The World Bank’s private sector lending arm has issued a revised draft
of changes to its social and environmental policies after allegations
that it has been trying to water them down.
The International Finance Corporation has spent a year rewriting the
environmental and social ‘safeguard policies’, which provide a
framework not only for its own lending decisions, but also for the
Equator Principles, which are guidelines used by financial institutions
to assess the social and environmental risks involved in lending on
dams, power stations and similar large projects. The Equator Principles
have been adopted by 34 financial institutions, including Barclays,
Credit Suisse and Rabobank, who will all be keenly awaiting the outcome
of the consultation to see how it will affect their lending criteria.
Non-governmental organizations, notably Friends of the Earth and War on
Want, claimed the initial draft issued in August 2004 amounted to a
dilution of the safeguards, while some companies, among them Rio Tinto,
felt the consultation was being rushed. Since then the IFC has gone
through an extended consultation that has resulted in a complete
redraft.
The new version is out for public comment until the end of this month,
after which it will undergo final revisions and will go to the World
Bank’s directors for approval in late January. The new policies will be
effective immediately they are approved.
Suggestions in the first draft that the safeguards be seen more as
principles and guidelines than as strictly enforced rules upset many
NGOs, as did a proposal to change their name to performance standards.
The new draft retains the name change and the emphasis on principles,
but the IFC says it has toughened up its requirements, not weakened
them.
Among the changes are new requirements for companies to consult
communities for the duration of a project rather than just at the
outset, to focus on plans to avoid social and environmental impacts
rather than merely to mitigate them, and to introduce grievance
procedures for complaints from workers and communities relating to
specific projects. Another key change has been to ‘elevate the
importance of social rather than environmental issues’, in particular
by requiring companies seeking IFC financial support to integrate their
social and environmental assessments of projects, and not to present
them separately.
‘That may seem just a technical point, but we feel it will force
companies to give more attention to the social impacts of proposed
projects,’ the IFC said.
Tighter requirements are also proposed for greenhouse gas emissions and health and safety standards in nearby communities.
The IFC, which has 178 member countries, has a loan portfolio for the present financial year of $19.3billion (£11bn).
The
OECD is developing a ‘risk management tool’ for companies that have
investments in countries whose governments fail to provide the basic
conditions for doing business by not protecting property rights or
providing basic public services. Consultation ends on 23 November and
the recommendations are expected to be ready in mid-2006.
