IFC standards revision leaves out human rights

18 February 2011

As the review of the performance standards of the International Finance Corporation (IFC), the World Bank’s private sector lending arm, enters its last stretch, civil society groups are up in arms about the latest draft’s steps backward, particularly in relation to human rights.

The striking of human rights language from the draft standards, as well as all references to labour rights, reflects ongoing debate among IFC staff, as well as differing views among the Board. In its 2010 annual report, the Compliance Advisor Ombudsman (CAO), the compliance mechanism of the IFC, notes that 62 per cent of the cases launched since 2000 involve claims of human rights violations or impacts.

NGO representatives from Nigeria, Cambodia and Argentina visited IFC headquarters to demand the inclusion of safeguards against possible human rights abuses. They held a panel discussion in early February, which included executive directors from China and Saudi Arabia and others.

“IFC sets the standards for many corporations, and we are hearing that corporations want these human rights standards in order to reduce risk and exposure, especially when all communities are now using the rights language. It is IFC’s duty and professional responsibility to address this issue,” said Daniel Taillant of Argentine NGO Center for Environment and Human Rights (CEDHA) at the panel discussion in early February. “[A]ll countries sitting in the board of IFC have human rights legislation and have voluntarily ascribed to international agreements that uphold those rights. So we are simply asking those countries to do so at the IFC,” added Chima Williams of Nigerian NGO Environmental Rights Action.

A number of other groups, including Amnesty International, Bank Information Center, International Accountability Project and the Center for International Environmental Law, have mounted critiques of the standards’ lack of inclusion of rights and will submit their concerns as part of a final window of consultation to end in early March before the standards are finalised in April. The NGOs demand that the IFC make a clear commitment not to support activities that are likely to cause, or contribute to, human rights abuses. They also demand a clear requirement that IFC and its clients undertake human rights due diligence.

“Although the IFC actively participated in the creation of the United Nations Framework on Business and Human Rights, the latest draft policies conflict with the UN framework by misrepresenting the definition of the ‘responsibility to respect'”, writes Raymond Offenheiser, of NGO Oxfam America, in a letter to IFC president Lars Thunnel.

Civil society groups have also drawn attention to financial intermediaries (FI) through which approximately half of the IFC’s investment flow. “[I]t is essential that the performance standards unambiguously apply to all FI subprojects”, suggests Offenheiser. The proposed standards only apply to “high risk” FI projects, unlike other lending, all of which is covered by the standards.

Despite the welcome inclusion of the need for free, prior and informed consent for Indigenous Peoples affected by IFC projects, the standard would apply to a narrow set of “special circumstances”. The proposed change puts the IFC more in line with international standards than their previous use of “free, prior and informed consultation”.