Elana Berger Child Rights Program Associate +1 (202) 624-0634 eberger*bicusa.org
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Beginning in the late 1980s, World Bank Safeguard policy requirements have been the cornerstone of Bank support for sustainable poverty reduction and the key to effective development.
In response to a changing global context, the Bank is considering how environmental and social safeguards must change to remain part of the core mission. The Bank’s safeguard policy review is part of a sweeping operational policy reform process that 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. Civil society organizations (CSOs) from the South and North are engaging in a global campaign to hold the Bank accountable to stronger, more comprehensive and properly implemented safeguards.
In the midst of a Bank-wide strategic reorganization, the World Bank formally initiated a two-year safeguards review in July 2012, following commitments made by management in response to a comprehensive internal evaluation of safeguard policy performance. Upon release of an “approach paper” for the Safeguard review process in early October 2012, the Bank began a three stage consultation process that will run at least through early 2015. CSOs from various countries and regions will participate in the safeguards review.
BIC focuses on the following areas:
The World Bank is updating and restructuring the way that it applies environmental and social safeguards to its investments.
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 are designed to ensure that its investments “do no harm” to people and the environment. Safeguards also help the Bank to do good by building institutional capacity and enhancing a number of economic development benefits. Safeguards also assure that those project benefits are shared equally.
What are the safeguards?
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 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 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, among other large middle income countries, 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.
When is this happening?
While the formal “safeguards review” began in October 2012, 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 half of the Bank’s total portfolio, with the majority of Bank lending not being open to consultation. It will be up to CSOs to broaden the scope of the review.
How can civil society contribute?
CSOs can take a variety of 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
New types of lending
Non-investment lending activities are growing as a percentage of Bank lending.
Other IFIs, such as the Asian Development Bank and governments provide safeguards coverage of non-IL activities. The Bank has fallen behind international best practice.
The World Bank safeguards review should not be limited to investment lending, but rather should include full and systematic consideration of possible safeguards application to all Bank activities and operations with potential for significant environmental, social, or human rights impacts. Any decision on the coverage of the safeguards should come at the end of the safeguards review, not at the beginning. Whether or not the Bank attempts to limit the scope of the safeguards review to investment lending. CSOs will continue to push hard for safeguards application to all types of Bank activities with potential for significant social, environmental, and human rights impacts.
Although there is good content in the IFC sustainability policy and performance standards (e.g., on labor, FPIC, community impacts, health and safety, among others), IFC’s approach devolves too much responsibility to borrowers, tolerates open-ended compliance, lacks transparency, fails to meet Pelosi Amendment standards for public availability of EAs, and has other major weaknesses that make IFC undesirable as a model for the World Bank safeguards to emulate. Similarly, despite helpful efforts by the US and other EDs, the recent investment lending “reform” (ILR) exercise eliminated or downgraded to non-binding guidance dozens of formerly mandatory supervision and economic evaluation requirements.
Neither the IFC nor the ILR approaches should be considered appropriate as models on which to base the World Bank safeguards update. The Bank should build on its existing strengths and incorporate the best of international law and practice from all relevant institutions, including for example the ADB and OPIC.
Reliance on local laws and borrower systems
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 path or decides on specific high risk investments. While it is important to ensure country ownership over development projects, this ownership should be democratic, environmentally sustainable, and socially just.
The IFC investment model also relies heavily on a borrower’s system for managing environmental and social risks (ESMS). However, recent evaluations of large segments of IFC lending suggest that reliance on borrower systems is not adequately accountable or clearly delivering pro-poor outcomes.
Many borrowers have cautioned the Bank on moving too quickly and without adequate guarantees to the use of borrower systems. The ADB CSS initiative has focused on the careful strengthening of the capacity of country systems before devolving safeguard responsibilities. Bank safeguards can be more effective in strengthening and selectively using borrower systems only if such a process is properly designed, transparent, and accountable to an acceptable set of standards.
Moving safeguards “upstream” in the decision making process
The Bank’s country lending strategies include plans for numerous high-impact activities such as dams, roads, and agriculture. The only way these multi-year plans and resource allocations will not have significant impacts is if the Bank does not fund them. As activities with significant risk, communities that might be affected should have ample space to participate and inform strategies to avoid or mitigate those risks. See ESAM page for more information on CSO recommendations for upstream risk assessment.
Indigenous peoples’ rights
In 2004, for example, 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.
Rights of persons with disabilities
Rights of children
Access to justice
Safeguards Case Studies of World Bank Group Projects , April 2014
Vital Recent Correspondence
World Bank Safeguards Review Team Presentation at the 2014 Spring Meetings , April 12, 2014
United States Comments on the World Bank Safeguards Review, April 29, 2014
Initial Comments by Civil Society Organizations on the World Bank Safeguards Review, December 2012
Letter to President Kim accompanying CSO Comment on Safeguard Approach paper, December 20, 2012
World Bank reply to letter on Safeguard Policy review, January 13, 2013
CSO Letter to President Kim on Safeguards and Investment Lending Reform, September 7, 2012
CSO letter on World Bank safeguards review, September 14, 2011
World Bank response to CSO letter on safeguards review, September 20, 2011
World Bank Safeguard Policies
World Bank Safeguard Review Consultation Page, August 2012
World Bank Operational Manual
Program for Results (P4R, OP 9.0)
Development Policy Lending (OP 8.60)
Investment Lending Policy (OP 10.0)
IFC 2010 Performance Standards and Sustainability Policy Review
World Bank Guidance Note, Stakeholder Consultations in Investment Operations, November 2011
Some Evolving Trends at the World Bank, May, 2014
World Bank Business Modernization, April 11, 2012
Annexes to World Bank Business Modernization Report, April 11, 2012
The World Bank Corporate Scorecard, March 12, 2012
BIC Update: World Bank modernization agenda advances, sets stage for Safeguard review, June 18, 2012
How will the World Bank safeguards affect your country?
“Will Safeguards Survive the Next Generation of Development Finance?”, Kirk Herbertson, International Rivers, June 2012
The Matrix System at Work: An Evaluation of the World Bank’s Organizational Effectiveness, IEG May 2012
IEG Evaluation Brief, Evaluative Directions for the World Bank Group’s Safeguards and Sustainability Policies, No. 15 (July 18, 2011)
IEG Evaluation, Safeguards and Sustainability in a Changing World, 2010
Development Policy Operations & 2012 DPO Retrospective
2012 DPO Retrospective
Global Witness comment on 2012 DPO Retrospective, August 31, 2012
CSO Comment on World Bank 2012 Development Policy Operation Retrospective (BIC, DAR, FUNDAR) Sept 1, 2012
World Bank defends integrity of Development Policy lending, evidence lacking, January 2012, BIC
World Bank & Development Policy Lending in Brazil: Lessons for Revising DPL Policy, September 2011, BIC
World Bank and DPLs: What middle income countries want, February 2011, BIC
Civil Society Safeguard analysis & news
CSO Safeguard Approach Paper (forthcoming)
World Bank Safeguard Policy Review: Early Issues, What to Expect?, August 2011, BIC
World Bank Safeguards Review Background, July 28, 2011 (Español), (Français)
World Bank gets jittery by Richard Mahapatra, July 15, 2011 (Down to Earth website)
CSO Civil Society Comments and Concerns about the World Bank’s Proposed “Program for Results” (P4R)
P4R Program for Results Lending Update, February 29, 2012, BIC
Asian Development Bank
African Development Bank
Inter-American Development Bank
FCPF Common Approach Assessment of World Bank, IDB and UNDP – FCPF summary of Common Approach results
CSO statement on MDP Common Approach following PC9, July 13, 2011