Hidroelectrica Santa Rita

Public Statement

Response of FMO to Compliance Investigation Report of the Compliance Advisor Ombudsman (CAO) regarding Hidroelectrica Santa Rita.

In this public statement we would like to reflect on the Compliance Investigation Report of the Compliance Advisor Ombudsman (CAO) [1] with respect to the Latin Renewables Infrastructure Fund (LRIF) and its investment in Hidroelectrica Santa Rita (HSR). The investigation report is focused on the International Finance Corporation (IFC). As an investor in LRIF and a former direct shareholder of HSR, FMO, the Dutch development bank values the outcome of this report.

Investment status

As per 29 September 2017, FMO has exited its direct shareholding investment in the HSR project. Because the HSR project will not be constructed in the immediate future, FMO’s added value to the project has diminished. It is important to note that FMO remains an investor in LRIF.

After stakeholder engagement to address identified environmental & social (E&S) risks proved unsuccessful, the management of the fund, in coordination with FMO, subsequently made the decision not to proceed with the HSR project, thereby limiting the potential for any future adverse impacts and disruption. As such, the E&S assessment for the HSR project has not been completed and the level of compliance with the IFC Performance Standards cannot be judged entirely by the current outcomes: various additional studies, programs, mitigation measures and independent reviews, in line with the IFC Performance Standards, would have been pursued, had the project progressed.

Revised sustainability policy

We acknowledge the CAO's findings relating to the complex contextual environment in this area of Guatemala at the time of the investment. FMO strongly values freedom of expression, the value of civil society, and recognizes the need to protect dissenting voices. FMO has revised its sustainability policy and has established position statements on human rights and land governance that outline our commitments. As part of the sustainability policy we strengthened internal procedures for contextual risk analysis, verification of broad community support and free prior informed consent. 

[1] The Compliance Advisor Ombudsman (CAO) is the independent recourse mechanism for the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA), members of the World Bank Group.