ADB leads push for requirements-based safeguards

The Asian Development Bank-supported Lahendong geothermal power plant in Manado, Indonesia. A report released on Nov. Safeguard policies are meant to protect communities from the harmful effects of the projects by multilateral development banks. Photo by: ADB / CC BY-NC-ND

The Asian Development Bank’s Independent Evaluation Department released Tuesday a comprehensive review of the Manila-based institution’s safeguards policy to serve its Asia-Pacific clients more efficiently, effectively and sustainably in the bank’s development programs.

The 89-page report — part of a five year operational requirement following ADB’s implementation of its safeguards policy statement in 2009 — highlights the need for multilateral development banks and other institutions to focus more on a requirements-based approach to designing and implementing social and environmental safeguards, along with increased flexibility and context over an “aspirational approach” to safeguard standards that ADB says the World Bank is currently pursuing to reform its own safeguards policy.

“Safeguards are needed because public and private investors do not automatically mitigate the damages that spill over from their actions,” Vinod Thomas, ADB’s independent evaluation director general, told Devex. “Meeting the safeguards cannot be aspirational or a goal to be considered down the road, but rather a regulation that is legally binding.”

Safeguard policies, particularly focusing on social and environmental issues, have recently become a buzz topic in global development, as the increasing number of new players entering the aid arena — particularly the China-led Asian Infrastructure Investment Bank and the BRICS’ New Development Bank — may not adhere as strictly as Western-dominated institutions like ADB or the World Bank to protect people and the environment.

“The additional sources of finance for infrastructure will be good for Asia’s legendary economic growth,” Thomas said in a bank statement. “But this raises the stakes — and presents a unique opportunity — for guaranteeing social and environmental defenses.”

Safeguard issues, when not prioritized or more so ignored, can pose extremely negative effects in a development project. Walter Kolkma, a director of ADB’s independent evaluation and principal author of the report, explained to Devex that without safeguard policies there is nothing to stop environmental damage, noninclusion of affected population or involuntary resettlements.

These policies, though, are more easily laid out than implemented. Thomas explained that despite safeguards’ importance in the whole development process, some of these standards are “often inadequately implemented by governments and businesses, even as it makes economic sense against spillover damage.”

“It is good economics to have regulation and compliance that deflect these damages or negative externalities,” he explained. “Flexibility in how the damages are addressed, at least [the] cost would be welcome, but that should not be confused with flexibility in whether and to what extent the ill effects are dealt with.”

Recommendations

The report cited five recommendations to improve ADB’s operations in designing, implementing and monitoring development projects.

Among these are the need to prioritize so-called category B projects, move away from a “front-loaded approach” on supervising; streamline the reporting and disclosure of progress and results; make country safeguard systems more systematic and phased, and build their capacities to do so; and explore efficient ways for staff and executing agencies to make adjustments when needed.

Thomas said that safeguard targets should also be made legally binding through the passing of law or policies and not just recommendations so compliance is ensured. Some examples include carbon taxes, greenhouse gas emission caps and even national policies like the Philippines’ clean air and water acts.

The independent evaluation chief, who previously headed the World Bank’s Independent Evaluation Group, further explained that monitoring and evaluation of development projects “with substantial risks” should also be “verified by an accredited third party and disclosed publicly” for greater objectivity, comprehensiveness and accountability.

These recommendations, for the most part, have been heard and discussed by ADB’s top management, which in a response dated Oct. 30 agreed with the majority of the report’s findings.

“We very much hope that IED will include in the evaluation team experienced safeguard specialists … [and] seek the views of ADB’s clients, as well as other stakeholders,” the response reads.    

Staff development

One of the most salient points in the report includes an intensified focus on safeguards and evaluation staff.

“Increased costs for staffing and other resources needed for effective safeguards in projects are worthwhile given the rising social and environmental risks facing emerging economies,” according to the ADB statement.

Kolkma added: “Continuous training is needed and more field-based checks by safeguard staff, especially for projects with environmental risks, and also new training in such areas as biodiversity, pollution, GHG assessments, and occupational health and safety issues.”

Other contributions, according to the report, include the need for better quality guidance notes for staff — which management acknowledged and vowed to improve by circulating additional guidance on the contents of monitoring reports and links to online materials.

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About the author

  • Lean 2

    Lean Alfred Santos

    Lean Alfred Santos is a Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. Prior to joining Devex, he covered Philippine and international business and economic news, sports and politics. Lean is based in Manila.