UDHR and IPN anniversaries underscore urgent need for Human Rights policy at all IFIs

19 July 2023

World Bank Inspection Panel building. Credit: Artem Avetisyan/ Shutterstock

This year marks the 30th anniversary of the World Bank’s Inspection Panel (IPN), created as the result of grass-roots and international pressure on the Bank to address the well-documented negative impacts of the Bank-financed Narmada dam in India and similar projects, on marginalised communities.

The establishment of the world’s first independent accountability mechanism (IAM) at the World Bank in 1993 led to the creation of similar mechanisms at nearly all international financial institutions (IFIs), with the IMF and the German Federal Ministry of Cooperation and Development stark exceptions. The establishment of the IPN and other IAMs was a step-change in accountability, as previously only shareholders and borrowers had institutional channels and pathways to hold IFIs accountable – as opposed to communities affected by their investments. Fittingly, this year also marks the 75th anniversary of the Universal Declaration of Human Rights (UDHR) and the foundation of the international human rights system.

These anniversaries take place as the world struggles to respond to the polycrisis exacerbated by the Covid-19 pandemic, the worsening impacts of climate change, and the war in Ukraine. This coincides with mounting calls for reform of the unjust international financial architecture, as evidenced by the Bridgetown Initiative and the evolving consensus of the need for a fourth UN Financing for Development Conference (see Observer Summer 2023). The demands for substantive governance reforms are counter-balanced by a strong focus on ‘technical’ and financial fixes, such as reforming multilateral development bank’s capital adequacy framework, to meet a supposed development financing gap of trillions of dollars. Calls for the tripling of multilateral development finance to catalyse private finance – known as the Billions to Trillions agenda or “Cascade” approach reflected in the World Bank’s proposed Evolution Roadmap – evidence this drive, as outlined in a 5 July statement signed by 74 civil society organisations and academics highlighting the key shortcomings of the proposal (see Observer Summer 2023).

As World Bank, IMF and other IFI shareholders celebrate the anniversary of the international human rights system, they must go beyond wordsUmida Niyazova, Uzbek Forum for Human Rights

A bigger bank without rights and remedy frameworks means bigger problems

The proposed tripling of multilateral development bank finance, principally focused on de-risking private sector investments, coupled with proposals to delegate project approval to management, will likely have a significant impact on the effectiveness and workload of already understaffed and under-resourced IAMs, particularly given the expected increased focus on large-scale, regional mega-infrastructure projects and indirect lending instruments. The need for systems within IFIs to meet their international human rights obligations and to provide remedy to affected communities will become more acute. Despite the Roadmap’s mooted expansion of Development Policy Financing (DPF), which falls outside the Bank’s environmental and social framework (ESF) (see Briefing, Learning lessons from the Covid-19 pandemic: The World Bank’s macroeconomic policies and women’s rights; Background, What is Development Policy Financing?), it does not bring DPF and Program for Results lending within the ESF.

The struggle for improved IFI accountability and compliance with international human rights obligations in the context of the 75th anniversary of the UDHR is further challenged by the fact that the IMF lacks an IAM. This is particularly concerning given the expansion of the Fund’s work to include, for example, gender and climate. The proliferation of its programmes in the context of increased debt burdens and a challenging global economic environment, where Fund-mandated austerity and other policies are having acute social impacts (see Observer Summer 2020) further exacerbates those concerns.

Umida Niyazova, Director of the Uzbek Forum for Human Rights, and part of the Defenders in Development campaign stressed, “As World Bank, IMF and other IFI shareholders celebrate the anniversary of the international human rights system, they must go beyond words. Shareholders must demand that all IFIs establish human rights policies, integrate ex ante and post hoc human rights impact assessments into all of their programmes, and ensure their IAMs are adequately resourced and structured to enable them to meet their human rights obligations by providing remedy and accountability to communities affected by IFI project and policy lending.”