36/40 Report of the Independent Expert on the promotion of a democratic and equitable international order
Document Type: Final Report
Date: 2017 Jul
Session: 36th Regular Session (2017 Sep)
Agenda Item: Item3: Promotion and protection of all human rights, civil, political, economic, social and cultural rights, including the right to development
GE.17-12317(E)
Human Rights Council Thirty-sixth session
11-29 September 2017
Agenda item 3
Promotion and protection of all human rights, civil,
political, economic, social and cultural rights,
including the right to development
Report of the Independent Expert on the promotion of a democratic and equitable international order*
Note by the Secretariat
The Secretariat has the honour to transmit to the Human Rights Council the thematic
report of the Independent Expert on the promotion of a democratic and equitable
international order, Alfred de Zayas, prepared pursuant to Council resolution 33/3.
* The annexes and the bibliography are reproduced as received, in the language of submission only.
United Nations A/HRC/36/40
Report of the Independent Expert on the promotion of a democratic and equitable international order
Contents
Page
I. Introduction ................................................................................................................................... 3
II. Positive features ............................................................................................................................ 4
III. Challenges ..................................................................................................................................... 6
A. Environmental degradation, evictions and forced resettlement ............................................ 7
B. Labour rights violations ........................................................................................................ 8
C. Circumventing rules by outsourcing ..................................................................................... 9
D. Public-private partnerships ................................................................................................... 10
E. Reprisals ............................................................................................................................... 11
F. Business bias ......................................................................................................................... 12
G. Immunity of the World Bank from litigation in domestic courts? ........................................ 13
H. Credit-rating agencies ........................................................................................................... 14
I. Ongoing research .................................................................................................................. 15
IV. Good practices ............................................................................................................................... 15
A. Environmental and Social Framework .................................................................................. 15
B. Inspection Panel .................................................................................................................... 17
C. Taking preventive and corrective action ............................................................................... 18
D. Compliance Advisor Ombudsman ........................................................................................ 19
V. A way forward ............................................................................................................................... 19
VI. Conclusions and recommendations ............................................................................................... 21
Annexes ............................................................................................................................................................... 24
Bibliography ........................................................................................................................................................ 47
I. Introduction
1. The present report is submitted pursuant to Human Rights Council resolution 33/3,
in which the Council invited the Independent Expert to continue his research into the
impact of the financial and economic policies pursued by international organizations and
other institutions, in particular the World Bank and the International Monetary Fund, on a
democratic and equitable international order.
2. Following an expert consultation hosted by the Office of the United Nations High
Commissioner for Human Rights (OHCHR) in Geneva in October 2016, the Independent
Expert decided to focus his report to the Council on the World Bank, and to devote his
report to the General Assembly to International Monetary Fund (IMF) issues. The two
reports should be read together, conscious that in the twenty-first century there are no
“human rights-free zones”,1 that all States, international organizations and non-State actors
must respect the customary international law of human rights, and that the so-called
“fragmentation” of international law cannot create “stand-alone regimes” or “legal black
holes”.
3. While international financial institutions can advance human rights and
development, some of their policies have resulted in the erosion of the enabling human
rights environment in some countries, especially through the promotion of neoliberal
policies that weaken the public sector and hinder States in the fulfilment of their human
rights treaty obligations in the fields of education, health care, labour standards and an
adequate standard of living. Moreover, by financing enterprises that evade taxes, the World
Bank abets the diversion of public resources away from public services. Increased Bank
support for public-private partnerships enhances the private sector at the expense of
communities, especially when investments go awry and result in greater costs to
governments. Henceforth, international financial institutions should take a human rights-
based approach to lending, consult stakeholders, conduct impact assessments, take action to
counter reprisals, combat corruption and accept legal responsibilities by waiving “absolute
immunity”.
4. The Independent Expert believes that, since the World Bank and IMF have
association agreements with the United Nations, they must support the General Assembly,
the Economic and Social Council and the United Nations Conference on Trade and
Development (UNCTAD) in advancing the purposes and principles of the United Nations,
as set out in the Charter of the United Nations, and in advancing human rights and
sustainable development, while respecting the sovereign equality of States and the principle
of non-intervention in the domestic affairs of States. It bears repeating that the member
States of the World Bank and IMF are also States parties to numerous United Nations
human rights treaties, notably the International Covenant on Civil and Political Rights and
the International Covenant on Economic, Social and Cultural Rights, and that they must
ensure that the policies of financial institutions and the projects they support do not have
adverse effects on human rights.2
5. Bearing in mind that States have an obligation to ensure that investors and
transnational corporations do not violate human rights,3 States should use their leverage to
strengthen the human rights regime whenever they negotiate deals with governments to
finance specific projects.4 In that regard, the Independent Expert recalls the commitments
made in 2015 by States at the United Nations summit for the adoption of the post-2015
1 See www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=16517&LangID=E and
www.nytimes.com/2016/06/27/opinion/the-world-bank-should-champion-human-rights.html.
2 See the text of the draft articles on the responsibility of international organizations prepared by the
International Law Commission and published in the report on its sixty-third session (A/66/10), para.
87.
3 See the Guiding Principles on Business and Human Rights: Implementing the United Nations
“Protect, Respect and Remedy” Framework.
4 See the International Covenant on Economic, Social and Cultural Rights, art. 2 (1).
development agenda and the adoption by the General Assembly of the Sustainable
Development Goals (see General Assembly resolution 70/1). The Addis Ababa Action
Agenda of the Third International Conference on Financing for Development, adopted in
2015, also calls upon all development banks to establish or maintain social and
environmental safeguards systems (see General Assembly resolution 69/313, annex, para.
75).
6. In January 2016, the Independent Expert sent questionnaires to the World Bank,
IMF, States, intergovernmental organizations and non-governmental organizations (NGOs)
(see annex 1). He expresses deep appreciation for their cooperation and the many statistics
and clarifications received.
7. In April 2017, he attended several events at the spring meeting of the World Bank
and IMF, conducted bilateral exchanges with lawyers and economists in both institutions,
and liaised with civil society organizations. He endorses the pertinent studies and reports of
OHCHR and special procedure mandate holders who have focused on manifold aspects of
the work of international financial institutions (see annex 2). He draws insight from
substantive studies prepared by NGOs5 and academics.
8. The World Bank Group is composed of the International Bank for Reconstruction
and Development (IBRD), the International Finance Corporation (IFC), the International
Development Association (IDA), the Multilateral Investment Guarantee Agency and the
International Centre for Settlement of Investment Disputes. Since 2012, Jim Yong Kim has
been President of the World Bank Group. The present report focuses on the work of IBRD
and IFC.
9. The publications of the World Bank Group document their awareness of impacts on
human rights. The evolution of the Bank’s own social assessment framework acknowledges
the Bank’s human rights responsibilities. The present report does not aspire to tell the Bank
what it already knows or what its experts are busy trying to address. It hopes to formulate
realistic recommendations, applying a human rights-based approach. In that regard, the
Bank’s Articles of Agreement should be amended to integrate the promotion of human
rights, and directives should be issued by the Board of Governors to mainstream human
rights. A revised mission statement that reconciles the economic and financial priorities
with human rights is desirable.6 Even the words written on the great wall at the entrance of
the Bank (“Our dream is a world free of poverty”) serve as a call for action.
10. Over the past 60 years, the activities of IFC, which was established in 1956, have
given rise to more criticism than that usually directed at the World Bank. As the Bank’s
private lending arm, IFC also has idealistic language on its website, where it boasts that the
Bank’s mission “is to fight poverty with passion and professionalism, for lasting results”.7
The Independent Expert agrees that that mission is achievable.
II. Positive features
11. The World Bank acknowledges that “sustainable development recognizes that
growth must be both inclusive and environmentally sound to reduce poverty and build
shared prosperity for today’s population and to continue to meet the needs of future
generations. It is efficient with resources and carefully planned to deliver both immediate
and long-term benefits for people, planet, and prosperity”.8
12. To that end, in 2006 the Bank adopted the Environmental and Social Framework,
comprising:
5 See www.oxfam.org/en/tags/world-bank and www.oxfam.org/en/pressroom/pressreleases/2016-10-
03/new-links-expose-world-bank-group-investments-and-human-rights.
6 See www.youtube.com/watch?v=TyOUputeq2Y.
7 See www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc_new/
IFC+Governance.
8 See www.worldbank.org/en/topic/sustainabledevelopment/overview.
• A vision for sustainable development, which sets out the Bank’s aspirations
regarding environmental and social sustainability;
• An environmental and social policy for project financing, setting out mandatory
requirements for projects it supports;
• Ten environmental and social standards, setting out mandatory requirements for
borrowers and projects.
13. The vision statement of the new Environmental and Social Framework formulates a
strategy that “sets out the corporate goals of ending extreme poverty and promoting shared
prosperity in all its partner countries”, including goals relevant to human rights, such as
environmental sustainability, social inclusion and the preservation of resources. Within the
Framework, 10 environmental and social standards, which are designed to support
borrowers’ projects, focus on: (a) social risks and impacts; (b) labour and working
conditions; (c) pollution prevention; (d) health and safety; (e) land acquisition, land use and
involuntary resettlement; (f) sustainable management of living natural resources; (g)
indigenous peoples; (h) cultural heritage; (i) financial intermediaries; and (j) stakeholder
engagement and information disclosure.
14. The vision goes beyond “do no harm” and aims at maximizing development gains.
Thus, where the borrower’s environmental and social assessment has identified potential
development opportunities associated with a project, the Bank will discuss with the
borrower the feasibility of incorporating those opportunities into the project. Moreover, the
Bank is committed to work with borrowers to identify strategic initiatives and goals to
address national development priorities and maintain dialogue on environmental and social
issues with donor governments, international organizations, countries of operation and civil
society.
15. There is no shortage of opinions about the impact of the World Bank on the
international order. Some observers contend that the Bank and IMF have a greater impact
on world affairs than all the resolutions of the United Nations General Assembly and the
Economic and Social Council combined. While the supremacy clause in Article 103 of the
Charter of the United Nations stipulates that the Charter shall prevail over all other
international agreements, the fact is that the Bretton Woods institutions are not
subordinated to the General Assembly and the Security Council and that they will continue
to have a determining effect on world affairs, including the enjoyment of civil, cultural,
economic, political and social rights.
16. Many in academia have been studying the impact of World Bank policies on human
rights and the international order. Already in 2003 the Tilburg Guiding Principles on World
Bank, IMF and Human Rights were adopted.9 A follow-up conference at the University of
Tilburg, in the Netherlands, entitled “Globalization and Transnational Human Rights
Obligations”, led to the adoption of the Tilburg-Glothro Guiding Principles in 2015 (see
annex 3). Similarly, in 2009, the Indian Law Resource Centre issued the “Principles of
International Law for Multinational Development Banks”,10 in which scholars refuted the
argument that the international financial institutions are somehow above the law and that
they only have to honour their charters and constitutions.
17. Whereas the Bank has the word “development” in its name, the question must be
answered what development means for the purposes of the Articles of Agreement. Hitherto,
both in doctrine and in practice, the Bank has understood development to mean growth in
terms of gross domestic product (GDP), increased trade and greater consumption.
Observers have been proposing a different understanding of “development”, as a more
equitable distribution of wealth, food security, clean water, sanitation, health care, housing,
9 See Willem van Genugten, The World Bank Group, the IMF and Human Rights: A Contextualized
Way Forward (Cambridge, Intersentia, 2015).
10 See http://scholar.law.colorado.edu/cgi/viewcontent.cgi?article=1001&context=free-prior-and-
informed-consent. See also Günther Handl, “Multilateral Development Banking”, available from
www.meraki-autoworks.com/multilateral-development-banking-environmental-principles-and-
concepts-reflecting-general-international.pdf.
education and employment. The inequalities among States and within States, however, have
been growing in many countries, where unemployment has increased, particularly affecting
young people, and the actual standard of living has dropped.
III. Challenges
18. Notwithstanding the positive developments described above, both the Bank and IMF
continue pressing for increased reliance on purely market-based solutions, following the
perspective of “market fundamentalism” that Joseph Stiglitz often decried.11 In 2016, there
was increased cooperation among multilateral development banks, with a focus on mega-
infrastructure projects, a reliance on public-private partnerships12 as a way to circumvent
constrained fiscal space, and a continued effort to impose so-called labour flexibilization
and other obsolete conditionalities on States.
19. As Naomi Klein recalls in her seminal work, The Shock Doctrine, the main problem
remains the commitment of international financial institutions to the philosophy of laissez-
faire economics, reflecting Milton Friedman’s Chicago school and characterized by the
almost religious belief that privatization and deregulation will advance GDP,
notwithstanding its endemic boom and bust cycles and its minimization of social costs.13
20. For many years, civil society has signalled human rights abuses committed by
companies benefiting from World Bank financing, with numerous publications
documenting those abuses. Among the most egregious violations are land-grabbing, brutal
evictions, involuntary resettlement, forced labour, 14 child labour, sexual abuse, massive
pollution, destruction of the environment, reprisals against human rights defenders,
corruption and money-laundering. The present report summarizes a few salient cases that
are representative of widespread violations.
21. Ahead of the Bank spring meeting in April 2016, Oxfam released a report entitled
“The IFC and tax havens”, in which it revealed that 51 of the 68 companies in which IFC
had invested in sub-Saharan Africa in 2015 used tax havens. 15 As described in the
Independent Expert’s 2016 report to the General Assembly (A/71/286), that risks depriving
countries in the region of essential tax revenue which could be used to meet their human
rights obligations, fulfil the Sustainable Development Goals and repay foreign debts. In
fact, UNCTAD estimates that developing countries lose $100 billion annually in tax
revenue, from which lost revenues and uninvested earnings yield a total development
finance loss in the range of $250-300 billion.16 It is time for the Bank to blacklist projects
with companies that fail to pay their taxes.
11 See Joseph Stiglitz, “Moving beyond market fundamentalism to a more balanced economy”, Annals
of Public and Cooperative Economics, vol. 80, No. 3 (2009). See also
www.globalpolicy.org/social-and-economic-policy/the-three-sisters-and-other-institutions/internal-
critics-of-the-world-bank-and-the-imf/42796-joseph-stiglitz.html.
12 See www.worldbank.org/en/topic/publicprivatepartnerships,
https://ppp.worldbank.org/public-private-partnership/overview/world-bank-group and
https://ieg.worldbankgroup.org/Data/reports/lp_Health_PPP_1116.pdf.
13 See www.ipsnews.net/2017/06/east-asian-miracle-myth-making/.
14 See www.theguardian.com/global-development/2017/jun/27/world-bank-funds-linked-to-forced-
labour-in-uzbekistan.
15 See www.oxfamsol.be/sites/default/files/documents/bn-ifc-tax-havens-110416-embargo-en.pdf. See
also www.oxfam.org/en/pressroom/pressreleases/2016-04-11/majority-world-banks-private-
investments-go-companies-have and
www.oxfam.org/en/pressroom/pressreleases/2016-12-12/worlds-worst-corporate-tax-havens-exposed-
oxfam-report-reveals.
www.oxfam.org/sites/www.oxfam.org/files/bp-race-to-bottom-corporate-tax-121216-en.pdf.
16 See UNCTAD, World Investment Report 2015, chap. V, available from
unctad.org/en/PublicationsLibrary/wir2015_en.pdf. See also
www.taxjustice.net/2015/03/26/unctad-multinational-tax-avoidance-costs-developing-countries-100-
billion/.
22. There is ample evidence that projects financed by the Bank cause harm to millions
of people. A 2015 report by the International Consortium of Investigative Journalists states
that from 2009 to 2013, the Bank pumped $50 billion into projects graded the highest risk
for “irreversible or unprecedented” social or environmental impacts. 17 The report also
indicates that the Bank and IFC have financed governments and companies accused of
human rights violations, including murder and torture. In some cases, they continue to
finance those borrowers notwithstanding the evidence.18
A. Environmental degradation, evictions and forced resettlement19
23. Among the vulnerable groups that have suffered as a consequence of major
prospecting, mining, logging and hydroelectric enterprises are indigenous peoples whose
lands have been taken away or devastated though industrial activity, without consultation
and without their free, prior and informed consent.20
24. In 2015, the International Consortium of Investigative Journalists determined that
3.4 million persons had been physically or economically displaced by projects funded by
the Bank, including Ethiopian Anuak, who faced a violent campaign of mass evictions
funded through the diversion of funds from a Bank-supported project.21
25. In 2016, the Consortium reported on the Bank’s support to an agribusiness project
that violated safeguards for indigenous people in Tanzania. Following massive protests by
NGOs, the Bank initially retreated, but in March 2016 the Bank’s Board granted a full
waiver of its safeguard policy (Operational Policy 4.10), creating an unfortunate precedent.
At issue was a $70 million loan to the Southern Agricultural Growth Corridor of Tanzania
(SAGCOT), a government initiative that evicted indigenous herders in the Barabaig region
in order to transfer fertile agricultural lands to investors. 22 The Consortium has also
reported on abuses in the mining sector,23 including those connected with gold mining in
Peru.24
26. The waiver of the Bank’s Operational Policy on Indigenous Peoples was the subject
of a communication addressed in February 2017 to the Bank by the Special Rapporteur on
the rights of indigenous peoples and the Independent Expert on the effects of foreign debt
and other related international financial obligations of States on the full enjoyment of all
human rights, particularly economic, social and cultural rights. The communication noted
that:
The SAGCOT project may have a significant impact on nomadic and semi-nomadic
pastoralist groups that self-identify as indigenous peoples, including the Barbaig, the
Datoga, the Hadzabe and the Maasai, who depend on lands in the project areas for
their daily livelihood and survival … we think that it is essential that projects aimed
17 See www.counterpunch.org/2017/03/24/world-bank-declares-itself-above-the-law/.
18 See www.icij.org/blog/2015/04/icijs-world-bank-probe-draws-global-attention.
19 Alfred de Zayas, “Forced Population Transfer”, in The Max Planck Encyclopaedia of Public
International Law, Vol. IV, Rüdiger Wolfrum, ed. (Oxford, Oxford University Press, 2012), pp. 165-
175.
20 See the United Nations Declaration on the Rights of Indigenous Peoples, arts. 10-11, 19, 28, 30 and
32.
21 See www.icij.org/blog/2015/04/new-investigation-reveals-34m-displaced-world-bank and
http://projects.huffingtonpost.com/worldbank-evicted-abandoned/new-evidence-ties-worldbank-to-
human-rights-abuses-ethiopia.
22 Bretton Woods Observer, Autumn 2016, p. 7. Available from www.brettonwoodsproject.org/wp-
content/uploads/2016/09/Observer_Sept_16_online.pdf. See also
http://documents.worldbank.org/curated/en/215191467995074230/pdf/103990-SU-P125728-IDA-
SU2016-0001-OUO-9.pdf and
www.huffingtonpost.com/entry/world-bank-allows-tanzania-to-sidestep-rule-protecting-indigenous-
groups_us_57607769e4b09c926cfd6b1c.
23 See www.brettonwoodsproject.org/2014/06/world-bank-mines-threatening-livelihoods/.
24 See http://projects.huffingtonpost.com/worldbank-evicted-abandoned/how-worldbank-finances-
environmental-destruction-peru.
at improving the social safety net in Tanzania are designed in such a manner that
Indigenous People can benefit from them … and that Indigenous People are fully
consulted.25
27. The Special Rapporteur and the Independent Expert concluded that “the granting by
the Board of waivers to OP 4.10 … is problematic both from a normative and an
operational point of view. By taking for granted the unilateral contention that OP 4.10
contradicts the provisions of the national constitution … this generates evident protection
gaps with relation to the rights of indigenous groups”.26
28. In its response of March 2017, the Bank argued that “the project preparation team
drew upon the advice of local and international experts and Indigenous Peoples’
representatives. In particular, the government agreed to prepare a safeguards instrument
aligned with the requirements of OP 4.10, known as the Vulnerable Groups Planning
Framework (VGPF)”.27
29. It further clarified that:
The World Bank’s Board of Executive Directors took account of the project design,
the legal documents including the legal covenants related to the VGPF, and
approved the SAGCOT Investment Project … the sub-project eligibility criteria has
been designed to limit the potential impact of sub-projects on the land rights of host
communities — the Project will not support investments that involve the
reallocation of land from smallholders to agribusinesses.28
30. Human Rights Watch has also highlighted instances in which the Bank failed to
observe its own policy of protecting indigenous peoples’ rights. For example, it
documented the forcible transfer of the semi-nomadic Nuer people in the Gambella region
of Ethiopia, noting an operational link between World Bank projects and a government
relocation programme known as “villagization”. The matter came before the Bank
Inspection Panel, which indeed found that the Bank “did not carry out the required full risk
analysis, nor were its mitigation measures adequate”.29
31. In 2014, the Bank approved a $73 million grant for the Inga hydropower project in
the Democratic Republic of Congo, despite the Board noting “significant implementation
risks”. In July 2016, the Bank suspended funding. The NGO International Rivers
commented that the Bank should not have been involved in the project in the first place,
because “Inga represents a failed development model which bypasses the poor for the
benefit of extractive industry and export markets”.30
B. Labour rights violations
32. Civil society has also drawn attention to labour rights violations in connection with
World Bank projects. Human Rights Watch’s “Toxic Toil” report, for example, documents
the flagrant violation of children’s rights and the exposure of child labourers to mercury
poisoning in Tanzania. In it, Human Rights Watch calls upon the gold mining industry to
establish a thorough due diligence process, including regular monitoring, to eliminate child
labour in supply chains.31
33. Further, in commenting on the Bank’s compliance investigation into an IFC
investment in Indian tea plantations, Human Rights Watch notes:
25 See
https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=22932.
26 Ibid.
27 See https://spcommreports.ohchr.org/TMResultsBase/DownLoadFile?gId=49127.
28 Ibid.
29 See www.hrw.org/news/2015/02/23/world-bank-address-ethiopia-findings.
30 Bretton Woods Observer, Autumn 2016, p. 2. Available from www.brettonwoodsproject.org/wp-
content/uploads/2016/09/Observer_Sept_16_online.pdf.
31 See www.hrw.org/report/2013/08/28/toxic-toil/child-labor-and-mercury-exposure-tanzanias-small-
scale-gold-mines.
The IFC invested millions … without taking into account serious labor and other
human rights abuses in the sector…The IFC failed to identify and address basic
risks, including the grossly inadequate living conditions for workers and child labor
… IFC deficiencies have been in part due to its culture and incentives that measure
results in financial terms, encouraging staff to “overlook, fail to articulate, or even
conceal potential environmental, social, and conflict related risks.32
34. Moreover, in the past, IFC has failed to properly measure the risks of oil and mining
projects, such as in the case of the Chad-Cameroon pipeline. In that case, a law intended to
earmark oil revenues for education, health care and other social needs was gutted in Chad
and the Bank ultimately had to suspend its loan to the country.33
35. Although Cameroon has ratified most of the International Labour Organization
(ILO) Conventions regulating labour and workers’ living conditions, and World Bank
clients are obliged to enforce Bank directives on occupational health and safety, violations
of workers’ rights continue unabated. One example concerns China International Water and
Electric Corporation, which participates in the Bank-financed Lorn Pangor Hydro Power
Project, which has witnessed repeated complaints made to the Bank concerning
environmental and social management problems. In January 2014, a report by the
Cameroon Network of Human Rights Organizations called the human rights situation on
the project site deplorable. The Electricity Development Corporation of Cameroon and the
labour inspector have failed to compel the Corporation to respect labour legislation.34
C. Circumventing rules by outsourcing
36. Beyond the direct harm caused by some World Bank projects, civil society
advocates have pointed out that the Bank has been funding human rights-insensitive
corporations indirectly, through intermediary banks. A discrete or “invisible” way of doing
that occurred when IFC financed six Indian commercial banks that in turn financed abusive
companies. As reported by Inclusive Development International:
Recipients of indirect IFC funds include Vedanta Resources, NHPC Limited and
Jindal Steel & Power, which have well-documented records of complicity in grave
human rights violations and environmental destruction. These companies would
have little chance of receiving direct assistance from the IFC. Yet by outsourcing its
development funds to for-profit commercial banks, the IFC is … concealing its
support from public scrutiny. In doing so, the IFC is providing little oversight in
how its funds are used.35
37. Inclusive Development International has identified 68 Indian companies or projects
implicated in serious harmful environmental impacts or abusive human rights practices that
received funding from IFC intermediaries. As noted in the report, “we’re seeing a worrying
trend — not just at the World Bank but other development banks too — of hands-off
lending through third parties to projects they would never usually touch. At the same time,
the Bank is washing its hands of the mounting human and environmental costs — to
forests, rivers and communities”.36
32 See www.hrw.org/news/2016/11/08/world-bank-group-india-tea-investment-tramples-rights.
33 See www.oxfamamerica.org/press/aid-group-lauds-new-world-bank-policies-on-indigenous-rights-
and-oil-and-mining-transparency/.
34 Bretton Woods Observer, Autumn 2016, p. 3. Available from www.brettonwoodsproject.org/wp-
content/uploads/2016/09/Observer_Sept_16_online.pdf.
35 See www.inclusivedevelopment.net/new-report-reveals-the-world-banks-murky-financial-
entanglements-with-indias-most-irresponsible-corporations/ and
www.inclusivedevelopment.net/wp-content/uploads/2017/04/Outsourcing-Development-India.pdf.
36 See www.inclusivedevelopment.net/new-report-reveals-the-world-banks-murky-financial-
entanglements-with-indias-most-irresponsible-corporations/.
38. Similarly, an October 2016 briefing note by Oxfam states:
Over the past six years, the International Finance Corporation has channelled over
$50bn to the financial sector, and its long-term investments in financial
intermediaries such as commercial banks and private equity funds have dramatically
risen by 45 per cent …. However, the evidence continues to grow that … the World
Bank Group has little control over how a great deal of this money is spent. This lack
of accountability is having devastating impacts on many poor communities.37
39. While some progress is being achieved, as Oxfam commented at the end of the 2017
World Bank and IMF meeting, still more could be done, “we’re encouraged by the IFC’s
commitments to improve oversight and be more selective of its high-risk financial
intermediary investments. … What we’re still waiting for, and which is key, is transparency
from the IFC to show where their money is really ending up”.38
D. Public-private partnerships
40. Many civil society organizations have protested the Bank’s apparent commitment to
the promotion of public-private partnerships, notwithstanding the challenges they pose to
the regulatory space of governments, especially in the fields of clean water and sanitation,
health services and education. In fact, the year 2016 was characterized by an intensified
push for megaprojects and public-private partnerships.39
41. However, experience shows that public-private partnerships have not served
developing countries well. For example, it appears that the flagship health public-private
partnership of IFC threatens to disrupt health-care programmes in Lesotho. In 1999, the
Queen Mamohato Memorial Hospital, a new hospital run by the private sector and financed
through an IFC loan, was built to replace the old main public hospital in Lesotho. Lesotho
finds itself locked into an 18-year contract that is already consuming more than half of the
country’s health budget, while producing high returns to the private partner. 40 That
constitutes a dangerous diversion of scarce public funds from primary health-care services
in rural areas, where three quarters of the population live. Not only are health public-private
partnerships high risk and costly, they fail to advance the goal of universal and equitable
health coverage.
42. In another case, in August 2016, the Minister of Education of Uganda announced the
closure of 63 nursery and primary schools operated by Bridge International Academies, a
private education services provider partly financed by IFC. The Minister stated that the
decision was based on “danger from poor hygiene and sanitation on the life and safety of
the innocent children”.41
43. Similarly, in its response to the questionnaire sent by the Independent Expert, Open
Society, Armenia, observed that, despite spending more than $100 million to support the
Armenian education system, almost no systemic impact or improvement was recorded from
an education public-private partnership supported by the Bank. On the contrary, the loans
served to increase unequal access to quality education. Elsewhere in Europe, after
examining the use of public-private partnerships in Portugal, the Organization for
Economic Cooperation and Development (OECD) warned that public-private partnerships
“should be chosen only when they represent good value for money, not because they allow
the government to escape budget restrictions by building up off-balance sheet liabilities”.42
37 See www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bn-ifc-owning-outcomes-031016-
en_0.pdf.
38 See www.oxfam.org/en/pressroom/reactions/no-breakthrough-big-issues-spring-meetings.
39 See www.brettonwoodsproject.org/2017/02/bank-imf-2016-year-review/ and
www.brettonwoodsproject.org/2017/04/world-bank-undermines-right-universal-healthcare/.
40 See www.oxfam.org/en/research/dangerous-diversion.
41 Bretton Woods Observer, Autumn 2016, p. 2. Available from www.brettonwoodsproject.org/wp-
content/uploads/2016/09/Observer_Sept_16_online.pdf.
42 See www.oecd-ilibrary.org/economics/oecd-economic-surveys-portugal-2012_eco_surveys-prt-2012-
en, p. 26.
Worryingly, however, OECD has continued to endorse public-private partnerships, stating
that “the government should consider expanding its remit to local public-private
partnerships and water, sewage and waste sectors”.43
E. Reprisals
44. Although development banks increasingly acknowledge the importance of public
participation for effective development, a growing number of governments have embarked
upon broad and sometimes brutal campaigns to shut down the space for civil society
activity, in some cases going so far as to criminalize independent human rights work.44
Those abusive measures exclude people from participating in decision-making, from
publicly opposing development projects that may harm their livelihoods, and from
complaining about initiatives that are ineffective.
45. In its response to the questionnaire sent by the Independent Expert,45 Human Rights
Watch noted that international financial institutions have done little to prevent reprisals
against critics of projects that they finance. A 2015 Human Rights Watch report on reprisals
against critics of World Bank Group projects describes how people in Cambodia, India,
Uganda, Uzbekistan and elsewhere have faced reprisals from governments and powerful
companies in connection with their critique of Bank projects.46
46. An Uzbek human rights defender, in exile after raising the issue of forced labour in
projects benefiting his Government’s cotton sector, stated, “the World Bank has not taken
any meaningful measures to ensure that independent human rights defenders like me can
monitor for abuses linked to the projects they fund. Nor have Bank staff spoken out against
the government’s attacks on my colleagues and me”.47 The defender, whose case was raised
with the Government of Uzbekistan by special procedure mandate holders, was allegedly
detained and ill-treated in connection with his monitoring of the sector, 48 although the
Government denies that.49
47. Human Rights Watch further documents the fact that in Azerbaijan, although the
Extractive Industries Transparency Initiative50 prevailed upon the Government to stop its
crackdown on independent civil society, and despite the fact that the Bank endorsed that
recommendation, project funding continued unabated.51
48. In addition, reprisals are routinely inflicted by enterprises on indigenous and other
persons who oppose land-grabbing and pollution. One of the most notorious cases, which
has been regularly raised by the special procedure mandate holders, is that of Berta
Cáceres, who was killed in March 2016.52 Two of those facing charges for her murder were
employees of a company involved in the construction of the Agua Zarca dam, a project
financed not by the Bank but by Dutch, Finnish and Central American banks. Although the
Bank was not responsible for financing that project, it was hit by so much collateral outrage
43 www.oecd.org/eco/surveys/Portugal-2017-OECD-economic-survey-overview.pdf, p. 25.
44 See www.hrw.org/news/2016/07/14/defending-human-rights-development.
45 See www.hrw.org/news/2017/04/25/human-rights-watch-submission-re-international-financial-
institutions-and-human.
46 Human Rights Watch, At Your Own Risk: Reprisals against Critics of World Bank Group Projects,
(2015). Available from www.hrw.org/sites/default/files/report_pdf/worldbank0615_4up.pdf.
47 See www.hrw.org/news/2016/07/14/defending-human-rights-development.
48 See https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?
gId=19586.
49 See https://spcommreports.ohchr.org/TMResultsBase/DownLoadFile?gId=48790.
50 See https://eiti.org/.
51 Human Rights Watch, Harassed, Imprisoned, Exiled: Azerbaijan’s Continuing Crackdown on
Government Critics, Lawyers, and Civil Society, (2016). Available from
www.hrw.org/sites/default/files/report_pdf/azerbaijan1016_web.pdf.
52 See www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=19805. See also public
communications on the case, and government responses to them, available on the special procedures
online communication database: https://spcommreports.ohchr.org/Tmsearch/TMDocuments.
that it became necessary to issue a press release, in which Bank President Jim Yong Kim
stated:
We deplore the high level of fear and violence in Honduras. Berta Caceres was one
of dozens of environmental activists who have been killed during the last six years.
We urge the Government to address the deep-rooted land conflict in the region and
bring this violence to an end. We know that strong environmental and social policies
are key to achieving our goals of ending extreme poverty and boosting shared
prosperity. This makes it all the more important that voices of people like Berta are
not silenced.53
49. The United Nations High Commissioner for Human Rights also observed:
Over the past year, at least six more campaigners have been killed in Honduras,
including … José de los Santos Sevilla, the leader of the indigenous Tolupán people.
Seven were killed in Colombia, Guatemala and Mexico during a single week in
January, in connection with hydroelectric dams, mining and agribusiness projects …
In addition to murder, the tools of repression include curbs on peaceful assembly,
clampdowns on non-governmental organizations, attacks on independent media,
state censorship, draconian antiterror laws, state-sponsored vilification, surveillance,
arbitrary detention, torture and disappearances. In some countries, punitive laws and
special law-enforcement agencies have been created specifically to protect investors’
interests.54
F. Business bias
50. In 2002, the Bank started the Doing Business project,55 with the mandate to rank
countries on how their national regulations operate in favour of the “ease of doing
business”. From its inception, the project was criticized for promoting deregulation and the
lowering of social and environmental standards. The Bank responded by removing the
project’s “employing workers” indicator from its scoring methodology, because it
undermined labour standards and internationally recognized workers’ rights.56 The Oakland
Institute has decried that and other flawed benchmarks, including the “paying taxes”
indicator, which rewards the reduction of all types of corporate taxes, including
environmental and social taxes levied to protect citizens and the planet.57 The most recent
Doing Business report actually notes as “good reforms” the abolition of environmental
protection fees for corporations in Spain58 and Viet Nam,59 and praises the reduction of
private sector taxes in a total of 28 countries. 60 Another example of incomprehensible
interference in the necessary regulatory space of States is the bad score given to Tanzania
as “punishment” for introducing a workers’ compensation tariff to be paid by employers,61
and the bad grade accorded to Malta for increasing employers’ maximum social security
contribution.62
51. Based on the Doing Business model, the Bank initiated the Enabling the Business of
Agriculture project in 2013. It scores countries on a range of agriculture-related “good
regulatory practices”, including how governments facilitate the importation and distribution
53 See www.worldbank.org/en/topic/indigenouspeoples/brief/honduras-and-indigenous-people.
54 See www.miamiherald.com/opinion/op-ed/article136884218.html.
55 See www.doingbusiness.org/reports/global-reports/doing-business-2017.
56 See www.doingbusiness.org/Methodology/Changes-to-the-Methodology,
www.ituc-csi.org/ituc-calls-on-world-bank-to?lang=en,
www.law.cornell.edu/uscode/text/22/262p%E2%80%939 and
old.brettonwoodsproject.org/update/70/bwupdt70_ai.pdf.
57 See www.oaklandinstitute.org/blog/world-bank%E2%80%99s-doing-business-rankings-
relinquishing-sovereignty-good-grade.
58 See www.doingbusiness.org/Reforms/Overview/Economy/spain.
59 See www.doingbusiness.org/reforms/overview/economy/vietnam.
60 See www.doingbusiness.org/reports/thematic-reports/paying-taxes.
61 See www.doingbusiness.org/Reforms/Overview/Economy/tanzania.
62 See www.doingbusiness.org/Reforms/Overview/Economy/malta.
of chemical fertilizers, implement intellectual property rights in agriculture,63 enable private
seed companies to increase profits, or facilitate the marketing of industrial seeds as opposed
to seeds produced and exchanged by farmers, which are cheaper, more diverse and readily
available in developing countries.
52. Those indexes are followed by investors and used by the Bank and bilateral donors
to guide their funding. The Bank’s Investment Climate department64 provides advisory
services to countries relying on the Doing Business scores. According to the Oakland
Institute, “in many countries such interventions have assisted with the creation of ‘one-stop
shop’ agencies to attract foreign direct investments, notably through offering cheap land
leases, water access and tax breaks to corporations”.65 Whereas no scientific evidence66
supports the selection of benchmarking topics by the Doing Business and Enabling the
Business of Agriculture projects, or proves their effectiveness in fighting poverty, the Bank
leverages such indexes to influence policy reforms around the world.
53. It is not without significance that over 280 civil society organizations, farmers’
groups, unions and think tanks have endorsed the Oakland Institute’s “Our Land Our
Business” campaign, which denounces the Bank’s imposition of normative, standardized
sets of reforms.67
54. Ahead of the Bank’s release of the 2017 “Enabling the Business of Agriculture”
report,68 157 organizations and academics from around the world criticized “the Bank’s
scheme to hijack farmers’ right to seeds, attack on food sovereignty and the environment”.69
The statement decries the fact that “the EBA dictates so-called ‘good practices’ to regulate
agriculture and scores countries on how well they implement its prescriptions”. In reality,
however, as the Oakland Institute adds, “the EBA has become the latest tool, to push pro-
corporate agricultural policies, notably in the seed sector”.
G. Immunity of the World Bank from litigation in domestic courts?
55. Hitherto the World Bank has been shielded from liability for human rights abuses by
virtue of the Convention on the Privileges and Immunities of the Specialized Agencies.70
However, as international law evolves, and in a similar way as Head of State immunity was
loosened since the Pinochet arrest warrant in 1998,71 the time has come for international
financial institutions to be made accountable for harm resulting from loan practices and
lack of due diligence.
56. Earth Rights International, a non-governmental advocacy group focused on the
environment, has filed two claims against IFC in United States federal courts,72 in which it
63 Alice Martin-Prével, “Down on the seed: the World Bank enables corporate takeover of seeds”,
(Oakland, California, Oakland Institute, 2017). Available from
www.oaklandinstitute.org/sites/oaklandinstitute.org/files/down-on-the-seed.pdf.
64 See www.worldbank.org/en/topic/competitiveness/brief/investment-climate.
65 Letter to the Independent Expert dated 6 March 2017.
66 See T. Manuel et al., “Independent panel review of the Doing Business report” (2013). Available
from
http://hendrikwolff.com/web/Doing%20business%20review%20panel%20report%20with%20signatu
res%20and%20Bibliography.pdf and
www.socialwatch.org/sites/default/files/Joint-statement-Our-Land-Our-Business.pdf.
67 See www.oaklandinstitute.org/our-land-our-business,
www.oaklandinstitute.org/world-bank-fuels-land-grabs-africa-through-shadowy-financial-sector-
investments and
www.oaklandinstitute.org/world-bank-sides-agribusinesses-against-farmers-indigenous-communities.
68 See http://eba.worldbank.org/.
69 See www.oaklandinstitute.org/civil-society-denounces-world-banks-scheme-hijack-farmers-rights-
seeds.
70 See August Reinisch, ed., The Privileges and Immunities of International Organizations in Domestic
Courts (Oxford, Oxford University Press, 2013).
71 See www.globalpolicy.org/component/content/article/163/29411.html.
72 See www.earthrights.org/sites/default/files/documents/jam_v_ifc_-_appellant_reply_brief.pdf.
argues that absolute immunity is an anachronism.73 The first, Jam v. International Finance
Corporation, came before Washington D.C. district and circuit courts regarding the
negative impacts of the Tata Mundra coal power plant in India.74 In that case, IFC had
provided $450 million for a power plant that the plaintiffs showed had degraded the
environment and destroyed their livelihoods. While the courts have to date held that IFC
enjoys absolute immunity,75 the plaintiffs continue to challenge the decision and, at the time
of writing of the present report, are requesting permission to present their arguments en
banc, or before a full seating of all D.C. circuit court judges.76
57. In a second lawsuit, Juana Doe v. IFC, Earth Rights charges the Bank with
responsibility for systematic human rights abuses committed by Dinant, a sprawling palm-
oil plantation accused of engaging in bloody land-grabbing, intimidation and murder of
indigenous persons in the Bajo Aguán region of Honduras.77 The lawsuit alleges that since
the mid-1990s, IFC, together with a financial intermediary, the IFC Asset Management
Corporation, has invested millions of dollars in Honduran palm-oil companies. For nearly
two decades, farmer cooperatives have challenged Dinant’s claims to 16 palm-oil
plantations, alleging that land was taken from the farmer cooperatives through fraud,
coercion and actual or threatened violence. For its part, Earth Rights contends that IFC has
“repeatedly and consistently provided critical funding to Dinant, knowing that Dinant was
waging a campaign of violence, terror, and dispossession against farmers, and that their
money would be used to aid the commission of gross human rights abuses”. The claimants
cite United States government sources to substantiate allegations that more than 100
farmers have been killed since 2009.78 Furthermore, the suit relies in part on reports of the
IFC internal watchdog, the Compliance Advisor Ombudsman (see sect. IV. D below and
annex VII), who determined that the Bank had failed to spot or deliberately ignored the
serious social, political and human rights context when implementing the project.
H. Credit-rating agencies
58. Every exercise of power, including economic power, must be subject to democratic
controls, transparency and accountability. Many countries believe that inadequate or even
deliberately false credit ratings and questionable rating processes were key contributors to
the Asian financial crisis,79 and more recently to the global financial crisis of 2007/08.80 It is
obvious that reforms are necessary, but it appears that the Bank is not yet tackling the
impact of those institutions, whose ratings influence the Bank’s decisions to grant or deny
loans. It is the view of the Independent Expert that the Bank has a responsibility to test the
reliability of the ratings by private sector agencies, or develop its own rating mechanisms
and institutions81 that can perform more objectively and effectively.82
73 See www.brettonwoodsproject.org/2016/04/ifc-claims-absolute-immunity-to-avoid-justice-but-will-
it-hold-up-in-court/. See also European Court of Human Rights, McElhinney v. Ireland (application
No. 31253/96) judgment of 21 November 2001 (dissenting opinion of Judge Loucaides).
74 See
http://d2zyt4oqqla0dw.cloudfront.net/sites/default/files/documents/ifc_tata_mundra_complaint.pdf.
75 See http://www.allgov.com/india/news/top-stories/world-bank-cant-be-sued-rules-us-judge-in-
denying-gujarati-villagers-lawsuit-160408?news=858610j;
http://law.justia.com/cases/federal/appellate-courts/cadc/16-7051/16-7051-2017-06-23.html.
76 See www.earthrights.org/media/federal-appeals-court-rules-world-bank-group-cannot-be-sued-
harming-communities-0.
77 See www.earthrights.org/media/honduran-farmers-sue-world-bank-group-human-rights-violations.
78 See https://systemicdisorder.wordpress.com/2017/03/22/world-bank-beyond-law/.
79 Naomi Klein, The Shock Doctrine (London, Penguin Books, 2008), pp. 267-276 and 426.
80 See http://unctad.org/en/Docs/osgdp20081_en.pdf.
81 See http://blogs.worldbank.org/developmenttalk/health/should-world-bank-issue-credit-ratings.
82 Jonathan Katz, Emanuel Salinas and Constantinos Stephanou, “Credit rating agencies”. Crisis
Response, Note No. 8 (Oct. 2009). Available from
http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resources/282884-
1303327122200/Note8.pdf. See also www.counterpunch.org/2017/06/07/muslims-are-very-strange-
people/.
I. Ongoing research
59. Without a doubt, the World Bank has enormous potential for good and its staff of
brilliant lawyers and economists is capable of devising policies and mechanisms to advance
an agenda of economic growth cum human rights. Many of their studies recognize the key
importance of human rights for development and formulate pertinent recommendations.
However, those recommendations are not always put into effect.
60. Yet some products of World Bank researchers are not above criticism. The
environmental and social justice organization Action for Solidarity Environment Equality
and Diversity Europe83 notes:
The World Bank is the institution with one of the largest research budgets globally
and has no rival in the field of development economics … A number of researchers
and scholars have questioned the reliability of the World Bank-commissioned
research … Regarding the World Development Report (WDR) series, for example,
Nicholas Stern, an Oxford professor in economics and former World Bank chief
economist says that many of the numbers used by the Bank come from highly
dubious sources, or have been constructed in ways which leaves one sceptical as to
whether they can be helpfully applied.84
61. Since the Bank is aware of that criticism, there is hope that sooner rather than later
the paradigm will change.
IV. Good practices
62. For several decades now, human rights have emerged as global priorities that the
World Bank no longer ignores. In 2000, universal primary education became a Millennium
Development Goal. In 2011, the Guiding Principles on Business and Human Rights were
adopted.85 In 2013, the Bank and the World Health Organization (WHO) committed to
universal health coverage. In 2015, the Bank and ILO agreed on an integrated set of
policies designed to ensure income security and support to all people across the life cycle,
known as the Universal Social Protection Initiative. 86 At the same time, there is keen
awareness about environmental issues at the Bank, and efforts are under way to address
them, such as the adoption of the Climate Change Action Plan, aimed at helping States
implement their obligations under the Paris Agreement reached at the twenty-first session
of the Conference of the Parties to the United Nations Framework Convention on Climate
Change.87
A. Environmental and Social Framework
63. In April 2016, after a four-year process, the World Bank Board approved a new
Environmental and Social Framework to replace the existing safeguards.88 The Independent
Expert welcomes it as a basis upon which further developments can be advanced. For
instance, the new policy on free, prior and informed consent sets a standard for companies
and financial institutions, including the 72 export credit agencies and private banks that
commit to the Equator Principles — a voluntary set of standards for identifying and
managing social and environmental risk in project financing.89 However, while the free,
prior and informed consent policy in the new Environmental and Social Framework
83 See www.aseed.net/pdfs/ASEED_Report_on_Worldbank_Conditionalities.pdf.
84 See www.counterpunch.org/2017/03/24/world-bank-declares-itself-above-the-law/.
85 See www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf
86 See www.ilo.org/global/topics/social-security/WCMS_378991/lang--en/index.htm and
http://journals.sagepub.com/doi/pdf/10.1177/0020872815604814.
87 See www.worldbank.org/en/news/feature/2016/04/07/world-bank-group-sets-new-course-to-help-
countries-meet-urgent-climate-challenges.
88 See www.brettonwoodsproject.org/2016/09/world-bank-approves-new-diluted-safeguards/.
89 See www.equator-principles.com/index.php/about-ep.
requires collective consent, it is also important to ensure that minority viewpoints are not
overlooked.
64. Even strong critics of the World Bank have identified the potential of the new
framework, particularly the requirement that IFC clients secure the free, prior and informed
consent of indigenous communities prior to launching development activities. The
President of Oxfam America observed that “IFC has been widely criticized for funding
socially and environmentally risky projects that, in some cases, have had negative impacts
on local communities, but IFC’s efforts to improve its lending policies are a step in the right
direction”. The executive director of Oxfam Australia noted that “the revised IFC
Sustainability Framework has the potential to help indigenous people get their fair share of
natural resource wealth, particularly in emerging economies and conflict-prone countries”.90
65. While much in the Environmental and Social Framework is welcome and
imaginative lawyers will press for more transparency and accountability, civil society
organizations have signalled some regrettable lacunae,91 including the failure to make a
binding commitment to the protection of human rights, especially when it comes to
balancing competing rights and interests,92 and the failure to commit to implement the core
ILO Conventions.
66. Amnesty International pointed out, after contributing to the elaboration of the
Environmental and Social Framework through several submissions, that “the Bank’s refusal
to address its own responsibility to respect human rights … means that it is lagging behind
other International Financial Institutions and risks creating major reputational risks for the
institution”.93 Amnesty urged the Bank “to ensure that the ESF allows for adequate human
rights due diligence in order to identify, prevent and/or mitigate all potential negative
impacts on human rights”.94
67. Similarly, the NGO Forum on the Asian Development Bank (ADB) and Social
Justice Connection cautioned that “gains have been largely undermined by the replacement
of clear time-bound requirements with vague language, loopholes, flexible principles and
reliance upon ‘borrower system’”.95 The International Trade Union Confederation raised
additional concerns over the absence of any reference to the ILO core conventions, which
prohibit discrimination, child and forced labour, and require respect for freedom of
association and the right to collective bargaining. The director of the Confederation’s
Washington office commented that “it should be an imperative for the Bank to ensure full
consistency with the norms of the recognised international standard-setting bodies,
including the ILO for labour”.96
68. The Independent Expert considers that the Environmental and Social Framework
should have explicitly required that all decisions on financing of projects be preceded by ex
ante human rights, health and environmental impact assessments and that review
mechanisms be devised to continue monitoring impacts for the duration of every project.
90 See www.oxfamamerica.org/press/aid-group-lauds-new-world-bank-policies-on-indigenous-rights-
and-oil-and-mining-transparency/.
91 See https://medium.com/@OxfamIFIs/four-quick-ways-to-fix-the-world-banks-social-and-
environmental-protection-policies-9e63721fe414.
92 See www.hrw.org/news/2017/04/25/human-rights-watch-submission-re-international-financial-
institutions-and-human.
93 See https://consultations.worldbank.org/content/submission-amnesty-international. See also the
environmental and social safeguard policies of the African Development Bank, the United Nations
Development Programme, the European Bank for Reconstruction and Development and the European
Investment Bank, which all contain to differing extents a policy commitment to respect human rights
in all their activities.
94 See https://consultations.worldbank.org/content/submission-amnesty-international.
95 Bretton Woods Observer, Autumn 2016, p. 8. Available from www.brettonwoodsproject.org/wp-
content/uploads/2016/09/Observer_Sept_16_online.pdf.
96 Ibid., p. 8. See also www.ciel.org/news/safeguard-policy-endangers-rights/ and
www.ituc-csi.org/IMG/pdf/ess2-wb_ituc-critique_0914.pdf.
B. Inspection Panel
69. In 1993, the World Bank Executive Board established an Inspection Panel97 as an
independent complaints mechanism for persons who believe they have been, or are likely to
be, harmed by a Bank-funded project. Over the past 24 years, the Panel has taken steps to
maintain and improve accountability in the Bank and assist management to implement
transformational projects. Composed of three members who respond directly to the Bank’s
Executive Board and remain independent of the Bank’s management, the Panel’s mission is
to ensure accountability for the Bank’s human rights and environmental obligations. All
reports that are prepared by the Panel, including the initial complaint, are made public, but
the identities of the complainants remain confidential, if they so wish.
70. The Inspection Panel has jurisdiction over projects financed by IBRD and IDA.
Complaints about IFC and Multilateral Investment Guarantee Agency-supported projects
are dealt with by the Office of the Compliance Advisor Ombudsman.98
71. Owing to its ability to conduct compliance investigations, the Inspection Panel has
growing potential to redress injustices associated with the Bank’s loans. The kind of dispute
resolution provided can address core concerns of affected communities through negotiation
and provide an opportunity to remedy abuses. In that regard, the Panel has investigated the
alleged harm to people’s livelihoods or environmental degradation resulting from
infrastructure projects. The Panel has also considered projects affecting the rights of
indigenous peoples, including land rights and sacred sites, projects affecting natural
habitats, stress on water sources, adverse impacts on wetlands, deforestation, loss of
biodiversity, or projects involving forced relocation, owing, for example, to the building of
a dam, road, pipeline, landfill or power plant. The Panel’s mandate, however, does not
extend to issues relating to the procurement of goods or services, suspected fraud or
corruption. The latter can be reported to the World Bank’s Integrity Vice Presidency.99
72. In 2013, 20 years after the creation of the Inspection Panel, the Panel introduced its
Pilot for Early Solutions programme as a second chance deferral process that entails putting
an investigation on hold while allowing World Bank management time to resolve
community complaints. Whereas the Pilot’s second implementation in Paraguay seems to
have worked well, experience elsewhere has shown that removal of a complaint from the
Panel’s transparent process may perpetuate the power imbalance, leaving the communities
to negotiate directly with the same Bank staff and government officials responsible for the
problems.100 Thus, the Pilot programme should be reformed or terminated.
73. In response to the Human Rights Watch report on reprisals, several international
financial institution accountability mechanisms are developing guidelines to prevent,
monitor and respond to reprisals. For example, on 30 March 2016, the Inspection Panel
published guidelines to reduce retaliation risks and respond to retaliation during the Panel
process.101 The Panel also collaborates with other complaints mechanisms, such as the
European Investment Bank, with whom it completed a joint investigation in Kenya in 2015,
adopting a mediation process. According to the Panel’s 2015/2016 Annual Report,102 the
Panel carried out investigations in cases concerning Kenya and Uganda, and Kosovo,103 and
is engaged in pending cases in Armenia, Colombia, Mongolia and Uganda.
97 See www.inspectionpanel.org and the Panel’s 2015/2016 Annual Report, available from
http://ewebapps.worldbank.org/apps/ip/Pages/Annual-Reports-2016.aspx.
98 See www.cao-ombudsman.org.
99 See www.worldbank.org/en/about/unit/integrity-vice-presidency/report-an-allegation.
100 Bretton Woods Observer, Autumn 2016, p. 5. Available from www.brettonwoodsproject.org/wp-
content/uploads/2016/09/Observer_Sept_16_online.pdf.
101 See http://ewebapps.worldbank.org/apps/ip/PanelMandateDocuments/2016%20Retaliation%20
Guidelines.pdf.
102 See http://ewebapps.worldbank.org/apps/ip/Pages/Annual-Reports-2016.aspx.
103 All references to Kosovo in the present document should be understood to be in compliance with
Security Council resolution 1244 (1999).
74. In addition to the guidelines, the Inspection Panel launched its Emerging Lessons
Series in 2016, in which errors are acknowledged and solutions proposed.104 The first in the
series, published in April 2016, concerns involuntary resettlement,105 the second concerns
indigenous peoples (October 2016),106 while a third focuses on environmental assessment
(April 2017). Those are important tools for the Bank, governments, businesses and civil
society.
75. In the opinion of the Independent Expert, who is a former Chief of Petitions at
OHCHR, the Inspection Panel holds enormous promise for petitioners and should ensure
continuous monitoring of World Bank projects. The downside of the procedure is that the
Panel does not have the authority to enforce its recommendations. Nevertheless, that is a
challenge also shared by United Nations treaty bodies like the Human Rights Committee
and the Committee on Economic, Social and Cultural Rights, both of which have
complaints procedures.107
C. Taking preventive and corrective action
76. While ex ante impact assessments are necessary, a system of monitoring ongoing
projects and the mechanism to suspend financing when human rights, health or
environmental problems arise should be strengthened. For instance, in 2016, the Bank
learned of widespread sexual abuse of workers in a $250 million bank-financed road
construction project in Uganda. After unsuccessful attempts to correct the situation,
financing was terminated. Yet ex post termination is insufficient. As World Bank President
Jim Yong Kim stated:
The multiple failures we’ve seen in this project — on the part of the World Bank,
the government of Uganda and a government contractor — are unacceptable … It is
our obligation to properly supervise all investment projects to ensure that the poor
and vulnerable are protected in our work … I am committed to making sure we do
everything in our power … first to fully review the circumstances of this project and
then to quickly learn from our and others’ failures so they do not happen again.108
77. An Inspection Panel report led to further action by the Bank and a 2017 Bank
management response containing concrete proposals for reparation and lessons learned. It
stated:
Management has undertaken steps on two fronts — both project-level and system-
wide, to address these issues. At the project level this has included steps to provide
support for the victims of child abuse; to complete the compensation process; to
address construction issues; to support capacity-building of the implementing
agency; and support for response to gender-based violence.109
78. In 2014, the Bank had to reconsider a cotton industry project in Uzbekistan, when it
learned of widespread forced labour, including child labour. As a senior international
financial institutions researcher at Human Rights Watch noted, “the World Bank’s
proposals fall short in Uzbekistan, where forced labor in the cotton sector is uniquely
government-orchestrated and supported by repressing independent groups…The World
Bank needs to ensure that independent groups and journalists can monitor World Bank
projects and report forced labor without fear of reprisal”.110
104 See http://ewebapps.worldbank.org/apps/ip/Pages/Emerging-Lessons.aspx.
105 See www.youtube.com/watch?v=D4Ewnz4JcVE.
106 See www.youtube.com/watch?v=-0cuHodwjEA.
107 Jakob Th. Möller and Alfred de Zayas, United Nations Human Rights Committee Case Law 1977-
2008: A Handbook (Kehl/Strasbourg, N.P. Engel Verlag, 2009).
108 See www.theguardian.com/global-development/2016/jan/12/world-bank-cancels-uganda-road-sexual-
assault-claims.
109 http://documents.worldbank.org/curated/en/256791492009515078/pdf/Uganda-TSDP-1st-Progress-
Report-REV-for-SVPOP-April-4-final-fdg-CLEARED-04062017.pdf, p. iv.
110 See www.hrw.org/news/2014/12/17/world-bank-investigate-uzbekistans-forced-labor.
D. Compliance Advisor Ombudsman
79. As mentioned above, the Office of the Compliance Advisor Ombudsman, created in
1991, is the independent accountability mechanism for IFC and the Multilateral Investment
Guarantee Agency (MIGA). The Office of the Compliance Advisor Ombudsman is
mandated “to serve as a fair, trusted, and effective independent accountability mechanism
and to improve the environmental and social performance of IFC and MIGA”. The Office
of the Compliance Advisor Ombudsman chooses its investigations independently and
reports directly to the President of the World Bank Group.
80. Among its recent investigations, the Office of the Compliance Advisor Ombudsman
has made useful recommendations concerning the failure of the IFC to monitor the
environmental and social performance of the Amalgamated Plantations Private Limited
project in India. It concluded:
CAO has made a number of noncompliance findings … These cover IFC’s pre-
investment E&S (environmental and social) review as well as its supervision of the
project … IFC underestimated the E&S challenges associated with the project.
Addressing these in accordance with IFC requirements will require the dedication of
resources and relevant sectoral expertise beyond that which IFC has made available
to the client to date … In light of the noncompliance findings … CAO will keep this
investigation for monitoring … until actions taken by IFC assure CAO that IFC is
addressing its noncompliance findings.111
In another case, the Office of the Compliance Advisor Ombudsman audited IFC investment
in a coal-fired power plant near the port town of Mundra in Gujarat, India. Complainants
were fisher people living in the vicinity of the project who suffered environmental impacts
of the plant operation. The audit concluded that:
IFC’s E&S review … did not support the formation of a robust view as to whether
the project could be expected to meet requirements of the Performance Standards
over a reasonable period of time …. Weaknesses in IFC’s E&S review process also
meant that required opportunities to consider alternative project designs to avoid or
minimize E&S impact were missed …. CAO has concerns that a framework for
managing E&S impact that can be audited and monitored has yet to be established:
the lacking elements being a consolidated statement of the requirements against
which performance is monitored, using verifiable data … Confidence among the
IFC team in the client’s E&S capacity and commitment, combined with a view that
the project is performing well from an E&S perspective, have meant that IFC has not
treated the Complainants’ concerns as compliance issues. In accordance with the
CAO Operational Guidelines, this audit will remain open and subject to CAO
monitoring until CAO is assured that IFC has moved back into compliance with its
E&S commitments.112
81. Other significant audits are summarized in annex VII to the present report. However,
it must be stated that, as with the Inspection Panel, the Ombudsman does not have the
authority to remedy abuses himself. As Human Rights Watch has observed, the Office of
the Compliance Advisor Ombudsman investigates, but “it is the IFC that determines how to
address the investigator’s findings and often it chooses not to”.113
V. A way forward
82. The Independent Expert welcomes the many positive measures already taken by the
World Bank to address systemic and extrinsic problems and encourages the Board of
111 www.cao-ombudsman.org/cases/document-
links/documents/CAOInvestigationReportofIFCinvestmentinAPPL_EN.PDF, p. 11.
112 See www.cao-ombudsman.org/cases/document-links/documents/CAOAuditReportC-I-R6-Y12-
F160.pdf, p. 5.
113 See www.hrw.org/news/2017/02/21/world-banks-view-through-looking-glass.
Governors to strengthen World Bank governance and accountability through enhanced and
facilitated access to justice when abuses occur. The Bank is in a position to give effect to its
commitment to end poverty and help achieve the Sustainable Development Goals ahead of
2030. There is reason for optimism, since the Bank is conscious of the problems, has a
formidable staff and benefits from the input of civil society organizations that do not cease
producing excellent studies, diagnoses and pragmatic recommendations.
83. Bearing in mind that multilateral development banks, including the World Bank,
receive large injections of public money, their biased approach in support of the private
sector in developed and developing countries must be transformed into a human rights-
based approach that carefully weighs the needs of the populations concerned.
84. The Independent Expert believes that a fundamental rethink is necessary and should
result in an explicit definition of new priorities that puts the interests of billions of human
beings who are deprived of the necessities of life ahead of those of foreign investors. The
rules of the game must be changed so that loans are not granted on purely economic
considerations and that the loan “conditionalities” henceforth aim at advancing the well-
being of the populations concerned. The Independent Expert admires the impressive
rhetoric and the beautiful publications of the World Bank and suggests that fewer resources
should be devoted to public relations and the packaging of the product, and much more to
risk-assessment, monitoring and implementation.
85. To that end, the Independent Expert proposes a change of paradigm that would
require not only amending the Articles of Agreement of 1944 (adopted at Bretton Woods,
New Hampshire, and last amended on 16 February 1989), but also clear directives from the
Board of Governors. Pursuant to article V, section 8 (a) of the Articles of Agreement, the
Bank should cooperate with international organizations having specialized responsibilities
in related fields, including the Economic and Social Council and UNCTAD, which have
proposed plans of action to advance development and human rights.114
86. At present, article IV, section 10, of the Articles of Agreement could be interpreted
as an obstacle to that paradigm change. That obsolete provision stipulates that “the Bank
and its officers shall not interfere in the political affairs of any member; nor shall they be
influenced in their decisions by the political character of the member or members
concerned”. However, there is no reason to consider the promotion of human rights and
environmental protection to fall under the scope of the prohibited “political activity” of the
Bank. Indeed, all States parties to the World Bank Agreement are also United Nations
members and all are bound by the Charter of the United Nations and numerous human
rights treaties.
87. Of relevance is the Agreement between the United Nations and the International
Bank for Reconstruction and Development, which came into force on 15 November 1947,
and its Protocol, signed at New York on 15 April 1948, which came into force on 1 July
1948. Pursuant to article IV of the agreement, the United Nations and the Bank shall
consult and exchange views on matters of mutual interest. Formal recommendations may be
made after such consultation. Moreover, “the Bank recognizes that the United Nations and
its organs may appropriately make recommendations with respect to the technical aspects
of reconstruction or development plans, programmes or projects”. Article VIII specifically
authorizes the Bank “to request advisory opinions of the International Court of Justice on
any legal questions arising within the scope of the Bank’s activities”. Hence, it would be
appropriate to make better use of the Articles of Agreement so as to effectively coordinate
the work of the United Nations and the Bank in a manner that will advance implementation
of United Nations human rights, development and environmental commitments. In
particular, the Bank should request an advisory opinion on the overall priority of human
rights treaties over commercial and other arrangements and how best to integrate customary
human rights norms into the Bank’s loan conditionalities.
114 See World Bank, “Coherence, coordination and cooperation among multilateral organizations: 2009
progress report” (2009). Available from
http://documents.worldbank.org/curated/en/589571468339611391/pdf/484000BR0SecM2101Official
0Use0Only1.pdf.
88. Bearing in mind that the Bank’s Articles of Agreement and the Agreement between
the United Nations and the Bank were adopted prior to the adoption by the General
Assembly of the Universal Declaration of Human Rights, and before the entry into force of
the International Covenant on Civil and Political Rights, the International Covenant on
Economic, Social and Cultural Rights and many other human rights treaties, it is not
unreasonable to expect that the human rights obligations of States members of the Bank
should be advanced and not hindered by Bank policies. Article XIII of the Agreement
between the United Nations and the Bank stipulates that the agreement is subject to revision
and both parties are authorized to make supplementary agreements. That is a window of
opportunity for the Bank to commit itself to certain key principles of the United Nations,
including respect for the sovereignty of all States and non-interference in the domestic
affairs of States. That requires acceptance of the fact that States, particularly developing
countries, need flexibility and policy space to implement social policies aimed at ensuring
food security, raising the standard of living, strengthening labour laws and ensuring access
to water and education, which some privatization projects financed by the Bank have been
known to undermine. Any amendment to the association agreement should strengthen the
cooperation between the Bank and the United Nations, particularly with UNCTAD.
89. In addition to amending its Articles of Agreement, the World Bank must take full
responsibility for the outcomes of its investments and implement preventive and corrective
measures to ensure effective participation by all stakeholders and protection of human
rights defenders on the ground. Procedurally, one of the challenges that must be addressed
is the World Bank’s undemocratic decision-making structure, which creates inequitable and
sometimes counterproductive priority setting. Thus, the gentleman’s agreement that Bank
leadership will be held by citizens of certain States should be gradually phased out. Further,
as other rapporteurs have noted, the underrepresented voices of the developing must be
upgraded.
90. The Independent Expert agrees with the Director of Global Programs at the World
Bank Institute, who said in 2006, that “it would be tantamount to a virtual ‘fig leaf’ for any
institution to claim that much is being contributed to enhancing human rights in a country
simply because development projects — such as on water or rural roads — are being
funded”.115 If the Bank really has development at heart, it will change the conditionalities
away from privatization, deregulation and lower corporate taxation and put the emphasis on
reducing military expenditures, ensuring that progressive tax legislation is enacted and
enforced, that tax havens are outlawed, and that a financial transactions tax is adopted and
the revenues used to build “A World Free of Poverty” through international solidarity.
VI. Conclusions and recommendations
91. The World Bank should:
(a) Embark on an inclusive process for drafting a new and separate human
rights policy, which should embody a commitment to integrate human rights into its
work by analysing human rights issues relevant to development in the context of
country strategies, advise governments how to advance compliance with their human
rights commitments, and identify human rights risks linked to its investments or
advice;
(b) Adopt and implement the Universal Social Protection Initiative and the
ILO Social Protection Floors Recommendation, 2012 (No. 202).116 It should support
the inclusion of enforceable labour provisions based on ILO standards, as well as the
repeal of investor-State dispute settlement mechanisms that undermine governments’
right to regulate (see A/HRC/30/44 and A/HRC/33/40);
115 Daniel Kaufmann, “Human rights, governance, and development: an empirical perspective”, in
Development Outreach, World Bank Institute, October 2006, p. 19. Available from
http://siteresources.worldbank.org/EXTSITETOOLS/Resources/KaufmannDevtOutreach.pdf.
116 See www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:R202.
(c) Cease promoting labour market deregulation, including through its
funding conditionalities, and instead help to reverse the rise in income inequality by
supporting social dialogue and collective bargaining;
(d) Formulate tax policies and implement due diligence tools that go beyond
asking simply for legal compliance from the companies to which it lends money;
(e) Hold IFC accountable for the development and implementation of a tax-
responsible investment policy, which should be developed in consultation with civil
society and include, at a minimum, due diligence beyond legal compliance to ensure
that IFC cannot invest in companies with aggressive or abusive tax practices;
(f) Support initiatives to upgrade the Committee of Experts on
International Cooperation in Tax Matters to an intergovernmental body that will
prevent harmful international tax competition, negative spillovers from shifts of tax
policies and illicit financial flows;
(g) Inform affected and prospectively affected communities about the
Inspection Panel and the Compliance Advisor Ombudsman and how to approach
them;
(h) Incorporate human rights chapters in its borrower country agreements,
give policy advice to States on how best to promote fiscal responsibility and
transparency in all sectors, including States’ military expenditures;
(i) Address, as a matter of urgency, reprisals against critics of World Bank
projects. Accountability mechanisms should systematically analyse the risk of
reprisals and other security risks linked to every complaint received and discuss them
with complainants; take all necessary measures to ensure confidentiality for
complainants who ask that their identities be kept confidential; actively monitor for
reprisals including by asking each of the complainants whether they or people closely
associated with them have faced any problems, particularly following community
visits; develop an early warning system to identify threats or other security issues
particularly for those who have filed or are considering filing a complaint or are
otherwise critical of a project; and work with World Bank management to respond to
any reprisals linked to their cases to ensure that the security of complainants and
others is restored;
(j) Issue operational procedures that involve Bank management in
preparing and making public biannual reports tracking progress in implementing
management action plans approved by the Board in response to Inspection Panel
investigations;
(k) Create mechanisms to ensure that the reports and recommendations of
the Inspection Panel and the Compliance Observance Advisor are publicized and
implemented. Empower the Inspection Panel and the Compliance Advisor
Ombudsman to reference human rights in their reports and recommendations,
including by expressly referencing the recommendations of human rights treaty
bodies and special procedure mandate holders;
(l) Be alert to any information about misuse of funds and ensure that
human rights violations that occur in connection with the granting or use of loans are
referred to the appropriate civil and penal tribunals and that cases of corruption do
not enjoy impunity but are prosecuted in domestic courts;
(m) Advise governments about their responsibility to regulate the practices
of businesses to ensure that they do not violate human rights and that they pay taxes
in the jurisdictions where the projects operate;
(n) Intensify its cooperation with OHCHR, UNCTAD, ILO and WHO;
(o) Waive institutional immunity when gross violations of human rights
have occurred.
92. IFC should immediately terminate all links with corporations and projects
engaged in dodging taxes, and stop lending money to borrowers that directly or
indirectly operate with tax havens and thereby deprive countries of their legitimate
tax revenues, crucial to implement human rights obligations.
93. The World Bank Board of Governors should issue a clear directive that the
International Centre for Settlement of Investment Disputes must refrain from
interfering with the ontological functions of the State, which are to regulate in the
public interest, including through environmental, health, social and labour legislation.
The International Centre for Settlement of Investment Disputes should not lend its
services to litigation that puts those functions of the State into question. Rather the
International Centre for Settlement of Investment Disputes should discover its
vocation to serve in an advisory capacity.117 To the extent that there is risk involved,
the investor should take advantage of the Bank’s Multilateral Investment Guarantee
Agency and obtain risk insurance there (see A/HRC/30/44, A/HRC/33/40 and
A/70/285).
94. Countries that benefit from World Bank financing should ensure that all loans
they request and all foreign direct investment they receive are used in a manner that
advances the enjoyment of human rights and does not result in the enrichment of a
few at the expense of the many. In particular, monitoring mechanisms must be in
place to ensure transparency and accountability, regular monitoring of business
activity and easy recourse and remedy to persons adversely affected by World Bank-
funded projects and IMF-funded government loans and “bail outs”.
95. Donor countries should:
(a) Demand that their money be used only in ways that promote the
common good;
(b) Deny funds unless and until there is an effective procedure for providing
redress and reparation to victims of possible violations;
(c) Terminate financing of ongoing projects whenever it is clear that human
rights violations are being committed, and rule out a return to direct budget support
until there is significant improvement in the human rights situation;
(d) Recognize their responsibility by insisting on independent investigations,
without the participation of governments suspected of corruption or other violations.
96. The media should objectively inform about abuses associated with loan
agreements when they occur, particularly instances of evictions, destruction of the
environment, child labour and corruption.
97. The International Consortium of Investigative Journalists should focus on early
warning so as to help prevent abuses accompanying World Bank-financed projects
and should ferret out cases of corruption, money-laundering and collusion with tax
havens.
98. Civil society organizations should alert the public to the dangers of
megaprojects and assist affected communities in presenting complaints to the World
Bank Inspection Panel118 and to the Compliance Advisor Ombudsman.119
117 See Kinda Mohamadieh, Lean Ka-Min and Anna Bernando, Investment Treaties: Views and
Experiences from Developing Countries (Geneva, South Centre, 2015). See also
www.iisd.org/itn/2008/08/06/south-american-alternative-to-icsid-in-the-works-as-governments-
create-an-energy-treaty/, http://old.brettonwoodsproject.org/art-561061,
http://hsfnotes.com/publicinternationallaw/2012/01/19/venezuela-follows-bolivia-and-ecuador-with-
plans-to-denounce-icsid-convention/, and Rafael Ramírez, Nuestra Industria Petrolera es un Baluarte
de Soberanía (Caracas, Petroleros de Venezuela, 2014).
118 See http://ewebapps.worldbank.org/apps/ip/Pages/FileaRequest.aspx.
119 See www.cao-ombudsman.org/howwework/filecomplaint/ and https://www.cao-grm.org/.
Annex I
Questionnaire from the Independent Expert on the promotion of a democratic and equitable international order to the World Bank
1. How does the World Bank promote the right to food, water, health and a safe and
clean environment? How does the Bank consider the relationship between its general
development model and human rights? In particular, how does the Bank consider mega
infrastructure projects and significant private sector investment to impact human rights?
2. How does the Bank’s new Environmental and Social Framework contribute to
promoting and protecting human rights?
3. Concerning the organisation’s institutional governance, how does the Bank ensure
transparency in decision-making? What type of accountability exists to remedy any adverse
effects on human rights resulting from projects or policies funded or promoted by the
Bank? What recourse or remedy is provided for victims of alleged human rights violations?
Is there any policy in place to prevent your financial assistance from being used to finance
international crimes or to commit human rights violations?
4. How often are human rights, health and environment impact assessments conducted?
Are ex ante impact assessments conducted ahead of loan agreements or development
projects? Are ex post monitoring carried out?
5. How do you ensure the Bank projects do not involve a regression in the enjoyment
of human rights? To what extent, and how, the Bank consider reducing economic inequality
as part of their lending policies?
6. How do you ensure the participation and consultation with all stakeholders,
including affected communities, in relation to decisions concerning new loan or
development projects? What are the measures put in place by the Bank to work hand-in-
hand with concerned governments to protect those voicing dissenting views? Is there any
policy in place in case of opposition by affected communities or civil society organisations
or others? Give examples of projects that have not been undertaken or have been
abandoned when they have caused or are likely to cause irreparable harm, e.g. mass
displacement of population.
7. How does the Bank see its responsibilities under international law and international
human rights law? More concretely, how does the Bank intend to advance the realization of
the Sustainable Development Goals and the COP21 commitments? To what extent does the
Bank implement the recommendations of the ILO's World Social Protection Report? To
what extent does the Bank act pursuant to General Assembly Resolution 69/319, Basic
Principles on Sovereign Debt Restructuring Processes? Bearing in mind that “austerity
measures” and “privatization” may cause considerable harm to the most vulnerable groups,
what other measures does the Bank envisage so that human rights are not hindered but
promoted? What do you do to alleviate the debt problem?
8. In the World Bank’s responses to previous Special Procedure Mandate Holder
reports, the Bank’s spokesperson said that the 2015 report of the UN Special Rapporteur on
human rights and extreme poverty (A/70/274) had fundamentally misrepresented the
Bank’s position on human rights. Could you provide a more detailed response to the report
(which parts do you agree and disagree with and why?)? Has there been any internal
follow-up on the publication of the report?
9. How does the Bank respond to the August 2016 report of the UN Independent
Expert on Human Rights and foreign debt (A/71/305), in which he calls for the Bank to
significantly broaden its definition of ‘sustainability’ under its Debt Sustainability
Framework and take into consideration the need to provide fiscal space to guarantee and
ensure governments’ core human rights obligations?
10. How do you measure public-private partnership performance in human rights terms?
What relationship exists between the Bank and governments that harbour tax havens and
enterprises that use secrecy jurisdictions to avoid taxes?
11. How can the Bank collaborate with UNCTAD in implementing meaningful debt
relief for poor countries and devising an international debt restructuring mechanism to
resolve debt crises? How does the Bank ensure the social and environmental sustainability
of their projects in cases of co-lending with other international financial institutions,
including new international financial institutions such as the BRICS new development bank
(NDB) and the Asian Infrastructure Investment Bank (AIIB), or in cases of financial
intermediary lending?
12. How does the Bank envisage cooperation with the NDB and AIIB to strengthen the
Purposes and Principles of the United Nations while advancing growth, stability and the
right to development?
Annex II
Table of relevant reports
International Human Rights Mechanisms and the World Bank/IMF
Special Procedures
Special Rapporteur on extreme poverty and human rights
Report on the World Bank and human rights
(A/70/274)
http://www.un.org/en/ga/search/view_doc.asp?
symbol=A/70/274
http://www.ohchr.org/EN/NewsEvents/
Pages/DisplayNews.aspx?NewsID=20797&LangI
D=E (Statement)
Special Rapporteur on the right of everyone to the enjoyment of the highest attainable standard of
physical and mental health
Missions to the World Bank and the International
Monetary Fund in Washington, D.C. (20 October
2006) (A/HRC/7/11/Add.2)
http://www.ohchr.org/EN/Issues/Health/
Pages/CountryVisits.aspx
Special Rapporteur on adequate housing
Preliminary note on the mission to the World Bank
Group (26 October to 1 November 2010)
(A/HRC/16/42/Add.4
http://www.ohchr.org/EN/Issues/Housing/
Pages/AnnualReports.aspx
Report on the financialization of housing the right
to adequate housing (A/HRC/34/51)
http://www.ohchr.org/EN/Issues/WaterAndSanitati
on/SRWater/Pages/AnnualReports.aspx
http://www.ohchr.org/EN/NewsEvents/
Pages/DisplayNews.aspx?NewsID=20878&LangI
D=E (Statement)
Special Rapporteur on the human right to safe drinking water and sanitation
Report on development cooperation and the
realization of the human rights to water and
sanitation (A/HRC/71/302)
http://www.ohchr.org/EN/Issues/WaterAndSanitati
on/SRWater/Pages/AnnualReports.aspx
http://www.ohchr.org/EN/NewsEvents/
Pages/DisplayNews.aspx?NewsID=20878&LangI
D=E (Statement)
Independent Expert on the effects of foreign debt and other related international financial obligations of
States on the full enjoyment of all human rights, particularly economic, social and cultural rights
Report on Responsibility of international financial
institutions (A/HRC/7/9)
http://www.ohchr.org/EN/Issues/Development/IED
ebt/Pages/AnnualReports.aspx
Guiding Principles on Foreign Debt and Human
Rights (A/HRC/20/23), endorsed by the HRC
(A/HRC/RES/20/10
http://ap.ohchr.org/documents/dpage_e.aspx?si=
A/HRC/20/23
http://ap.ohchr.org/documents/dpage_e.aspx?si=
A/HRC/RES/20/10
Commentary on the guiding principles on foreign
debt and human rights (A/HRC/25/51)
http://www.ohchr.org/EN/Issues/Development/
IEDebt/Pages/AnnualReports.aspx
Report on structural adjustment and labour rights
(A/HRC/34/57)
http://www.ohchr.org/EN/Issues/Development/IED
ebt/Pages/AnnualReports.aspx
Working Group on the issue of human rights and transnational corporations and other business enterprises
Report on developments in the embedding of the
Guiding Principles into global governance
frameworks (A/67/285)
http://www.ohchr.org/EN/Issues/Business/Pages/
Reports.aspx
Report on improving policy coherence for inclusive
and sustainable development (A/HRC/29/28)
http://www.ohchr.org/EN/Issues/Business/Pages/
Reports.aspx
Special Rapporteur on the rights to freedom of peaceful assembly and of association
The exercise of the rights to freedom of peaceful
assembly and of association in the context of
multilateral institutions (A/69/365)
http://www.ohchr.org/EN/Issues/Assembly
Association/Pages/AnnualReports.aspx
Special Rapporteur on the situation of human rights defenders
Empowering environmental human rights defenders
(A/71/281)
http://ap.ohchr.org/documents/dpage_e.aspx?si=
A/71/281
Other Special Procedures actions
SP Joint Letter from 12 December 2014 http://www.ohchr.org/Documents/Issues/
EPoverty/WorldBank.pdf
Communication from the Special Rapporteur on the
right to food and the Independent Expert on the
effects of foreign debt and other related international
financial obligations of States to the World Bank
https://spdb.ohchr.org/hrdb/22nd/public_-
_AL_Other_(W.Bank)_10.08.12_(7.2012).pdf
https://spdb.ohchr.org/hrdb/24th/public_-
_OL_Other_28.03.13_(3.2013).pdf
https://spdb.ohchr.org/hrdb/22nd/OTH_09.10.12
_(7.2012).pdf (reply from the Bank)
Communication from the Independent Expert on the
effects of foreign debt and other related international
financial obligations of States and the Special
Rapporteur on the rights of indigenous peoples to the
World Bank
https://spcommreports.ohchr.org/TMResultsBase
/DownLoadPublicCommunicationFile?gId=
22932
https://spcommreports.ohchr.org/TMResultsBase
/DownLoadFile?gId=49127 (reply from the
Bank)
Treaty Bodies
Committee on economic, cultural and social rights
General Comment No. 14 The right to the highest
attainable standard of health
http://apps.who.int/disasters/repo/13849_files/o/
UN_human_rights.htm
(Para. 39: States parties which are members of
international financial institutions, notably the
International Monetary Fund, the World Bank,
and regional development banks, should pay
greater attention to the protection of the right to
health in influencing the lending policies, credit
agreements and international measures of these
institutions.)
OHCHR
Comments and recommendations of UN/OHCHR in
relation to the draft Environmental and Social
Framework (2016)
https://consultations.worldbank.org/Data/hub/
files/20160315_memorandum_ohchr_esf_with_
annexes.pdf
Key messages on Human Rights and Financing for
Development
http://www.ohchr.org/Documents/Issues/MDGs/
Post2015/HRAndFinancingForDevelopment.pdf
Report on austerity measures and economic and
social rights
http://www.ohchr.org/Documents/Issues/Develo
pment/RightsCrisis/E-2013-82_en.pdf
Others
UN International Law Commission
Draft articles on the responsibility of international
organizations, with commentaries, 2011 UN.Doc.
A/66/10
http://legal.un.org/ilc/texts/instruments/english/
commentaries/9_11_2011.pdf
OAS
Public Hearing: Human rights violations and
responsibility of international financial institutions
http://www.ciel.org/Publications/IFIs_HR_
Analysis_28Feb07.pdf
Annex III
Tilburg-GLOTHRO Guiding Principles on the World Bank Group, the IMF and Human Rights
Underlying Notions and Observations
Human Rights Obligations for International Financial Institutions (IFIs)
1. The Universal Declaration of Human Rights of 1948 is a ‘common standard of
achievement for all peoples and all nations’ (Preamble of the Declaration). At the beginning
of the new Millennium, the Declaration goes far beyond being merely a moral or political
obligation, as large parts of it belong to international customary law, while some rights
have developed into jus cogens standards.
2. As a follow-up to the 1948 Declaration, a large number of human rights conventions
have been adopted by the United Nations, including its Specialised Agencies, and by
regional organisations. Regional and international supervisory bodies and national courts
have established a serious and extensive body of case law and jurisprudence.
3. International human rights law includes civil, cultural, economic, political and social
rights, as well as the right to development. These rights are, each in their own way, relevant
in the struggle against poverty as well as for other activities performed by World Bank and
IMF, and, mutadis mutandis, other IFIs.
4. The traditional division between obligations of States not to interfere with civil and
political rights on the one hand, and obligations of States to actively provide for the
realisation of economic, social and cultural rights on the other hand, is no longer reflecting
the reality in the implementation of human rights. Instead, the division of obligations of
States into three levels: the obligation to respect, the obligation to protect and the obligation
to fulfil, has gained widespread acceptance in the international human rights community.
5. The responsibility for implementing human rights is universal and concerns all —
state and non-state — actors whose activities may affect people’s lives. The primary
responsibilities and obligations in the field of domestic human rights enjoyment, however,
remain with the State: States cannot ‘delegate’ human rights obligations to, for instance,
international institutions and relieve themselves of these obligations. As international legal
persons, the World Bank and the IMF have international legal obligations to take full
responsibility for human rights respect in situations where the institutions’ own projects,
policies or programmes negatively impact or undermine the enjoyment of human rights.
6. The two IFIs are also Specialised Agencies, having entered into Relationship
Agreements with the United Nations in accordance with UN Charter Article 63. This is
another indication of their international legal personality separate from their members,
which carries with it rights and obligations according to international law. According to the
Relationship Agreements the organisations are, and are required to function as, independent
international organisations. It provides an organisational independence from the UN, not
from international law.
7. The World Bank and the IMF are governed by their member States. When
representatives of member States determine the policies of the two IFIs, they are bound by
their States’ international obligations, including those arising from international human
rights law. This includes an obligation on those States in a position to assist, to provide
international assistance and co-operation. The obligation of international assistance and co-
operation includes the duty to work actively towards an equitable financial investment and
multilateral trading system that is conclusive to the reduction and eradication of poverty
and the full realisation of all human rights.
8. As members of the UN the member States of the two IFI’s have legally committed
themselves to uphold the purposes and principles of the UN Charter, including the
promotion of respect for human rights. According to Article 103 of the UN Charter, the
obligations of States under the Charter, including obligations in the field of human rights,
take primacy over other international obligations.
Linking Legal Obligations in the Field of Human Rights to Economic and Political
Realities
9. Markets are to ensure economic effectiveness in processes of production,
distribution and consumption of goods and services. From a macro-economic perspective
they may contribute to generally improved living conditions. To ensure, however, that
outcomes of economic processes also conform to standards of social justice and meet
obligations in regard to the daily livelihoods of poor people, human rights standards must
be an integral part of decision-making by actors in market-oriented environments.
10. While most governments have ratified human rights conventions, the status of
human rights in many societies — in all its dimensions — remains precarious at best. The
implementation of rights is often impeded by weak legal systems, particularly relating to
the poor, the powerless, minorities and indigenous peoples as well as to the realisation of
the right to a clean environment. The negative experience with capacity building and
institutional development is a major problem for any discussion on the mainstreaming of
human rights in development institutions.
11. Practice often shows that one part of government does not necessarily know what
another part is doing, even if both parts are working in the same field. One segment of the
government might even be resistant to what another governmental agency is doing. Often,
governments do not ensure that all relevant departments are familiar with international
human rights norms that bear upon policy-making processes. This is a problem in all States
in the world, albeit in varying degrees.
12. When the UN was created, it was endowed, through its Charter, with a mandate to
deal with problems of international co-operation, in particular economic and social co-
operation. Today, much of the economic policy dialogue has shifted to the World Bank and
the IMF (and to the WTO, which is not addressed in these Guiding Principles).
13. The World Bank and the IMF currently also address global concerns that are within
the expertise of different UN organs and Specialised Agencies, inter alia, security,
environment, social policy, gender, development, poverty reduction, debt relief, health and
educational issues. They exert significant influence on these issues either directly, by
setting actual policies, or indirectly, by prescribing economic policy directives.
14. In practice, there is a striking asymmetry of power and influences between the UN
and both IFIs. The World Bank and the IMF have considerable resources available to fulfil
their mandates and they dispose of powerful means to have their decisions enforced. The
UN on the other hand has only a limited budget, apart maybe from the UN Security
Council, which is insufficient to effectively perform the wide spectrum of functions it is
expected to fulfil.
15. There is a troubling lack of dialogue and co-ordination between the UN and the two
IFIs. The World Bank and the IMF, albeit UN Specialised Agencies, exhibit a large degree
of independence from the UN. Based on their interpretation of the Relationship Agreements
with the UN, the IFIs have contrived to distance themselves from many UN resolutions and
recommendations that reflect the broad wishes of the international community.
16. Although the World Bank and the IMF increasingly adopt partnerships with other
organisations, including those within the UN system, these partnerships often mean that the
IFIs set the policy directions while the respective partner organisation is tasked with the
implementation. Partnership in the design of policy directions is rare.
Evaluation and Redress of Adverse Human Rights Impacts
17. Rights and obligations demand accountability, while it is up to the duty-holders to
determine which accountability mechanisms are most appropriate in particular cases. In any
case, however, these mechanisms must be accessible, transparent and effective.
18. A human rights impact assessment can be done ex ante, i.e. in the stage of decision-
making, or ex post, i.e. when projects have evolved or have come to an end.
19. Strategies to supervise the implementation of economic, social and cultural rights
should not be limited to the monitoring of violations. In relation to economic, social and
cultural rights, the poor’s access to these rights is one of the core issues. In particular, firm
links need to be established between legal/constitutional reform and social policy. This
includes the incorporation of international economic, social and cultural rights in national
law, accompanied by a change in legal, political and social systems, structures and
institutions.
20. The monitoring and assessment of human rights violations can normally be done on
a case by case basis. However, in the framework of assessing the human rights impact of
World Bank projects and IMF programmes, a case by case approach might work for
individual projects and country strategies, but not for the evaluation of broad and general
policies that are problematic from a human rights point of view.
21. The effectiveness of the World Bank Inspection Panel as a human rights
accountability mechanism is limited by its inability to invoke specifically human rights law,
its lack of decision-making power, the absence of a role for the petitioners in the Inspection
Panel procedure itself, and the limited human rights expertise of the Panel.
22. The IMF Independent Evaluation Office’s mandate allows flexibility in possible
evaluation topics and consultations with informed and interested parties outside. The key
lacuna in the Office’s terms of reference, however, is that affected or interested parties
cannot challenge IMF programs if flawed. For that reason, there is still a need to establish a
complaint office.
Guiding Principles
Human Rights Obligations for International Financial Institutions
23. While joint statements by the World Bank and the IMF increasingly recognise that
macroeconomic and financial aspects cannot be considered separate from the structural,
social and human aspects of development, their macro-economic policy should take into
account its impact on human development objectives, including human rights.
24. The World Bank and the IMF should integrate human rights considerations into all
aspects of their operations and internal functioning. Both financial 252 institutions should
ensure that prevention of human rights violations is given high priority in their processes,
policies, financed projects and in the implementation of various programs and strategies. If
violations do occur in the course of these operations, then measures for mitigating the
impact thereof and mechanisms of accountability and redress should be put into place.
25. The IMF Articles of Agreement acknowledge the need to respect domestic social
and political policies of members. Such policies include international commitments to
human rights. Neither the IMF nor the World Bank should impede the Borrower from
honouring such legal obligations, or agree to measures depriving individuals of their rights
under domestic and international law.
26. In concluding agreements with their members, the IFIs shall respect the obligations
of the members according to Article 103 of the UN Charter, including giving priority to
respect for human rights.
27. When determining the policies, programmes and projects of the World Bank and the
IMF, member States must comply with their obligations under international human rights
law, including the duty to engage in international assistance and co-operation. Moreover,
when member States decide upon policies, programmes and projects that impact upon a
State, they must take into account and respect the relevant national and international human
rights laws that apply to that State. Member States should not agree to measures that will
impede their ability to comply with their national and international human rights
obligations.
28. For reasons of operationalisation, general human rights obligations for the World
Bank and the IMF should be specified in a practical and accessible instrument by which the
two IFIs are to be guided in all their decisions and on the basis of which they can be held
accountable.
29. The World Bank Articles of Agreement need to be interpreted in the light of the
current definition of development, which includes respect for human rights.
30. The Bank’s operational policies are an appropriate instrument for assisting staff in
ensuring that Bank-financed projects do not result in human rights violations. The
following clause should be included in the operational policies of the World Bank: ‘The
World Bank shall not finance projects that contravene applicable international human rights
law.’ A clause to the same effect should be included in loan agreements concluded between
the Bank and member States. The loan agreements are international treaties, which are
binding both on the international organisations and the State concerned, and are governed
by international law. The Bank should ensure compliance with the human rights clause
during implementation.
31. The following clause should be included in the policies of the IMF: ‘The IMF shall
not enter into financial agreements that contravene applicable international human rights
law.’ A clause to the same effect should be included in programme support agreements
between the IMF and States. The IMF should ensure compliance with the human rights
clause during implementation of its programmes.
Linking Legal Obligations in the Field of Human Rights to Political and Economic
Realities
32. Concrete policies, programmes, projects and actions activate specific duties,
including in particular with regard to people whose lives are affected by the decisions
taken. In order to establish the nature and implications of such concrete duties, decision-
making by the World Bank and the IMF should be open and transparent, so that the
interests of all stakeholders be represented and acknowledged in the light of applicable
international human rights standards.
33. The World Bank and the IMF are required to ensure that people who are affected by
their projects and strategies as well as civil society organisations are given the opportunity
to participate actively in taking the decisions that affect them. This participation should be
facilitated and conducted in the light of applicable international human rights standards —
including the principle of non-discrimination and the right to information, the right to be
consulted, and the right to free and informed consent — and take into account marginalised
groups and peoples, including indigenous peoples, with respect for their right to (internal)
self-determination.
34. In adopting partnerships, the World Bank and the IMF need to pursue the equity of
goals of other solid and financial partners and to take on board the goals and instruments of
partner organisations, including those within the UN system, and to see how they relate to
the Bank’s and the IMF’s policy orientations and decision-making processes. This would
not only benefit all constituents of the World Bank and the IMF but also enrich the policy
agenda of other actors. The World Bank and the IMF need to search systematically for
common ground and co-operation so as to increase the impact of their projects and
programmes on poverty reduction.
Evaluation and Redress of Human Rights Impacts
35. The World Bank and the IMF should ensure that all accountability mechanisms are
easily accessible for affected individuals and groups, inter alia through supporting capacity
building initiatives that would enable individuals and groups to engage more effectively
with these institutions.
36. The World Bank and the IMF should support initiatives in which co-operation
between human rights NGOs and development NGOs is strengthened in order to maximise
their effective engagement with the IFIs and the communities affected by World Bank- and
IMF-funded activities. It enables both IFIs to ensure the development of policies that are
consistent with the rights and needs of these communities.
37. Given the wealth of information and data held by the World Bank and the IMF on
issues closely bearing upon the implementation of human rights within States, both IFIs are
urged to make this material available, on a regular basis, to relevant bodies within the UN
human rights system, such as the UN Committee on Economic, Social and Cultural Rights.
The IFIs should also make their staff available to discuss such material with the relevant
UN human rights organs.
38. The World Bank and the IMF should evaluate the human rights impact of their
projects and policies, ex ante as well as ex post, through the collection of disaggregated
data according to, inter alia, gender, race, religion, ethnicity, age and poverty level.
39. The insertion of a human rights clause in the World Bank operational policies will
enable the World Bank Inspection Panel to include international human rights law in its
review of the standards against which Bank actions are tested.
40. As a complement to the Inspection Panel procedure, the Bank should agree to
engage in international arbitration for settling disputes with private parties. Affected parties
might claim that the Bank with its operational policies has adversely affected their human
rights.
41. Human rights considerations should be integrated in the IMF’s Independent
Evaluation Office’s terms of reference, mandate and functioning. The Office, as well as the
World Bank Inspection Panel, should build up human rights capacity and resources,
including staff training.
42. The IMF should review its accountability mechanisms, in order to provide for
settlement of complaints, brought by affected individuals and communities, challenging
IMF programs and policies.
Annex IV
Global Unions “IFI Actions must contribute to building a fair and sustainable global economy” Statement by Global Unions to the 2017 Spring meetings of the IMF and World Bank
Washington, 21-23 April 2017
Introduction
1. A slight uptick in global growth prospects announced in the international financial
institutions’ latest economic forecasts does not signal an improvement in the situation of
working people. Global Unions1 cite data showing wage stagnation and weak employment
growth in much of the world, and urge the IFIs to focus on the creation of quality jobs,
achieving the transition to a low-carbon future and reducing inequality. The trade union
movement is concerned by the growth of right-wing nationalism in many countries, due in
part to a lack of confidence in the global economic system. The IFIs should join those
calling for fairer rules in international trade and investment agreements, not push for
liberalization that further strengthens investors’ rights at the expense of everyone else.
2. Global Unions’ statement puts forward detailed recommendations for IFI action to
make progress on gender equality and a just transition to a sustainable economy. The
statement also recommends specific measures that the IMF and World Bank should take in
order to contribute to reductions in income and wealth inequality. While welcoming the
World Bank’s first-time adoption in 2016 of a labour standards lending requirement, Global
Unions urge the Bank to fulfil commitments to cooperate with trade unions and the ILO for
its implementation. Joint work with other development banks that have several years’
experience in applying labour safeguards is also suggested.
IFI forecasts do not announce improvements for working people
3. In updates to their global economic growth forecasts published at the beginning of
the year, both the IMF and World Bank predict slightly higher growth for 2017 and 2018
due in large part to the impact on exporters of firmer prices for oil and some other
commodities.
4. The IMF also factored in expectations of fiscal stimulus applied by the US, but both
IFIs emphasized that the high degree of current policy uncertainty has increased “downside
risks”. Signs of tighter credit conditions and reduced investment in emerging and
developing economies, along with political instability and uncertainty in several countries,
could further undermine the positive trends suggested in the latest IFI forecasts.
5. It should be noted that the IFIs’ growth predictions have been widely off the mark in
recent years because of the failure to correctly assess the impacts of austerity policies,
continued high unemployment and under-employment, and stagnant wages. At the
beginning of 2016, the Fund and the Bank also predicted a growth uptick for that year.
Instead, 2016 registered the slowest rate of global economic growth since the Great
Recession year 2009.
6. Even if the slightly higher growth for 2017 predicted by the IFIs materializes, it will
not significantly improve the situation of working people. Recent reports published by the
International Labour Organization identify a steady deceleration of wage growth since 2012
in developing and emerging countries, and forecast a modest increase in the global
unemployment rate in 2017 due to a deterioration in emerging economies (Global Wage
1 The Global Unions group is made up of the International Trade Union Confederation (ITUC), which
has 181 million members in 163 countries; the Global Union Federations (GUFs), which represent
their respective sectors at the international trade union level (BWI, EI, IAEA, IFJ, IndutriALL, ITF,
IUF, PSI and UNI); and the Trade Union Advisory Committee (TUAC) to the OECD.
Report 2016/17; World Employment and Social Outlook — Trends 2017). The ILO further
estimates that there will be only slight improvements for those at the bottom of the income
scale in 2017. Close to 43 per cent of workers worldwide will remain in a situation of
vulnerable employment and almost 29 per cent in “working poverty”. The fair and effective
integration of migrants and refugees into labour markets is also a key concern, as these
populations are often vulnerable to unemployment, low quality jobs and social exclusion.
7. The IFIs currently predict that the economies of emerging and developing countries
will grow more than twice as fast as developed countries, which as a whole have grown at
an average annual rate of only 1.6 per cent since 2010. Indications of increased joblessness
and slowing wages in emerging economies identified by the ILO will undermine the IFIs’
predictions of improved growth prospects for the entire global economy in 2017 and 2018.
8. Some IFI forecasts note that political developments over the past year will further
complicate attainment of a sustainable growth path for the global economy. The rise of
right-wing nationalism in several countries is of great concern to trade unions around the
world, but the response of policymakers should not be to ignore the growing lack of
confidence in the global economic system. For years, some international institutions
including the IFIs have shrugged off the adjustment costs from trade liberalization and the
losses suffered by a significant number of working people from trade and investment
agreements. Further liberalization without fairer rules for all is not the way forward. As a
recent Trade Union Statement to G20 Finance Ministers 2 noted, policymakers must
correctly identify the direction of causality between trade and growth when they formulate
policy responses:
“The recent trend of trade slowing down is mainly caused by weak domestic demand
(prompted by austerity, internal devaluation, debt deleveraging), not by a surge in
protectionism. Ignoring this causality by trying to push for more trade runs the risk
of falling into the ‘competitiveness’ trap where economies depress wages in order to
try to export themselves out of the crisis, which ends up deepening the global lack of
demand, further slowing down trade dynamics.”
9. The IMF and World Bank should endorse a rebalancing of investors’ rights and
obligations in trade and investment agreements by supporting the inclusion of enforceable
labour provisions based on ILO standards, as well as the repeal of investor-state dispute
settlement mechanisms that undermine governments’ right to regulate. To respond to the
global lack of aggregate demand, growing inequality and the challenge of climate change,
Global Unions urge the IFIs to support an extensive programme of public investment in
energy efficient infrastructure and quality public services, and coordinated wage increases.
Promote gender equality through decent work and public investment in social
infrastructure
10. Gender equality and female labour force participation efforts must deliver lasting
economic empowerment for women. Working women around the world are often
concentrated in precarious, low-wage jobs in the service sector, domestic work and the
bottom end of global value chains, and women are more likely than men to have informal
jobs. Meaningful progress on decent work and transition from the informal to formal
economy will be a particular boon for women and drive inclusive development. The global
economy currently functions through the underpaid and unpaid work of women. Increasing
female labour force participation in isolation from a decent work agenda will fail to
adequately address gender equality.
11. Progress on gender equality is undermined by policy advice and conditionality
involving austerity for social programmes, public sector retrenchments, labour market
deregulation, cutbacks in public services and dismantling of collective bargaining systems.
In Greece, labour market reforms and austerity applied at the behest of the IMF and EU
creditors disproportionately affected women through job losses in the majority-female
public sector, increased precarious work and a spike in gender-based firings. Women suffer
2 TUAC, March 2017 (http://www.tuac.org/en/public/e-docs/00/00/13/2C/document_doc.phtml).
most when social programmes are cut and care reverts to unpaid labour. Global Unions
commend the IMF for supporting increased female labour force participation, for example
in the 2016 Egypt programme, but caution that the failed model of austerity now being
applied in the Middle East and North Africa will harm women and risks outweighing
progress in participation.
12. Global Unions urge the IFIs to support public investment in social infrastructure,
including health, education and care systems. Investing in the care economy in particular,
would help to create jobs, raise productivity, reduce the burden of unpaid labour and
catalyse economic growth.3 Responsible public investment is needed in this sector along
with improved job quality for care workers in order to improve the attractiveness of jobs in
the sector, address shortages in the supply of care services and ensure the accessibility and
quality of these services. Expansion of social infrastructure will create new physical
infrastructure projects and procurement that offer further economic benefits. Global Unions
support investments in both physical and social infrastructure, and call on the IFIs to
promote them in tandem.
13. Gender budgeting with the participation of social partners will also help achieve
gender equality. In Iceland, where 86 per cent of the workforce is unionized, tripartite
dialogue led to adoption of the Equal Pay Standard, a trailblazing initiative and global
example. The core labour standards of collective bargaining and freedom of association
give women effective tools to create safe workplaces free from violence, harassment,
discrimination and health and safety risks. The full realization of these rights is central to
gender equality.
Financing a just transition to a sustainable global economy
14. A zero-carbon, zero-poverty future is possible through a coherent response to the
social, economic and climate challenges facing our world. The influence and financial
resources of the IFIs are necessary to reach this future through a just and equitable
transition. The conversion to a sustainable economy can be a net creator of jobs, but the
substantial economic changes involved could leave workers behind and create further
inequality. The danger of unemployment, forced migration and rising energy costs loom
over working people.
15. Sustainable infrastructure built in the coming years can form the backbone of a
sustainable global economy involving better transport, agriculture, industry and more.
Public investment in essential services — such as housing, electricity, sanitation and water
— is also essential in order to enable individuals to fully participate in society as well as the
labour market. Major climate change mitigation projects are also necessary. Global Unions
urge the World Bank to take a leadership role in ensuring that global infrastructure is
sustainably built, energy-efficient and creates quality jobs. The IMF and World Bank can
assist countries in policy and fiscal planning for a just transition and the achievement of the
Nationally Defined Commitments under the UN Framework Convention on Climate
Change. Additionally, the IFIs can follow up on their research on carbon taxes as well as
discussions held with trade unions and other parties and move toward implementation.
Equitable carbon taxes can fund a just transition and investments in infrastructure.
16. The shocks of climate change, including rising sea levels and temperature changes,
will increasingly displace people from their jobs and homes. This problem will particularly
affect lower-income people in developing countries. Adequate, universal social protection
is needed to help working people survive and adjust. Whenever possible, plans should be
made to directly help fossil fuel workers transition to new jobs. This is especially important
for communities with low levels of economic diversification that rely on a single facility or
sector, where retooling facilities to sustainable activities is one way to create a direct path
to jobs. Social dialogue is crucial to planning these changes at the local, national and
international level. Global Unions ask the IFIs to support dialogue and the negotiation of
binding agreements for sustainable economic transformation.
3 ITUC, Investing in the Care Economy, January 2017 and March 2016 (https://www.ituc-
csi.org/investing-in-the-care-economy).
Reduction of inequality: Actions should follow words
17. The IFIs’ increased attention to the negative impacts of income and wealth
inequality and its causes is a welcome development. The World Bank has emphasized that
measures to make income distribution more equal are a necessary condition for attainment
of Sustainable Development Goal 1.1 on eradicating extreme poverty, as well as SDG 10.1
on boosting the bottom 40 per cent (Poverty and Shared Prosperity, October 2016). The
IMF has published several research papers showing that countries with lower inequality
have higher and more durable growth; that fiscal policies have become less redistributive in
most countries; and that weaker labour market regulations and institutions, reflected in
declining trade union density and collective bargaining coverage, are the main drivers of
increased inequality in many countries.
18. However, action in lending programmes or country-level policy advice has been
slow to catch up to the IFIs’ discourse and research on the need to reduce inequality. Many
IMF programmes or policy recommendations continue to support measures that weaken
minimum wages, employment protection regulations or collective bargaining institutions.
For example, the IMF has encouraged many countries to substantially weaken or dismantle
national or sector-level collective bargaining, despite the role that coordinated collective
bargaining systems have played in achieving more equal income distribution. In February
2017, the UN’s Independent Expert on the effects of foreign debt and other related
international financial obligations submitted a report to the Human Rights Council, which
documented numerous cases of the IMF promoting austerity-related labour market reforms
that erode workers’ rights.4 The report found little evidence that the deregulatory measures,
put forward on the pretext of preventing or resolving debt crisis, contributed to economic
recovery; but they did contribute to increased inequality.
19. The Fund’s advice or loan conditions in the area of social policy have also had
potentially troubling impacts on inequality. Some IMF programmes include a “social
spending floor” as a Quantitative Indicative Target, but these are purely symbolic since a
failure to meet minimum spending targets has no effect on loan disbursements. The main
object of IMF involvement in social programme reforms is to control their fiscal cost, not to
improve their adequacy or coverage. In some countries, for example in Egypt, the Fund and
the Bank have supported the extreme targeting of social benefits over universal approaches:
for example by replacing universal consumer subsidies with severely means-tested benefits.
The “proxy means test” mechanism often used has been shown to typically exclude 50 per
cent or more of those that should be eligible by virtue of income level, according to
research published by the ILO.5 Social protection reform measures promoted by the IFIs
that leave a majority of lowest-income people without any assistance are incompatible with
inequality reduction and shared prosperity goals.
20. To its credit, the World Bank has in recent years expressed support for universal
healthcare coverage and universal social protection. In 2016, it launched a joint programme
with the ILO for increasing the number of countries with universal protection. The Bank
has endorsed these initiatives in conformity with its support for the SDGs, specifically
targets 1.3 on social protection for all and 3.8 on universal health coverage. The Bank
should ensure that its country programmes deliver on the promise of protection for all by
helping establish comprehensive systems based, for example, on the social protection floor
concept developed at the ILO. The IMF should also support this approach, following up on
country-level research work it has already been involved in for identifying fiscal space for
social protection floors.
21. Additionally, the World Bank has supported the SDG targets linked to Goal 4 on
ensuring inclusive and quality education for all, which is another key instrument for
4 United Nations Human Rights Council, A/HRC/34/57, 27 December 2016
(http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/34/57).
5 Kidd, Gelders and Bailey-Athias, Exclusion by design: An assessment of the effectiveness of the proxy
means test poverty targeting mechanism, (http://www.developmentpathways.co.uk/resources/wp-
content/uploads/2017/03/Exclusion-by-design-An-assessment-of-the-effectiveness-of-the-proxy-
means-test-poverty-targeting-mechanism-.pdf).
achieving more equal distribution of income as well as contributing to countries’ growth of
productivity and access to prosperity. The Bank’s 2018 World Development Report, on the
theme of “Education for Development”, provides an opportunity for the institution to
describe in detail the strategies it needs to develop to support education targets, starting
with SDG target 4.1: “By 2030, ensure that all girls and boys complete free, equitable and
quality primary and secondary education leading to relevant and effective learning
outcomes”. The Bank should make certain that all the schooling initiatives it supports are
consistent with and supportive of the commitment to free, equitable and quality education.
Cooperation for implementing World Bank’s new labour safeguard
22. If the World Bank’s announced plans are respected, in 2018 it will join several other
multilateral development banks (MDBs) that, over the past several years, have implemented
comprehensive labour standards lending requirements or safeguards. “Environmental and
Social Standard 2: Labour and Working Conditions” (ESS 2) is part of the Bank’s new
Environmental and Social Framework, adopted in August 2016. ESS 2 provides for basic
occupational health and safety requirements, obligations to provide information to workers
and a requirement to respect certain fundamental workers’ rights.
23. The World Bank’s introduction of a labour safeguard is an important development,
but the effectiveness may be impaired by the fact that in some aspects its version is weaker
than those of the other MDBs. Principal among the weaknesses is the absence of any
reference to the core labour standards (CLS) conventions of the ILO, which prohibit
discrimination, child labour and forced labour, and require respect for freedom of
association and the right to collective bargaining. Whereas ESS 2 stipulates that the first
three practices will not be tolerated in Bank-funded projects whether or not they are
prohibited in the client country’s law, it requires respect of freedom of association only “in
a manner consistent with national law”. This proviso is at odds with the requirements of the
other MDBs and also contrary to the universal nature of the CLS as established by the ILO
since 1998.
24. In order to avoid that weaknesses or ambiguities in ESS 2 lead to tolerance of
unacceptable labour practices or denial of workers’ rights in Bank-financed activities, it
will be imperative that the Bank cooperates fully with parties knowledgeable about the
labour conditions in its projects and programmes, notably the ILO and trade unions. The
Bank should move forward with cooperation as it develops staff directives, training
material, monitoring mechanisms and consultation procedures for implementing ESS 2.
The Bank should also examine possibilities of working jointly with other MDBs that have
had years of prior experience in implementing labour safeguards. Joint work could take
place, for example, in training of staff and project managers on labour standards
requirements, and in establishing effective monitoring and information-gathering
procedures to identify risks of safeguards violation.
Global Unions’ recommendations
Measures to support economic recovery
25. The IMF and World Bank should
• Support and help implement a global recovery strategy aimed at boosting aggregate
demand and consisting of a policy mix of public investment stimulus and
coordinated wage increases to reverse the falling labour share in national income.
• Contribute, as part of this strategy, to public investments in education, the care
economy, water and sanitation and other quality public services, including actions to
support the integration of migrants and refugees.
• Support public investments in energy-efficient infrastructure and climate change
mitigation projects to protect against climate change damages, improve long-term
productive potential, and support the transition to a low-carbon economy including
through the adoption of carbon taxes.
• Support the inclusion in trade and investment agreements of enforceable labour
provisions based on ILO standards and the repeal of investor-state dispute settlement
mechanisms that undermine governments’ right to regulate.
Measures for creating decent work and reducing inequality
26. The IMF and World Bank should
• End the promotion of labour market deregulation, including through its funding
conditionality, and instead help to reverse the rise in income inequality by
supporting social dialogue, strengthened collective bargaining and robust minimum
wages as part of a coherent set of labour market and social policies for more
inclusive growth. This work should entail enhanced cooperation with international
organizations with expertise in labour market and social policy, such as the ILO and
World Health Organization.
• Support gender equality and women’s economic empowerment through wage
increases, formalization and respect of workers’ rights in majority-female sectors,
along with public investments, notably in the care economy, to create quality jobs
and reduce the burden of unpaid labour.
• Help countries restore or establish fiscal policies that reduce inequality through more
progressive tax regimes including through greater tax revenues from higher incomes,
and increased coverage of social protection programmes.
• Develop actions to contribute to attainment of the Sustainable Development Goals,
which include targets on full and productive employment, protection of workers’
rights, reduction of inequality, universal health coverage, universal primary and
secondary education, and national social protection systems for all including floors.
27. The World Bank should
• Ensure that its projects and programmes respect fundamental workers’ rights and
provide safe working conditions and adequate wages, and work jointly with trade
unions and the ILO in the implementation of “Environmental and Social Standard 2:
Labour and Working Conditions” to ensure that Bank-financed activities comply
fully with recognized international labour standards.
• Examine possibilities of joint work with other development banks that have adopted
labour safeguards on their implementation, for example in training activities and
developing effective monitoring procedures.
Measures for effective financial regulation and taxation
28. The IMF should
• Support the extension and completion of steps taken since 2008 to correct under-
regulation of the financial sector, such as shadow banking systems, too-big-to-fail
financial groups and under-taxation of the financial industry, and oppose efforts to
roll back the measures already adopted.
• Support the creation of a multilateral framework for negotiating binding
international debt restructuring agreements when countries face unsustainable
sovereign debt.
• Promote stronger actions to counter the erosion of tax bases and achieve reform of
taxation systems in order to move towards broader-based and more progressive
taxes, and to shift taxation from employment to environmentally damaging and non-
productive activities.
• Support stronger measures to ensure that fiscal revenue is not lost through tax
havens by requiring automatic exchange of information and action to stop base
erosion and profit shifting by multinational enterprises.
• Support the introduction of financial transactions taxes to discourage speculative
behaviour and create new sources of finance, including by offering assistance for the
coordinated implementation of the comprehensive FTT initiative supported by
several Eurozone countries.
Annex V
Statement by the Intergovernmental Group of 24 at the 2017 Spring meeting of the World Bank and the International Monetary Fund (excerpts)
1. We held our ninety-seventh meeting in Washington D.C. on April 20, 2017 with
Abraham Tekeste, Minister of Finance and Economic Cooperation of Ethiopia in the Chair,
Ravi Karunanayake, Minister of Finance of Sri Lanka as First Vice-Chair; and Julio
Velarde, Governor of the Central Bank of Peru as Second Vice-Chair.
Financing for Development
8. Strong fiscal frameworks are essential to mobilize domestic resources to effectively
support development efforts. We are encouraged by the progress made in improving tax
revenue-to-GDP ratios and enhancing spending efficiency in EMDCs. Progressive and
growth-enhancing tax policies and expenditure measures also play an important role in
improving income equality and broadening opportunity. We underscore the important role
of IFIs and donors in supporting capacity building for revenue mobilization and encourage
more peer learning and capacity building among EMDCs through collaborative platforms.
We welcome the work of the Platform for Collaboration on Tax and look forward to its
engagement with tax officials in EMDCs.
9. We welcome ongoing initiatives on international tax cooperation such as the
Automatic Exchange of Information (AEoI) initiative and the Base Erosion and Profit
Shifting (BEPS), and call for a framework that ensures effective participation of EMDCs.
We support the development of a digital global platform with least compliance cost for
implementation of AEoI. We appreciate the work of the UN Tax Committee and encourage
multilateral support to upgrade the Committee to an intergovernmental body to enhance the
voice of EMDCs on international tax policy matters. We also call for more attention to
developing fair tax rules to guide the taxation of multinational corporations and for
international cooperation to prevent harmful international tax competition, negative
spillovers from shifts in tax policies in major countries, and illicit financial flows …
Reforming the Bretton Woods Institutions
15. We support a quota-based, adequately-resourced IMF that is less dependent on
borrowed resources. We call for the full implementation of the 2010 Governance Reforms
on Board Representation. We call for the completion of the 15th General Review of
Quotas, including a new quota formula, by the Spring Meetings of 2019 and no later than
the Annual Meetings of 2019. We call for a revised quota formula that further shifts quota
shares from AEs to dynamic EMDCs, reflecting their growing weight in the global
economy, while protecting the quota share of the poorest countries, and puts greater weight
to GDP PPP within the GDP blend. The realignment of quota shares must not come at the
expense of other EMDCs. We reiterate our longstanding call for a third Chair for Sub-
Saharan Africa, provided that it does not come at the expense of other EMDCs’ Chairs.
16. We look forward to a World Bank’s Shareholding Review that upholds the Istanbul
Principles to achieve equitable voting power between developed and developing and
transition countries (DTCs), and produces an outcome that is broadly acceptable to the
membership, while protecting the smallest poor countries. We call for the timely
implementation of the Lima Roadmap. As the review moves toward the conclusion of the
new shareholding package, we call for exploring options to ensure a meaningful
realignment with a balanced shareholding outcome, including allocations in line with the
agreed formula, special allocations, forbearance, and limits on dilution of individual DTCs.
17. We reiterate our support for a stronger WBG to provide continued assistance to
developing countries of all income levels, as laid out in its Forward Look. In the meantime,
we are concerned with the IBRD’s and IFC’s strained financial capacity and the consequent
expected decrease in annual lending over the coming years. This will adversely affect the
WBG’s ability to engage its member countries and to catalyze private financing, which are
essential to meet the ambition of its Forward Look. To strengthen the financial capacity of
the IBRD and IFC and build on their ability to leverage their shareholders’ capital, we call
for exploring all options, including capital increases, further balance sheet optimization,
and review of financial transfers from IBRD and IFC to IDA. Furthermore, we recognize
the importance of having a balanced portfolio, which contributes to the financial
sustainability of IBRD. We welcome the shift in the WBG’s development financing
approach towards greater strategic use of official resources to further catalyze public and
private investments and mobilize private capital.
18. We call for strengthening the efforts of the IMF and the WBG towards greater
representation of under-represented regions and countries in recruitment and career
progression, including at managerial levels. We reiterate the importance of staff diversity
and gender balance at all levels, including diversity of educational institutions.
Annex VI
Declaration of the Coalition on Human Rights and Development, Petition of 14 July 2016
1. (Washington, July 14, 2016) — Development banks should respect human rights in
their investments around the world and ensure their activities are not putting human rights
defenders at risk, the Coalition for Human Rights in Development said today in a joint
petition signed by over 150 developments, human rights, and environment groups.
2. Major development banks have long touted the importance of public participation
for effective development, the organizations said. But a growing number of governments
have been shrinking the space for safe and effective participation in development processes
through criminalizing activities by land, environment, and human rights activists and
adopting restrictions on nongovernmental groups.
“I hope that civil society will have the opportunity to contribute towards sustainable
development,” said Abhijeet, an Indigenous community member in Nepal who does
not want his identity disclosed for security concerns. “Unfortunately, the
fundamental human rights of many peoples are being systemically violated as a
result of development projects. And when we help communities defend their rights
we are met with threats and violent attacks.”
3. The petition is directed to international financial institutions (IFIs), including the
World Bank, African, Asian, European, and Inter-American Development Bank, as well as
the newest institutions, the Asian Infrastructure Investment Bank, and BRICS New
Development Bank.
4. In March 2016, Berta Cáceres, a renowned indigenous land rights and environmental
defender in Honduras, was killed in the middle of the night as she slept in her bed. Two of
those facing charges for Cáceres’ murder were employees of a company involved in the
construction of the Agua Zarca dam, a project that Cáceres and her organization, Civic
Council of Popular and Indigenous Organizations of Honduras (COPINH), have long
opposed and campaigned against. The murder sparked a high-profile movement to demand
accountability of the Dutch, Finnish, and Central American banks financing Agua Zarca for
failure to ensure their investments weren’t fuelling human rights abuses.
5. But as recent reports have documented, the Cáceres case is not unique.
“In Uzbekistan, the World Bank is pouring money into projects that benefit the
government’s abusive cotton sector, marred primarily by systemic forced labor,”
said Dmitry Tikhonov, an Uzbek human rights defender who is in exile following
government reprisals. “The World Bank has not taken any meaningful measures to
ensure that independent human rights defenders like me can monitor for abuses
linked to the projects they fund. Nor have Bank staff spoken out against the
government’s attacks on my colleagues and I.”
6. Human Rights Watch has recently documented numerous abuses against individuals
and communities impacted by projects financed by the World Bank and its arm for
corporate loans, the International Finance Corporation.
“Those who try to engage in development processes have suffered threats,
harassment, physical assault, or worse,” said Jessica Evans, senior international
financial institutions advocate at Human Rights Watch. “Development banks have a
responsibility to ensure that their investments don’t interfere with human rights, and
that people can participate in or express their opinions about development projects
without fearing for their safety.”
7. The joint petition — International Financial Institutions’ responsibility to ensure
Meaningful and Effective Participation in their Investments — details ways in which the
institutions should
“ensure that the activities they finance respect human rights and that there are spaces
for people to participate in the development of IFI projects and hold IFIs to account
without risking their security.” The organizations call on the financial institutions
“to actively support the realization of rights to freedom of expression, assembly, and
association, and related human rights, including economic, social and cultural rights
in all their activities.”
“Development banks and their member states can’t hope to achieve sustainable
development or eliminate poverty if their investments are contributing to human
rights violations or if those who are meant to benefit from development find
themselves subjected to abuse,” said Adam Shapiro, Head of Communications and
Visibility for Front Line Defenders. “The banks should take responsibility for the
outcomes of their investments and take meaningful action to safeguard human rights
defenders on the ground.”
Annex VII
Summary of CAO Cases
1. The CAO investigation of IFC Investment in Eco Oro Minerals Corp. Ltd., a
Canadian mining company conducting open-pit mining in Colombia. Concerning the lack
of consultation and disclosure the CAO concluded:
“IFC identified significant gaps in the company’s stakeholder engagement strategy
as the project proceeded. This became evident in late 2009, following the
submission of the open-pit mine EIA to the government that was rejected due to
non-conformance with national requirements. IFC recognized that the project faced
considerable opposition from the citizens of Bucaramanga. At this point IFC
recommended that the company improve its stakeholder engagement strategy so as
to strengthen community support. CAO notes that the limited scope applied to the
project at appraisal and categorization of the investment for IFC’s purposes did not
reflect affected community members’ understanding of risks.”
2. With regard to community health, safety and security, CAO determined that:
“there was not sufficient information to establish whether IFC assured itself of the
company’s compliance with PS4 requirements.”
3. With regard to conservation and sustainable natural recourse management, CAO
concluded:
“IFC supervision documentation does not show substantive progress on the
completion of necessary studies. IFC has not pursued a remedy, but has made
subsequent investments in the company.”
4. The CAO investigation in Corporación Dinant S.A. de C.V., Honduras, published in
December 2013 made findings that should have motivated IFC to fundamentally review its
practices:
“IFC was or should have been aware of a series of public allegations and negative
perceptions in relation to its client that went significantly beyond those that were
considered in the course of its integrity due diligence process… The detailed six-part
integrity due diligence process should have been adhered to. IFC’s failure to do this
was out of compliance with the relevant procedure. …IFC’s failure to disclose the
Dinant E&S Assessment was not compliant with its Policy on Disclosure of
Information (para 13). IFC remains non-compliant on this point. IFC supported a
breach of Performance Standard 1 (paras 20 & 26) by (a) accepting the client’s
disclosure of a modified translation of the ESRS in the place of the E&S
Assessment, and (b) failing to assure itself that the client’s ESAP was disclosed to
affected communities in an accessible form. IFC failed to ensure that the Dinant
E&S Assessment met the consultation requirements set out in PS1 (para.21) … IFC
failed to adequately assess its client’s performance against the full range of ESAP
CODs that had fallen due prior to making its November 2009 disbursement to
Dinant … IFC failed to “develop and retain the information needed to assess the
status of [its client’s] compliance with the Performance Standards during
supervision …
5. In the light of the above, IFC decided to continue financing Dinant indirectly,
through loans to Honduran Banks. The CAO Investigation of IFC Environmental and
Social performance in relation to Investments in Banco Financiera Comercial Hondureña
concerned the circumvention of WB rules concerning upper limits for loans to projects by
providing the loans to banks that would in turn loan to the project — no strings attached.
The IFC had already lent $15 million to an agribusiness company in Honduras, which was
under investigation in connection to allegations of violence against farmers on and around
Dinant palm oil plantations. The CAO found that:
“IFC took insufficient measures to identify activities where Ficohsa was exposed to
environment and social risk through its existing portfolio. This is of particular
concern given background E&S risk that emerges from the regulatory and
governance context in which Ficohsa was operating.”
6. CAO further noted that IFC had failed to conduct an adequate review of Ficohsa’s
social and environmental management system, or its capacity to implement IFC’s
environmental and social requirements.
“As a result, IFC acquired an equity stake in a commercial bank with significant
exposure to high risk sectors and clients, but which lacked capacity to implement
IFC’s environmental and social requirements …This included additional exposure to
Dinant, a company which IFC knew to be affected by a violent land conflict.”
7. In relation to the decision to disburse, CAO found that IFC’s review of the
applicable conditions of disbursement did not comply with the requirement that E&S staff
clear any E&S conditions following a review of evidence of compliance:
“CAO finds that IFC cleared disbursement against its investment agreements,
without assuring itself that Ficohsa had submitted the environmental and social
information that was required.”
8. In relation to project supervision CAO found that:
“IFC had not assured itself in an adequate or timely manner that Ficohsa was
operating as envisaged at the time of appraisal or that Ficohsa was applying the
Performance Standards to its sub-projects”.
9. In relation to Dinant, CAO found that:
“highly relevant information on the conflict and related D&S risks surrounding
Dinant, that was held by members of IFC’s Dinant investment team, was not shared
with key members of its Ficohsa team, even though there were staff working across
both teams … By waiving a key financial covenant and then taking an equity
position in Ficohsa, however, IFC: (a) increased its exposure, and (b) facilitated a
significant ongoing flow of capital to Dinant, outside the framework of its
environmental and social standards; and thus at a time when IFC management was
aware of serious unmitigated environmental and social risks regarding its
agribusiness client.”
10. This remarkable investigation also sought to explain the underlying causes of the
numerous instances of non-compliance. CAO observed:
“a primacy of financial considerations in IFC’s decision making”. CAO also noted
“a siloing of information with the result that relevant information was not shared
among key members of IFC’s Ficohsa team.”
Annex VIII
Inspection Panel Form — Sample form
(More information about the Inspection Panel Form is available at:
http://ewebapps.worldbank.org/apps/ip/Documents/Guidelines_How%20to%20File_for_w
eb.pdf)
To: Executive Secretary, the Inspection Panel
1818 H Street NW, MSN 10-1007,Washington,
DC 20433, USAEmail: ipanel@worldbank.org
or the appropriate World Bank Country/Regional Office
• We [insert names] live and/or represent others who live in the area known as [insert
name of area].
• Our addresses are attached.
• We have suffered, or are likely to suffer, harm as a result of the World Bank’s
failures or omissions in the [insert name and/or brief description of the project or
program] located in [insert location/country].
• [Describe the damage or harm you are suffering or are likely to suffer from the
project or program.]
• [List (if known) the World Bank’s operational polices you believe have not been
observed.]
• We have complained to World Bank staff on the following occasions [list dates] by
[explain how the complaint was made]. No response was received, [or] we believe
that the response received is not satisfactory as it does not answer or solve our
problems for the following reasons:
• We request the Inspection Panel recommend to the World Bank’s Executive
Directors that an investigation of these matters be carried out.
Signatures:
Date:
Contact address, telephone number, fax number, and e-mail address:
List of attachments
We [do/do not] authorize you to disclose our identities
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