Since the early years of its inception in the 1940s, The World Bank has primarily used two instruments for financing its development projects; Investment Project Financing and Development Policy Lending. However, no regulation or policy framework was established to address the environmental and societal discriminatory practices arising out of such funding.
The World Bank “Safeguard Policies” came into existence in the 1980s as a regulatory framework to address the shortcomings in these financing norms. The World Bank Environmental and Social Framework (ESF) introduced in 2017 is an ameliorated and upgraded version of the Safeguard Policies and lists down ten simplified standards, known as Environmental and Social Standards (ESS) that borrower nations must abide, whenever borrowing for infrastructural and development projects.
The framework is currently applicable to all borrower nations and was constructed after several years of draft reviews, recommendations, policy improvements and structural changes. However, numerous critics have raised questions based on its international practices and human rights concern. Are the Environment and Social Framework “safeguarding” in the true sense? Some shreds of evidence prove otherwise.
The World Bank and several other International Organisations (IOs) have at several instances remained silent on allegations related to one particular domain: Human Rights. Though the World Bank has agreed to conform with international laws and agreements relating to climate change, marginal or no references have been made regarding International Human Rights Law in the framework.
The Coalition for Human Rights in Development (CHRD) in 2016 indicated that several recommendations from civil society groups were not included in the ESF, where labour policies were included but were inconsistent in any mention of international standards for the rights of workers. Labour rights are usually referred to from the four core labour standards, as mentioned by the International Labour Organization (ILO). The Bank fails to mention them in the ESF.
The diversity in such policy frameworks is usually indicated by the social and environmental inclusion of various aspects. For example, the JP Morgan Chase and Co. Environmental and Social Policy Framework include not only labour policies, but dimensions of Child Labour and Human Trafficking, which is highly appreciable.
The issue of Labour policies particularly gained great criticism where the Bank has directed borrower nations to follow basic workers’ rights and stressed extensively on the aspect of working conditions only. The fact that suggestions from civil societies were not appreciated is highly disturbing. Civil Society Organisations are the most important watchdogs when such policy frameworks are proposed and their recommendations are of great value.
Indigenous communities, LGBTI groups have been adversely affected due to human rights violations. The term “Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities” as mentioned in the ESF Standards is highly confusing in the sense that several governments do not acknowledge the term “indigenous people” due to differences in nomenclature and the Bank does not acknowledge the fact either.
The framework should comply with the UN Declaration on the Rights of Indigenous People, as no international agreement mentions any special emphasis to the Sub-Saharan local community, which is highly discriminatory in terms of several indigenous groups who remain unrecognised to this day.
The Forest Peoples Programme indicate that indigenous groups usually have negative benefit from the overuse and commercialisation of their natural resources under World Bank projects. Loss of livelihood, forced migration and the psychological cost of land resettlement are the most common repercussions created from large-scale projects.
The Gender Justice Women’s Rights, in a report, uses specific quantitative and qualitative analysis to indicate that the first review draft of the ESF has no or a very low-frequent mention of terms relating to gender standard indicating possible gender discrimination. Terms such as gender, boy, girl have low frequency, whereas terms like sexual orientation are not mentioned at all.
The study indicates that in a 110-page consultation draft, the word gender is mentioned 19 times only, with women and men even less. The latest document on the ESF, 2018, has a reduced frequency of 11 when the term gender is mentioned.
The ESS mentioning the labour working conditions attracts more criticism given the absence of gender dimensions. The standard fails to encourage women empowerment and promotion, especially given the fact that women’s labour force participation has stagnated in the last few decades.
There are several critical points to introspect given the discriminatory attitude of the Bank in gender policy discussions; the distinctive health and medical problems faced by men and women, the percentage of land held by the world’s women population (roughly 1%), women being globally paid less compared to men, having unaccounted economic activities and their increasing importance in biodiversity and ecosystem protection are not mentioned in the entire framework structure.
The establishment of the framework, coincidently arrived at a juncture when major shareholders to the World Bank agreed on an increased amount available for financing. This phenomenon is known as a General Capital Increase.
However, such policies tend to strengthen the Bank’s intention to provide comparatively “risker lending” into “high-risk projects” in “politically-fragile” economies. The financing structure of these projects also uses the term “risk-based management” very frequently, which means that environmental and social challenges will be addressed when they appear in the course of the program rather than a prior assessment.
There are also several structural deficiencies indicated in the framework. Its restrictions to Investment Project Financing only, and not to other lending heads such as the Development Policy Lending (DPL) has been a subject of controversy.
DPL in some years includes around 40% of total funds lent out. Though countries require mandatory submission of Environmental Impact Assessments (EIAs), several organisations such as the Bretton Woods Project have criticised the procedure indicating inefficient environmental and social assessment. The structure of the framework is based on “environmental” discrimination but does not make any references from The Paris Agreement.
Several projects, such as dam construction, landscape-management, forest rejuvenation, river-basin cleaning, etc. have led to adverse environmental and social impacts on communities living in the vicinity of such projects, and are dependent on local resources for livelihood.
Such impacts instigate protests. However, at several instances activists have been threatened, with personal-risk when they campaign for under-served minorities and particularly vulnerable groups. One such example can be of campaigns against the Indonesia Geothermal Project. Environment promoters and climate activists have been often termed as “terrorists” and criticised to serve “foreign-interests”, whereas they fight for the public good based on international human rights.
The debate relating to any such criticism based on instruments of International Organisations revolves solely around the courage and fearlessness of the stakeholders who take up against such large Multilateral Development Banks (MDBs). The fact that there is minor support is deeply worrisome, as externalities from projects may impact any group in any country.
The case of Tata Mundra Vs International Finances Corporation in Gujarat is very famous in this regard, where funding for a coal-plant led to respiratory illnesses in the locality. The Bank remains immune in this regard (latest verdict in February 2020).
While several economists have hailed praises for The World Bank ESF, there remains scope for improvement at several fronts. Some indicate the previous Safeguard Policies to be comparatively inclusive, considering the discriminatory angle in several ESS. Though protests and campaigns continue, there remains uncertainty regarding any change in the fundamentals of the framework and accountability in the financing aspect.