The World Bank Group’s Conscious Evolution Must Also Be Conscientious: The Imperative for Responsible and Rights-based Climate Finance.

The World Bank Group (WBG) is evolving its mission to confront a “crisis of development” precipitated by climate change, biodiversity loss, pandemic risks, rising fragility and conflict, and global economic distress. By its very definition, the Evolution Roadmap it has offered for public consultation is evidence enough that this is intended to be a conscious evolution. So, how has WBG consciously proceeded? So far, it has focused on scaling its operations to be bigger, faster, and with heavy reliance on the private sector.

Accountability Counsel, supported by 22 civil society organizations, have called upon the World Bank Group to confront yet another crisis– a crisis of impunity posed by the environmental, social, and human risks of these scaled operations, inefficiencies and deficiencies in its independent accountability mechanism (IAM) processes, and its historic refusal and neglect to provide remedy for harm.

An Evolution to Accountability Roadmap

As the WBG vies to lead on climate finance, its crisis of impunity jeopardizes a just and inclusive transition that leaves no one behind, especially those it aims to serve. Its conscious evolution must therefore also be conscientious; WBG must reflect on how it has often failed to ensure rights-compatible development impacts, and how those failures have made some communities more vulnerable to the crises now before us. Civil society has responded with an Evolution to Accountability Roadmap, outlining necessary reforms to govern the WBG’s evolution and ensure that communities impacted by WBG financing remain at the center of its broadened mission. The Evolution to Accountability Roadmap urges WBG to appreciate and respond to three challenges:

1. Acknowledge the heightened environmental, social, and human rights risks of responding to the climate crisis rapidly, at scale, and with heavy reliance on the private sector, and deliver on remedy as a discrete development objective;
2. Acknowledge that the WBG evolution is proceeding as civic space is shrinking, and deliver on commitments to protect those who raise concern about WBG projects; and
3. Acknowledge the importance of accountability to achieving just, inclusive, and resilient development impacts, and deliver on strengthening and empowering its IAMs.

Details of the Evolution to Accountability Roadmap

The Evolution to Accountability Roadmap can be distilled to three ‘R’s: Rights, Readiness, and Remedy.

Rights

The rights of project-affected communities, and the safety of those asserting their rights, must be of primary concern in the face of increased conflict, fragility, economic inequality, and authoritarianism. “Misplaced Trust” – a new report from the Coalition for Human Rights and Development – documents a deeply concerning practice of multilateral development banks offloading onto clients the duty to both assess the likelihood of and respond to instances of retaliation against those raising concern about projects. The WBG does this despite clients often being implicated in the retaliatory actions.

Each lending arm of WBG has so far acknowledged the importance of protecting civic space by asserting zero tolerance for reprisals and retaliation (see these statements by the World Bank and the International Finance Corporation), but its failures in addressing ongoing attacks against those who raise concerns or voice opposition to its projects demonstrate that more is needed to actualize those commitments. Enforceability is essential to any zero-tolerance policy; the Evolution to Accountability Roadmap therefore calls on WBG to protect civic space and respond to instances of reprisal and retaliation with consequences, including sanctions and debarment.

Readiness

The WBG must also evolve its readiness to respond to potential and actual harm by strengthening its IAMs and improving its responsiveness to complaints. Some barriers to readiness have much to do with stakeholder engagement and disclosure–WBG has never required itself or its borrowers and clients to inform project-affected communities about the existence of its IAMs and their processes for investigating environmental and social compliance and facilitating remediation. IAMs cannot be effective if they are unknown. WBG must ensure that project affected people understand the processes it has created to help to protect their rights.

Other barriers concern access. For example, the World Bank has restricted the agency of communities to choose their representatives in a complaint process, and it retains an ability to deny and limit the scope of investigations against IAM recommendations. The WBG IAMs also have limited review over complaints concerning global public goods, which should give pause considering that global public goods are soon to be a primary focus of WBG lending.

Efficiency is also at issue. WBG IAM policies deny communities the opportunity to engage in dispute resolution during or after a compliance investigation, stifling opportunities to resolve acute matters as investigations into WBG actions and oversight proceed, or when an investigation confirms noncompliance best resolved through a dispute resolution process.

Readiness also relates to the WBG’s willingness to respond to complaints. IAMs can be leveraged to deliver positive development impacts only if WBG respects their independence in earnest. In this regard, respecting and deferring to the independent and neutral status of IAMs when considering their findings and recommendations is critical. There are several ways to respect and protect the IAM independence, including by:

• Relying on the WBG Board, and not the bank’s President or other management representatives, to select apolitical IAM leadership;
• Valuing the perspective and insight that IAMs can offer with respect to remedy; and
• Developing public policies detailing how WBG will effectively engage with its IAMs to respond to concerns, enable remedy, and implement remedial actions.

Remedy

The WBG must finally take responsibility for remedying unintended harm caused by its own environmental and social due diligence deficiencies. Not only does this reflect the fundamental “do no harm” principle, but also embracing remedy as a facet of development will ultimately benefit the sustainability of projects done in partnership with private sector actors who do not share the same claims of immunity from lawsuit as multilateral development banks. If WBG seeks to entice a risk-averse private sector to risk-laden environments, then there’s all the more reason to offer strong risk-based due diligence and shared responsibility for remedying adverse development impacts.

The matter is as ethical as it is prudent. The WBG’s default position has been to avoid financing remedy and instead rely on borrowers and clients to use their own resources. As a result, communities endure what is often a multi-year IAM process validating their experiences of harm and negotiating from a position of loss with limited leverage, only to be denied full and timely remedy because of insufficient resources, decisions to proceed defensively against potential legal liability, or decisions to limit expenditures on remedy to minimize profit loss. The position is no longer defensible, especially considering the WBG’s willingness to fund remedial efforts on other fronts. Just as the Evolution Roadmap envisions contingency funds to respond to catastrophic crises that compromise development projects, the WBG can develop contingency funds to respond to unintended harm that stems from the projects themselves. Just as it has developed a sanctions framework to deter fraud and the illicit capture of funds, it can impose consequences for clients who fail to remediate harm.

The WBG must also develop a public policy on how it will responsibly exit projects. To keep the promise of the 2030 UN Sustainable Development Goals (SDGs) to leave no one behind, WBG must commit to never exit projects without first ensuring the delivery of remedy for adverse impacts to the satisfaction of project-affected communities.

The Evolution Will Be Televised

Other development banks are watching the WBG as they consider how to proceed in this time of important transition. This is the opportunity for WBG to champion and model just, inclusive, and resilient development. To be successful, it must be human rights-forward, accountable to the very people it impacts, and it must be ready and willing to deliver on remedy. The greatest good is only achieved responsibly, and WBG must ensure that its efforts to “create a world free from poverty on a livable planet” is not at the expense of some people to benefit others. WBG must evolve with a conviction for accountability and remedy.

The full comment in response to the public consultations is here.