IFI governance

Commentary

World Bank accountability mechanisms: Any lessons learned yet?

27 February 2014 | Guest comment

“Insanity is doing the same thing over and over again and expecting different results.”
– Albert Einstein

The World Bank Group accountability mechanisms – the Inspection Panel, which handles complaints for public-sector projects, and the Compliance Advisor Ombudsman (CAO), which handles private-sector projects – were created to provide communities a space to raise their concerns about projects and to ensure the accountability of Bank-supported programs.

With the October 2013 adoption of its new strategy, the Bank decided that “smart risk-taking will help clients to strengthen their capacity”, which it interprets to mean that accountability mechanisms should “comple­ment compliance with a focus on outcomes”[1]. However the effectiveness of these mechanisms relies on the extent to which their recommendations and findings are taken into account by the management of the Bank and that actual remedies are provided to amend potential failures in the programmes.

The Bank president's failure to consider the findings by the accountability mechanisms threatens the effectiveness of these institutions.Astrid Puentes and Andrea Rodriguez

In three recent and fundamental cases, the Inspection Panel and the CAO concluded that Bank-supported programmes failed to comply with the Bank’s safeguards and policies. The institutions found that the Eskom energy project in South Africa, the Tata Mundra hydropower project in India, and the Dinant palm oil project in Honduras (see Observer Winter 2014, Bulletin Dec 2014, Update 81) posed serious negative impacts to the environment and human rights that according to the CAO, its compliance report on Dinant, resulted from the failure “to overlook, to articulate, or even conceal potential environmental, social and conflict risk” [2]. The World Bank Group president Jim Yong Kim has not made a serious response to these findings. This can be seen in his apparent unwillingness to provide effective and immediate solutions to the Bank’s internal structures, which are needed to improve environmental and social safeguards for Bank-funded projects and activities.

The Bank president’s failure to consider the findings by the accountability mechanisms threatens the effectiveness of these institutions.  This lack of commitment to learn from past mistakes undermines the value of the Bank’s own safeguards and the chance to improve the outcomes for those affected by Bank-funded activities. It sends a message that the Bank lacks a real commitment to collaborate and ensure accountability, and that it is not willing to assess potential errors in the approval and implementation of the programmes it supports.

The future of the accountability mechanisms

Despite the inadequate reactions by the Bank’s management in formulating action plans that address the findings of the accountability mechanisms in these three cases, there are opportunities for re-evaluation and correction. There are good reasons why when either accountability mechanism identifies a programme or project that has violated the Bank’s policies and safeguards, the Bank is required to develop effective action plans that incorporate and address the conclusions from the accountability mechanisms.  The action plans should consider learning lessons from the past and avoiding the repetition of the same mistakes.

The Bank’s structure and decision-making processes are clearly complex and are not easy to change. Bank management should use the opportunity to assess internal decision-making processes and implement reforms in response. The Bank’s management also needs to seriously consider the findings of the mechanisms and implement the necessary measures to bring about changes in the performance of those specific projects.

These measures must also be applicable to future programmes to prevent these situations from happening again in similar cases.  This is a core value for the effectiveness of the accountability mechanisms, and the improvement of the Bank Group´s performance.  Thus, the adoption of a different approach by the Bank to the one it used in the Dinant case in Honduras  is vital.[3]

The Bank has the opportunity to show different results to the accountability mechanism findings.  There are two important on-going investigations – the Quellaveco mine in Peru (see Update 82) and the Angostura mining case in Colombia – that are pending the CAO´s final decisions. The allegations against the IFC for the above cases includes non-compliance with their policies, inadequate consideration of environmental impacts and promoting mining in sensitive ecosystems and in violation of national laws.  We expect a different kind of response than to the three previous cases.

Furthermore, the World Bank is going through a review of its environmental and social safeguards[4]. The plan is to adopt an integrated policy framework that combines and simplifies current safeguard policies to make them more flexible and focussed on results. This new policy framework could influence how other international organisations, such as the UN’s Green Climate Fund, approach environmental and human rights protection. The language from the World Bank’s strategy does not help.

The review should not be only about ways to simplify the applicability of safeguards, but to ensure that the Bank learns from its mistakes and commits to comply with human rights laws throughout the life cycle of projects and programmes. The Bank’s president has made several public statements on his commitment to public health, fighting climate disruption and averting the dilution of safeguards. He has pledged that the World Bank will learn from its past mistakes.

As a globally influential institution, meeting these commitments and creating a new and more effective safeguards framework will bring greater legitimacy. This needs to be coupled with strong, effective and independent accountability mechanisms which can play a crucial role in creating certainty for people affected by World Bank projects. The mechanisms must be powerful enough to influence the Bank and hold it to account.


by Andrea Rodriguez Osuna and Astrid Puentes, Interamerican Association for Environmental Defense (AIDA)

Footnotes

[1] New World Bank Group Strategy from October 2013.

[2] CAO investigation p. 59.

[3] In the Dinant case, the CAO found that due to internal pressures the discussion of the due diligence by the IFC was neglected and that the culture to risk aversion inside the IFC may have put pressure on staff to overlook environmental and social negative impacts.

[4] http://consultations.worldbank.org/consultation/review-and-update-world-bank-safeguard-policies