November 5, 2002
The following are the Center for International Environmental Law’s (CIEL’s) comments on the September 25, 2002 Draft “Review of IFC’s Safeguard Policies“. CIEL thanks the International Finance Corporation (IFC) and its Compliance Advisor/Ombudsman (CAO) office for this opportunity to comment on the Safeguard Policy (SP) Review. For nearly a decade, CIEL has followed the evolution of the IFC’s SP framework as well as the systems meant to implement the policies and mainstream environmental and social concerns into IFC’s investment portfolio. CIEL also participated in the global policy workshop held in Washington as part of the SP Review. CIEL believes the SP review presents an important opportunity to enhance the effectiveness of the IFC’s approach to environmental and social safeguards. We hope that these comments provide constructive assistance to the process.
CIEL’s comments are divided into two parts: (1) general or overall comments and (2) comments relating to specific sections of the SP Review.
General Comments
1. The process for conducting the SP Review was both thorough and participatory, reflecting the importance of safeguard policies to many different IFC stakeholders. We also believe the CAO’s independence and commitment to project-affected people make this a credible and useful process. We hope that this commitment to transparency and broad participation will continue through the completion of this Review and in the design of the steps IFC takes in implementing the Review’s recommendations.
2. Most importantly, the SP Review concludes clearly that the IFC’s current systems for ensuring consistent and effective application of the SP framework are inadequate and that the IFC must take action to improve its internal approach to SPs. This requires a pro-active response from IFC management to ensure that all Investment Officers understand the central role of the SP framework in achieving IFC’s development mission. The strength and integrity of the SP framework is what differentiates the IFC from a private investment bank. That framework should be explicitly affirmed by the IFC management in light of this review and specific steps should be taken, including revising staff performance evaluations, to ensure that the framework is fully integrated into investment operations.
3. The survey of staff opinions and perceptions regarding the safeguard policies was particularly informative and useful. The SP Review could have been strengthened if similar surveys had been conducted of project sponsors, project-affected people or civil society groups familiar with the IFC. Data from such surveys would be useful because, in our experience, IFC staff often perceive issues differently than do project sponsors or affected communities. This is particularly important because the staff surveys provide the only quantitative data (with the exception of some conclusions regarding the case studies) reflected in the SP Review. As a result, when reading the SP Review the opinions from the survey can take on potentially disproportionate weight, because they are reflected in quantitative terms. In finalizing the draft, we suggest that the authors take additional steps to ensure that the staff survey is not provided undue weight. For example, the fundamental conclusions that the project sponsor is the most important variable in determining the effectiveness of the SPs could reflect a self-interested bias in the staff survey. Although the SP Review cites other evidence for this conclusion, we should be given some confidence that the reviewers discounted the potential self-interest of IFC staff in pointing the finger elsewhere. In addition, whenever the
staff survey is cited, the review should remind the readers that it is a ‘staff’ survey. Thus, for example, in paragraphs 7.4 and 7.11, the Review should not refer to the survey “respondents” because it could give the wrong impression that the survey was of multiple stakeholders.
4. In part because of the predominance of the staff survey in the Review, the concerns and interests of affected persons who are the beneficiaries of the SP framework seems to be lost in the document. Although affected persons were part of the workshops held in the review, their ‘voice’ is not heard clearly in the resulting document. The inclusion of additional quotes or evidence from affected communities, if available, or more information from the case studies might strengthen the Review.
5. Given the continued criticism of the SP framework, within IFC, the World Bank Group and other institutions, the SP Review should emphasize its findings that the framework benefits both the institution and project-affected people. Such findings are mentioned in the report (see summary of conclusions, page 5), but are not highlighted sufficiently. The Review finds that the SP framework is valuable for designing and implementing development projects in the private sector and appears to suggest that no substantial departure from a policy-based approach is warranted. The Review should go further in explicitly endorsing the SP framework approach, assuming that this was warranted by its findings.
6. The SP framework is a critical part of an emerging ‘rights-based’ approach to development that ensures certain minimum standards of consultation, participation, and other rights in internationally financed projects. The current draft does not highlight sufficiently the importance of the SP framework in providing such clear minimum standards for the treatment of affected people – in essence, the rights they can expect under projects financed by the IFC. In this context, IFC compliance with the framework is also particularly critical.
7. As the Review clearly states, the systems within IFC for ensuring effective compliance and implementation of the framework and the resulting on-the-ground positive impacts of the SPs need to be changed. The SP Review rightly highlights the failure of the IFC to adopt a consistent and systematic internal process for ensuring a high-level of positive impact from the SP framework. In this regard, we believe the SP Review should identify more detailed recommendations on specific steps that the IFC should consider in improving the future effectiveness of the SP framework. This would enhance the likelihood that the IFC actually takes the necessary steps, rather than burying this Review and the important criticisms of IFC management identified therein.
Specific Comments
The following are comments specific to the enumerated paragraphs in the Review.
Para. 4.21. This finding suggests that the IFC has failed to communicate the importance, scope and content of its SPs to Investment Officers and project sponsors. That nearly one-third (78 of 247) of IFC Staff respondents did not have “experience” with SPs is also noteworthy, as such a high percentage may indicate a need for further communication and capacity building directed at IFC staff.
Para. 4.5. We agree that “once specific criteria, standards, or requirements are included in the contractual agreements between IFC and the project sponsor, the content is equally binding.” For this reason, we believe the IFC should insist on the public release of the environmental and social covenants of their loan agreements. We think this issue should be flagged in the SP Review because it relates closely to the need to enhance supervision of SP implementation.
Para. 4.28. The inclusion of specific examples illustrating actual conflicts between procedural requirements of the SP framework and national laws would be useful. See also, the comments below on Para. 7.14-16 regarding the need for professional judgment.
Para 4.34. We think the last sentence in this paragraph that suggests the SPs may “not be the most important factor in influencing outcomes” may not be warranted from the discussion in the paragraph. Prior to 1998, the IFC stated publicly and repeatedly that it was holding project sponsors to the World Bank Group policies. Although, as the 1997 Independent Review of the BioBio project found, the IFC did not always inform project sponsors of these guidelines, it is probably not accurate to suggest that IFC operated under no SPs until 1998. Prior to 1998, the application of SPs was undoubtedly more ad hoc and unfocussed, but the pre-1998 period was not completely devoid of safeguard policies (or equivalents). Thus, it is somewhat difficult to conclude that changes or a lack of changes post-1998 were due to the advent of SPs.
Para. 4.45-4.47. We welcome the discussion concerning the need for applying the SPs to projects that come late in the project cycle to the IFC. As pointed out in the review, IFC’s due diligence must be strengthened, as well as its commitment to ensuring that SP standards are applied fully even in projects that arrive late to IFC’s doors. A clear signal must be sent to project sponsors and Investment Officers that these projects will not be rushed through the necessary environmental and social review.
Para. 5.1- 5.35. We welcome the SP Review’s recommendation for revising specific policies. In particular, we support as necessary the recommendation to strengthen the role of EA panels, to adopt social assessments, and to extend the indigenous people policy to all vulnerable groups. The IFC should set forth a timetable for this process.
For more information, please contact Marcos Orellana.