World Bank proposal to reform Investment Lending Operational Policies threaten to dilute key Safeguard enabling requirements and could severely reduce accountability at the Bank. Together with other recent developments, these reforms to investment lending suggest a systematic dilution of the Bank’s social, environmental, and transparency standards, most of which have been undertaken through non-transparent and non-participatory processes.
Some 40 civil society organizations and networks signalled to World Bank President Jim Kim their concern that a confluence of policy reforms, many of which have not been properly vetted, are leading to a substantial dilution of social, environmental and transparency standards at the World Bank. As a proposal to consolidate some 20 Operational Policies governing World Bank investment lending makes it way to an approval decision by the Bank’s Board of Directors on October 24th, civil society organizations are calling on President Kim to take notice that the policy reform process is not on track.
Recent developments, including but not limited to the proposal to weaken invesment lending requirements, appear to be undermining the positive evolution of the World Bank Group’s sustainability framework, and have the potential to impair the legitimacy of the institution.
The letter calls for a more open, systematic and informed discussion with the World Bank Group about its environmental, social, and transparency standards and their consistent application to all World Bank Group activities as necessary and critically important for securing the poverty eradication mission of the organization.
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CSO Letter to President Kim on Safeguards and Investment Lending Reform (Sep. 7, 2012) Text of the letter:September 6, 2012
Dr. Jim Yong Kim
President
The World Bank
1818 H Street, NW
Washington, DC 20433
Re: World Bank Policy Revisions
Dear Dr. Kim:
We, the undersigned organizations, welcome you to your new role as leader of one of the world’s most influential development finance organizations. We are hopeful your background and professional experience will add new perspective and energy to the World Bank Group, bringing a renewed focus to eradicating poverty and ensuring sustainable development.
We stress the importance of the World Bank Group’s work being transparent, ensuring the protection of rights of indigenous peoples and other local communities, adhering to the highest due diligence standards for development assistance, and guaranteeing the sustainable use and protection of natural resources and ecosystems.
To realize this commitment, the World Bank Group has constructed over many years crucial social, environmental, transparency, and procedural standards that apply to its activities. These were developed through multi-stakeholder processes involving Bank agencies, governments, civil society organizations and affected communities. As you know, these standards have become an important, while imperfect, benchmark for sustainable finance for other international financial institutions, governments, and companies.
A consistent and robust application of these standards to all World Bank Group lending activities is paramount for transparency, equity, and improved social and environmental outcomes. At the same time, it is essential that the World Bank’s social and environmental standards are periodically reviewed and upgraded to ensure their consistency with international standards and the legal obligations of lender and borrower countries under environmental and human rights treaties ratified by these countries.
Recent developments, however, appear to be undermining the positive evolution of the World Bank Group’s sustainability framework, and have the potential to impair the legitimacy of the institution.
The Bank’s current Investment Lending Reform (ILR) initiative proposes to eliminate or reduce critical requirements related to Bank supervision, appraisal and cost-benefit analysis. These requirements are central to efforts to address social and environmental issues related to Bank activities, yet face amendment by way of an unacceptably non-transparent and weak consultation process. The investment lending reform process is moving forward despite the fact that a more robust process to review the Bank’s environmental and social standards – the so-called ‘safeguard policies’ – is about to begin. We strongly believe current proposed changes to investment lending policies have the potential to reduce accountability at the Bank, and should be considered during the review of safeguards and a more robust consultation process.
Other initiatives that have raised concerns about transparency, environmental, and social standards include the Program-for-Results lending approach, increased lending through financial intermediaries, IFC’s Asset Management Company, and the joint Bank-IFC public private partnership (PPP) reform effort. These developments suggest a systematic dilution of the Bank’s social, environmental, and transparency standards, and most have been undertaken through non-transparent and non-participatory processes.
We note that during the Asian Development Bank’s (ADB) multi-year safeguard review process, the ADB’s President repeatedly committed, in public, to ensuring “there will be no dilution of our standards protecting the environment and the people affected by ADB projects” as a result of the Bank’s safeguard review. We urge you to make a similar commitment.
Additional recommendations for the World Bank Group include the following:
1. Undertake systematic, transparent and informed consultations when revising World Bank Group policies, in recognition of the World Bank Group’s stated commitment to civic participation;
2. Ensure that all key investment policy issues related to implementation of environmental and social standards, including, for example, project supervision, appraisal, and economic evaluation, are addressed through a robust safeguard review process;
3. Ensure that current trends at the Bank Group to lend through programs, intermediaries, and pooled funds provide, for activities on the ground, at least the same level of public transparency and attention to social and environmental concerns as lending directly to borrowers and clients.
We request a meeting with you as soon as possible to discuss these issues and how the World Bank Group is planning to consult on policy change during your tenure. We believe a more open, systematic and informed discussion with the World Bank Group about its environmental, social, and transparency standards and their consistent application to all World Bank Group activities is necessary and critically important for securing the poverty eradication mission of the organization.
We look forward to hearing from you.
Oxfam International, UK
Sasanka Thilakasiri
Human Rights Watch, US
Jessica Evans
Centro de Derechos Humanos y Ambiente (CEDHA), Argentina
Daniel Talliant
Aksi, Indonesia
Titi Soentoro
Jamaa Resource Initiatives, Kenya
Maurice Ouma Odhiambo
The Lebanese Physical Handicapped Union (LPHU), Lebanon
Mohammed Ali Loufty
Japan Center for a Sustainable Environment and Society (JACSES), Japan
Yuki Tanabe
Alyansa Tigil Mino (ATM), Philippines
Jaybee Garganerea
Institute of Research and the Promotion of Alternatives in Development (IRPAO), Mali
Mohammed Couliabaly
Global Witness, UK
Hana Heineken
Sawit Watch, Indonesia
Norman Jiwan
Fundar, Center for Analysis and Research A.C., Mexico
Mariana Gonzalez
Derecho Ambiente y Recursos Naturales, DAR, Peru
Cesar Gamboa
Greenpeace International, Netherlands
Susanne Breitkopf
Sierra Club, US
Steve Herz
Forest Peoples Programme, UK
Tom Griffiths
Urgewald, Germany
Korinna Horta
Bank Information Center, US
Mark Rentschler
Inclusive Development International, US
David Pred
Rainforest Action Network, US
Rebecca Tarbotten
International Rivers Network, US
Zachary Hurwitz
Both ENDS, Netherlands
Anouk Franck
Ulu Foundation, US
Stephanie Fried
Gender Action, US
Elaine Zuckerman
11.11.11 – the coalition of the Flemish North-South movement, Belgium
Pol Vandevoort
Friends of the Earth, US
Karen Orenstein
Pacific Environment, US
Doug Norlen
Environmental Investigation Agency, US
Mark W. Roberts
Accountability Counsel, US
Komala Ramachandra
Centre national de cooperation au developpement, CNCD – 11.11.11, Belgium
Antonio Gambini
Common, Italy
Antonio Tricario
Crude Accountability, US
Kate Watters
Halifax Initiative, Canada
Karyn Keenan
The Social Justice Committee of Montreal, Canada
Derek MacCuish
Bretton Woods Project, UK
Petra Kjell
International Accountability Project, US
Emily Joiner
Norwegian Forum for Environmental Development, Norway
Ane Schjolden
Heinrich Boell Foundation, North America, US
Nancy Alexander
Center for International Environmental Law, US
Anne Perrault