectors and regions

The initial introduction to companies or investors will not introduce negative environmental or social impacts.

However, the decision to partner with companies or investors -- both on the supply side, i.e., those companies wanted to invest and on the demand side, i.e., local entities receiving matching financial services, technical assistance -- may pose a reputational risk for USAID.

Other risks to USAID include the risk of non-performance or malfeasance and harm to the environment or human health.

Engage and develop relationships with a range of finance providers

Support for finance providers and investors through a detailed due diligence and Financial analysis

• Potential environmental or social negative impacts as a result of these activities will be minimized via a culture of environmental and social governance practices adapted and appropriate to the operating context in Eastern Congo and other geographies of the

DRC.

• The Investment Facility will promote good ESG practices among its IPs, including for MSEs.

• Host country regulatory and corporate responsibility practices will be reinforced

Support for companies through Fundraising support, deal structuring, due diligence preparation

• Potential environmental or social negative impacts as a result of these activities will be minimized via a culture of environmental and social governance practices adapted and appropriate to the operating context in Eastern Congo and other geographies of the

DRC.

• The Investment Facility will promote good ESG practices among its IPs, including for MSEs.

• Host country regulatory and corporate responsibility practices will be reinforced

The danger that must be acknowledged is that, in spite of USAID’s efforts to promote responsible investments, the investments facilitated by USAID under this platform could lead to environmental and social harm. This would impact the relevant stakeholders, as well as undermine USAID’s reputation and the Agency’s programmatic goals in the DRC. The potential for such harm is hard to assess, but it is heightened by the fact that, 1) USAID will have little control over the details of the investments, given that they are being made between private actors over which USAID will have only limited influence; and 2) the environmental regulatory structures in the DRC are very weak, and cannot be relied upon to provide reliable control over such investments in this country.

IEE TEMPLATE VERSION 3.1

4.0 ENVIRONMENTAL DETERMINATIONS

4.1 RECOMMENDED ENVIRONMENTAL DETERMINATIONS

The following table summarizes the recommended determinations based on the environmental analysis conducted. Upon approval, these determinations become affirmed, per 22 CFR 216.

Specified conditions, detailed in Section 5, become mandatory obligations of implementation, per ADS 204.

TABLE 4: ENVIRONMENTAL DETERMINATIONS

Projects/Activities Categorical Exclusion

Citation (if applicable) Negative Determination

Positive Determination

Deferral3

Build a pipeline of investible companies aligned with USAID/DRC target sectors and regions

Engage and develop relationships with a range of finance providers

Support for finance providers and investors through a detailed due diligence and Financial analysis

Support for companies through Fundraising support, deal structuring, due diligence preparation

The entire activity justifies a Negative Determination. The potential exists that investments facilitated via this mechanism will lead to significant harm to the environment, but a Positive Determination is not justified because those investments will not be controlled by USAID.

Nonetheless, the due diligence and screening actions that are identified in Section 5 as mandatory mitigating conditions are essential for reducing the likelihood of environmental and/or social harm coming from investments facilitated via this mechanism.

4.2 CLIMATE RISK MANAGEMENT

The Investment facilitation platform design team used USAID's “Climate Risk Screening Tool” to assess potential climate risks. The tool is essentially a matrix that systematically identifies the relevant sectors, regions, and timeframes for analysis, and assesses the potential climate change impacts, adaptive capacity and potential options to address those impacts. The team

2 Positive Determinations require preparation of a Scoping Statement and Environmental Assessment.

3 Deferrals must be cleared through an Amendment to this IEE prior to implementation of any deferred activities.

IEE TEMPLATE VERSION 3.1

has ranked as low risk for the activity: Rising temperatures; increased frequency of intense rainfall and prolonged dry spell. No further analysis has been conducted. See Annex 1 for the complete CRM table.

5.0 CONDITIONS AND MITIGATION MEASURES

5.1 CONDITIONS

The environmental determinations in this IEE are contingent upon full implementation of the following general implementation and monitoring requirements, as well as ADS 204 and other relevant requirements.

The Agency supports and encourages Corporate Environmental and Social Responsibility ( CESR) to be applied in mobilizing private sector investment. Environmental, Social and Governance (ESG) criteria are commonly taken as core to the way today’s responsible businesses operate, esp. for major investments (see, e.g., http://datatopics.worldbank.org/esg/). Likewise, specific and robust environmental, social and governance policy can be ingrained into overall credit policy and practice, and thus advance proactive principles for providing inclusive and affordable financial and business development services for growth in micro- and small enterprises, even in fragile contexts like Eastern DRC.

This is a good example of corporate environmental and social responsible investing, which is to be encouraged in mainstreaming Private Sector Engagement.

The DRC Investment Facility Platform’s IP should be prepared to build capacity on pertinent environmental guidelines and social soundness practices, e.g., land tenure, ethical trade and human rights. Specifically, the IP should develop and apply, and/or refer to the Investment Facility’s CESR Standards and Operating Procedures and applicable Micro and Small Enterprise Environmental Guidelines.

Emerging practice is that specific and appropriate environmental, social and governance policies and procedures be developed and ingrained into overall credit policy and practice.

Thus, USAID will advance proactive principles for providing inclusive and affordable financial and business development services, for growth in micro- and small enterprises, even in fragile contexts like Eastern DRC.

5.1.1 During Pre-Award:

5.1.1.1 Pre-Award Briefings: As feasible, the design team and/or the cognizant environmental officer(s) (e.g., MEO, REA, BEO) will provide a pre-award briefing for potential offerors on environmental compliance expectations/responsibilities at bidders’ conferences.

5.1.1.2 Solicitations: The design team, in coordination with the A/CO, will ensure solicitations include environmental compliance requirements and evaluation criteria. A/CO will ensure technical and cost proposal requirements include approach, staffing, and budget sufficient for complying with the terms of this IEE.

The solicitations will expect that state-of-the art Environmental and Social http://datatopics.worldbank.org/esg/

IEE TEMPLATE VERSION 3.1

Governance principles are/will be part of the offerors’ due diligence practices, and that the opportunities to appropriately apply innovative investment business models will be sought.

5.1.1.3 Awards: The A/COR, in coordination with the A/CO, will ensure all awards and sub-awards, include environmental compliance requirements.

5.1.2 During Post-Award:

5.1.2.1 Post-Award Briefings: The A/COR and/or the cognizant environmental officer(s) (e.g., MEO, REA, BEO) will provide post-award briefings for the IP on environmental compliance responsibilities.

5.1.2.3 Workplans and Budgeting: The A/COR will ensure the IP integrates environmental compliance requirements in work plans and budgets to comply with requirements, including EMMP implementation and monitoring.

5.1.2.4 Staffing: The A/COR, in coordination with the IP, will ensure all awards have staffing capacity to implement environmental compliance requirements.

5.1.2.5 Records Management: The A/COR will maintain environmental compliance documents in the official project/activity file and upload records to the designated USAID environmental compliance database system.

5.1.2.6 Host Country Environmental Compliance: The A/COR will ensure the IP complies with applicable and appropriate host country environmental requirements unless otherwise directed in writing by USAID. However, in the case of a conflict between the host country and USAID requirements, the more stringent shall govern.

5.1.2.7 Work Plan Review: The A/COR will ensure the IP verifies, at least annually or when activities are added or modified, that activities remain with the scope of the IEE. Activities outside of the scope of the IEE cannot be implemented until the IEE is amended.

5.1.2.8 IEE Amendment: If new activities are introduced or other changes to the scope of this IEE occur, an IEE Amendment will be required.

5.1.2.14 USAID Monitoring Oversight: The A/COR or designee, with the support of the cognizant environmental officer(s) (e.g., MEO, REA, BEO), will ensure monitoring of compliance with established requirements (e.g., by desktop reviews, site visits, etc.).

5.1.2.16 Environmental Compliance Mitigation and Monitoring Plan: The A/COR will ensure the IP develops, obtains approval for, and implements Environmental Mitigation and Monitoring Plans (EMMPs) that are responsive to the stipulated environmental compliance requirements.

IEE TEMPLATE VERSION 3.1

5.1.2.17 Environmental Compliance Reporting: The A/COR will ensure the IP includes environmental compliance in regular project/activity reports, using indicators as appropriate; develops and submits the Environmental Mitigation and Monitoring Reports (EMMRs); and completes and submits a Record of Compliance (RoC) describing their implementation of EMMP requirements in conjunction with the final EMMR or at the close of sub activities (as applicable). And where required by Bureaus or Missions, ensure the IP prepares a closeout plan consistent with contract documentation for A/COR review and approval that outlines responsibilities for end-of-project operation, the transition of other operational responsibilities, and final EMMR with lessons learned.

5.12.17 Corporate Environmental and Social Responsibility (CESR): The Investment Facility and Mission will agree on CESR principles and standards built into the credit mobilization dialogue and investments approval process. Likewise, the IP should develop and apply, and/or refer to the Investment Facility’s Operating Procedures and applicable Micro and Small Enterprise Environmental Guidelines and standards.

5.1.2.18 Corrective Action: When noncompliance or unforeseen impacts are identified, IPs notify the A/COR, place a hold on activities, take corrective action, and report on the effectiveness of corrective actions. The A/COR initiates the corrective action process and ensures the IP completes and documents their activities. Where required by Bureaus or Missions, ensure Record of Compliance is completed.

5.2 AGENCY CONDITIONS

5.2.1 Sub-award Screening: The A/COR will ensure the IP uses an adequate environmental screening tool to screen any sub-award applications and to aid in the development of EMMPs.

5.2.2 Programmatic IEEs (PIEE): PIEEs stipulate requirements for additional environmental examination of new or country specific projects/activities. The A/COR of any project/activity being implemented under a PIEE will ensure appropriate reviews are conducted, typically through a Supplemental IEE, and approved by the cognizant BEO.

5.2.3 Supplemental IEEs (SIEEs): An SIEE will be prepared for any new project/activity being planned which fall under a PIEE. The SIEE will provide more thorough analysis of the planned activities, additional geographic context and baseline conditions as well as specific mitigation and monitoring requirements.

5.2.4 Other Supplemental Analyses: The A/COR will ensure supplemental environmental analyses that are called for in the IEE are completed and documented. CESR and MSE environmental and social soundness standards will be established and applied.

IEE TEMPLATE VERSION 3.1

5.2.5 Resolution of Deferrals: If a deferral of the environmental threshold determination was issued, the A/COR will ensure that the appropriate 22CFR216 environmental analysis and documentation is completed and approved by the BEO before the subject activities are implemented.

5.2.6 Positive Determination: If a Positive Determination threshold determination was made, the A/COR will ensure a Scoping Statement, and if required an Environmental Assessment (EA), is completed and approved by the BEO before the subject activities are implemented.

5.2.7 Compliance with human subject research requirements: The AM, A/COR shall assure that the IP and sub-awardees, -grantees, an d -contractors demonstrate completion of all requirements for ethics review and adequate medical monitoring of human subjects who participate in research trials carried out through this IEE and ensure appropriate records are maintained. All documentation demonstrating completion of required review and approval of human subject trials must be in place prior to initiating any trials and cover the period of performance of the trial as described in the research protocol.

5.3 MITIGATION MEASURES

The mitigation measures presented in this section constitute the minimum required based on available information at the time of this IEE and the environmental analysis in Section 4. These measures shall provide general direction for completing the project/activity Environmental Mitigation and Monitoring Plan (EMMP) and/or the EA and PERSUAP, if required.

PROJECT/ACTIVITY 1: INVESTMENT FACILITATION PLATFORM

TABLE 5A. SUMMARY OF MITIGATION MEASURES FOR THE ACTIVITIES

Project/Activity Mitigation Measure

Build a pipeline of investible companies aligned with USAID/DRC target sectors and regions

A Negative Determination with Conditions is recommended pursuant to 22 CFR 216.3(a)(2)(iii) for the choice of company to associate with.

Prior to selection, the IP is required to undertake a due diligence investigation of its prospective alliance companies or investors.

The investigation will assess environmental and social responsibility, financial soundness, and environmental accountability. This includes both the companies or investors’ environmental accountability track record and its specific plans for environmental accountability under the alliance.

The Implementing Partner and USAID together will develop a means of screening entities and proposed

Engage and develop relationships with a range of finance providers

IEE TEMPLATE VERSION 3.1

activities before providing any technical assistance or financial support. The screening methodology will provide an objective and standard means for determining whether the entities are compatible with USAID values and do not pose a reputational risk. Further, the screening process will allow USAID to approve or reject proposed investments, based upon their potential for environmental or social impacts. The proposed screening process should be reviewed and cleared by the COR, Mission Environmental Officer, Regional Environmental Advisor and the Bureau Environmental Officer team.

The Investment Facility (Platform) IP should initially complete the screening process, with subsequent approval by the AOR, MEO, and REA.

The screening process should:

● Identify the nature of activities typically implemented by the entities, and more specifically of the activities proposed for investment;

● Identify the environmental and social procedures and capacity of the entities to promote environmental and social soundness in their activities. The screening process will allow for a determination of whether the entity meets an acceptable USAID standard or needs improvement before any further engagement.

● Ensure either: 1) that no investment is facilitated that would require an Environmental Assessment (EA) per USAID’s Environmental Procedures and/or under the DRC’s environmental regulations;

or 2) in the event that the proposed investment WOULD require an EA per USAID or the Government of the DRC, that a credible EA is prepared and that all relevant parties understand and commit to implementation of the necessary mitigating conditions therein identified.

● Alert the relevant DRC government authorities, the USAID/DRC MEO and leadership, as well as the AFR Bureau Environmental Officer if it appears that investments facilitated under this mechanism present the risk of significant harm to the environment or to affected communities.

In the case of the participation of micro and small enterprises, the IP should provide training on related

IEE TEMPLATE VERSION 3.1

environmental guidelines. Specifically, the IP should develop and apply, and/or refer to the Investment Facility’s Operating Procedures and applicable Micro and Small Enterprise Environmental Guidelines, e.g.:

Micro and Small Enterprises

● Introduction - MSEs & the Environment

● Mechanisms for MSEs to Control Environmental

Impact

● Institutionalizing Environmental Capacity

● Sub-Sector Specific CP Briefings Resources)

● Annexes :

○ Annex A: Sample Environmental Screening/Report Form for MSE Assistance Programs

○ Annex B: Classifying MSEs as Damaging or Not

○ Annex C: Sample Screening Form for Individual

MSE Loans

○ Annex D: Sample Environmental Commitment

Statement for MSEs

○ Annex E: Sample Terms of Reference for

Specialized Consultants

Support for finance providers and investors through a detailed due diligence and Financial analysis, and application of best practices and CESR

• Potential environmental or social negative impacts as a result of these activities will be minimized via a culture of environmental and social governance practices adapted and appropriate to the operating context in Eastern Congo and other geographies of the

DRC.

• The Investment Facility will promote good Environmental, Social and Governance (ESG) practices among its IPs, including for MSEs.

• Host country regulatory and corporate responsibility practices will be reinforced

Support for companies through Fundraising support, deal structuring, due diligence preparation, incl. application of best practices and CESR

• Potential environmental or social negative impacts as a result of these activities will be minimized via a culture of environmental and social governance practices adapted and appropriate to the operating context in Eastern Congo and other geographies of the

DRC.

• The Investment Facility will promote good ESG practices among its IPs, including for MSEs.

• Host country regulatory and corporate responsibility practices will be reinforced

6.0 LIMITATIONS OF THIS INITIAL ENVIRONMENTAL EXAMINATION

The determinations recommended in this document apply only to projects/activities and sub-activities described herein. Other projects/activities that may arise must be documented in either https://www.usaid.gov/environmental-procedures/sectoral-environmental-social-best-practices/sector-environmental-guidelines-resources#ms https://usaidgems.org/Documents/SectorGuidelines/ENCAP/mse_introduction.pdf https://usaidgems.org/Documents/SectorGuidelines/ENCAP/mse_controlmechanisms.pdf https://usaidgems.org/Documents/SectorGuidelines/ENCAP/mse_controlmechanisms.pdf https://usaidgems.org/Documents/SectorGuidelines/ENCAP/mse_institutionalizing.pdf https://usaidgems.org/Documents/SectorGuidelines/ENCAP/mse_sectorbriefings.pdf https://usaidgems.org/Documents/SectorGuidelines/ENCAP/mse_resources.pdf https://usaidgems.org/Documents/SectorGuidelines/ENCAP/mse_annex.pdf

IEE TEMPLATE VERSION 3.1

a separate IEE, an IEE amendment if the activities are within the same project/activity, or other type of environmental compliance document and shall be subject to an environmental analysis within the appropriate documents listed above.

Other than projects/activities determined to have a Positive Threshold Determination, it is confirmed that the projects/activities described herein do not involve actions normally having a significant effect on the environment, including those described in 22 CFR 216.2(d).

In addition, other than projects/activities determined to have a Positive Threshold Determination and/or a pesticide management plan (PERSUAP), it is confirmed that the projects/activities described herein do not involve any actions listed below. Any of the following actions would require additional environmental analyses and environmental determinations:

● Support project preparation, project feasibility studies, or engineering design for activities listed in §216.2(d)(1);

● Affect endangered and threatened species or their critical habitats per §216.5, FAA

118, FAA 119;

● Provide support directly influencing extractive industries (e.g., mining and quarrying), per FAA 117, unless an applicable Environmental Assessment has been conducted and approved.

● Promote timber harvesting per FAA 117 and 118;

● Lead to new construction, reconstruction, rehabilitation, or renovation work per

§216.2(b)(1);

● Provide support for regulatory permitting per §216.1(b)(2);

● Lead to privatization of industrial facilities or infrastructure with heavily polluted property per §216.1(b)(4);

● Research, testing, or use of genetically engineered organisms per §216.1(b)(1), ADS

● Assist the procurement (including payment in kind, donations, guarantees of credit) or use (including handling, transport, fuel for transport, storage, mixing, loading, application, clean-up of spray equipment, and disposal) of pesticides or activities involving procurement, transport, use, storage, or disposal of toxic materials.

Pesticides cover all insecticides, fungicides, rodenticides, etc. covered under the Federal Insecticide, Fungicide, and Rodenticide Act per §216.2(e) and §216.3(b).

7.0 REVISIONS

Per 22 CFR 216.3(a)(9), when ongoing programs are revised to incorporate a change in scope or nature, a determination will be made as to whether such change may have an environmental impact not previously assessed. If so, this IEE will be amended to cover the changes. Per ADS 204, it is the responsibility of the USAID A/COR to keep the MEO/REA and BEO informed of any new information or changes in the activity that might require revision of this environmental analysis and environmental determination.

ATTACHMENTS:

Annex 1: Climate Risk Management Summary Table for Activity.

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ANNEX 1. ACTIVITY CLIMATE RISK MANAGEMENT SUMMARY TABLE

Tasks/Defined or Illustrative Interventions

Climate Risks4 Risk Rating5 How Risks are Addressed6

Opportunities to Strengthen Climate Resilience7

Build a pipeline of investible companies aligned with USAID/DRC target sectors and regions

Engage and develop relationships with a range of finance providers

Support for finance providers and investors through a detailed due diligence and Financial analysis

Support for companies through Fundraising support, deal structuring, due

Rising temperatures;

Increased frequency of intense rainfall and prolonged dry spell.

Low

However, the interested company shall have a climate risk management plan that ensures that their activities are resilient to climate risk mentioned at the right.

NA NA

4 List key risks related to the defined/illustrative interventions identified in the screening and additional assessment.

5 Low/Moderate/ High 6 Describe how risks have been addressed in activity design and/or additional steps that will be taken in implementation. If you choose to accept the risk, briefly explain why.

7 Describe opportunities to achieve multiple development objectives by integrating climate resilience or mitigation measures diligence preparation