Shifting Risk from the Poor to the Powerful Through Accountability: 2019 World Bank Group Annual Meetings Read Out

When development institutions like the World Bank Group (WBG) talk about their “risk-management services,” as President David Malpass did in his speech at the WBG Annual Meetings that just concluded, the risk being managed is that of losses to governments and corporations that benefit from public development finance.

Accountability Counsel and many of our colleagues participating in the Civil Society Policy Forum, held during the Annual Meetings, highlighted the WBG’s duty to urgently reframe thinking about risk. Rather than financial loss, the WBG should think about risk in terms of the people, and the environments they depend on, that the bank exists to serve.

As our partners at Save Lamu in Kenya describe a planned coal-fired power plant, facilitated by WBG policy support, “we are grieved that whatever ecological value the site has now will be permanently lost. We fear the ash will be blown by our monsoon winds and may settle on nearby houses, vegetation, and ocean. There can also be runoff of these pollutants by rain and this will contaminate both our lands and water.”

For people in Lamu and communities around the world, the WBG needs strong accountability systems that allow redress of negative impacts of investments and prevent risks that undermine their development. The WBG has two accountability offices as part of their system — the World Bank Inspection Panel and the International Finance Corporation (IFC) Compliance Advisor/Ombudsman (CAO), governing public and private financial flows respectively.

Feeding Collective Recommendations for Accountability Into Live Policy Reviews at the WBG

At the Policy Forum, Accountability Counsel collaborated with the Centre for Research on Multinational Corporations (SOMO) and Fundación para el Desarrollo de Políticas Sustentables (Fundeps) to explore what it means for these accountability systems to be accessible and effective for communities experiencing harm from projects. Since co-publishing the 2016 report, Glass Half Full?, which comparatively assesses challenges in the state of accountability across 11 multilateral development banks, Accountability Counsel and partners have compiled recommendations for robust accountability systems that would reflect the strongest policy provisions of existing accountability offices at various development banks. The soon-to-be-published recommendations are intended to be a “living document” that serves to guide and improve institutional accountability as accountability offices and larger institutional frameworks evolve.

We will channel the recommendations into the live, and troubled, reviews of the Inspection Panel and the IFC’s accountability framework, including the CAO. So far, both reviews have been characterized by lack of transparency, with civil society organizations and communities neither apprised of the full scope of the reviews, nor afforded adequate opportunities to contribute input. The irony can’t be lost on the WBG: it must not review its accountability systems in an unaccountable way. The WBG must ensure that the review processes are inclusive and result in stronger accountability frameworks to improve community access to the accountability offices and meaningful remedy.

Challenging Accountability Systems to Deliver Remedy

“If we skip work for more than two days, they cut our wages,” said Rita Bhuyan, a tea worker on IFC-owned plantation in Assam, to a Devex reporter. “How can I make sure I’m ready to work in two days? The doctor comes for just two hours during the day, when I was out picking leaves,” said the 36-year-old, who used a pseudonym to speak frankly.

After tea workers on Rita’s plantation in Assam, India filed a complaint to the CAO due to the IFC’s investment in the tea company perpetuating abuses around medical care, housing, sanitation, wages, freedom of association, and pesticide exposure, the CAO found the IFC had failed to follow its social and environmental policies. Unfortunately, the IFC has not appropriately responded. Although Accountability Counsel has worked for years with an alliance of tea workers to demand justice after the CAO’s findings, remedy has not been delivered to tea workers like Rita.

Where development bank money has contributed to social or environmental harm, the institution is responsible for providing resources to fully redress the harm to communities. At a CAO- and SOMO-sponsored event at the Policy Forum, Accountability Counsel board member David Hunter highlighted the challenges that communities have experienced in accessing remedy for harm caused by IFC projects. As it stands, communities bear the entire risk of failure with respect to environmental and social standards in IFC development projects.

If the IFC seeks to claim the benefits of its development projects, it must also acknowledge its role in any negative project impacts as well and work to remediate harm. One means of addressing adverse impacts explored at the CAO/SOMO panel is the creation of a fund dedicated to assist in implementing community-endorsed remedies. In our experience supporting communities that have struggled with the ‘last mile’ of accessing remedy, Accountability Counsel encourages the IFC and other development banks to commit remedial fund resources in order to ensure that their accountability systems are meaningful.

Accountability Must Not Hide Behind Financial Intermediary Lending

In addition to the Policy Forum, Accountability Counsel attended a workshop sponsored by our civil society partners on the growing challenges related to financial intermediary (FI) lending. FIs, which may include entities like commercial banks, investment funds, or insurance companies, receive money from development banks to invest in their own project portfolios. Social and environmental standards that development banks require are often lost through FI links by the time that finance reaches communities. As our community partners in Lamu, Kenya have seen, when harm occurs from an FI sub-project, communities must be able to access accountability and remedy.

At the workshop, Accountability Counsel’s Robi Chacha relayed first-hand experience navigating the IFC’s failure to track and disclose FI sub-projects and barriers to accountability those problems created in our work with communities opposing the coal power plant in Lamu, Kenya, which has been linked to a number of IFC FI clients. Accountability Counsel’s policy advocacy around the IFC accountability framework review seeks to ensure that the ineligibility finding we saw with the Lamu communities’ complaint due to these barriers is not repeated. Recognizing that more than half of the IFC’s lending portfolio now funds FIs, we will continue to advocate for greater accountability across the value chains of development bank lending.

The Annual Meetings connected us with partners and created momentum around our work to strengthen accountability at development banks, all within a movement for justice for communities and the environments they depend on. Read more about our advocacy relating to the World Bank and the IFC.