The Search Is On For A New Accountability Leader At The IFC: What's At Stake And Who Can Meet The Challenge?

This update was co-written with Margaux Day, Policy Director of Accountability Counsel.

The process for replacing the Vice President of the International Financial Corporation’s (IFC) accountability office, the Compliance Advisor Ombudsman (CAO), is well underway, and the stakes for selecting the right candidate for the job have perhaps never been higher. At all times, the head of the CAO needs to be committed to serving communities seeking accountability and remedy for harms caused by IFC investments, and the new CAO VP will be charged with fulfilling this mission amid significant global and institutional upheaval. This context will test the very purpose of the CAO, as well as IFC’s commitment to its development mandate, and the CAO VP must be prepared to deal with all of these challenges and dynamics. 

Ongoing E&S and Accountability Reforms at IFC

The new VP will be installed in the middle of a major reform effort of IFC’s accountability system, including the CAO‘s own governance. Unlike the two previous VPs, the reform effort will likely result in the new VP reporting directly to the World Bank Board of Executive Directors—a highly political body made up of 25 representatives of World Bank Group member countries. Meanwhile, the relationship between IFC and CAO is at an all-time low. For the last several years, IFC has largely ignored CAO compliance findings, which led two communities to file lawsuits in U.S. federal court when IFC failed to provide recourse in response to CAO investigations.

Global Pandemic and Economic Crisis

The CAO’s job will also be made more complicated by the global pandemic and economic crisis, which have placed even more pressure than normal on IFC to push money out the door fast. This sense of urgency makes mistakes more likely, and the focus on potential environmental and social harm less of a priority. More deals also likely means more cases. CAO’s compliance caseload was already on the rise over the last several years, and significant delays in processing cases has become the norm. When communities have to wait years to see a final investigation report after filing an initial complaint, there is almost no hope that the harm can be fully remedied, and IFC often has little leverage left to influence clients to provide or contribute to remedy.

New IFC Leadership

Reform efforts and leadership transitions each present opportunities to recalibrate policies and practices and to reorient institutions toward their stated missions. IFC is not only going through a major policy reform effort, as well as seeking a new CAO VP, but it will also soon replace its current CEO, Philippe Le Houerou. Le Houerou is largely responsible for re-focusing IFC on its development mandate and strengthening the environmental and social governance systems of the institution. The CAO VP may have to work with an IFC CEO who has a different agenda.

Eliminating the Trust Deficit

Given the current context, it is paramount that the new CAO VP have impeccable integrity, a demonstrable history of independence, and credibility with civil society and communities. Because the CAO works directly with private sector companies, IFC management, civil society, communities, and—now—IFC shareholders, it is of course important that the new VP have experience and credibility in dealing with all stakeholders. However, at a time when IFC is in active litigation in two separate U.S. federal courts for harming the people they are meant to serve, it is critical that IFC focus on re-building the trust of communities.  Supporting a strong, independent CAO VP that recognizes the importance of engagement with communities can help.  After all, the CAO was established for communities that are harmed by IFC projects—not only so that the institution can be held to account for its mistakes but also to be a mechanism for recourse.

The CAO’s mission is an ambitious one and should be embraced by IFC as a key part of being a preeminent development finance institution.  A responsive CAO and accountability framework more generally is critical for IFC credibility. The CAO VP must be someone who can work with IFC management in a cooperative—but not compromising—way.  The next head of the CAO needs to be someone who is ready to take on these significant challenges, has a clear vision for strengthening the CAO and reasserting itself as a leader among independent accountability mechanisms, and who above all prioritizes the needs of communities who have seen the process fail so many times.