IFC Funding of Dinant Project: Call for Overhaul of Risk Assessment for Sustainable Finance

This case won Second Prize in Sustainable Finance Track in the oikos Case Writing Competition, 2016. Organized by oikos International, Switzerland.



Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

Abstract

The case study is based on a dilemma faced by IFC, one of the financing arms of the World Bank Group, on whether it should release its next round of funding to Corporación Dinant (Dinant), a Hondurus-based vertically-integrated palm oil and food company, to enable it to develop young palm oil plantations. IFC, which proposed to invest US$30million of the total estimated project cost of US$75million, had disbursed US$15 million in November 2009.Civil society groups had alleged that Dinant had been involved in gross human rights violations and accused it of forced eviction of farmers and inappropriate use of private and public security. The civil liberty groups alleged that IFC had not exercised due diligence in its review of the social risks attached to the project and that it had not responded adequately to the context of intensifying social and political conflict surrounding the project after its commitment to it....

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Issues

The case is structured to achieve the following teaching objectives:

  • Understand the significance of sustainable finance and the issues and challenges faced by banks and financial institutions related to this.
  • Analyze the issues and challenges faced by banks and financial institutions in relation to funding agriculture and the agri–processing industry especially in a conflict prone region
  • Discuss and debate whether IFC did the right thing in financing the Dinant Project
  • Understand the challenges faced by IFC going forward and explore the ways in which it can overcome the challenges.

Contents
INTRODUCTION
WORLD BANK GROUP AND INTERNATIONAL FINANCE CORPORATION
INVESTMENT SERVICE OF THE IFC
HONDURAS ECONOMY
LAND AND LAND RELATED CONFLICTS
CORPORACIÓN DINANT
IFC AND THE PROJECT
HUMAN RIGHT ISSUES
COMPLAINT OF RIGHTS ACTION
FINDINGS OF CAO
IFC’S RESPONSE
MOVING FORWARD
EXHIBITS

Keywords

Sustainable Finance, Sustainability for banks and financial institutions, Project finance, Human rights as a Management issue; Human rights and sustainability, Businesses as human rights advocates, Business-government-society relationship, Financial Institution’s Stakeholder Constituency, Stakeholder management, Corporate Sustainability, Business Ethics, Corporate Social Responsibility, Dinant, IFC, Equator Principles, Bajo Aguán, Civil Society,

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