The International Finance Corporation (IFC) is in the process of updating its Sustainability Framework, including its Performance Standards on Environmental and Social Sustainability, a set of requirements for how IFC clients should avoid, mitigate and manage environmental and social risk in their projects. The IFC Performance Standards not only influence how the IFC and its clients manage risk, but they set a global bar for other lending institutions and corporations, making them a critical instrument for mainstreaming improved policies and practices across development and other project finance.
Inclusive Development International led the drafting of a joint submission endorsed by more than 30 civil society organizations, which addresses flaws and gaps in the current version of Performance Standard 5: Land Acquisition and Involuntary Resettlement (PS5).
The submission critiques the IFC’s current approach, emphasizing that large-scale resettlement and livelihood restoration have proven extraordinarily difficult to carry out in a manner that upholds human rights and meets the IFC’s own Performance Standard objectives. The costs borne by affected people—including food insecurity, psychological trauma, increased morbidity and vulnerability, especially among women and children, the erosion of social fabrics, and, for Indigenous Peoples, the endangerment of cultural survival—are unacceptably high. It is fundamentally inconsistent with the World Bank Group’s mission and goal of sustainable development to impose these costs on vulnerable communities.
The submission points out that the scale and persistence of these harms indicate structural deficiencies within the standards, underscoring the need for substantial reform. This reform is especially urgent in the current race for transition minerals, where mining projects frequently threaten the land rights and human rights of affected communities.
The submission outlines our joint recommendations to reform PS 5, as well as related aspects of PS 1 (Assessment and Management of E&S Risks and Impacts), PS 7 (Indigenous Peoples and the Sustainability Policy). It draws from our recent policy proposal for a new, rights-based approach to community participation in decision-making about investment projects that impact their land and lives and our experience working with communities in our cases over the years. It also reflects important input from our partners, including international and regional environmental and Indigenous Peoples’ rights groups.
Key recommendations include:
- Prohibiting (not just “avoiding”) forced evictions, which are a gross violation of human rights.
- Requiring that IFC conduct a human rights compliant assessment as part of its due diligence, to determine whether any land expropriation is justifiable, and expand the scope of PS5 to cover both public interest projects that justify expropriation and non-public interest projects that do not.
- Requiring IFC clients to engage in a process of informed community engagement and participation that leads to Broad Community Support through equitable negotiations for any project that will have significant impacts on land and resources, including the terms on which the project can proceed.
- Requiring clients to engineer the project—including its technical design and footprint—to avoid displacement to the maximum extent possible, including through “no-go zones” to be cut out of the project footprint to allow communities to co-exist with the project with minimal disruptions to their lives and livelihoods.
- Requiring clients, through competent technical specialists, to engage with communities at the earliest project stages, prior to project decisions being made, to inform impact avoidance design.
- Requiring clients to offer communities, through arm’s length resources, access to their own independent technical and legal advisors to ensure they have the necessary support to engage in the process.
- Requiring clients to plan and finance progressive restoration, rehabilitation, project closure, and land-return measures—based on agreed timeframes negotiated with communities.
- For high-risk projects IFC should explore financial arrangements—such as bonds, contingency funds or withholding of final disbursements on loans—that would create the financial and contractual leverage to help ensure rehabilitation, land return and responsible project closure.
- Requiring clients to deploy measures and resources demonstrably capable of achieving the objective of livelihood and living standard improvement.
- Requiring clients to co-design or negotiate sustainable and effective benefit-sharing packages with communities to ensure they are left in a better position than before the project commenced.
- Addressing legacy land issues by applying PS5 retroactively where:
- any physical or economic displacement, including land acquisition or land use restrictions, occurred prior to the project, but which was undertaken or initiated in anticipation of, or in preparation for, the project;
- other events led to displacement, which was taken advantage of in order to advance the project;
- the IFC is supporting the expansion of an existing project, or a project that is an associated facility of an existing project owned by the same project developers (the IFC client), that caused physical or economic displacement at early phases.
- Requiring clients to provide communities with the full entitlements and protections of PS 5 where project impacts are so severe that communities ask to be resettled.
- Extending PS 5 to primary suppliers where land acquisition or land-use change causing displacement is induced by, or directly linked to, an IFC-supported project.
Read the full submission here.