The launch of the Principles for Responsible Banking (PRB), a bank-led initiative supported by the UN Environment Programme Finance Initiative (UNEP FI), is a welcome acknowledgement that the activities of the banking sector can have harmful social and environmental impacts, and that industry has a responsibility to prevent and address those impacts. But the new Principles are not sufficient to prevent harm or hold banks to account.

One hundred thirty participating banks have so far embraced the PRB, making a much-needed public commitment to align their financing with the Sustainable Development Goals (SDGs) and the Paris Climate Agreement. But at a time when our planet is teetering on the brink of climate catastrophe, the up to four years that the PRB gives participating banks to demonstrate they are implementing the principles is far too long, and even the earliest banks to endorse the PRB have dragged their feet on publishing concrete implementation plans. Meanwhile some PRB signatories continue to fund industries driving climate change and deforestation, including the fossil fuel industry, and continue to finance projects linked to human rights violations. The latter also represents a major flaw in the PRB, which does not commit participating banks to the UNGPs or otherwise make the human rights responsibilities of banks explicit.  The joint statement provides details of the investment behaviors of eight banks with “significant gaps between their PRB commitments and their unsustainable financing practices,” and urges all PRB signatories to act quickly to end their harmful financing.

Read the full statement here.

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(Washington DC) – The World Bank Group is quietly bankrolling some of Indonesia’s most destructive coal mining companies, despite instituting a virtual ban on coal financing in 2013, according to a report released today.

The International Finance Corporation (IFC), the World Bank’s private-sector arm, has in recent years provided hundreds of millions of dollars to client banks and private equity funds that have on-lent the money with limited oversight in Indonesia, including to the country’s largest coal producer, Bumi Resources, and other major players in the industry.

Coal mining has devastated large parts of Indonesia, the world’s second-largest coal exporter. It has decimated the archipelago’s globally important rainforests and biodiversity, threatened the country’s food security, and displaced thousands of indigenous people from their homes and land. The impacts have been particularly severe in Borneo, Asia’s most biodiverse island.

The findings are part of an ongoing investigation into the IFC’s sprawling and opaque financial-sector portfolio, worth some $6.4 billion in 2018 alone. While the World Bank Group member has historically provided direct financing for private-sector projects, it has increasingly outsourced its budget to commercial banks, private equity funds and insurance companies.  This new model of development finance has exposed the IFC to a range of harmful corporate activities that conflict with the World Bank’s mission to fight poverty through sustainable development.

The investigation of the IFC’s financial-sector portfolio, led by Inclusive Development International and Bank Information Center Europe, has uncovered hidden financial flows to more than 150 companies and projects around the world that have violated human rights, damaged the environment and accelerated climate change, in violation of the IFC’s social and environmental Performance Standards. The organizations have been releasing the results of the investigation, which began in 2016, in a series of reports and a comprehensive database.

More than half of the 150 projects uncovered involve coal. In response to these findings, the IFC recently unveiled a draft plan, called the Green Equity Strategy, designed to move its client banks away from financing coal and toward renewable energy. In addition, the IFC says it increasingly requires its financial-sector clients to direct its money toward specific development purposes such as small business loans, an approach known as “ring fencing.” Such ring fences effectively exclude coal, the IFC contends.

“The IFC is taking welcome steps to address the harms in its financial-sector portfolio, including pledging to reduce coal exposure to zero and help its clients step away from coal. The IFC influences over $4.5 trillion of investments in emerging markets, so these moves signal the beginning of the end for coal. But the devil is in the details, and we will be watching closely for any loopholes which allow this dirty financing to continue,” said Kate Geary, Co-Director of Bank Information Center Europe.

Inclusive Development International and Bank Information Center Europe are urging the IFC to speed up the Green Equity Strategy’s timeline of targets and extend restrictions to other fossil fuels to make the strategy commensurate with the severity of the climate crisis. They are also calling on the IFC to be more transparent, rigorous and accountable in its ring fencing of financial-sector investments.

“Money is fungible so if the IFC doesn’t put strict measures in place to ensure that its funds are actually being used to achieve a positive development impact, then banks will continue to go about their business as usual while reaping the benefits of the World Bank’s green stamp of approval,” said David Pred, Executive Director of Inclusive Development International.  “The taxpayers who fund the World Bank need to be given much more assurance that this isn’t just a bunch of smoke and mirrors,” he added.

The report looks in particular at the impacts of the Kaltim Prima Coal company, which operates a 90,000-hectare strip mining operation in East Kalimantan, a province in Indonesian Borneo. The project has displaced members of the indigenous Dayak Basap people and damaged their livelihoods, water sources and food security. The IFC is exposed to the mining project through two financial-sector clients, Raiffeisen Bank International of Austria and Axis Bank of India. The IFC also directly financed the mine’s largest customer, the 4-gigawatt Mundra coal plant in India.

The authors also call on the IFC to address the harm caused by these projects in Indonesia, which the new coal commitments are unlikely to remedy.

“The World Bank’s money has funded the destruction of an entire indigenous people’s way of life,” said Merah Johansyah, the head of the Jakarta-based coal watchdog JATAM. “It helped create this mess, so it has a responsibility to help fix it.”

The report can be found here:

https://www.inclusivedevelopment.net/wp-content/uploads/2019/04/Digging-Deeper.pdf 

More information and reporting from Inclusive Development International on this issue can be found here and here.

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International Finance Corporation announced new ‘green equity’ policy to encourage financial intermediaries to divest from coal, while Bank pulled plug on mooted Kosovo coal project. READ FULL ARTICLE ▶

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“The IFC has a $57 billion portfolio and influence over another $4.5 trillion in investments in emerging markets. IFC is sending a strong signal that there is no future for coal,” said Kate Geary, Co-Director of Bank Information Center Europe.

“This is an important step by the IFC to redirect its investment to align with the Paris Agreement on climate change, and other financial institutions should sit up and pay attention. This move reflects the tireless efforts of frontline communities fighting destructive coal projects while feeling the impact of a changing climate. The IFC must now also ensure that it extends this new approach to be consistent with the World Bank Group’s broader commitment to end finance for oil and gas extraction, and lead a transition of all investments toward a safe climate future,” said Alex Doukas of the Big Shift campaign.

The IFC’s ‘hands-off’ lending through financial intermediaries has embroiled it in human rights and environmental scandals from Honduras to Cambodia. The IFC has been reforming its FI lending following public outcry, disastrous media coverage, damaging findings from its independent accountability mechanism, the Compliance Advisor Ombudsman (CAO) and pressure from a rattled Board.

In October last year, more than 100 civil society organizations and affected communities in the Philippines filed an historic complaint to the CAO – the first mass climate-related complaint ever filed against IFC – for investing in Rizal Commercial Banking Group, which went on to bankroll a boom in coal fired power plants across the country.

A key demand of  the complaint was that the IFC clean up its financial intermediary portfolio and ensure that its intermediaries hold to the same climate and energy commitments that the World Bank Group has made for its direct investments.

While the IFC’s announcement is a step in the right direction and demonstrates that it can act to exclude harmful projects from its portfolio, the commitments do not yet go far enough. Through what he calls “a green equity investment approach,” Le Houerou stated that the IFC would continue to take equity stakes in financial intermediaries that “formally commit upfront to reduce or, in some cases, exit all coal investments over a defined period.”

“If the IFC really wants to shift the market, it needs to make it clear to banks that if they want the IFC’s equity and seal of approval, they need to get out of the business of financing coal – full stop,” said David Pred, Executive Director of Inclusive Development International   “Without the blanket coal exclusion that we have been calling for, the IFC will need to require full disclosure by its clients of their exposure to coal and other environmentally and socially risky projects so that civil society can monitor the speed and extent to which these banks are actually getting greener.”

Civil society also urged the IFC to address the legacy impacts of its financial intermediary portfolio. “The IFC’s financial intermediary lending is inherently flawed, un-transparent and unaccountable. The IFC’s change of heart on coal has come too late for the communities affected by the GMR Kamalanga coal plant, who continue to suffer to this day. As part of its reforms, the IFC should put right past damages and ensure FI clients provide redress to affected communities,” said Joe Athialy, Director of Centre for Financial Accountability, India.

“The Philippine Movement for Climate Justice welcomes this IFC policy shift as a positive step towards achieving the climate goals. But with this bold announcement, we find no reason for the IFC’s continuous presence on the board of Rizal bank, which has not backed away from its coal investments even after drawing fire from affected communities. The IFC should atone for the negative impacts of its past decisions, as a matter of social responsibility and justice,” said Bibiano Rivera, of the Philippines Movement for Climate Justice.

Civil society is now urging the IFC to make two complementary steps: to ensure greater transparency and to help its FI clients decarbonize their own portfolios.

The IFC must make its FI lending more transparent so that affected communities are able to hold the IFC accountable for its reforms. The IFC should:

• Disclose the name, sector and location of sub-projects financed via FIs both on its own  website and that of  the FI client;
• Publicize its involvement at the site of the project itself among affected communities;
• Adhere to a wide range of transparent and consultative processes with communities and CSOs, to avoid backing such damaging projects in future;
• Track and disclose its FI clients’ exposure to coal and other fossil fuels.

In order to clean up its FI lending portfolio and achieve a transformational shift in global finance flows through its influence on clients and other financial actors, the IFC should:

• Ensure that none of its investments result in an increase in coal support by IFC clients: whether for power generation or industrial uses, and associated facilities such as transmission lines and railways or ports primarily meant for the transportation of coal;
• Exclude coal across all its FI investments and disclose these exclusion clauses, so that they can be publicly monitored; also exclude upstream oil and gas from 2019 in line with Word Bank Group’s commitments;
• Refuse to invest in FIs whose portfolios have more than a 5% exposure to coal. Dutch Bank ING has stated it will no longer finance utilities sector clients that will be over 5% reliant on coal in 2025 and will stop lending to its existing clients unless they end their reliance on coal by 2025. BNP Paribas will only provide services and investment to companies that are diversifying away from coal. The Dutch development finance institution FMO, which is a similar operator to the IFC and invests in similar markets, has a 20% portfolio coal exposure limit in place, demonstrating that this target-setting is possible;
• Work with new and existing clients to ensure they disclose their GHG emissions and commit to develop a portfolio decarbonization plan within a year of investment, which aims to achieve emissions reductions in line with targets set under the Paris Climate Agreement.

The IFC should also ensure that harms caused by existing coal projects supported via FI clients are remedied and that local communities receive adequate redress.

For more information on Inclusive Development International’s research and advocacy on financial intermediary lending, see:

Outsourcing Development:  Lifting the Veil on the World Bank Group’s Lending through Financial Intermediaries

Broken Promises:  The World Bank, International Investors and the Fight for Climate Justice in the Philippines

Time to Come Clean:  How the World Bank Group and International Investors Can Stop the World’s Most Dangerous Coal Plant 

Philippines climate complaint to the Compliance Advisor Ombudsman

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The report, “Broken Promises: The World Bank, International Investors and the Fight for Climate Justice in the Philippines,” details how investors have helped prop up coal in the Philippines despite strong public opposition and local market conditions that favor clean energy. International investors face enormous financial risk, with experts predicting some $21 billion in stranded coal assets in the Philippines in the coming years.

The boom in new carbon-polluting coal plants in the Philippines threatens to derail international efforts to limit global temperature rise to below 1.5°C above pre-industrial levels, which scientists believe is necessary to stave off the most catastrophic impacts of climate change. In addition to making the Philippines even more vulnerable to climate change, the coal projects havecaused forced displacement and dangerous air and water pollution, among other impacts. Environmental defenders opposing the projects have been threatened, harassed and even murdered, according to the report.

“These investors are complicit in putting our country and communities at risk at a time when addressing climate change is the order of the day,” said Aaron Pedrosa of the Philippine Movement for Climate Justice.

The report details how the World Bank Group’s International Finance Corporation (IFC) has funneled money into coal through opaque investments in two financial intermediaries, Rizal Commercial Banking Corporation and BDO Unibank. After receiving more than half a billion dollars in funding from the IFC, these banks went on to participate in $24.2 billion of financing for coal.

In October, more than 100 citizen groups and affected communities in the Philippines filed a historic complaint with the IFC’s watchdog, the Compliance Advisor Ombudsman, demanding that the World Bank Group member be held accountable for its contribution to global warming. The complaint, which centered on Rizal bank’s funding of new and planned coal projects, was deemed eligible by the Ombudsman last month. The watchdog will now commence an investigation of the IFC’s compliance with its policies to protect people and the environment and the adequacy of those policies to address the root causes of global warming.

“If the World Bank Group is going to continue to use commercial banks as proxies, then it must require those banks to make the same commitment that it has made to stop financing fossil fuels, and instead build the low-carbon economy that we need to save the planet,” said David Pred, Executive Director of Inclusive Development International.

A who’s who of the global financial system has joined the IFC in supporting coal in the country. Commercial banks such as Standard Chartered and ING, along with asset managers including BlackRock and Norway’s sovereign wealth fund, have poured billions into the sector despite making much-lauded anti-coal commitments.

The report is part of the Big Shift Global campaign, which is calling on the World Bank to pull its money out of fossil fuels and redirect funds to affordable renewable energy. The World Bank Group’s Energy Policy from 2013 forbids investments in coal projects, except in rare circumstances, but the bank has not applied the policy to its investments in financial institutions, which now make up more than half of the IFC’s business.

“The IFC is flouting the World Bank’s Energy Policy by funding financial intermediaries that have gone on to finance dozens of risky coal plants around the world. It is time for the IFC to close this loophole and stop indirectly backing projects that push the planet to the brink of climate disaster,” said Nezir Sinani, Director of Bank Information Center Europe.

The report is available at:

Broken Promises: The World Bank, International Investors and the Fight for Climate Justice in the Philippines

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These previously hidden backers include the World Bank’s private-sector arm, the International Finance Corporation (IFC); leading U.S. asset managers BlackRock and Vanguard; pension funds including the U.S. fund for teachers, TIAA; and Japanese commercial banks. The Asian Development Bank has proposed a $700 million loan to build transmission lines in southwestern Bangladesh that will carry the electricity from the plant. All have social and environmental guidelines, or have made public statements about sustainable investment, that should preclude them from enabling a project like Rampal.

The report, “Time to Come Clean: How International Investors Can Stop the World’s Most Dangerous Coal Plant,” calls on these investors to use their leverage to halt the project. It urges the IFC, a substantial indirect backer of the project through its investments in Indian banks, to take a lead in coordinating a pushback among investors.

The report was published by U.S.-based Inclusive Development International, Bank Information Center Europe, and Delhi-based Center for Financial Accountability.

Rampal is being built just 14 kilometers from the Sundarbans, a UNESCO World Heritage-designated mangrove forest. Two million Bangladeshis and Indians depend on the Sundarbans for food, water and income. The forest also plays an outsize role in the fight against climate change by sequestering large amounts of carbon and protecting low-lying Bangladesh from cyclones and floods.

UNESCO, former U.S. Vice President Al Gore, and a number of climate and energy scientists have all called for the plant to be cancelled. An Indian-Bangladeshi consortium is developing the project.

Find the report here:

Time to Come Clean: How International Investors Can Stop the World’s Most Dangerous Coal Plant

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The IFC’s financial-sector clients have funded some of the region’s most destructive projects, contravening the Performance Standards, the institution’s social and environmental guidelines. These projects include mega-hydropower dams in Vietnam and Cambodia, dirty coal-fired power plants and mines in the Philippines, Vietnam and Myanmar, and massive agro-industrial land grabs in Cambodia and Laos.

Inclusive Development International, in collaboration with Bank Information Center, Accountability Counsel, Urgewald, 11.11.11, Ulu Foundation and Tarkapaw Youth Group, has today released a report detailing these findings, Reckless Development: The IFC’s Dodgy Deals in Southeast Asia. The report is the third installment of an ongoing investigation, Outsourcing Development: Lifting the Veil on the World Bank’s Lending Through Financial Intermediaries, which follows the trail of IFC money globally and looks at how it impacts people on the ground in developing countries.

“Once again we have found that outsourcing the World Bank Group’s development mandate to private financial institutions is a recipe for disaster,” said David Pred, Managing Director of Inclusive Development International.

The report confirms the most damning conclusions of a monitoring report released last week by the Compliance Advisor/Ombudsman (CAO), the IFC’s independent watchdog. The CAO report found systemic non-compliance by the IFC with its policies and procedures across all stages of the investment process in a sample of financial intermediary investments. 

“IFC does not, in general, have a basis to assess [financial intermediary] clients’ compliance with its [environmental and social] requirements,” the report states. This is “highly problematic” in high-risk projects where the IFC “does not have assurance” that its requirements are being implemented in the projects funded by its intermediaries, the CAO concludes.

“When we look at the actual projects that IFC’s intermediaries are funding in Southeast Asia, we see no evidence that IFC’s standards are being respected,” Pred said. “On the contrary, we see a trail of human suffering and environmental devastation from the Indonesian archipelago to the highlands of Laos and Vietnam.  This is the bulk of IFC’s business, and its out of control.”

The IFC’s due diligence failures have exposed the development bank to harmful projects across the region, according to this latest research.

In Vietnam, the IFC owns a large stake in Vietinbank, a majority state-owned commercial bank that has funded destructive hydropower dams, including the devastating Son La project, which was estimated to have displaced 91,000 people without providing adequate compensation and resettlement assistance. Vietinbank has lent billions of dollars to Son La’s owner, Electricity of Vietnam, which also has a stake in the highly controversial Lower Sesan 2 dam in Cambodia. Lower Sesan 2 is expected to profoundly harm the Mekong River’s fish stocks and damage food security for hundreds of thousands of people.

Vinacomin, which has also received Vietinbank funding, owns bauxite mines that have polluted and decimated large swathes of the country’s pristine Central Highlands. In addition, Vieitinbank has financed coal plants and the companies that operate them, including the controversial 6,224-megawatt Vinh Tan project, which have evicted landowners and polluted the air and water.

Meanwhile, in Laos and Cambodia another Vietinbank client, Vietnam Rubber Group, has developed massive industrial rubber plantations on the ancestral domains of the region’s indigenous peoples, resulting in widespread deforestation, forced displacement, and other human rights abuses.

In Indonesia, the IFC owns approximately 20 percent of an infrastructure finance facility that has funded a number of problematic projects, raising widespread concerns among Indonesian civil society groups. The facility has failed to implement IFC standards on information disclosure, consultation, and environmental and social protection.

In Myanmar, the IFC is exposed to the Ban Chaung coal mine, which is expected to harm 16,000 indigenous people in a region that experienced 70 years of civil conflict. The project is polluting water sources, contaminating agricultural land, and causing uncontrollable fires that release toxic fumes. The IFC is exposed to the project through equity investments in two large commercial banks, Austria’s Raiffeisen Bank and The Postal Savings Bank of China.

“After 70 years of civil war, the people of Ban Chaung are trying to rebuild their lives again from zero. But rather than focusing on community development and improving education, health and livelihoods, we have had to spend five years fighting with this company that is trying to take away everything,” said Naw Pe Tha Law of the Tarkapaw Youth Group.

These investments in Southeast Asia fit a global pattern. The IFC is increasingly outsourcing its development funds to commercial banks and private equity funds, which generate enormous profit for the World Bank Group. Although these IFC clients are required to apply the Performance Standards to their investments, there is little evidence that this is occurring. In 2016, the IFC made more than $5 billion in new commitments to financial intermediaries, bringing its total outstanding commitments by year’s end to $20.4 billion.

“It is time for the directors of the World Bank to bring the IFC under control,” said Kate Geary, Forest Campaign Manager for Bank Information Centre, Europe. “This murky lending is resulting in appalling human suffering and environmental damage, so first steps must be for the IFC to open up about where its money goes, and curtail its high risk lending until it can show it does no harm.”

___________________________________________________________________________________________________

Reckless Development: The IFC’s Dodgy Deals in Southeast Asia can be downloaded here.

Further reporting from the Outsourcing Development investigation is available here. 

IDI’s database of IFC financial intermediary sub-investments with serious social, environmental and human rights risks and impacts is available here.

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Ahead of Human Rights Day, December 10th, Inclusive Development International joined with over 45 civil society groups around the world to call on financial institutions, governments and businesses to stand up for human rights in development processes.

While respect for human rights is essential for development, too often investments in the name of development do not meet the needs or respect the human rights of poor or marginalized communities. Globally, the space for civil society participation in development processes is shrinking and communities are being left out of critical development decisions. Human rights defenders who speak out about development proposals find themselves threatened or subjected to violent attacks.

The month of December marks both the 30^th anniversary of the United Nations Declaration on the Right to Development and Human Rights Day, the 68th anniversary of the Universal Declaration of Human Rights. In honor of this occasion, communities and civil society groups around the world are urging development financiers to take 3 Steps to stand up for human rights:

1) Promote Rights-Respecting Development. Adopt a policy commitment to respect human rights and implement due diligence to prevent human rights violations.
2) Protect Civil Society Participation. Ensure meaningful participation in development processes and promote an enabling environment for civil society.

3) Defend the Defenders. Adopt a zero-tolerance policy on attacks against human rights defenders and enact protocols to prevent and respond to such attacks.

You can read the full “3 Steps” statement here: http://bit.ly/1OaeGb5

You can find stories from human rights defenders and more policy recommendations at www.rightsindevelopment.org/hrd.

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World Bank President Jim Yong Kim has spoken forcefully about the dangers of new coal projects. “If Asia implements the coal-based plans right now, I think we are finished,” he said. Yet the World Bank continues to fund coal and other projects that have led to severe environmental damage and human rights abuses through multilayered financial transactions that exist beyond the scrutiny of the public.

The IFC, the World Bank’s private-sector arm, is funding these projects through its highly opaque support for commercial banks, private equity funds and other financial intermediaries.

During a months-long investigation, Inclusive Development International, a human rights organization, uncovered 91 harmful projects that the IFC is funding through the back door. Many of the projects are coal-fired power plants that are accelerating global climate change and deforestation. The research tackled only a small portion of the IFC’s sprawling financial-sector portfolio, doubtless leaving many projects uncovered. Despite the limited scope, the findings strongly suggest that the problem is widespread and systemic.

“This shocking exposé lays bare the IFC’s climate double-whammy: not only funding a boom in coal-fired power plants, but also tearing down the forests to mine the coal. It’s clear that IFC lending in the financial sector is out of control and directly undermining President Kim’s climate pledges,” said Kate Geary, Forest Campaign Manager for Bank Information Center, Europe.

Financial-sector lending represents a sea change in how the IFC does business. After decades of lending almost exclusively to companies and projects, the World Bank Group member is now outsourcing the bulk of its development work to for-profit financial institutions. Between 2011 and 2015, the IFC provided $40 billion to these financial intermediaries, who then invested the money as they saw fit, with little apparent oversight.

“The IFC contends that financial-sector lending is helping small businesses in developing countries access credit, driving economic growth and reducing poverty. Yet our investigation found that IFC’s intermediaries are in fact using World Bank Group funds to bankroll some of the largest, most harmful corporations in the world,” said David Pred, Managing Director of Inclusive Development International.

The results of the investigation, released today, reveal that projects and companies financed by IFC clients have forcibly evicted and impoverished tens of thousands of people. They have contributed to climate change, polluted the oceans and rivers, and killed endangered species. Activists who have dared to resist them have been jailed, beaten and even murdered.

The projects come from a range of high-risk sectors, such as energy, agribusiness, mining, transportation and infrastructure. They are located in Asia, Africa and Latin America. The findings include some of the most notorious development projects in the world. Yet until now, the IFC’s involvement was unknown.

“The results of this research are disturbing. Yet what’s arguably even more scandalous is how the IFC conceals where its financial-sector investments ultimately end up. The only way to find this information is to use expensive financial databases and painstakingly pore over company records, putting it out of reach for most affected communities,” said Pol Vandevoort, International Financial Institution Policy Officer with 11.11.11.

The projects include the proposed Rampal coal plant, located in Bangladesh, which will devastate the Sundarbans, the world’s largest remaining mangrove forest, and harm the lives of 2 million people. In Africa, the IFC is connected to some of the continent’s largest land grabs, including agribusiness plantations in Gabon, Mozambique and Ethiopia. In Southeast Asia, it is fueling a destructive coal boom and hydropower projects that have or will displace hundreds of thousands.

“While the IFC has tried to distance itself from the projects funded by its intermediaries, the fact is that these banks are brazenly disregarding the IFC’s environmental and social requirements. As a result, the World Bank Group has ended up fueling and profiting from business activities responsible for enormous human suffering, environmental devastation and in some cases serious crimes,” Pred said.

Inclusive Development International, in collaboration with its partners Bank Information Center, Accountability Counsel, Urgewald, and 11.11.11, has released the results of this investigation on its website, where it will be periodically updated with new findings. Over the next six months, the organizations will publish a series of investigative reports, entitled Outsourcing Development: Lifting the Veil on the World Bank’s Lending Through Financial Intermediaries, which follows the trail of IFC money and looks at how it impacts people on the ground in developing countries.

The first report in the series, which was released today, examines the contribution of IFC intermediaries to climate change and the destruction of forests. The report, “Disaster for Us and the Planet”: How the IFC is Funding a Coal Boom, reveals how IFC financial-sector clients have funded at least 41 coal projects since the World Bank announced its moratorium on new coal funding. These new projects have a combined capacity of over 56,000 megawatts. To put that in perspective, that’s the entire coal-generating capacity of Germany.

In the Philippines, an island nation that is extremely vulnerable to climate change, the IFC is fueling a coal boom through two commercial banks, Rizal and BDO Unibank. After receiving hundreds of millions of dollars from the IFC, the banks have gone on to fund at least 20 new coal plants.

“Coal kills, and the World Bank’s investments are literally killing the people of my country by exacerbating our vulnerability to climate change,” said Valentino de Guzman of the Philippine Movement for Climate Justice. “The bank, together with its local cohorts here, must answer to the Philippine people and be held accountable.”

“The lack of oversight by the board of directors must end. Influential World Bank shareholders, including Germany, must address and overcome this systemic failure of the IFC”, said Knud Vöcking, director of Urgewald’s program on International Financial Institutions.

The groups are calling upon the IFC to stop investing in banks that fund coal and other destructive projects and start bringing its financial sector investments into line with its Environmental and Social Performance Standards.

The Outsourcing Development Series is available here.

The database of IFC Financial Intermediary sub-Investments with serious social, environmental and human rights risks and impacts is available here.

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On March 4, 2015, the World Bank finally published the first and second phases of its Involuntary Resettlement Portfolio Review, completed in May 2012 and June 2014, together with the action plan. The review concluded that “sizeable gaps in information point to significant potential failures in the Bank’s system for dealing with resettlement” and that it had particularly failed the most marginalized people, including indigenous peoples and women. Kim recognized that the findings caused deep concern, and proposed an Action Plan in response.

“The World Bank’s resettlement review found serious failings,” said Jessica Evans, senior international financial institutions researcher at Human Rights Watch. “Communities forced to make way for bank-financed projects have suffered serious harm, but a plan to identify the affected people and make things right is entirely absent from the bank’s response.”

The World Bank will host its annual spring meetings in Washington, DC on April 17-19. Finance and development ministers will convene to discuss the bank’s plans to achieve its twin goals of ending extreme poverty by 2030 and boosting shared prosperity. Ministers should press Kim to consult the public and external experts on its action plan and develop a comprehensive, time-bound response to the review.

The bank withheld the first phase of the review from the public for more than two years, and the second for eight months. The delayed release was particularly problematic as it was published after the consultation period for the bank’s proposed new Environmental and Social Framework had closed. The review findings would have had a major impact on the consultations had it been released when completed, the groups said. The bank’s action plan relies primarily on the proposed new framework, which itself has many shortcomings related to the review’s findings, including weaknesses in the due diligence, monitoring and evaluation requirements on the Bank and an overall deferral of responsibility for managing resettlement to borrowers.

The review found a rapid increase over the past two decades in the number of World Bank projects that have required resettlement – from 8 percent of the portfolio in 1993 to 29 percent in 2009 and 41 percent of the new projects in the pipeline. The bank has a resettlement policy to compensate and rehabilitate the households and communities displaced by its projects. However, in most cases, the bank failed to find out what happened to people who lost their homes, land and livelihoods, let alone ensure they were left no worse off – as the bank’s own policies promise.

Previous audits of resettlement practices at the bank were able to estimate the number of people affected: 750,000 in the 1985 review, 2.5 million in the 1993 review. But the 2014 review was unable even to estimate the number because only 204 active projects out of 747 provided the information. For those 204 projects, an estimated 3 million people were affected. But there is no overall figure.

Of the minority of projects that the review found where resettlement planning had actually occurred, there was insufficient information in more than half of the cases to determine whether affected people’s livelihoods and incomes were restored to their pre-displacement levels, a central requirement of the resettlement policy. The internal review also found that in nearly half the cases studied, there was no evidence of a functioning mechanism to address the grievances of the people affected, another basic requirement of the policy.

“These audits reveal a culture of systematic disregard for World Bank policies by staff and senior management, which may well have impoverished millions of people, said David Pred, managing director of Inclusive Development International. “There must be accountability for this gross negligence.”

The bank’s action plan should, as a central feature, include a process for identifying and providing redress to the individuals and communities left worse off by World Bank projects, the groups said.

The bank should prepare a series of new grant-funded projects that provide genuine, sustainable development opportunities to the displaced households, the groups said.

“The World Bank’s twin goals cannot be achieved when its own resettlement practices are impoverishing communities,” said Kate Geary, Oxfam’s land rights policy lead. “Now that the bank has finally revealed its own assessment of its resettlement failures, it needs to do all it can to repair the damage done.”

To view the joint letter, please visit:

https://www.inclusivedevelopment.net/wp-content/uploads/2015/04/Letter-to-Kim-re-resettlement-audit-final.pdf

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