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Published by:
IBS Center for Management Research (2016)
23 pages
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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 Corporacion 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 USD30million of the total estimated project cost of USD75million, had disbursed USD15 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. They said IFC policies and procedures provided inadequate guidance to staff on how to assess and manage the social risks associated with projects in areas that were subject to conflict or were conflict prone. The World Bank's own watchdog Compliance Adviser / Ombudsman (CAO) in its report found multiple failures by IFC in the handling of the Dinant project. The first action plan of IFC disagreed with the CAO findings saying that the sudden change in the political environment after the military overthrow of the President Zelaya government in 2009 gave rise to a social uprising and calls for land redistribution that could not have been foreseen. But later, the World Bank Group Board demanded a revised response to the CAO findings. IFC then admitted that it had failed in implementing its social and environmental policies while funding Dinant and said it would work on its second action plan and take assurances and commitments from Dinant. Having faced a backlash from civil liberties groups and having admitted to lapses, IFC now has to decide on whether to go ahead with its next round of USD15 million financing to Dinant. IFC is engaging with Dinant actively but the decision on funding the next round has to be taken. Backtracking on the funding would be seen as a serious blow to sustainable financing while releasing the next round of financing could only happen after Dinant gives a series of commitments to work closely with the community. All in all, the case study will definitely raise issues and call for discussion on appropriately assessing, forecasting, and pricing risks of sustainable finance projects, especially in conflict prone countries in the future.


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; Business ethics; Corporate social responsibility; Dinant; IFC; Equator principles; Bajo Aguan
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2016 - oikos Case Writing Competition - second prize winner

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