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    • World Bank

    IFC still failing to track impact of investments on local communities, reports say

    Two new reports, one of which is by the IFC's own watchdog, have criticized the World Bank's private sector lending arm for negating its duty to make sure the high risk investments it makes to intermediaries are not causing environmental and social damage to communities further down the financing line.

    By Sophie Edwards // 17 March 2017

    The World Bank's private sector lending arm continues to put profit first and to inadequately monitor projects that could pose social and environmental risks to local communities, according to two new reports, including one by its own ombudsman.

    According to an internal audit carried out by the World Bank’s Office of the Compliance Advisor/Ombudsman, the International Finance Corporation is failing to ensure that the investments it makes via financial intermediaries, such as commercial banks and private equity funds — which make up an increasingly large share of its portfolio — are meeting its own environmental and social standards.

    In 2015, nearly half of the IFC portfolio was invested in financial intermediaries, but the CAO said it has little way of making sure that those investments do not harm local communities and the environment. The report states that “IFC does not, in general, have a basis to assess [financial intermediary] clients' compliance with its [environmental and social] requirements."

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    About the author

    • Sophie Edwards

      Sophie Edwards

      Sophie Edwards is a Devex Contributing Reporter covering global education, water and sanitation, and innovative financing, along with other topics. She has previously worked for NGOs, and the World Bank, and spent a number of years as a journalist for a regional newspaper in the U.K. She has a master's degree from the Institute of Development Studies and a bachelor's from Cambridge University.

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