NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, July 30, 2014

The World Bank board’s Committee on Development Effectiveness meets on Wednesday to review a new proposal that may change the way the Washington, D.C.-based institution assesses and mitigates the environmental and social impacts of its investments.

Much to the bank’s chagrin, the proposal draft leaked last week and sparked a quick reaction among human rights and environment watchers, who called it “disastrous” for the environment and a “shocking attempt to eviscerate protections for the poor.”

Wednesday’s meeting will not determine whether the proposal becomes official policy, but instead ask for the committee’s agreement to move forward with consultations, including with civil society and NGO representatives. Input from the consultations would then be used “to refine the proposals,” a World Bank spokesperson told Devex.

Environmental and social safeguards are among the most controversial and divisive bank procedures, since they are relied on to strike a balance between “transformational” investments that can boost economic growth and the adverse and disproportionate impacts those investments often carry. Safeguards are also one area of World Bank policy where human rights norms sit uneasily alongside the international financial institution’s multilateral governance structure. Member states have very diverse views when it comes to the role rights protection should play in national development plans, and some members of the bank’s 25-seat board — mainly China — have stymied efforts to bolster explicit human rights protections in the institution’s investments.

But the implications of the proposed changes to the framework may not be as immediately clear as some of the fiery online rhetoric would have it seem. Wednesday’s meeting should provide an opportunity for the bank’s leaders to delve into — and answer — some of the questions this draft proposal raises.

Here are the four questions we believe the committee should ask about the new safeguards proposal:

1. What does ‘where appropriate’ mean?

A controversial change to the policy revolves around the World Bank’s ability to defer to countries’ own environmental and social impact frameworks. “The borrower may, where appropriate, agree with the bank to use all or part of the borrower’s national environmental and social framework to address the risks and impacts of the project,” the proposal reads. For that to happen, the borrower’s national framework must enable the project to satisfy the bank’s environmental and social safeguards, but what are the criteria on which to base that “where appropriate” determination?