Background: IDB’s Safeguards Update...using a private sector-based model
This year, the Inter-American Development Bank (IDB) is updating its environmental and social Operational Safeguards Policies (2006).
IDB has proposed adopting the 8 Environmental and Social Performance Standards (PSs) of the International Financial Corporation (IFC, the private sector finance arm of the World Bank Group), plus two other standards: one on gender, and one on stakeholder engagement and information disclosure. The PSs were last updated in 2012. Given the social, economic, and environmental changes since then, these are out of date for addressing the main challenges of the region today, particularly with regards to mitigation and adaptation to climate change, gender, the use of security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, human rights and reprisals, indigenous peoples, and afro descendant groups.
The expectation for the IDB review is that the environmental and social policies, as well as their implementation, would be strengthened and that and their scope would be expanded in some of the key areas mentioned above. At a minimum, existing standards should not be diluted. However, the draft Environmental and Social Performance Standards (ESPSs) propose a significant shift: from prescriptive rules to avoid harm and manage social and environmental risks, to a private sector-based model, which shifts significant responsibility to the Borrower. Specifically, the Bank’s proposed role has transitioned toward conducting due diligence before agreeing to finance a particular project, and then supervising, monitoring, and evaluating the project’s compliance with its E&S Policies during design and implementation. Civil society continues to voice serious concerns that shifting responsibilities of implementation to borrowers will lead to a weakening of the social and environmental protections that prevent harm in Bank-financed projects. This can be particularly problematic when Borrowers have low capacity in these areas, as appears generally to be the case.
CSO Recommendations on IDB’s proposed Environmental & Social Policy Framework (ESPF)
Civil society has engaged in this review process, urging IDB to incorporate lessons learned from IFC, World Bank, IDB implementation and Independent Consultation and Investigation Mechanism (MICI) cases, and higher standards adopted and applied by peer institutions by taking on the following recommendations:
1) Prior Consultation: All documents accompanying the IDB’s draft ESPF that will go through the Board of Directors for their approval should be previously consulted through a significant participatory process with stakeholders, including civil society. This includes the ESPF Implementation Plan and ESPF Action Plan.
2) Do Good: The Policy should be guided by the principle of ‘do good’ and go beyond ‘do no harm’. The ESPF is not aligned with what is established in the Policy Profile, which states that one of its guiding principles will be to “do good” and go beyond “do no harm.” In practice, ESPS application should strengthen and promote positive sustainable impacts for communities on the ground as well as actions aimed at remediation of environmental damage generated by the projects financed by the Bank.
3) No dilution: The proposed ESPF in many respects represents a step backwards with respect to the current IDB Environmental and Social Policies and international parameters adopted by peer institutions, particularly from an environmental point of view. According to the principle of “No Dilution”, the ESPF should be at least equivalent to them. Likewise, it should be aligned and converge with the strongest international parameters and standards.
4) Add an Exclusion List: The ESPF should have an exclusion list of activities that are inconsistent with the IDB’s commitments to environmental and social sustainability and the objectives of the ESPSs as part of its initial environmental and social screening. Peer institutions have adopted exclusion lists as stand-alone policies or by incorporating them in their E&S frameworks. Not having an exclusion list in today’s age considering the accelerating climate emergency increases the risk of serious mistakes and reflects poorly on the Bank.
5) Strengthen Supervision during Implementation: Civil society is also concerned about greater flexibility in the language and requirements in the proposed ESPF. Flexibility and ambiguity of language should be avoided to reduce discretion and noncompliance. Language should be strengthened to make clear that the Bank is responsible for monitoring and supervising compliance with the ESPSs of projects in accordance with IDB’s policies, legal agreement specifications, and other relevant agreements. Likewise, the IDB should clarify how it will address non-compliance with safeguards. The Bank should establish a clear mechanism to monitor and report on safeguards performance.
6) Grievance Mechanism and Accountability: It should be required of Borrowers to provide project-affected people with information on MICI. Also, the ESPF should require the Borrower to design and implement the Borrower Grievance Mechanisms based on Principle 31 “Effectiveness criteria for non-judicial grievance mechanisms” of UN Guiding Principles.
7) Respect Human Rights and Avoid Reprisals: There are advances relative to the current Safeguards, but the proposed ESPF is still inadequate compared to international standards for Human Rights and Environmental and Social Defenders. The commitment to Human Rights should be made clear as a cross-cutting standard throughout the ESPF. Human rights appear as a principle but are not effectively integrated into the ESPF.
8) Provide Feedback: In terms of process, a major concern moving forward is that it is not clear how the IDB will take into account and incorporate the recommendations made, considering that the Bank has been weak in following up with stakeholders to make sure that feedback received is taken into account, and in the past policy reviews, there has been lack of responsiveness to CSOs' submissions. During this consultation , CSOs asked questions on next steps, but we didn't receive a clear response. For example, CSOs asked if the guidelines and implementation plan will be consulted on. In addition, CSOs requested the Bank to publish a matrix with comprehensive analysis and response to the comments received at least one month before the 2nd draft is sent to the Board for consideration. We’re still waiting on an answer.
Read and follow up on the complete document with all the comments recommendations from civil society on IDB proposed Environmental and Social Policy Framework:
Civil society will continue to engage in the IDB revision of its safeguards policies. We believe it is in the interest of IDB and its Borrowers for it to move towards the highest feasible standards for development and incorporate these suggestions and recommendations which are based both on the technical expertise of CSOs in this field, and on lessons learned from projects that resulted in MICI complaints.