Formation of Policies at the MDBs
Concerted grass-roots activism, NGO advocacy efforts, and shareholder pressure forced the MDBs in the 1980s and 1990s to adopt policies that require varying degrees of due diligence in addressing environmental and social impacts of MDB-financed projects. For example, the World Bank established a policy on involuntary resettlement in 1980, and in 1982 it established a policy on “Tribal People in Bank-Financed Projects.” While the World Bank had adopted general environmental guidelines in the 1970s, it was not until 1987 before it instituted mandatory environmental review procedures and 1989 before it had a formal environmental assessment policy, established only after direct pressure from the U.S. government. U.S. pressure in the form of the Pelosi Amendment (See BIC’s U.S. Government webpage) also led to the formal establishment of environmental assessment “procedures” at the Inter-American Development Bank (1990) and the Asian Development Bank (the ADB had adopted procedures in the 1980s, but did not publish them until 1993).
Function of Environmental and Social Policies
Mandatory environmental and social policies and procedures at the MDBs fulfill a number of critical functions. From the perspective of the MDBs, these policies provide a means of integrating environmental and social considerations into development finance decision-making and of reducing risk exposure from costly “projects gone wrong.”
From the perspective of communities impacted by MDB projects and programs, mandatory policies establish minimum “do no harm” protections and provide the most important means for holding these institutions accountable for their actions. (Citizens may file claims of harm at many of the MDBs for perceived policy violations. For more information on these recourse mechanisms, see BIC’s Accountability page.)
As the environmental and social policies at the MDBs have been adopted on a piecemeal basis, often in reaction to development disasters and citizen and creditor government pressure, there are glaring inconsistencies both within the policy-frameworks at individual MDBs as well as between the institutions. For example, while the World Bank’s environmental assessment policy mandates a comprehensive screening for environmental impacts of project lending, there is no comparable mandatory social assessment requirement. While the World Bank and the ADB have policies on indigenous peoples, the IDB does not.