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Infrastructure

News

Bank response to oil, gas and mining review “completely inadequate”

26 July 2004

The Bank management response to the recommendations of the Extractive Industries Review (EIR) was released 18 June to widespread criticism. The Greens alliance in the European Parliament called the management response “completely inadequate”, while a coalition of US socially responsible investors said it needed to be “considerably strengthened”. NGOs have argued that the management response represents “only a small step” to ensuring that the right conditions are in place to make extractive industries contribute to poverty alleviation.

In the past months, support for the full implementation of the EIR recommendations had come from a wide range of individuals and institutions including the European Parliament and European Commission, the German parliament, the Dutch development minister and the Indonesian finance minister.

Highlights of the management response (MR) and the civil society (CS) analysis of that response include:

Pro-poor measures

MR: Says that the Bank will focus on the need to “minimise risks” to local communities, compensate them and ensure that communities “benefit in some way from projects that affect them.”

CS: Each extractive project should be screened against a set of criteria to determine whether or not it will directly alleviate poverty.

Governance

MR: Agrees to assess governance risks based on existing World Bank indicators, consider risk mitigation measures in certain projects and use Bank judgement to decide how to proceed on a case-by-case basis.

CS: Existing Bank indicators do not address unique issues that arise with extractive projects, such as revenue problems and the presence of armed conflict. The Bank should develop governance criteria specific to extractives that would demonstrate a country’s ability to manage the relevant risks.

Human rights & free, prior and informed consent

MR: Management will discuss with the board the issue of a rights-based approach to development. “Free, prior and informed consultation” with affected indigenous peoples should result in informed participation that leads to “broad community acceptance of the project”.

CS: Bank policies and practice must reflect the international legal obligations of its shareholders with respect to human rights and indigenous peoples. Indigenous peoples’ organisations labelled as “unacceptable” the sleight of hand whereby free, prior and informed consent was turned into consultation.

Transparency & disclosure

MR: The Bank will expect corporate level revenue transparency as a condition for new investments. Immediate transparency about payments to governments for large projects, extended to all projects within two years. The Bank will encourage transparency in government “where feasible and appropriate”. Make disclosure of “key agreements” for “significant” projects standard.

CS: The Bank should require transparency from all extractive investments, not just new or large ones. The same principle which applies to companies should be applied to client governments that receive and spend the revenues. Disclosure of key agreements should be required for all projects, including project rationale, net benefit analyses and monitoring and evaluation reports.

No-go zones

MR: Defers the determination of clear no-go zones to the IFC’s safeguard review process, but also points to the Bank’s natural habitats policy as a suitable safeguard.

CS: The natural habitats policy is vague. The Bank should take this opportunity to define a set of critical natural habitats of high conservation value following best practice standards.

Climate change & renewables

MR: Commits the Bank to “at least 20% average growth annually in both our energy efficiency and renewable commitments over the next five years.”

CS: Given the ambiguous wording of this commitment and the arbitrary selection of a low baseline, it is likely that the Bank will be increasing their support for fossil fuels over the next five years by more than their increase in renewables funding.

The plan was to be put before the Bank’s Board in early August.