The World Bank board's Committee on Development Effectiveness meets on Wednesday to review a new proposal that may change the way the Washington, D.C.-based institution assesses and mitigates the environmental and social impacts of its investments.
Much to the bank’s chagrin, the proposal draft leaked last week and sparked a quick reaction among human rights and environment watchers, who called it “disastrous” for the environment and a “shocking attempt to eviscerate protections for the poor.”
Wednesday’s meeting will not determine whether the proposal becomes official policy, but instead ask for the committee’s agreement to move forward with consultations, including with civil society and NGO representatives. Input from the consultations would then be used “to refine the proposals,” a World Bank spokesperson told Devex.
Environmental and social safeguards are among the most controversial and divisive bank procedures, since they are relied on to strike a balance between “transformational” investments that can boost economic growth and the adverse and disproportionate impacts those investments often carry. Safeguards are also one area of World Bank policy where human rights norms sit uneasily alongside the international financial institution’s multilateral governance structure. Member states have very diverse views when it comes to the role rights protection should play in national development plans, and some members of the bank’s 25-seat board — mainly China — have stymied efforts to bolster explicit human rights protections in the institution’s investments.
But the implications of the proposed changes to the framework may not be as immediately clear as some of the fiery online rhetoric would have it seem. Wednesday’s meeting should provide an opportunity for the bank’s leaders to delve into — and answer — some of the questions this draft proposal raises.
Here are the four questions we believe the committee should ask about the new safeguards proposal:
1. What does ‘where appropriate’ mean?
A controversial change to the policy revolves around the World Bank’s ability to defer to countries’ own environmental and social impact frameworks. “The borrower may, where appropriate, agree with the bank to use all or part of the borrower's national environmental and social framework to address the risks and impacts of the project,” the proposal reads. For that to happen, the borrower’s national framework must enable the project to satisfy the bank’s environmental and social safeguards, but what are the criteria on which to base that “where appropriate” determination?
2. What counts as a ‘national environmental and social framework?’
The draft proposal calls for the use of “national environmental and social frameworks” when those frameworks are deemed “appropriate” to achieve the bank’s environmental and social safeguards, but what if a given country’s government maintains multiple “environmental and social frameworks.” If a ministry of health upholds much higher environmental and social standards than other ministries, will the World Bank still defer to a “national framework?” What about strongly federated countries like India, where one state’s environmental and social safeguards might be much more robust than the national average, or cities with their own municipal impact frameworks? The draft proposal, as with many discussions of the appropriate use of “local systems,” leaves the definition of “national framework” very vague.
3. Is there a conflict of interest in post-disaster, weak states?
One provision in the draft document raises potential concerns about conflicts of interest, when it comes to reviewing and monitoring environmental and social impacts in post-disaster settings or in particularly weak states, Paul Cadario, distinguished senior fellow in global innovation at the University of Toronto, told Devex. The document lays out special options for situations “where the Borrower is deemed by the Bank to: be in urgent need of assistance because of a natural or man-made disaster or conflict; or experience capacity constraints because of fragility or specific vulnerabilities.” In these situations, the borrowing government may seek the “bank's support” to carry out environmental and social safeguards work. “Signing off on its own environmental and social investigations is very dangerous for the bank,” Cadario said, adding that strikes him “as a blatant example of a conflict of interest.”
4. Cutting red tape or propping up lending?
The World Bank’s reform efforts, including this effort to update and clarify the safeguards policy, are all supposed to improve the way that knowledge, expertise, and technical assistance flow to partner countries — but the bank faces pressures that go beyond whether or not it can effectively cut red tape. President Jim Kim has to show that demand for the institution’s lending and knowledge services remains robust, despite increased competition from newly emerging multilaterals and despite the board’s direction that the bank cut costs at the same time it pursues its new dual goals: ending extreme poverty and fostering inclusive growth. Changes to the safeguards policies could be seen as an effort to relax restrictions simply to prop up the bank’s lending numbers. With controversy already brewing over the draft proposal, Kim will have to work hard to show that these changes are about better development impact, not just a better bottom line.
Michael Igoe is a global development reporter for Devex. Based in Washington, D.C., he covers U.S. foreign aid and emerging trends in international development and humanitarian policy. Michael draws on his experience as both a journalist and international development practitioner in Central Asia to develop stories from an insider's perspective.