Private Sector


Sustainability report out of step with Bank managers, companies

8 May 2002

The World Bank finally released its draft World Development Report on sustainable development at the beginning of April. This was a welcome move, despite the short timeline and lack of advance notice. Commentators gave the report a mixed reception. Many praised its recognition that the political and social context of sustainability is as important as the technical issues. The report also urges countries to maintain a range of ‘assets’, arguing that countries need to safeguard their social and natural resources in order to maintain economic development in the medium-term.

However, whilst raising these insights towards the beginning, the draft report does not follow them through. Vested interests are mentioned in various places but there is no serious treatment of the ways that transnational companies and powerful governments obstruct debate and block official action. An example of this was given in mid-April when the head of the Inter-governmental Panel on Climate Change was removed from his post, apparently after intense pressure from the US Government and US oil companies. The scientist in question, Robert Watson, is a senior figure in the World Bank’s environment department.

The report recognises that climate change poses major threats to developing countries including serious risks of catastrophic and irreversible climate and ecosystem disruption. Whilst the Bank authors propose shifting to more energy efficient buildings, forms of transport etc., they duck the vital debates on global institutional arrangements and approaches to achieve this. Aubrey Meyer of the Global Commons Institute commented “the Bank and the WDR 2003 are to be commended for recognising the seriousness of the problems”. However “they should be more explicit that it is impossible to solve such problems with random market-based activity. They should help foster understanding of the need for a constitutional basis for solving the problem on the basis of precaution, prevention and equity, as required by the UN climate treaty. Contraction and Convergence is logically the only way of resolving this set of problems”.

Unless the recommendations of the chapter on global issues is changed, the Bank risks being seen as out of step not just with much scientific, governmental and NGO thinking, but also with that of many corporations. The big insurance companies involved in the UNEP Financial Initiative say that climate-change related damages are growing at between two to four times the rate of economic growth and 1,000 corporate CEOs at Davos recently described climate change trends as ‘devastating’.

Another area where the WDR risks being seen as too timid is on international institutional mandates. Examples of this include the question of whether to establish a World Environment Organisation, the record of the Global Environment Facility and the role of the Bank itself. And many people preparing for the Johannesburg summit have pointed to the need for governments to examine and reconcile the tensions between international trade agreements and multilateral environmental agreements. The former have the force of hard law – with a strong institution to back them up, while the latter have no compliance system or strong enforcement agency.

Interestingly the growing literature which raises concerns about the international institutional architecture will soon be joined by a book from World Bank Vice President for Europe, Jean-Francois Rischard. His book High Noon: 20 Global Issues, 20 Years to Solve Them, written in a personal capacity, argues that twenty globally important issues (including climate change and financial crises) are getting worse and the standard strategies for dealing with them, such as international treaties, are woefully inadequate to the task. New institutional mechanisms based on “global issues networks” should be created to monitor compliance with globally recognized standards and single out the nations and organizations that are not co-operating.

Another commentator whose views diverge markedly from those in the draft WDR is Herman Daly. Author of many well-known books on environmental economics, Daly worked with the World Bank in the early 1990s and was invited back to give a lecture in late April. He argued that “the role of rich countries in sustainable development should be addressed. Should they grow faster to provide markets and capital for poor countries or restrict their own growth to free carrying capacity and ecological space for poor countries to use?” Daly pointed out that “globalization opts for the former and so does WDR 2003, but without making the case or even raising it”.

The report also covers more specific issues of great interest to outside commentators, including genetically modified crops, the impacts of the mining industry, forest certification, watershed management and alternative national accounts. The WDR team is redrafting the report by the second week in May when the Bank’s Board will discuss it. Especially given the need to get such political clearance it is questionable how much the WDR team will be prepared to strengthen its analysis.

Global Commons Institute

High Noon: 20 Global Issues, 20 Years to Solve Them, Jean-Francois Rischard

Daly’s criticism of WDR

The Bretton Woods Project is preparing a commentary on the WDR in collaboration with other organisations. For more information or to submit your views on the report