World Bank chief defends new safeguards

By Michael Igoe 05 August 2016

World Bank President Jim Yong Kim. Photo by: Grant Ellis / World Bank / CC BY-NC-ND

The World Bank Group’s new environmental and social protection policies — or safeguards — are a tale of (at least) two interpretations.

The bank’s board of executive directors approved the new safeguards policy Thursday, the culmination of a multiyear effort to update social and environmental protection policies in World Bank projects for the first time in two decades.

The consultation and revision process has been closely scrutinized. Civil society critics charge the World Bank’s new protection policies are riddled with loopholes that could allow countries to overlook harmful impacts from road construction, energy and dam projects, and other infrastructure investments. Optimists call the safeguards update a multilateralism success story that will improve country ownership of development projects.

After the board approval Thursday, World Bank President Jim Yong Kim held a briefing and urged reporters to “reflect” on how challenging multilateral decision-making has been in recent years. Kim referenced issues such as membership in the European Union and the international response to the Syria crisis as evidence of the difficulty of finding consensus.

“I hope that everyone will reflect a bit on just how difficult this was, how much noise there continues to be, despite the fact that we’ve reached some kind of resolution,” he said.

Kim asked reporters to consider the World Bank’s difficult position as arbiter of nearly 200 different countries’ agendas and concerns. On one hand, Kim said, developing countries consider access to World Bank financing a “life or death issue,” while on the other, donor countries want to uphold “very high standards” for social and environmental protections. The bank could make its safeguards so demanding that it becomes “literally impossible to take a loan from the World Bank Group,” Kim said, or, “you can make the safeguards in a way that will allow … things to happen to the poor, to indigenous people that we don’t want to happen.”

“This [new safeguards framework], we feel, is the best possible compromise,” Kim said.

After the board approval, civil society groups were quick to reiterate that gaps remain in the new safeguards policy.

“Ultimately, the real test of these policies will be how they work in practice,” the head of Oxfam International’s Washington office, Nadia Daar, said in a statement.

Much of the criticism of the updated safeguards stems from the World Bank’s decision to allow borrowing countries to use their own accountability mechanisms to hold development project implementers responsible for compliance with the bank’s social and environmental standards.

Critics say this gives countries too much leeway to ignore social and economic costs to affected populations, environmental impacts, or other harm inflicted by bank-funded projects, thereby “diluting” the safeguards’ regulatory power.

Bank leaders say countries’ accountability mechanisms will be thoroughly assessed before they are entrusted with responsibility and that this system could help countries improve their own project management and oversight, instead of outsourcing it to international consultants.

“We should expect that this is going to start out in a very gradual way in those countries where the internal capacity, institutional capacity is materially consistent with achieving the objectives of the standards,” said Hart Schafer, the World Bank’s vice president for operations policy and country services.

“There’s going to be a rigorous assessment by the World Bank, and once there’s agreement to use the borrower framework full or in part, that does not mean that the World Bank is not going to carry out the same level of oversight and due diligence we are doing now,” he said.

The bank has pledged to increase funding to support safeguards implementation, including harmonizing the rollout across the institution and strengthening the capacity of borrowers. Kim said his expectation is that the World Bank will dedicate additional staff to safeguards oversight once the new policies go into effect.

“It is more complicated,” Kim said. “We have to do two things at once … We need to both be extremely rigorous in implementing the safeguards, and at the same time we have to ensure that it doesn’t slow things down.”

The new policies are expected to go into effect in early 2018. To govern those projects approved before the launch of the new safeguards, the bank’s current safeguards are expected to run in parallel for approximately seven years.

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About the author

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Michael Igoe@AlterIgoe

Michael Igoe is a senior correspondent 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.


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