From country systems to DPLs: understanding the World Bank’s approach to social and environmental ri

This session will discuss the strengths and weaknesses of the Bank’s approaches with respect to different financial instruments and evaluate the challenges of ensuring coherence in environmental and social sustainability outcomes across instruments.

Sponsors: Global Witness, Bank Information Center (BIC), AKSI

Panelists: [Vince McElhinny (Bank Information Center), Rick Jacobsen (Global Witness), Titi Soentoro (AKSI), Stephen Lintner (World Bank)

Facilitator: Ingrid Hoven, German World Bank ED

Presentations

Vince McElhinny, BIC

• There are implications of the new risk frameworks at the Bank for how we approach the safeguards policy
• There are some concerns about risk identification before project selection versus implementation support
• Explanation of the WB’s ORAF (operation risk assessment framework) and how the bank is using ORAF pilots on risk categorisation
• There has been a decline in the volume of lending that uses the full safeguard frameworks, this will continue as some Investment Lending (IL) gets fast-tracked; at the same time there is a need to think about proliferation of different systems in place at the WB
• Example: WB DPL for funding environmental work with BNDES; but DPLs don’t get a risk classification; many flaws in the loans and errors in risk management
• Proposed IL Reform – going to board 25 October, but not clear how it will deal with ORAF

Rick Jacobsen, Global Witness

• Assessing social and environmental risks in Development Policy Loans (DPL) but missing comprehensive independent evaluation, walk through some preliminary findings from the 2012 DPL retrospective
• Increasing forest sector DPLs are a worry
• Description of the safeguard policies of DPLs, toolkits for environmental assessment
• Case study 1 on DRC – this resulted in an inspection panel investigation
• Case study 2 on Cameroon – failure to look at implementation of plans to mitigate risks related to indigenous people; failure to consider forest management issues
• Conclusions: risk assessment on DPLs is needed, an ORAF-style approach further upstream might work

Titi Soentoro, Aksi

• The Paris declaration on aid effectiveness led to a push into country systems approach
• There were a number of lessons learned from country system approaches at the World Bank, ADB, and MCC
• Risks versus realities: country systems shifted responsibilities from the IFI to the authoritarian government; a justification for financing problematic projects; whose ownership is being promoted?
• Examples of forest permit scheme in Indonesia where there were lots of loopholes for corruption; Examples of Beung Kak Lake community in Cambodia; NTs project
• Need empowerment of not just national governments, also need empowerment of people

Stephen Lintner, World Bank

• WB scaling up its work on risk management, within OPCS we have a risk management department; important to think of risk assessment as part of a system
• ORAF – and traditional processes working in tandem; ORAF looks at a wider range in factors that traditional ES risk assessment; ORAF is a good, but an evolving tool; which allows managers to see big picture better
• We will have an early review of P4R
• DPLs – we look at risks, do PSIAs, macro-economic risks, fiduciary and governance risks; we have different stages in how we look at risks; IL is a more traditional investment so more predictable

• Safeguards diagnostic review has led to a few cases of using national systems for resettlement or indigenous people
• WB still clearing environment/social documentation, not country alone

Discussion

Mark Rentschler – back in the day OP4.01 was applied to sectoral adjustment lending? Why has this changed with DPL?

Stephen – adjustment lending was supposed to be on an emergency basis; we need to think about what is effective in terms of the kinds of DPLs we are doing now; we need to use new and more appropriate instruments

Jessica Evans – risk analysis of negative human rights risks of projects? Especially where you have authoritarian regimes

Stephen – Can’t answer directly because of IP case; but think about the broader topic: governance. These are being looked at in CASs.