Remedy Requires Real Resources

  • Overview

    Accountability Counsel advocates for the establishment of remedy funds at international financial institutions to ensure that resources are proactively set aside for remedying the harm suffered by local communities.

    The Problem

    The advent of Independent Accountability Mechanisms (IAMs) signified a recognition that development actors should be accountable to local communities for unintended environmental and social harm. However, time has shown that even “successful” complaint processes often fail to produce outcomes that meaningfully remedy the harms inflicted on project-affected people. Access to these mechanisms, alone, is not enough. Real remedy requires real resources.

    Thirty years ago, the World Bank Group catalyzed a crucial advance in development finance by establishing the first independent accountability mechanism, the Inspection Panel. Since then, over twenty other international financial institutions (IFIs) have created IAMs, which together have received more than 1,600 complaints from individuals alleging environmental and social harms.

    Despite this dramatic growth in access to IAMs, communities whose environmental and social rights have been infringed have too often found real remedy delayed or unforthcoming. Even when a compliance review investigation confirms local communities’ claims of harm and the IFI’s management responds by developing a remedial action plan, communities often do not receive remedy for harms suffered.

    There is no one-size-fits-all formula for effective remedy. Rather, remedial measures must be designed in consultation with affected people and tailored to address the specific harms they have experienced. Some remedial measures aim to compensate or rehabilitate a community, or to restore conditions to how they were before the harm occurred. Other measures, such as official public apologies, aim to repair moral and dignitary harms. Guarantees that the harm will not be repeated in the future may also be important to communities. Meaningful remedy usually needs to include some combination of different measures.

    However, meaningful remedy remains elusive. As one example of many, in 2016, the IAM of the International Finance Corporation (IFC), the Compliance Advisor Ombudsman (CAO), released an investigation report on a complaint regarding IFC-financed tea plantations in the Indian state of Assam. The report found a raft of substandard living and working conditions on the plantations imperiling worker health and safety. Though failing to address all of the CAO’s findings, the IFC did draft an action plan detailing a number of remedial measures to be taken, including improvements to housing, sanitation facilities, and access to clean water. However, six years later, most of those remedial actions remain unimplemented.

    The Root Cause

    While Accountability Counsel’s casework reveals that there are many reasons why remedial action plans are not sufficiently implemented, one fundamental factor is that IFIs are unwilling to spend money on remedy.  Despite having the resources and know-how, and despite the inevitability that some instances of environmental and social harm will occur despite preventative efforts, IFIs have largely shirked their responsibility for contributing to remedy. IFIs too often employ an ad-hoc and ineffective approach to remediation, rather than using their financial expertise to create instruments to deliver remedy promptly and reliably. The problem therefore is not caused by a lack of resources but rather a lack of will. IFIs have been content to leave key questions unresolved: Who should pay for remedy, the financier, or the borrower? How should the financing of remedy be structured? Should remedy only be available at the end of an accountability process, or should opportunities to provide remedy be built into project planning from the very beginning?

    Because IFIs have not resolved who should pay for remedy and how, communities find that resources for remediation remain unavailable.  In the Assam case for instance, as documented in the 2019 CAO monitoring report, the IFC’s client sought financial support from the IFC and other shareholders for implementing remedy. That financial assistance has yet to materialize. As a result, remedy remains elusive for tea workers harmed by the IFC-financed project.

    The Solution

    Although the approach to remedy requires a multifaceted response, one basic requirement is that IFIs dedicate financial resources specifically for the provision of remedy. To that end, Accountability Counsel advocates for IFIs to create remedy funds. Remedy funds are dedicated resources set aside for use in the event that a project causes verified harm. The funds could be administered as part of or adjacent to the IFI’s IAM processes and used to finance actions identified for redressing harm to project-affected people. With a remedy fund, IFIs can systematically shift risks away from communities and envisage more environmentally and socially sustainable projects.

  • Our Advocacy

    Helping local communities secure remedy through Independent Accountability Mechanism (IAM) processes is the core focus of Accountability Counsel’s work, be it through directly supporting communities, advocating for policy changes to strengthen IAMs, or compiling and analyzing data on IAM outcomes. Effective IAMs can produce a number of positive outcomes, including increased compliance and continuous institutional learning that can inspire forward-looking reforms. While these components are laudable, perhaps the most important outcome an IAM should achieve is redressing the harm that local communities have already experienced.

    Ensuring the Principle of Remedy

    Accountability Counsel has pushed for the memorialization of this principle, particularly with its advocacy around the drafting of the United Nations Guiding Principles on Business and Human Rights (UNGPs). The UNGPs are a set of general and operational principles on the issue of human rights and transnational corporations and other business enterprises.

    Knowing that the UNGPs would serve as an important source of guidance for a wide variety of business and financial entities, we sought to make the UNGPs as strong as possible. In 2011, Accountability Counsel submitted comments to Professor John Ruggie on a draft of the UNGPs. Those comments focused heavily on the third pillar of the UNGPs, access to remedy, which established a number of principles meant to ensure that those harmed by business activity can seek redress.

    Documenting the Remedy Gap

    Unfortunately, effective remedy has too often been elusive for communities raising their concerns through IAMs. Accountability Counsel has seen this first-hand in multiple cases we support. Local communities who have had their harm verified by IAM compliance reports have then found bank management largely unwilling to provide the support necessary for redressing that harm, while other communities that have been able to negotiate an agreement through an IAM dispute resolution process have seen implementation of that agreement languish.

    Accountability Counsel has demonstrated that, far from occurring in isolated instances, the failure of IAM processes to produce meaningful remedy is systemic. Working with partners, we have published multiple analyses illuminating this “remedy gap” across the international finance landscape. For instance, Accountability Counsel co-authored the OECD Watch report Remedy Remains Rare, which examined the effectiveness – or lack thereof – of OECD National Contact Point system in increasing access to remedy. Accountability Counsel also co-authored the seminal Glass Half Full report. The report analyzed hundreds of complaints brought to nearly a dozen IAMs and found that far too often these complaints resulted in inadequate remedy for local communities. In 2022, the Office of the UN High Commissioner on Human Rights confirmed the existence of a systemic remedy gap in its comprehensive report Remedy in Development Finance, which cited data from the Accountability Console.

    Advancing Remedy Good Practice

    Throughout numerous reviews of various IAM policies, Accountability Counsel, working with partners, has pushed for provisions that are crucial to an IAM’s ability to facilitate remedy. In submissions to international financial institutions (IFIs) like the European Bank for Reconstruction and Development and the Asian Infrastructure Investment Bank, we have pushed for IAMs’ overarching mandates to include facilitating remedy as a key purpose of the IAM. We have urged adherence to good practice regarding the management action plans (MAPs) that are supposed to address harm. Provisions guaranteeing project-affected people opportunities to participate in the drafting of MAPs and strong monitoring provisions are key to ensuring that MAPs meaningfully redress harm. And we have implored IFIs to take the next step towards truly accessible remedy by establishing remedy funds, resources set aside to ensure remedial measures can be properly implemented.

    Accountability Counsel has built on this last recommendation in particular, working with partners to envision and illustrate how a remedy fund can be operationalized to meaningfully enhance access to remedy. In 2020, as part of our engagement on the review of the accountability framework for the World Bank Group’s private-sector arm, we called for the creation of a remedy fund. The submission illustrated how a lack of readily available resources can impede meaningful remedy. While recognizing the various ways a remedy fund might be structured, our submission stressed that any remedy fund must be structured around a set of guiding principles, including community responsiveness, accountability, and predictability. Our submission calls on the World Bank Group to commit to developing a remedy-fund framework through a transparent and inclusive process that includes consultations with affected communities and other stakeholders.

    In November 2020, we and our partners Lumière Synergie pour le Développement and Inclusive Development International submitted similar recommendations for a remedy fund as part of the African Development Bank’s review of its accountability office, the Independent Review Mechanism.

    Throughout 2022, we shared recommendations for how to enable remedy with various IFIs, including the World Bank, the International Finance Corporation, the European Bank for Reconstruction and Development, and the African Development Bank. Looking beyond IAMs as a source for remedy, we submitted extensive comments on the African Development Bank’s Integrated Safeguards System to illustrate how planning for remedy could be built into the financing of all projects. And as the International Finance Corporation develops a proposed remedial framework for its operations, we have urged the framework not to be only forward-looking, but also to address current existing harms.

    Accountability Counsel will continue to push for more meaningful access to remedy in every facet of our work.

  • Documents

    Resources & Reports

    Glass Half Full

    ARP III Report

    Remedy Remains Rare

    State of Remedy 2020 

    Remedy in Development Finance: Guidance and Practice

    Remedying Harm: Lessons from International Law for Development Finance

    Key Documents by Release Date

    May 2022 – Accountability Counsel and Inclusive Development International submitted recommendations urging the U.S. government to champion meaningful remedy at IFIs as part of the National Action Plan on Responsible Business Conduct.

    May 2022 – Accountability Counsel shared a briefing paper with the European Bank for Reconstruction and Development making the case for a remedy framework.

    May 2022 – Accountability Counsel submitted written comments to the African Development Bank during the Integrated Safeguards System review. The comments included model language for building remedy into routine project planning.

    April 2022 – Accountability Counsel submitted a briefing document to European Executive Directors of the World Bank outlining key recommendations for enabling remedy, including the establishment of a remedy fund.

    Feb 2022 – The United Nations Office of the High Commissioner for Human Rights issued Remedy in Development Finance: Guidance and Practice. Accountability Counsel’s Executive Director, Natalie Bridgeman Fields, spoke at the launch event for the report.

    June 2021 – Accountability Counsel submitted written testimony to the Senate Appropriations Committee’s subcommittee on State, Foreign Operations, and Related Programs with recommendations for U.S. leadership on ensuring remedy at multilateral development banks.

    Nov 2020 – Accountability Counsel, Lumière Synergie pour le Développement, and Inclusive Development International submitted recommendations on a remedy fund as a part of the African Development Bank’s review of its accountability office.

    Jan 2020 – Accountability Counsel submitted a series of recommendations for the external accountability review of the IFC, MIGA, and CAO, including  the establishment of a remedy fund at the IFC/MIGA.

     

    Related Media

    7 Jun 2022 – AC Calls for New U.S. National Action Plan on Responsible Business Conduct to Champion Accountability and Remedy, Stephanie Amoako and Mireille Becerra, Accountability Counsel

    26 April 2022 – Nothing Has Changed About the IFC’s Responsibility to Remedy Harm from Its Projects, Accountability Counsel

    29 March 2022 – Opinion: What development finance institutions don’t want you to know, Margaux Day, Devex

    25 Jun 2020 – The Long Road to Remedy Continues, Megumi Tsutsui, Accountability Counsel

    18 Feb 2020 –  Translating Community Experiences into Recommendations for Stronger Accountability at the IFC and MIGA, Accountability Counsel

    31 Oct 2019 – Calls for IFC to create ‘remedy fund’ to compensate harmed communities, Sophie Edwards, Devex

    13 Feb 2019 –  A Long Road to Remedy Continues, Sarah Singh, Accountability Counsel

    27 Apr 2018 – Nine Years of Neglect: Deaths on Indian Tea Estates under the World Bank’s Watch, Accountability Counsel, PAD, PAJHRA, & Nazdeek