Organisers: CIEL, Accountability Counsel, BIC, IDI, PMCJ, Recourse, Urgewald, AWC, CEE Bankwatch, Green Advocates International.
Moderator:
- Carla Garcia Zendejas, Director of People, Land, and Resources, CIEL
Panellists:
- Sadaf Lakhani, Specialist, CAO
- Aaron Pedrosa, Attorney, PMCJ
- Eang Vuthy, Executive Director, Equitable Cambodia
- Larissa Luy, Manager, Environmental & Social Risk Management, IFC
Carla: Representing communities harmed who continue to seek remedy. Many empty-handed.
Exploring exits that have taken place during accountability process.
The discussion is very timely, as IFC is creating Remedial Action and Responsible Exit Framework – including pilot.
Aaron: 2017 CAO case – IFC found in violation. Management Action Plan (MAP). MAP must be updated to provide remedy. 19 coal plant projects. 1 case dropped. IFC funds were not disbursed to the financial intermediary (FI), which exited the project.
Conditions have deteriorated – no access to water. Leaders in hiding as there are allegedly bounties for them.
Victory in 2021 might still have resulted in remedies. IFC continues to have equity in Rizal – the FI involved. Philippines have 30 coal plants. IFC has leverage at the board.
IFC may exit due to deteriorating relationships. FI has a no coal commitment, but has provided general purpose funds to coal plants. Before exiting IFC should force FI to exit coal.
48 gas pipelines in Philippines – need for Paris alignment. No Remedy policy.
Eang: HAGL case: Land grabbing of indigenous lands. IFC involved through FI.
Concessions overlap with ancestral lands. 14 villages affected. Food security remains an issue. Loss of religious lands.
Bank had tried to support land tenure for indigenous populations, but the project has destroyed the progress made.
Process is very difficult to understand. After complaint, company divested – as did IFC, all in the middle of the compliance process. HAGL is still involved.
Spent years with the community on the ground.
Minister of Agriculture agreed to excise 742 hectares.
However new clients entered and new process begun. 12 villages now working on a new proposal. Submitted to company by CAO.
IFC must work with the company to provide remedy.
Sadaf: Presented CAO case insights from 2023 review.
- Exists during active CAO cases are common. Some due to early payment.
- Exits can weaken accountability and access to remedy, also increased risk of threats and reprisals.
- Complaints normally received about 5.5 years after project begins – well into the IFC investment cycle.
- More frequently in compliance cases – generally driven by client pre-payment.
- Creates problems with eligibility criteria. In extraordinary circumstances, can accept case 15 months after end of loan.
- Affects context for remedial action.
- Impacts institutional learning – as process are truncated.
- Clients may not act in good faith after exit.
- Results in weak remedy.
Carla: Responsible exits is a “hot topic” at the institution.
CAO process must change as communities have not asked for remedy. Need for an explicit chapter in case process to allow communities to detail what would make them ‘whole’.
Community engagement must take place as exit is being planned.
Larissa: Development of exit principles begun 2020 with multi-disciplinary group.
Worked with CAO on advisory paper. Regional consultations and pilot were organised.
IFC – first development finance institution (DFI) to establish a remedy framework.
Proposal will have significant operational implications.
Questions from consultations:
- Scope of application
- Stakeholder engagement (tension with client confidentiality).
- Disclosure
There are regulatory and contractual barriers – e.g. limits on early payment.
Scope broadened after consultation – now incorporates all active exits. More guidance on stakeholder engagement. Will change clearance procedures.
Framework undergoing final clearances. Framework begins at design and includes monitoring.
Margaux Day, Executive Director Accountability Counsel: Must focus on threats and hardships faced by communities.
CAO must therefore be ‘bold’ and effective. No remedies despite compliance ‘victory’. Exit leads to abandonment.
In some cases the CAO case has resulted in exit.
IFC CEO stated publicly that Bridge was consistent with responsible exit.
Default should be: Exit is never responsible during investigation, unless communities consent to exit.
Carla: Some successful exits – only prior to beginning of construction, etc. That said, even then retaliation continues.
Larissa: New Framework may be launched by July.
Questions and answers
Question 1: IFC was the first institution to require a risk bond for extractives. In most finance there is an element of insurance. One could add an early finance penalty.
Larissa: Some potential, but will affect loan costs.
Joe Athialy, Centre for Financial Accountability: Will remedy also apply to closed cases such as Tata Mundra?
ANZ – divested but provided profits to communities.
Juana Doe vs. IFC settlement – groundbreaking.
Remedy should result in fewer, rather than more cases – as cases result from frustration and lack of remedy.
What about a remedy fund?
Sadaf: in some cases pre-penalty fees were waived.