In June, IDB Invest, the private sector finance arm of the Inter-American Development Bank Group (IDBG), announced it was updating its Environmental and Social Sustainability Policy. As part of the process, on June 17th, it opened the public consultation for the draft of the new E&S Sustainability Policy for 120 days (until October 15th). IDB Invest plans to submit the final draft of the Policy to the IDBG Board of Executive Directors for final consideration before the end of 2019. IDB Invest hosted virtual consultation sessions and in-person consultations in Argentina, Colombia, Jamaica, Panama, and at its headquarters in Washington D.C. in the first two weeks of September.
In terms of the consultation process, civil society strongly urges IDB Invest to add at least one other consultation phase to consult on the draft Policy to make sure that feedback received during the consultation is taken into account. A major concern is that it is not clear how IDB Invest will incorporate recommendations made during the consultation process considering that the consultation plan does not establish a second phase for consultation on the draft Policy.
IBD Invest is conducting a safeguards policy review that proposes to adopt the 8 Environmental and Social Performance Standards (PSs) of the International Financial Corporation (IFC, the private sector finance arm of the World Bank Group) without the possibility of proposing changes to them. The PSs were last updated in 2012. Given the social and economic changes since, these are out of date for addressing the main challenges of the region today, particularly with regards to mitigation and adaptation to climate change, gender, the use of security forces, contextual risk analysis, persons with disabilities, stakeholder engagement, and indigenous peoples. By adopting the PSs without the possibility of modifying them, IDB Invest is missing the opportunity to address the policy gaps and shortcomings of the PSs, many of which have been identified by the IFC itself and addressed through complementary policy reforms and guidelines , during the nearly 8 years of experience in their application.
Civil society has engaged in this review process urging IDB Invest to incorporate lessons learned from IFC, World Bank, IDB implementation and MICI cases, by taking on the following recommendations:
1) Add two additional stand-alone standards to the 8 IFC PSs, a Gender Equality, and Stakeholder Engagement standard
Do not eliminate the current Operational Policy on Gender Equality: By simply adopting the PSs of IFC, IDB Invest would be leaving behind the existing Gender Equality Policy (OP-761; 2010) currently used by the IDB Group. The IDB Group has been a leader in gender as the first Multilateral Development Bank (MDB) to adopt a stand-alone operational gender policy, which has served to successfully incorporate and elevate the gender perspective in the projects and operations it finances. Excluding this existing gender focus in the new Policy would be a major setback for IDB Invest in terms of social and environmental risk management and gender mainstreaming in all operations that IDB Invest finances.
Adopt a Stakeholder Engagement and Information Disclosure standard: This has been a problem area for MDBs in general, and the IDB has been no exception  (projects such as Ituango Hydroelectric Project and Mareña Renovables provide clear evidence ). Learning from their own experiences, the World Bank recognized the need to adopt a normative standard for Stakeholder Engagement and Information disclosure (ESS10) in its new Environmental and Social Framework (ESF). PS1 of the IFC covers elements of stakeholder engagement and information disclosure, however, PS1 is not a stakeholder engagement policy. Stakeholder engagement and information disclosure is a complex process and needs a high level of detail and specificity. A good execution of this needs more than a passing mention; it requires its own policy to minimize client discretion and thus maximize the benefits of the project, especially for the most marginalized. A stakeholder engagement and information disclosure policy should:
- Provide clear minimum requirements for what is considered acceptable with respect to stakeholder identification and participation, information disclosure and consultation, and grievance mechanisms especially for, but not limited to, high or substantial risk projects.
- Ensure that stakeholder participation is made accessible and safe.
- Commit the client to being deliberately inclusive and participatory, such that all stakeholders are empowered to participate in and benefit from the disclosure of information and the stakeholder engagement process.
- Include specific actions to be taken by the client in identified contexts of restricted civic space, to ensure safe participation of all stakeholders and to prevent and respond to retaliation.
The Office of the United Nations High Commissioner for Human Rights (OHCHR) also recommends IDB Invest to add a self-standing performance standard on Stakeholder Engagement, such as those adopted by the World Bank and EBRD, including a requirement that participation is free of intimidation and coercion (page 5). The OHCHR submission provides further evidence to support the fact that stakeholder engagement continues to be an area where MDB project implementation regularly falls short. The OHCHR also calls for IDB to seek to harmonize its safeguard policies with best practice.
By adopting two additional standards, one for gender and the other for stakeholder engagement and disclosure of information, and our recommendations to strengthen supervision and implementation, IDB Invest will begin a new era with a solid set of standards that incorporates not only the lessons learned from almost 8 years of implementation of the PS by the IFC, but also lessons learned from their our IDB implementation projects and MICI cases.
2)The Sustainability Policy should be guided by the principle of “do good” beyond “do no harm”
The Sustainability Policy should respond to the guiding principle of ‘do good’ beyond the mere mitigation, prevention or minimization of negative impacts. The Sustainability Policy should aim at sustainable development focused on a proactive commitment on the part of clients to increase the positive externalities of the operations they finance in order to generate genuine benefits that improve people's quality of life. In practice, the application of PSs should strengthen and promote positive sustainable impacts for communities. Given the current challenges in the region and the mandate of the IDB Group to support sustainable development, we recommend that the guiding principle of ‘do good’ to affected communities in the area of influence of their investments should be the main objective of the IDB Invest Sustainability Policy.
3) Strengthen IDB Invest’s responsibilities for supervision to ensure no dilution of supervision responsibilities in the implementation of safeguards
- Include specific requirements, procedures, and criteria that define responsibilities and clear time frames for supervision, reporting, and corrective measures. Apply to IDB Invest the requirements of due diligence and supervision of the IFC Sustainability Policy and the Environmental and Social Review Procedures, which offer a more robust framework for these.
- Establish clear objectives and incentives to ensure that the Safeguards Unit (SEG) has the mandate, budget, staff, and capacity to carry out its supervisory function effectively.
- Make due diligence be continuous throughout the project cycle and not only focused on pre-approval requirements.
4) Incorporate lessons learned from the IFC regarding the actions of Financial Intermediaries
- Provide clear guidance and requirements that incentivize greater transparency and disclosure of information on high-risk projects financed by financial intermediaries.
- Include mechanisms in all contracts for “general loans” that allow IDB Invest to track and identify the projects, activities or operations in which it invests. Require IDB Invest be carefully selective in evaluating its financial intermediaries, avoiding high-risk activities.
5) Specify learning and adaptation functions for IDB Invest
Develop a mechanism to make sure that they translate the lessons learned from difficult projects and problem cases, as well as successes, into new approaches and tools. In this sense, civil society urges IDB Invest to determine learning and adaptations functions to clarify and establish how lessons learned and recommendations of MICI will be incorporated and taken into account on an ongoing basis to improve and strengthen the safeguard supervision and implementation. The Policy should specify how MICI experiences should help IDB Invest improve its performance and how IDB Invest will incorporate MICI's learning and recommendations continuously to improve and strengthen the supervision and implementation of sustainability policies.
6) Strengthen guidance for Climate Change
- IDB Invest should ensure that investments it supports do not increase 1) net GHG emissions of its portfolio or 2) vulnerability or risk to communities and ecosystems (i.e. are not maladaptive), or if they do, it must take measures to reduce vulnerability and mitigate risk.
- While PS3 (Resource Efficiency and Pollution Prevention) does require that clients “implement technically and financially feasible and cost-effective options to reduce project-related GHG emissions during the design and operation of the project,” this commitment could be strengthened through the adoption of additional requirements .
Read and follow up on the complete document from civil society with recommendations and specific comments on IDB Invest’s proposed Environmental and Social Sustainability Policy:
Civil society advocates for the IDB Group to be a leader on safeguard standards in the region. The importance of this extends beyond the Bank. The expectation is for the IDB group to increase reliance on the highest development standards to guarantee better environmental and social governance, thus promoting positive spillover effects across other development institutions with high presence in the region, including governments and the private sector.
Civil society will continue to engage in the IDB revision of its safeguards policies to make sure that the IDB moves towards the highest feasible standards for development, incorporates lessons learned from projects that resulted in MICI complaints and strengthens its position in the region as a rules-based lending institution that enhances positive sustainability impacts that extend beyond specific project interventions.
 For example: In Financial Intermediaries, use of security forces, contextual risk analysis and due diligence, accountability reforms, reprisals against civil society in the process of project participation
 The report “Lessons from four Decades of Infrastructure Project-Related Conflicts in Latin America and the Caribbean” (2017) prepared by the IDB, investigates the nature and consequences of conflict in infrastructure projects in Latin America and the Caribbean. It identified that the lack of stakeholder engagement and adequate consultation, along with deficient planning, reduced access to resources, and lack of community benefits were the most prominent conflict drivers in the region. In many cases, conflicts escalated because grievances and community concerns accumulated and went unresolved for many years.
 With respect to the Ituango Hydroelectric Project (Hidroituango) in Colombia, the affected communities have publicly reported and explained the errors and failures in the determination and identification of the population affected by the project and the resultant lack and/or limited participation of those communities in the consultations that were carried out. The inadequate identification of the affected population produced censuses that did not include the entire population. These incomplete and deficient censuses have a direct connection with the lack of information and lack of adequate and effective participation of the population in the consultations on the Hidroituango project. Additionally, the resettlement plans that are a critical part of the Hidroituango project were based on incomplete and erroneous censuses, which means that there is a large part of the population that was never included or consulted regarding those plans. These deficiencies with regards to inclusion and participation continue to have direct consequences on people in the Antioquia region because the project causes both physical and economic displacement.
 For more information, please read: Office of the United Nations High Commissioner for Human Rights (OHCHR), Recommendations for IDB Invest’s Environmental and Social Sustainability Policy
 A model Climate Change Assessment (CCA) Safeguard Policy, supported by over 100 civil society organizations, and submitted to the World Bank for its Safeguard Policy Review in May 2014, offers an excellent starting point. Additional guidance is available and could be incorporated for specific sectors, such as agriculture; see FAO’s on Integrating climate change considerations throughout the project cycle, including the use of specific tools, such as FAO’s Ex Ante Appraisal Carbon-balance. Similarly, given the importance of forests--for climate and multiple other reasons--in the LAC region, it would make sense for PS6 to be supplemented by the additional guidance on forests contained in the World Bank’s Operational Policy 4.36 (as revised April 2013), and related guidance.