Board accepts management response to report on oil and mining

21 September 2004

The management response to the Extractive Industries Review (EIR) – described by development and environment campaigners as “completely inadequate” – was accepted by the board of the World Bank at the beginning of August. The management response rejected calls in the review for a phase-out of support for oil and coal, made merely symbolic gestures towards increasing support for renewables, and watered down language on the rights of indigenous peoples to oversee extractive developments on their land. It has since come under heavy criticism from civil society groups for endorsing business as usual and missing a historic opportunity to bring its lending more in line with its mission to alleviate poverty and promote sustainable development.

Executive Directors at the August board meeting took up divergent positions: some further strengthening on certain issues, while others sought to weaken the management response. Several southern governments, joined by Australia and New Zealand, effectively fought off efforts to move the management plan closer to the recommendations of the report particularly on the issues of governance, free prior and informed consent, and support for renewables.

The UK position at the board was to demand that the Bank go further to implement the report’s recommendations. In particular it emphasized good governance, transparency, poverty reduction and sustainable development. However, it fundamentally neglected to hold the bank to account on a number of significant points, most notably the principle of free prior and informed consent, and the phase-out of fossil fuels. It also continues to grant the Bank an unquestioned role in the extractives sector, crediting it with the ability to raise standards, set benchmarks and establish best practice.

the World Bank is not doing enough for the people and the environment it is supposed to serve

A spokesperson for Friends of the Earth welcomed “with caution the UK government’s agreement that the World Bank is not doing enough for the people and the environment it is supposed to serve”, but expressed disappointment at the failure to make this view public earlier on in the review process before a final decision had been made.

UK Executive Director to the Bank, Tom Scholar, revealed that he would be pressing Bank management about the implementation of their plan. “We will only know by what is done in specific projects. They need to go out of their way to communicate how projects meet commitments made in the plan”. The board has asked management for an annual report on implementation of the plan which is to include the “nuts and bolts at a project level” and not just vague summaries.