IFI governance

Background

IFC and broad community support

World Bank spring meetings, April 23, 2009

27 April 2009 | Minutes

IFC performance standards review

The International Financial Corporation (IFC), the World Bank’s private sector lending arm, adopted safeguard policies in 1998 that were equal to the standards set out by the Bank’s public sector lending. In 2003 there was a review of those standards leading to the adopting of IFC-specific policy and performance standards in 2006, which vary in content and ways in which they are applied. This year marks the third year policy review of those standards for the World Bank’s board. It is expected that inputs and consultation from stakeholders will take place from August until mid-year of 2010.

According to IFC staff the review process will encompass the performance standards as well as the IFC’s “guidance notes” and disclosure policies. In response to questions from civil society, the IFC stated that they expect this review to be both an updating and revision of existing performance standards as well as an opportunity to address any issues missing from the performance standards. One of the areas of weakness most noted in the performance standards by civil society is broad inclusion of human rights.

Few details were given beyond this.

Broad Community Support

The broader event focused around a theoretical mining project in an indigenous community where there was not support for the project. Using this example as a platform, the event focused on how the IFC should proceed in this scenario and aimed to address the issues of most concern.

Amar Inamdar of the Compliance Advisor Ombudsman’s (CAO) Office

In a brief presentation, Amar focused on the four main areas of investigation for the CAO, the compliance mechanism for the IFC. Among those areas of most concern to the CAO with respect to complaints and community support are representation, data collection, data assurance and dealing with conflicting interests.  He highlighted that one of the primary issues in interacting with communities is legitimacy of who is representing the community and if they have the support of the community in that representation. For the CAO, further questions arise around the collection of data, reassuring the quality of that data and the need to corroborate that evidence. Finally, he highlighted that within any given community impacted by a project, you can have different perspectives and interests, which poses a challenge.

Kirk Herbertson, World Resources Institute

Kirk focused on the principle of free, prior and informed consent
enshrined in the rights of indigenous People as the proposed scenario was to take place on the land of an Indigenous Community.

He highlighted that IFC has a verification responsibility to ensure that FPIC was given and that there must be public reporting and documentation of the process.

FPIC is based on consent being given by a community itself. Therefore, Kirk pointed out concern with IFC’s Broad Community Support, under which IFC staff can decide if consent exists among an effected community or can be based on a collection of letters IFC holds. The “free” aspect of FPIC requires that consent be given with no military presence or coercion from companies. Because the IFC is brought into projects midway into the project cycle, a community may already feel the project will go ahead regardless of their opinion, so IFC has to be able to address these issues.  A further concern is that evidence given to determine “free” is given by the companies themselves, which presents a conflict of interests. Finally, the “prior” element of FPIC is a challenge for IFC given that it enters a project mid-project cycle.

“Broad community support” under the IFC uses a snapshot approach in that it looks at whether a project is supported by a community in the early stages when a project is going to the Board for a decision. There needs to be an evaluation of community attitudes towards a project throughout.

Lee Swepton- Human Rights at Work

Lee used to work for the ILO and was part of the drafting of ILO convention 169 on Indigenous Peoples rights. He stated that consent is part of human rights aspirational norms, but that it isn’t yet possible to say it is required. The ILO Convention says there should be consultation with the objective of consent.

Most countries are not even up to ILO 169 standards and the government itself doesn’t consult with people. Companies are brought into a country after the window for consent has passed because the government has already given a company a concession.

Therefore, there is a need to develop the capacity to be able to consult fully in developing countries. In a review of companies working with IFC, Lee has found that companies say there countries they work with who make attempts at consultation, have no system for a consultation process. Many more countries don’t even make attempts at consultation.

It usually takes a year to 18 months to make sure a project is up to IFC standards. Initially companies are resistant to IFC performance standards. However, in the end they find that it benefits them.

IFC

Patty Miller of the IFC Environment and Social Department highlighted that these standards are still fairly new, especially in their application. Therefore, this is the first year since the adopting of the performance standards that projects are coming up to the supervision stage.

Ted Pollet, a social specialist for the IFC who worked in the field on the application of standards emphasized that the IFC comes into the project when it is already in construction and communities are already dug for or against a project. He also highlighted that it is important to do consultation throughout the life of the project and to think about whom the “effected community” encompasses. For example, in the investigative stages of a project, those impacted by preliminary studies may be different than those impacted once a project site has been chosen and begun. Furthermore, feelings of a community towards a project can change at different stages of the project. Echoing concerns of the CAO he also raised the issue of looking at who is representing communities and do they have legitimacy in doing so.