Forests: A Tale of Two Banks?

Our assessment of the World Bank’s three-year-old Forest Action Plan (FAP) reveals that although the Bank has increased forest investments by almost 16% relative to the prior four-year period, the Bank is failing to reduce the impacts on forests and forest people of projects in the sectors most responsible for deforestation: infrastructure, energy, extractives, and agriculture.

On the one hand, there is a Bank that deserves credit for its forest conservation and governance efforts. This is the Bank that undertook a Forest Action Plan (FAP) in 2016, that has spent the last 10 years trying to build different models to integrate forests into climate change, that created the Dedicated Grant Mechanism for Indigenous Peoples and Local Communities, and that continues to work with countries on capacity building, planning, and executing forest conservation, sustainable forest management, and integrated sustainable landscape programs. 

On the other hand, there is a Bank that continues to support development of dirty energy and associated infrastructure ($21 billion for fossil fuels compared with $7 billion for clean, climate-smart renewables, FY14-18, according to a recent report). Our own review identified projects likely to contribute to deforestation through infrastructure and industrial development (in Indonesia), expansion of extractive industries and geochemical prospecting (DR Congo), scaling up mining and gas activities (Mozambique), gold mining (Liberia), and sugarcane expansion, industrial development, and unsustainable power generation (Brazil).

The bottom line: The scale and impact of the WBG’s non-forest investments pose serious risks to the gains its efforts may achieve for forests and forests-dependent people.

Being a leader vs. business as usual: the choice is obvious, but the Bank needs to choose

Our findings—looking at projects in nine important forest countries over the past six years-- show that the World Bank Group (WBG) succeeded in increasing investments and funding for projects with positive impacts on forests by 69% after the adoption of the FAP (most of these projects are forestry-sector projects). However, funding for projects that pose negative impacts to forests increased by 70% in the same period. The FAP appears to have no influence in systematically mainstreaming forests into other sectors that are primary drivers of deforestation-- infrastructure, energy, extractives, and agriculture.

If there is ever a time for leadership, this is the time: WBG leadership should use its influence to insist on forests as a key element of sustainable development and integrating upstream analysis of policies and investments and their potential impacts on forests (as per the FAP), and require better social and environmental business development, implementation, and oversight in the IFC portfolio –or disinvesting from projects that have negative impacts on forests.

The Bank's own data (and data gaps) reveal that it has failed in its stated commitment to ensure all of its projects don’t harm forests and forest-dependent peoples. BIC’s new research provides a snapshot of the Bank’s performance in each of the nine countries reviewed and lays out recommendations for how the Bank can mainstream forest into sectors that are primary drivers of deforestation.

Read our report here: World Bank Group Forest-Sector Impacts: Has the Forest Action Plan Made a Difference at the Country Level?