World Bank's Updated Safeguards a Missed Opportunity to Raise the Bar for Development Policy

Despite an unprecedented consultative process involving thousands of stakeholders from government, civil society, and the private sector, the review and update of the World Bank safeguard policies has proven to be a missed opportunity for the Bank to reclaim its place as a global leader in development. While the new Environmental and Social Framework (ESF) includes promising new areas of policy coverage, it lacks the strength and clarity that people negatively impacted by development so profoundly depend upon. It is therefore critical that the Bank utilize the upcoming implementation period to address the weaknesses of the new Framework and build on its strengths to ensure that it ultimately leads to a more equitable and sustainable approach to development.

For decades World Bank safeguards have been viewed as the gold standard in development finance. The Bank was the first development finance institution to adopt mandatory safeguard policies to prevent and mitigate environmental and social harms. These policies have served as a model for other institutions and set the bar for development policy generally. With the development landscape undergoing rapid change over the last several years, the safeguards review represented a historic opportunity for the World Bank to once again take the lead among its peer institutions. The outcome of the review, however, is clearly a result of political compromise rather than an effort to set a new paradigm for development policy.

As a whole, the ESF represents a fundamental shift in the way the Bank has approached safeguards for over thirty years. Most concerning, it moves the Bank away from a system of rules-based compliance and toward a system of unprecedented flexibility that favors using a borrower's own laws and policies in lieu of Bank safeguards--despite the widely varying capacity of borrowers to deal with social and environmental impacts of risky development projects. Similarly, the ESF allows for third party financial intermediaries (FIs) to take responsibility for managing social and environmental risk, leading to concerns around the processes through which communities will be able to seek redress for harm. Existing mechanisms for transparency and oversight are also undermined by the pervasive vague language and loopholes in the ESF, which will not even be applied to over one third of the Bank's total portfolio. In some of the most problematic areas of change, the ESF represents a profound weakening of existing protections, putting it at odds with U.S. Congressional mandates as well as President Kim's commitment not to dilute the safeguards.

On certain issues, however, the final ESF represents an improvement over earlier drafts and current policies. A key disclosure requirement that provides communities with crucial information before a project is approved has been added in this draft, bringing the ESF closer to current safeguard standards. The ESF also expands the reach of safeguards into new areas that were previously ignored or underrepresented--including labor, discrimination, stakeholder engagement, and disadvantaged and vulnerable groups. These new requirements will help prevent negative impacts of projects on the most marginalized, including children, persons with disabilities, women, ethnic and religious minorities, and those that identify as LGBT, and to enable those groups traditionally excluded from development to share in its benefits.

These improvements in the ESF are not without their caveats. With regard to labor, for example, the ESF includes provisions related to child labor and forced labor, but lacks reference to core ILO conventions. Language defining disadvantaged and vulnerable groups in earlier drafts has also been removed from the main policy in the latest draft. Bank's clear commitment to prevent negative impacts on disadvantaged and vulnerable groups, including children, early in the project cycle is a step in the right direction. However, it is disappointing that the Bank chose at this late stage to move key language defining those groups from the policy to a management-level directive without providing stakeholders a chance to review and comment on such a significant change.

The updated ESF also represents progress toward inclusion of disability in World Bank policy, yet improvements are still necessary to ensure persons with disabilities will share in project benefits. The new ESF shows that the Bank is making progress in considering persons with disabilities in its operations. However, this latest draft does not go far enough to ensure persons with disabilities are fully able to benefit from Bank projects. The term 'inclusion' in the updated ESF should be clearly defined and include persons with disabilities as this is essential to ensuring that barriers to participation in the design, implementation, monitoring and evaluation of Bank projects are removed.

Another positive development in the updated ESF is a new policy on Stakeholder Engagement and Information Disclosure, which would require borrowers for the first time to engage with project stakeholders in a much more systematic way than current policies demand. However, many borrowing countries do not have the national systems in place to conduct meaningful, accessible, and safe consultations with impacted communities and project stakeholders. In order for the new policy to allow for effective engagement, the Bank will have to increase its supervisory role, particularly for high and substantial risk projects and for those taking place in countries where communities and civil society may have limited capacity and space to operate.

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Photo caption: Protesters in front of the World Bank office in Brussels (Belgium), September 2014 (Photo credits: Arnaud Ghys)

Other areas in which the ESF clearly does not go far enough include climate change. The updated ESF pales in comparison to the Bank's powerful rhetoric on the immediate need to address this global crisis, and there is a concerning lack of emphasis on potential impacts to the climate resilience of communities and ecosystems. The ESF only requires estimates of greenhouse gas emissions for some projects to the extent 'technically and financially feasible. Combined with the Bank's commitment to increase its climate-focused spending from 21% to 28%, it remains unclear how it plans to mitigate the negative climate impacts caused by the vast remaining portion of its lending.

As it relates to forests and natural habitats, the updated ESF can be characterized as a serious dilution of current policy. The World Bank's existing safeguards on forests and natural habitats have been collapsed into one standard that fails to consider or protect environmental values other than biodiversity, and introduces the possibility of offsets in critical habitats. For the first time in the history of its safeguards, the Bank has given a green light to industrial logging and other projects in protected forests. At the same time, it has stripped away protections and rights from forest communities, leaving them and the forests they depend upon highly vulnerable.

The characterization of the ESF as a missed opportunity is perhaps most emblematic in its treatment of human rights. By referencing human rights only in the "Vision Statement" of the ESF, which includes no operational requirements on either the Bank or borrowers, the Bank is setting itself apart from other development institutions that have already committed to respect human rights in their activities. The Bank's failure to recognize the right of indigenous communities to give their consent to development projects also threatens to increase their vulnerability at a time when their resources and their very lives are increasingly at risk. The ESF does little to strengthen the land rights of people affected by its investments, and despite disastrous failures in its record of displacing people, does not extend adequate protections to those evicted as a result of Bank projects.

While serious concerns remain about the text of this document, the World Bank has the ability to improve the ESF through the development of detailed guidance notes, proper tools, and well-resourced support during the critical implementation process. The disappointingly low bar for the safeguards--"no dilution"--should not be the Bank's benchmark moving forward. Instead, the original ambitious objectives of the review process should guide the implementation period, including enhancing protections for people and the environment, providing inclusive access to development benefits and seeking the participation of communities that stand to be impacted.

Co-authored with Jolie Schwarz, Legislative Affairs Fellow at Bank Information Center