Remedy Requires Real Resources
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 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.
Twenty-five 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 1,260 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.
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. However, nearing four 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 of them is an unwillingness to spend money on remedy. Despite IFIs having the resources and know-how, and despite the inevitably of some instances of environmental and social harm occurring, they 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 for the reliable delivery of remedy. The problem therefore is not caused by a lack of resources but rather a lack of will. IFIs have largely left unresolved key questions of whether the financier or the borrower should pay for remedy, how to structure the financing of remedy, and whether remedy should be only a part of an accountability process or also a part of regular project planning.
By not resolving 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.
Although the approach to remedy requires a multifaceted response, one 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.
Helping local communities secure remedy through Independent Accountability Mechanism (IAM) processes is the core focus of Accountability Counsel’s work, be it through our work 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 serve as the basis for forward-looking reforms. While these components are laudable, perhaps the most important outcome an IAM should achieve is redressing the harm that has already occurred to local communities.
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.
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-affect people opportunities to participate in the drafting of MAPs and strong monitoring provisions are key to ensuring that MAPs meaningful 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 prove a detriment to 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.
Accountability Counsel will continue to push for more meaningful access to remedy, both through the on-going accountability framework review at the World Bank Group and in every facet of our work.
Resources & Reports
Key Documents by Release Date
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.
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