This post appeared as part of a Roosevelt House Faculty Journal series on the New and Renewed Visions of Environmental Justice.
The 2030 Agenda for Sustainable Development, which was adopted by all 193 countries of the UN General Assembly in 2015, reaffirms the global community’s commitment to ensuring that current development projects do not undermine the wellbeing of future generations. This commitment requires balancing economic growth and sustainable development with environmental protection and social inclusion. Environmental justice, as a field, deepens this global commitment by analyzing the role of the environment in public life and how concerns regarding environmental harm intersect with existing racial, gender, and class disparities. In recent years, there has been an academic and programmatic push to connect environmental justice and sustainable development. The accountability mechanisms of the IFC implemented by the World Bank in project-affected communities provide a basis for this intersection. More could be done, however, to increase responsiveness from the IFC and their clients to the environmental concerns of all members of project-affected communities.
The World Bank Group has long provided significant financial and technical assistance to developing countries and is one of the many institutions that adopted the principles of Sustainable Development. In recent years, private investments entering emerging markets have dwarfed the amounts the World Bank disperses in loans, and the relevance of the institution has increasingly been put into question. Jim Yong Kim, the President of the World Bank, has responded by intensifying efforts to attract private sector partnerships. Previous partnerships involving the International Finance Corporation (IFC), the private sector arm of the World Bank however, have repeatedly failed to prevent that individuals in local communities, are not burdened by environmental and social costs that outweigh the benefits of their projects.
As Kim embarks on his strategy to revitalize the World Bank Group through profit-driven projects, incorporating an environmental justice framework would help better safeguard sustainable development objectives by bringing more attention to the unequal distribution of costs and benefits that often result from development. Environmental justice discourse could be valuable to advocate the establishment of more effective grievance mechanisms and policy that enhance accountability, transparency, monitoring, and compliance with existing standards and guidelines. Furthermore, the sustainable development agenda tends to emphasize the role of the state and could benefit from the local and community focus of environmental justice.
In its own Policy on Environmental and Social Sustainability, the IFC states a commitment to ensure that the “environment is not degraded” in the pursuit of economic development and demands that their clients abide by their Performance Standards to manage environmental and social risks. Despite that, communities in the developing world too frequently experience devastation in connection to IFC investments in damns, mines, airports, power plants, and agribusiness, among others. The 2017 lawsuit Jam v. International Finance Corporation, brought in Washington, D.C. against the IFC by communities from Gujarat, India that suffered adverse environmental and social impacts as a result of the Tata Mundra Power Plant, demonstrates that seeking resolution for harm through national courts remains nearly impossible as long as IFC continues to enjoy immunity from suit under the International Organizations Immunities Act (IOIA) and Atkinson v. Inter-American Development Bank.
The solution devised by the World Bank to provide communities with a means of recourse without waving the IFC’s immunity was establishing The Office of the Compliance Advisor Ombudsman (CAO). The CAO supports the IFC in addressing any complaints submitted directly by individuals from communities affected by projects, or by non-governmental organizations (NGOs), activists, and civil society groups representing them, as long as they are not malicious or intended to gain competitive advantage.
The CAO reports to the President of the World Bank and has three distinct roles that follow specific procedures. In its Ombudsman role, the CAO communicates directly with individuals, IFC clients, and any other relevant stakeholders to resolve disputes collaboratively. In its Compliance role, the CAO supervises investigations of IFC compliance with their Performance Standards and other policies. Lastly, in its Advisory role, the CAO provides advice based on knowledge gained from real experiences to the President and senior management of the IFC. There is broad consensus that the creation of the CAO represents a significant and positive shift toward increasing IFC accountability to project-affected communities by fostering transparency by generating and publicly sharing information related to cases and IFC responses. The CAO has also provided a space for affected communities to communicate concerns and negotiate their own settlements. Simultaneously, several significant limitations that reduce the CAO’s ability to fully hold IFC accountable have been identified.
The CAO’s transparency function for example, is often not able to generate accountability by itself for several reasons. Since the CAO is unable to issue binding decisions, command IFC clients to stop harmful practices, or terminate projects, it relies on the reputational effect of the public sharing of information to foster accountability. The IFC however, has contested or ignored the CAO’s findings in several instances, resulting in no or little improvements for communities affected by projects. In 2011 for example, before the Tata Mundra Power Plant lawsuit against IFC was initiated, Machimar Adhikar Sangharsh Sangathan (Association for the Struggle for Fishworkers’ Rights) submitted a complaint to the CAO alleging among other concerns, that the project was harming habitats, water and air quality, and was displacing local communities. In their Compliance investigation, the CAO found that the IFC had failed to ensure that environmental and social risks were managed according to their Performance Standards. IFC management rejected most of their findings and in its 2015 monitoring investigation, the CAO found that the problems identified in its appraisal had still not been addressed nor remedied.
The CAO is also not able to provide affected individuals with a way to demand reparations when the IFC is found to be noncompliant with their own Performance Standards or policies, even if the impacts they suffer are severe, irreversible, or remain unaddressed. Additionally, the CAO is limited to assessing IFC projects in relation to their standards and policies, and is unable to hold them accountable to international norms or conventions on environmental and social practices.
The CAO has exhibited a serious commitment towards improving their outreach strategy; however in communities affected by IFC projects, there continues to be low awareness of not only the IFC but also the CAO. Persistent low awareness of the IFC and CAO undermines the very purpose of accountability mechanisms– if individuals are not aware of IFC involvement in ongoing projects in their communities, they will not know that they could file a complaint with the CAO. Though other evidence shows that project-affected communities are reluctant to submit complaints not due to lack of awareness, but rather due to justifiable fears of retaliation.
If the IFC continues to refuse to waive its immunity, thus making it impossible for communities to find recourse for environmental damage through national courts, the CAO’s limitations must be addressed. One option would be to grant the CAO with the authority to issue reparations or cancel projects that are not in compliance. Doing so however, might discourage the participation of IFC clients in the dispute resolution process due to concerns that information gathered in this phase could be used by IFC management to justify withdrawing investment from their projects. Another option could be for the CAO’s operation guidelines to be modified to stimulate greater civil society, activist, and NGO participation. Civil society groups, activists, and NGOs that incorporate an environmental justice framework could reframe issues to highlight the unequal local and international distribution of environmental burdens and gains while increasing media attention on the impacts of projects, which has often resulted in improved IFC responsiveness to CAO cases and reports.
Additionally, the CAO or other independent accountability offices could analyze all past cases and assess if the IFC is truly incorporating lessons from CAO reports over time. If the World Bank and IFC are truly committed to the principles of environmental justice, sustainable development, and accountability, these reports could help determine if expanding the CAO’s mandate and operational guidelines can sufficiently increase accountability to local communities.
About the author:
Claudia Baethgen is an Undergraduate student Majoring in Anthropology with a Minor in Political science at Hunter College. She first studied at the Fashion Institute of Technology and spent five years working in the fashion industry, first as a designer, and then coordinating production in intentional factories. While working in fashion she became concerned with environmental and labor practices in the industry and decided to study Anthropology at Hunter. She plans to continue graduate studies in the area of International Development.
Research Interests:
International Politics, International Development, and Human Rights.
