Private sector safeguard review continues despite boycotts

15 November 2004

Civil society organisations globally have stepped up their campaign against the International Finance Corporation’s (IFC) process to overhaul its safeguard policies. This sees an unacceptably short and politically-driven timeframe for consultation, and a dilution of principles for environmental and social protection. The IFC’s fundamental revision of both the environmental and social policy requirements that govern its lending operations, as well as its information disclosure policy, sees the replacing of the current ten safeguard policies of the World Bank Group with nine IFC-specific ‘performance standards’. These standards would adopt a more flexible approach which critics say would make them less binding and harder to enforce (see Update 42).

Consultation lacks credibility

In September a joint letter was sent by a coalition of 180 development, environment and human rights NGOs to Bank president James Wolfensohn and IFC head Peter Woicke. It highlighted changes that need to be made to the consultation process. “Unless the minimum preconditions for meaningful and informed consultation are put in place, we do not see how we can participate in this process, as we fear it will be lacking any acceptable level of credibility.” The response to this letter was disappointing, making only concessionary changes to the consultation process, notably the scheduling of additional one-day consultations.

This has resulted in boycotts by many NGOs, social movements and people’s organisations of consultations in Rio de Janeiro, Washington DC, Tokyo, Manila and London. Further boycotts are planned for future consultations including Istanbul, Nairobi, Johannesburg and Tunis.

we fear it will be lacking any acceptable level of credibility

At the Rio consultation at the end of September, many NGOs withdrew their participation in protest. Less than 30 days before the first regional consultation was planned to take place in Brazil, the proposed draft documentation had still not been translated into all appropriate languages, including Portuguese. A civil society meeting which had been set up by the IFC in Washington during the World Bank/IMF annual meetings was boycotted by a large group of NGOs, who issued a statement: “To involve local affected people in the process requires more time, more outreach, more translation, more information and more engagement than IFC’s current process will allow”. A consultation in London on 1 November was attended by only one NGO. The consultation scheduled for 3 November in Berlin was cancelled.

Substantive criticisms

NGOs globally are calling for clear and enforceable rules for IFC lending and significant institutional reforms to guarantee due diligence, ensure effective implementation and improve accountability to affected communities and citizens. They are calling on the IFC to strengthen its social and environmental policies to ensure that multinational corporations respect fundamental international human rights, labour rights and environmental law as conditions for access to IFC loans (see box).

Weakened policies?

Research into the new ‘performance standards’ which will replace existing safeguard policies shows that- while offering some improvements- many policies will be weakened, for example:

Performance standard 1, social and environmental assessment: No longer requires the obligations of the country, under relevant international environmental treaties and agreements to be taken into account, and does not require a human rights impact.

Performance standard 2, labour and working conditions: No longer refers to ILO standards and international conventions with regard to forced labour and child labour.

Performance standard 5, land acquisition and involuntary resettlement: May treat indigenous peoples with customary rights to land that are not recognised in domestic law as people without legally recognised claims to land.

Performance standard 7, indigenous peoples and natural resource dependent communities: Most notably fails to adopt the internationally accepted standard of ‘free, prior and informed consent’.