Introduction
As part of the global movement to promote a more environmentally sustainable and socially just world, we are jointly committed to prevent harm to communities negatively affected by development. We focus on a wide variety of issues—ranging from human rights to climate change to development effectiveness.
One issue has emerged that will affect many of the communities we serve. The World Bank is restructuring the way that it applies environmental and social safeguards to its investments.1 What the Bank decides to do will affect the behavior of international investors and governments worldwide. It will affect the future design of development projects, and will change the ways we hold international institutions accountable. In this rapidly changing context, civil society organizations (CSOs) from the South and North are preparing for a global campaign to hold the Bank accountable to stronger safeguards.
As an institution of 10,000+ staff, owned by 187 governments, the World Bank invests in a wide range of development activities to help meet the needs of a wide range of borrowers. The Bank’s safeguards have the potential to ensure that its investments "do no harm" to people and the environment. This briefing introduces the World Bank safeguards review, including the opportunities and threats it presents.
What are the safeguards?
For the past 30 years, safeguards have served as an important "foot in the door" for CSOs into the international development institutions. While not perfect by any measure, safeguards help to raise community voices in international decision-making, to prevent harm from happening, and to seek justice from international institutions when harm occurs.
The original safeguards were created largely as a collective call from communities and organized pressure from CSOs. In the 1980s and 90s, in response to strong public criticism of its involvement in controversial projects—such as the Narmada Dam in India, which displaced over 300,000 people—the World Bank developed safeguards to help identify and minimize harms to people and the environment. Since that time, other international institutions have also created their own safeguards. These safeguards require borrowers to mitigate certain risks in order to receive bank financing. Examples include conducting an environmental and social impact assessment, consulting with affected communities, and restoring the livelihoods of displaced people.
When communities believe that World Bank-financed projects have not complied with the safeguards, they can bring their concerns directly to the institution. Since 1993, for example, communities have been able to bring complaints directly to the World Bank’s Inspection Panel. This opens up additional avenues for dispute resolution, particularly when governments are not responsive to communities’ concerns.
Why is this review important?
In 2011-2013, the World Bank is overhauling its safeguards. The Bank was the first international organization to adopt safeguards, and its safeguards have since become the most influential model. The new safeguards will shape how other international donors and investors approach environmental and human rights protection.
In recent years, global crises such as climate change, food and fuel shortages, and financial instability have emerged that affect all development projects. The Bank created the safeguards before these issues rose to prominence.
The balance of power has shifted, as well, with the rapidly expanding influence of emerging economies such as China, Brazil, and India at international institutions. At the same time, the World Bank is facing new competition from banks in emerging economies. In 2009 and 2010, China’s Export Import Bank and its Development Bank lent more to developing countries than the World Bank did. Financial institutions from emerging economies are providing governments with low cost alternatives to the Bank. This has led to a sense of competition and uncertainty over the World Bank’s role as a leader in development finance. The Bank has responded by trying to make its safeguards more flexible in an effort to attract large borrowing countries. These changes have made it more difficult for CSOs to monitor and hold the Bank accountable for its use of public funds.
Nevertheless, the World Bank’s safeguards continue to serve as de-facto international standards for other development banks and governments. As a result, any reforms to the World Bank’s safeguards—whether progressive or regressive—will have far reaching global impacts.
What are the key debates?
A broad spectrum of CSOs from various countries and regions will participate in the safeguards review and will have their own priorities. Below are examples of some CSO criticisms of the World Bank safeguards. We also expect that CSOs will identify additional issues as the campaign moves forward. To be successful, the campaign will need to draw on the wide range of expertise of CSOs worldwide, put all of the issues on the table, and identify where we can pursue shared goals and strategies.
New types of lending
Traditionally, the World Bank finances specific development projects, such as dams, roads, and oil and gas infrastructure. These are called "investment loans." Safeguards were designed to manage the environmental and social risks associated with these specific projects. However, financing is now being channeled in ways where the borrower’s actual use of World Bank funds is often unknown. These recently introduced instruments are called "development policy loans" and "programs for results." The environmental and social impacts of these new investments are extremely difficult for CSOs to monitor.
Human rights
Most governments and international institutions use human rights standards as a way to manage risks and recognize the rights of disempowered people, particularly the poor. In many cases, CSOs have helped to incorporate human rights—ranging from the rights to life, food, and health to freedom from discrimination—into national constitutions and laws. When these same governments sit on the World Bank’s board of directors, however, they refuse to explicitly incorporate human rights into Bank policies. As a result, the safeguards do not address key issues such as labor rights, land rights, gender rights, freedom from torture and discrimination, rights of disabled persons, and indigenous peoples’ rights, among others.
Climate change
The World Bank has played a significant role in the United Nations negotiations to reach a global deal on climate change. Since 2008, the World Bank has managed multi-billion dollar climate change trust funds for the UN. In December 2010, governments signed the Cancun Agreement and created a Green Climate Fund to finance the global response to climate change. Governments selected the World Bank to manage the trust fund. In the coming years, the Bank will play a leading role in directing finance to climate change efforts, and in setting the precedents for future financing. At the same time, the World Bank has not committed to reduce its own climate change footprint. The Bank does not measure how its investments contribute to greenhouse gas emissions, and has not committed to reduce the overall climate footprint of its lending portfolio. Instead, the portfolio of fossil fuel-related projects has grown.
Indigenous peoples’ rights
Worldwide, indigenous peoples constitute some of the poorest of the poor. Although the World Bank was an early leader on indigenous peoples’ rights, it has fallen behind other development actors. For example, the World Bank’s 1991 indigenous peoples policy requires clients to create an indigenous peoples development plan, which gives people a voice in the future development path of their community. This has since become global best practice for governments and companies.
In 2004, in contrast, the World Bank slowed the advancement of indigenous peoples’ rights by creating a watered-down alternative to the international legal principle of "free, prior and informed consent." The principle requires project developers to gain the consent of impacted indigenous peoples before starting a project. The World Bank’s policy only requires developers to conduct "free, prior and informed consultations" with indigenous communities, stripping them of the right to control their traditional lands. Only since the UN General Assembly’s adoption in 2007 of the Declaration on the Rights of Indigenous Peoples has the more robust "consent" principle moved forward among governments and companies.
Access to justice
Since 1993, when communities feel that the World Bank has not followed the safeguards, they can bring claims directly to the Bank’s Inspection Panel. But it is unclear whether the Bank’s reforms will narrow the Panel’s jurisdiction.
Reliance on local laws
Globally, donors are expressing a desire to shift away from environmental and social safeguards towards greater reliance on developing countries’ local laws. This will help to attract major borrowing countries such as China, India, and Brazil to the World Bank. The Bank, for example, has developed a "country systems" approach, which allows borrowing governments to rely on their own local laws instead of following the safeguards. This helps to build countries’ own capacity, but can also mean that development projects go forward in the short term in the absence of strong environmental and human rights protections. Many poor communities do not have a voice in how their government chooses a development pathway. While it is important to ensure country ownership over development projects, this ownership should be democratic, environmentally sustainable, and socially just.
When is this happening?
The World Bank announced the start of the safeguards review in early 2011, but has remained silent on its intentions. Currently, we expect the Bank to release an "approach paper" in Fall 2012, followed by more in-depth consultations in 2013. The Bank intends to complete the review by 2013. It will be up to CSOs to demand ample time and opportunity to provide input.
While the formal "safeguards review" will begin around September, many reforms are already taking place that will affect the outcome. As a result, the Bank’s safeguards review could potentially only cover less than one-third of the Bank’s total portfolio, with the remaining two-thirds not being open to consultation. It will up to CSOs to broaden the scope of the review.
How can civil society contribute?
The World Bank’s safeguards review will have ripple effects across the world—and will hopefully create an opportunity to strengthen global standards for environmental and human rights protections. How will we know if the safeguards reforms are a success? No matter what system emerges, the Bank should avoid supporting activities that would cause environmental damage or human rights violations. Communities will need to be aware when a World Bank investment impacts them, and must be able to voice their concerns directly with the Bank (in addition to local remedies).
We will soon initiate global and regional discussions to identify campaign priorities, strategies, and effective coordination. CSOs can take several steps to help ensure a successful campaign:
Ensure that voices in the Global South play an active, leading role.
Demand a strong consultation process so that local voices can be heard.
Participate in regional consultations.
Submit written or recorded commentaries to the Bank that reflect local experiences.