{"id":243956,"date":"2010-01-08T00:00:00","date_gmt":"2010-01-08T05:00:00","guid":{"rendered":"11495 at http:\/\/www.wri.org"},"modified":"2010-01-08T00:00:00","modified_gmt":"2010-01-08T05:00:00","slug":"what-is-the-future-of-the-world-bank-group%e2%80%99s-environmental-and-social-safeguards","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/243956","title":{"rendered":"What is the Future of the World Bank Group\u2019s Environmental and Social Safeguards?"},"content":{"rendered":"

Here is a summary of a civil society consultation WRI had with the World Bank Group\u2019s (WBG) Independent Evaluation Group (IEG), on the IEG\u2019s review of the effectiveness of the WBG environmental and social safeguards.<\/strong><\/p>\n

\n

The World Bank Group (WBG) has a number of policies to help ensure that its investments \u201cdo no
\nharm.\u201d In the 1980s, in response to public criticism of its involvement in controversial projects\u2014
\nsuch as Polonoroeste\u2019s BR-364 Amazon highway program in Brazil that uprooted indigenous
\ncommunities, and the Narmada dam in India that displaced 90,000 people\u2014the World Bank began
\nto develop a set of safeguard policies that require clients to consider the environmental and social
\nimplications of projects. These policies now require clients to conduct an environmental assessment
\nand consider a project\u2019s potential impacts on surrounding communities.<\/p>\n

Similarly, the International Finance Corporation\u2019s (IFC) involvement in high profile projects led to
\nthe adoption of similar policies. In 2006, the IFC adopted a set of \u201cPerformance Standards\u201d to guide
\nits corporate clients in environmental and social risk management. Through these standards, the
\nIFC\u2019s influence stretches far beyond financing projects, acting as a de facto \u201cstandard-setter\u201d for
\nprivate sector environmental and social risk management in several high impact sectors, such as oil,
\ngas, and mining. More than 118 financial institutions worldwide have adopted the Performance
\nStandards into their own risk management systems.<\/p>\n

On January 8th, 2010, the World Bank Group\u2019s Independent Evaluation Group (IEG) met with 9
\ncivil society groups in Washington DC at the World Resources Institute to discuss the IEG\u2019s
\nupcoming report. The report will examine the World Bank\u2019s and IFC\u2019s implementation of the
\nenvironmental and social safeguard policies. The report is due out in March 2010, will likely
\ninfluence the review of the IFC performance standards, and may shape a future reform agenda for
\nthe World Bank safeguards.<\/p>\n

The following is a summary of issues that civil society participants raised during the meeting.<\/p>\n\n

\n
World Bank Group’s environmental and social requirements for clients<\/caption>\n
\n

World Bank safeguard policies<\/strong><\/p>\n

    \n
  • OP4.01: Environmental Assessment (1999)<\/li>\n
  • OP4.04: Natural Habitats (2001)<\/li>\n
  • OP4.09: Pest Management (1998)<\/li>\n
  • OP4.11: Physical Cultural Resources (2006)<\/li>\n
  • OP4.10: Indigenous Peoples (2005)<\/li>\n
  • OP4.12: Involuntary Resettlement (2001)<\/li>\n
  • OP4.36: Forests (2002)<\/li>\n
  • OP4.37: Safety of Dams (2001)<\/li>\n
  • OP7.50: Projects on International Waterways (2001)<\/li>\n
  • OP7.60: Projects in Disputed Areas (2001)<\/li>\n<\/ul>\n<\/td>\n
\nIFC performance standards<\/strong><\/p>\n
    \n
  • PS1: Social and Environmental Assessment and
    \nManagement System (2006)<\/li>\n
  • PS2: Labor and Working Condition (2006)<\/li>\n
  • PS3: Pollution Prevention and Abatement (2006)<\/li>\n
  • PS4: Community Health, Safety and Security (2006)<\/li>\n
  • PS5: Land Acquisition and Involuntary Resettlement
    \n(2006)<\/li>\n
  • PS6: Biodiversity Conservation and Sustainable<\/li>\n
  • Natural Resource Management (2006)<\/li>\n
  • PS7: Indigenous Peoples (2006)<\/li>\n
  • PS8: Cultural Heritage (2006)<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/table>\n

    How does the WBG compare to international norms?<\/h3>\n

    Several participants emphasized that the IEG\u2019s evaluation must consider whether WBG safeguard
    \npolicies meet global standards, such as international human rights and environmental law. While the
    \nWBG may not have a legal obligation to meet these standards, in many cases its government and
    \ncompany clients do.<\/p>\n

    One example is climate change finance. The WBG has argued that it should be the custodian for any
    \nclimate finance mechanisms that result from the UN climate change negotiations. One of the
    \nWBG\u2019s justifications is that is already has safeguard policies to apply to climate financing. However,
    \nthe safeguards do not encompass human rights, and in many cases are less stringent than the policies
    \nof other multilateral development banks, such as the Asian Development Bank and the European
    \nBank for Reconstruction and Development.<\/p>\n

    What is the relevance of the safeguards as the nature of WBG\u2019s portfolio changes?<\/h3>\n

    The WBG\u2019s lending portfolio is moving away from traditional \u201cdirect finance\u201d in projects towards
    \nother forms of \u201cindirect\u201d financing. At the IFC, this includes a shift towards financial intermediaries,
    \ntrade finance, asset management, and supply chains. At the World Bank, this includes a shift towards
    \n\u201cinvestment lending reform\u201d\u2014providing loans to governments at a broader programmatic or sector
    \nlevel, and through development policy loans. Both IEG and civil society participants indicated that
    \nthe safeguards as currently designed do not effectively apply to these forms of indirect finance, and
    \nin some cases do not apply at all. For example, safeguards do not seem to apply to the World Bank\u2019s
    \ndevelopment policy loans. There is a risk that the safeguards will increasingly only apply to a small
    \npercentage of the WBG\u2019s portfolio.<\/p>\n

    Furthermore, one participant argued that the WBG needs to update the safeguards more frequently
    \nto reflect changing international norms. At the World Bank, it took nine years to update the 2001
    \nindigenous peoples policy, and eleven years to update the 2006 physical cultural resources policy.
    \nThe 1999 environmental assessment policy was out of date before it even took effect.<\/p>\n

    When the IFC moved towards the Performance Standards in 2006, it adopted a new model of
    \nsafeguards that are \u201coutcomes-based\u201d\u2014where IFC clients have to meet broadly defined principles,
    \nrather than specific objectives. The IFC\u2019s rationale for doing this was to give clients more flexibility,
    \nso that IFC clients could choose which tools to use to achieve these results. But participants
    \nemphasized that the new system has faced implementation problems, as IFC clients fail to meet the
    \noutcomes, and IFC staff do not monitor to ensure that outcomes are met. Affected communities, in
    \nturn, often lack confidence and trust in IFC or its clients. Because of this lack of trust, affected
    \ncommunities need assurances that WBG clients will follow strict rules. Several participants indicated
    \nthat the World Bank should not move towards the IFC\u2019s model.<\/p>\n

    Similarly, participants expressed concern with the World Bank\u2019s \u201ccountry safeguard systems\u201d
    \napproach, in which qualifying countries can substitute domestic laws for WBG policies. While the
    \nParis Declaration emphasizes the importance of this approach to build country capacity, in practice
    \nthe World Bank\u2019s country safeguards approach devotes significant resources to procurement and
    \nfinancing issues, but virtually ignores environmental and social safeguard issues.<\/p>\n

    What is required for adequate implementation of the safeguards?<\/h3>\n

    Many participants emphasized that transparency and accountability are necessary to implement the
    \nsafeguards effectively. The IFC\u2019s performance standard approach has focused on achieving results\u2014
    \nclients must demonstrate results, and can achieve those results however they choose. But
    \nparticipants pointed out that the WBG publishes only aggregate results, and has not demonstrated to
    \nthe public that the development outcomes of its investments are truly making people better off.<\/p>\n

    IFC, for example, tends to implement and monitor projects behind closed doors. This is particularly
    \nproblematic with financial intermediaries, where the public does not know how these intermediaries
    \nuse IFC financing. Similarly, the IFC does not make public how it determines whether an affected
    \ncommunity has given its \u201cbroad community support.\u201d<\/p>\n

    Accountability is also essential. What ensures that clients implement the WBG\u2019s requirements? In
    \npractice, the WBG will rarely cancel a loan for failure to comply with safeguard policies, so what
    \nincentives do clients have to comply? There is an over-reliance on information from clients without
    \nverification of what the client provides. Reporting requirements do not appear to be stringent, and
    \nthe WBG rarely discloses reports after project implementation begins. The WBG does not commit
    \nsubstantial resources to monitoring and continued engagement with clients.<\/p>\n

    Participants also emphasized the importance of the accountability mechanisms\u2014the World Bank
    \nInspection Panel and the IFC Compliance Advisor Ombudsman\u2014to the safeguards. IEG is
    \nconsidering the impact of these mechanisms within the safeguard system. Participants emphasized
    \nthe need for a strengthened role for these accountability mechanisms. These mechanisms can
    \nprovide recommendations to management, but this is insufficient to hold management accountable.
    \nMany participants expressed the need for an expanded mandate to monitor the implementation of
    \nthe recommendations and produced a follow up public report on the WBG success in complying
    \nwith their recommendations.<\/p>\n

    Similarly, several participants pointed out that increased flexibility reduces accountability to affected
    \ncommunities. Under the World Bank\u2019s investment lending reform approach, clients have fewer
    \nmonitoring and reporting requirements, which could reduce WBG oversight over safeguard
    \nimplementation. For example, the WBG might approve a small-scale agricultural project, which a
    \nclient could then decide to expand into a large-scale project (with more significant impacts on local
    \ncommunities). These changes could be made without the project going back to the Board of
    \nDirectors for new approval. The WBG needs to adequately monitor project implementation and if
    \nthe project design changes significantly they should need additional Board approval.<\/p>\n

    How does the WBG\u2019s internal organizational structure affect safeguard implementation?<\/h3>\n

    One participant raised concerns with the WBG\u2019s internal staff incentive systems. Staff members are
    \nrewarded for quantity of financing, rather than quality. Many staff members still view the safeguards
    \nas transaction costs, rather than a core design feature of a good development project. Furthermore,
    \nthe WBG has developed a culture where criticism (both internal and external) is discouraged. As a
    \nresult, another participant noted, the WBG lacks mechanisms to learn from past violations of its
    \nsafeguard policies, despite the growing body of evidence found in the work of the World Bank
    \nInspection Panel and IFC Compliance Advisor Ombudsman.<\/p>\n

    Specific substantive issues<\/h3>\n

    The discussion also raised a number of specific concerns with the existing safeguards, such as:<\/p>\n