With the World Bank Evolution Roadmap process underway, concerns are growing over the Bank expanding its private-finance-first approach to tackling climate change (see Observer Summer 2023). The Bank has been at the forefront of promoting private sector centred “false solutions”, including carbon trading and so-called biodiversity offsets, which attempt to compensate for the destruction of natural habitats and species through conservation elsewhere. While the ineffectiveness of the carbon trading system has been widely documented, the spotty track record of biodiversity offsets has largely escaped public scrutiny, and they were included in last year’s UN biodiversity framework.
The International Finance Corporation (IFC), the Bank’s private sector investment arm, has funded at least 19 projects involving biodiversity offsets. Recent research in Guinea published by investigative news outlet ProPublica demonstrates the problematic nature of this approach, where an IFC-co-financed mining company displaced people and destroyed the habitat of endangered apes who in turn attacked villagers in a shared struggle for food and water. Meanwhile, the “offsetting” project, a national park protecting chimpanzees further away, is already being undermined by another bauxite mine and a planned dam that could kill half the ape population there as well. These issues are not new: In 2013, civil society experts already raised concerns with the WBG board over problematic biodiversity offsets from a different IFC-financed mine in Guinea, also in relation to chimps (see Bulletin December 2013).
Biodiversity offsets are based on thin evidence of their effectiveness, as fragile ecosystems can rarely just be uprooted and recreated elsewhere. As a Civil Society Policy Forum panel at the April IMF and World Bank Spring Meetings pointed out, the sustainability of the conservation offset component is also rarely monitored in the long term, so protection may not even extend beyond a project’s timeframe (see Dispatch Springs 2023). Regardless, offsets go on being used by environmentally destructive companies to continue their business as usual approaches with public funding from the World Bank Group, something environmental civil society organisations (CSOs) like Global Witness have called out as greenwashing.
Time’s up for business-as-usual or false solutions – we need real change that supports the rights and interests of those most affected by biodiversity loss.Hannah Greep, BankTrack
Without upholding credible standards and remedy, the IFC sets a low bar for others
IFC and World Bank investments in extractives and infrastructure megaprojects have been regularly linked to deforestation, displacement, loss of livelihoods, human rights abuses and environmental degradation (see Observer Winter 2021, Autumn 2020, Autumn 2019, Bulletin December 2013). However, the impact of such cases goes beyond the project itself, as the WBG’s standards and practices on accountability, remedy and environmental protection set the bar for other development institutions and provide a stamp of legitimacy for extractive companies – as shown in a 2018 report by Human Rights Watch, which found the government of Guinea pointed to IFC’s standards as best practice.
Pressured by its board and an expert panel after the highly-publicised Jam vs. IFC lawsuit (see Observer Summer 2022), the IFC committed to creating a remedy framework, but a first draft released earlier this year was severely criticised by an alliance of 48 CSOs including Accountability Counsel, Recourse, Oxfam and the Center for International Environmental Law for its “abject failure” to acknowledge human rights obligations or indeed, “provide a plan for any type of remedy” (see Observer Summer 2022). The World Bank’s 2022 reform of their own accountability and remedy mechanism was denounced by a similar group of CSOs for lagging behind even the IFC, lacking the option to suspend projects that result in imminent and irreversible harm (see Observer Autumn 2022).
In the context of a green industrial and energy transition that will see increased extraction of minerals required for renewable energy storage and other “green” technology, the risks of environmental degradation and human harm in resource-rich Global South countries like Guinea will retain their urgency. As a June expert briefing endorsed by 74 CSOs and co-authored by BankTrack, Friends of the Earth, Bank Information Center and Rainforest Action Network stressed: “It is critical that financiers avoid biodiversity and carbon offset approaches…and dependency on unproven, vague technologies, as there is an abundance of longstanding evidence that these approaches are not effective in solving the root problems of biodiversity loss and climate change.”