15 March 2006
The Compliance-Advisor Ombudsman (CAO) released last week its comments on the January 25th drafts of the International Finance Corporation’s (IFC) Safeguards policies, which the IFC approved February 21, 2006. Following the IFC’s lead, a collection of private sector financial institutions intends to complete a review of their guiding policies on social and environmental issues, the Equator Principles.
On March 6, 2006, the Compliance Advisor Ombudsman (CAO), the World
Bank Group’s institutional appeals mechanism for communities affected
by projects involving the International Finance Corporation (IFC) and
the Multilateral Investment Guarantee Agency (MIGA), posted online
comments it submitted during the IFC’s review of its safeguards and
disclosure policies. The IFC approved its new Policy and Performance
Standards on Social and Environmental Sustainability and Policy on
Disclosure of Information on February 21, 2006, which then take effect
May 1, 2006.
While noting some areas in which the IFC had
strengthened the requirements for its operations in the private sector
from previous draft policies, the CAO expressed a number of misgivings
about the IFC’s truncated approach and lack of minimum benchmarks. The
main concerns raised by the CAO highlighted the failure of the IFC to:
- firmly commit to reporting on development impact and effectiveness at the project level;
- address institutional inadequacies for implementing the new Safeguards;
- implement recommendations of the Management’s Response to the Extractive Industries Review;
- and
insure that the Performance Standards actually strengthen current
minimum benchmarks for environmental and social sustainability,
transparency, and accountability
Civil society calls the new policies a 'risky experiment'
International
civil society organizations have called the IFC’s new policies a risky
experiment that could leave the people and environments affected by its
projects more vulnerable than they were before. Specific concerns
center around the new standards failure to specify when consultation
with local populations affected by its operations will take place, or
to protect the rights of indigenous peoples to their lands and natural
resources. Civil society experts argue that both the IFC’s former
policies and a growing body of international norms are more stringent
than the new standards. “Undercutting the rights of the world’s poor to
make things easier and cheaper for the IFC’s corporate clients won’t
lead to equitable or sustainable development. Rather, it will lead to
increased impoverishment and resistance,” said Dana Clark from the
International Accountability Project.
Equator Banks to follow IFC lead
A
week after the approval of the IFC Policies, a group of private-sector
lending institutions met in Vienna to discuss proposed revisions to the
Equator Principles, a set of guidelines adopted by these banks to
govern internal environmental and social procedures for their lending
operations. The so-called “Equator Banks” (EBs) have agreed to abide by
the World Bank’s environmental and social safeguard policies. The
objectives of the EB's review are to “1) reflect implementation
learning from the past two and half years, 2) incorporate comments from
various stakeholders received during this period, and 3) to ensure
incorporation of, and consistency with, the IFC Performance Standards.”
The Equator Banks will hold a “short engagement” with stakeholders
prior to re-adopting the new Equator Principles on April 30, after
which they will take effect on July 1.
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