IFI governance

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IFC: ‘badges of excellence’, dubious practice

5 October 2007

The IFC is scaling up its investment in high risk and low-income countries “as part of its development mission”, and is now on track to double financing for mining in Africa this year (see Update 56). However its attempts to position itself as an environmental and human rights ‘expert’ in these sectors lacks credibility.

An NGO coalition including World Wildlife Fund, Oxfam, EARTHWORKS, Bank Information Center and the Center for Science in Public Participation points out that the IFC’s recently released draft environmental, health and safety guidelines for mining (EHS guidelines) fail to specify the necessary measures to protect affected local communities and environments, and in some cases do not meet the mining industry’s existing “best practice” standards. The organisations call on the IFC to rewrite the guidelines with the participation of independent experts and civil society organizations, and “to document the actual contributions its mining projects make to poverty reduction.” The EHS guidelines are marked by significant gaps, including the failure to specify the performance levels or quantitative measures necessary to protect local communities and environments impacted by these projects. In some cases the guidelines do not even meet the mining industry’s existing “best practice” standards. When the IFC adopted its policy and performance standards on social and environmental sustainability in 2006 (see Update 50 ), it stated the details missing from these would be provided in the subsequent EHS guidelines. However, the draft guidelines have failed to do this

Paradoxically the IFC, together with the UN is now helping the International Council on Mining and Metals, which represents the world’s 16 largest mining companies, to develop a “badge of excellence” for standards in environmental protection and mining safety. This is apparently in response to increased competition from China for Africa’s natural resources and to help the industry fend off criticism from environmental and human rights campaigners.

the IFC does not actually require a human rights impact assessment

In June the IFC released its guide to human rights impact assessment and management for ‘road testing’ by companies, which will lead to a revised version by mid-2009. Human rights experts have criticised the IFC’s legitimacy in this area. The IFC’s claim that its “sustainability policy and performance standards. reference internationally agreed human rights norms” has previously been challenged by groups such as Amnesty International on the grounds that it uses language and concepts which are vague and open to interpretation, and for its failure to ensure that its standards comply with international law (see Updates 53, 52). Moreover, the IFC does not actually require a human rights impact assessment as part of its lending to companies. Consultation with affected communities and/or civil society experts in the design of the IFC’s guide has also been limited. This in contrast to a recent methodology for human rights impact assessments of foreign direct investment projects, which was drawn up by Canadian NGO Rights and Democracy.

In a potentially positive step John Ruggie, the UN special representative on business and human rights (see Update 55), and the IFC recently launched a joint study on foreign direct investments and human rights. This aims to examine the relationship between investor ‘rights’ and the human rights obligations of the host states (see Update 47). The study, which is due for completion in spring 2008 will look at the potential impact of these clauses on the host states’ ability to adopt and implement new human rights laws in areas such as labour, protection of the environment, and the provision of essential public services such as water.