For many years, there was an urgent need to review the mechanism’s policy to improve access to accountability and remedy for communities harmed. In the past year, Both ENDS, IDI and SOMO have participated in the consultation process, together with other CSOs that have supported communities through complaints procedures, as well as experts on the topic of DFI accountability. We are very pleased to see a strengthened mechanism, that is a result of commitment by all actors involved. Nevertheless, there are still critical gaps that we believe need to be addressed.

The new policy introduces significant improvements that strengthen the ICM’s mandate and
operational capacity. We particularly welcome the:

• Structural improvements including creation of a structurally distinct, single mechanism with its own website and creation of the ICM’s advisory and outreach functions.
• Possibility to file complaints post-exit: the ICM is allowing complaints to be submitted up to 12 months after project exit. However, for a complaint to be admissible post-exit, it is required to show “compelling reasons” that the complaint could not be submitted prior to exit, which is still outside of best practice.
• Enhanced references to international standards including IFC Performance Standards, UN Guiding Principles on Business and Human Rights, and OECD Guidelines. Although the language used in the policy still uses the Bank’s own environmental and social policies as point of reference, which leaves some room for confusion: if FMO, DEG or Proparco weaken their policies, it may cast confusion about whether or not the above mentioned standards apply.
• Explicit recognition of retaliation risks against marginalized populations including women, Indigenous Peoples, and human rights defenders, and measures to mitigate risks in contexts where these risks are present.
• Procedural improvements including shorter timelines, clear explanations about the procedures, a clear mandate to monitor Management Action Plans (MAPs), and a possibility to also monitor non-compliances beyond the MAP.
• Deferral process improvements including important changes made between the draft and final policy that give more agency to complainants, particularly language making it clear that the Independent Expert Panel will not defer complaints if complainants object and clarifying that deferral can be terminated at any time. This represents a positive step forward in respecting complainant agency throughout the process.
• Steps toward greater independence including a strengthened secretariat, more autonomy over budget, and independent communications channels.
  

Despite these advances, several fundamental gaps persist that limit the ICM’s ability to fulfill its mandate and ensure that the banks are accountable and communities have access to remedy: Financial Intermediaries Gap: While the policy acknowledges complaints against financial intermediaries (FIs) and provides much needed clarification for how the ICM will handle FI complaints, it also creates a significant remedy gap that is out of line with best practice, as well as the UN Guiding Principles. The policy denies access to Dispute Resolution for all FI complaints in which the DFI applied a Portfolio Approach, even if the sub-project that is the subject of a complaint falls within the scope of the DFI’s loan to the FI (e.g. inside the “use of funds” or the “ring fence.”).Moreover, the policy effectively limits the scope of Compliance Review in such cases and attempts to preemptively distance the DFIs from playing any role in contributing to remedy. This is a significant departure from how other independent accountability mechanisms (IAMs) and DFIs handle FI complaints, and it directly contradicts the well-established human rights principle that financial institutions that contribute to harm must contribute to remedy.

Given that the Banks’ preferred approach to FI lending is the Portfolio Approach, this policy will effectively block communities from accessing remedy for the majority of cases in which these DFIs finance harmful projects through intermediaries. Moreover, it creates complicated rules which may be difficult for many CSOs and complainants to understand. Additionally, increased transparency is a necessary condition to be able to be accountable for FIs. Although the Banks have committed to revising their disclosure policies on FIs, this has yet to materialize.

Early Complaint Timeline Gap: There remains confusion about when complaints can be filed
during the project lifecycle. The policy states complaints are not eligible when “there is not yet an active financial relationship.” This creates contradictory guidance, especially when combined with the definition of DFI-financed operation as “any activity or any asset of the Client that is or is going to be financed by DFI funds.” The lack of clarity on early complaint filing is problematic from both a complainant perspective and a prevention of harm perspective, as it limits opportunities to address issues before they cause harm or otherwise escalate.

Dispute Resolution Timeline: The strict 24-month cut-off for Dispute Resolution is inappropriate. Some productive and promising dispute resolution processes may require longer timeframes to reach meaningful resolution. Looking across IAMs, there are many examples of dispute resolution process that ultimately achieved successful results, but where such results took longer than 24 months. Forcing otherwise productive processes to close simply due to a policy timeline can be counterproductive and undermine the effectiveness of the mechanism.

Inadequate Retaliation Protections: The policy fails to establish robust measures to address
retaliation against human rights defenders. Critical missing elements include: the ICM’s authority to publicly recommend project suspension in cases of unresolved retaliation, and mandatory publication of disaggregated data on all documented retaliation cases including investigation findings and recommended actions.

Insufficient Capacity and Independence: While the policy acknowledges the need for greater capacity, the language remains vague and non-committal. We recommended an explicit commitment to sufficient ICM dedicated staffing (a minimum of 3 committed positions) and adequate budgetary resources to execute its mandate effectively and independently. 

Limited Mandate and Scope: The policy maintains restrictions on self-initiation by the ICM and excludes climate-related complaints, limiting the mechanism’s ability to address emerging environmental and climate justice concerns. 

Some of these gaps can be addressed immediately via improved practices of both the ICM and the Banks, without any changes to the new policy. The Banks can improve their transparency on FIs, but they must live up to that commitment, which has been outstanding for several years without result. It is also well within the power of the Banks to contribute to remedy in FI cases, in particular where a compliance review helps establish their contribution to harm. Additionally, in terms of zero tolerance for retaliation, the Banks and the ICM can take a step forward when the risk occurs by taking meaningful action. 

The revised ICM policy represents a significant advancement over its predecessor, demonstrating that stakeholder engagement and civil society input can yield meaningful improvements in institutional frameworks. We commend the adoption of numerous recommendations that emerged through the consultation process. The trajectory shown through this policy revision provides a foundation for further advancement, but the journey toward genuine accountability and effective remedy is far from complete. We remain committed to working collaboratively while holding the institutions accountable to the highest standards.

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Inclusive Development International (IDI) and the Data Science Institute at the University of Chicago (DSI) have launched expanded versions of our free-to-use Shareholder Tracker and Development Bank Investment Tracker (DeBIT) tools, providing users with up-to-date information on the investments of a vast universe of financial actors that would otherwise be prohibitively expensive or time consuming to track down.

Join us on Tuesday, March 10 at 10am EST for a practical demonstration of what the new tools can do. Register here.

New Shareholder Tracker covers thousands of additional global investors 

The new and improved Shareholder Tracker allows users to instantaneously search the shareholdings of 4,200 global investors, a more than 5,000 percent increase from the 80 included in the original version. While the initial version covered the world’s largest investment firms, scraping information from quarterly filings to the U.S. Securities and Exchange Commission (SEC), the new version covers every investor filing a 13F form to the SEC—that is, any investor with more than $100 million in assets under management that does business in the United States, including pension funds, socially responsible investors and impact-driven funds. The tool also directly scrapes the websites of 17 European pension funds that do not disclose to the SEC and have historically been responsive to engagement from human rights advocates. 

“Shareholders are important targets in corporate accountability advocacy because they have leverage over companies that harm people and the planet, and a responsibility to use that leverage. The Shareholder Tracker brings them out of the shadows so that advocates can identify and engage them to effect change,” said Dustin Roasa, IDI’s senior research director.

Data in the Shareholder Tracker is now automatically refreshed on a quarterly basis (as soon as new 13Fs are filed with the SEC), giving users real-time insight into the shareholders of an estimated 17,500 publicly traded companies around the world that may be harming people and the planet. Advocates can also use the tool to access a comprehensive and searchable list of the current equity holdings of specific investors, allowing them to, among other things, assess how well those investors are upholding commitments to divest from specific companies or sectors—for example, fossil fuels. The tool has also been updated to allow users to sort investors according to the market value of their shareholdings in specific companies—meaning they can easily identify those actors with the most potential leverage. Users can also filter results by investor type (i.e., pension funds vs. institutional investors) and download search results, making shareholder research and engagement quicker and easier. 

DeBIT tool provides easy access to real-time information on development bank investments 

The DeBIT tool allows users to search investments made by 16 development finance institutions that have independent complaint mechanisms that are accessible to affected communities. DeBIT has been updated to streamline the user experience and ensure it reliably represents the most up-to-date information available. For researchers investigating a specific harmful project or company, DeBIT can quickly establish which, if any, of the 16 development banks are directly exposed to it. This would otherwise require users to search 16 separate websites for every company or project of interest. The tool is especially useful for people trying to uncover development bank connections to harmful projects through complex, multilayered business relationships such as financial intermediary lending, which can be time-consuming and difficult when done manually. Campaigners focused on influencing the policies of one development finance institution can also easily use the tool to get an overall picture of what that institution is financing, with numerous possibilities for sorting and filtering by project status, sector, country or year. 

Democratizing access to financial information  

The Shareholder Tracker and DeBIT tool updates are part of Inclusive Development International’s ongoing work to develop a suite of tools that gives community environmental and human rights advocates and other public interest researchers access to important financial data that is currently only available through paid subscription services—such as Bloomberg Terminal and LSEG Workspace—that are prohibitively expensive for most civil society organizations and public interest researchers. 

As part of this work, Inclusive Development International, BankTrack and DSI will soon be launching a complementary tool allowing users to track commercial bank loans and bond underwriting. This Commercial Debt Tracker will help users quickly identify private-sector financial institutions that are exposed to a harmful project, expanding the universe of potential advocacy targets. 

By automating key steps in investment and supply chain research, these tools—combined with our Follow the Money research support, in-depth trainings and do-it-yourself resources—play a central role in our efforts to grow a wider community of advocates who are employing these proven  methods in their efforts to hold corporations and development institutions accountable for their harmful impacts on  human rights and the environment.

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The proposal notes that while a rapid shift to renewable energy use is urgently needed, transition mineral mining, large-scale renewable energy infrastructure and other projects being pursued are enormously land-intensive, and current approaches to land acquisition for such projects routinely lead to forced displacement and other rights violations.  

“Unless the major industries involved—including mining companies, their downstream buyers and the development banks and other financial institutions backing them—adopt a fundamentally different approach to how communities are treated when their land is needed for investment projects, we will replicate the injustices of the extractive, fossil economy we are trying to leave behind,” said David Pred, executive director of Inclusive Development International.   

Proposal for a just alternative to development-forced displacement 

The proposed new approach puts forward a framework for shifting policy and practice away from the prevailing paradigm that accepts forced displacement of communities “in the way of development,” towards a new approach to engaging project-affected people that is rooted in respect for their dignity, knowledge and capabilities to make their own development choices.  Core principles include:  

1. Communities should have access to independent technical and legal support to conduct mapping and baseline studies of their land and resources, assess the impacts of project design options, and shape the development benefits they wish to attain from the project. 

2. Designs that avoid displacement and other significant community impacts to the maximum extent possible should be prioritized—only after fully exploring avoidance options should unavoidable impacts be addressed, with a focus on minimizing their duration and maximizing restoration and return of land.  

3. Rights-based mediation that addresses power imbalances should be used to forge fair and equitable agreements that prevent harm to communities and provide compensation and development benefits that sustainably improve their living standards and well-being.  

4. Involuntary resettlement should only be carried out in the most exceptional circumstances, in strict accordance with international human rights law principles—any invocation by governments of “public interest” to justify expropriation and override community objections must be subject to a rigorous human rights assessment. In the case of Indigenous Peoples, expropriation should not proceed without their Free, Prior and Informed Consent (FPIC).  

5. Community-company agreements should be legally binding and enforceable by communities themselves—with the support of legal counsel—through courts, human rights-compliant arbitration, such as under the Hague Rules on Business and Human Rights Arbitration, or other accessible and effective enforcement mechanisms.   

6. Development finance institutions, commercial lenders, investors and buyers should enable this approach by contributing resources for independent technical and legal support for communities and by offering mediation services for upfront agreement making, and they should use their leverage to ensure that obligations to communities are met throughout the project cycle. 

As the leading private sector standard setter on environmental and social issues, the IFC’s adoption of a just approach to community engagement would have a catalytic effect. More than 150 organizations, including financial institutions that are signatories to the Equator Principles, export credit agencies, and Development Finance Institutions rely on the IFC’s Performance Standards, and many individual corporations commit to their implementation in their operations. In April 2025 the IFC commenced a multi-year update of its Sustainability Framework, including the Performance Standards, offering a critical opportunity for change.  

“This moment requires more than tinkering on the edges of the IFC Sustainability Framework. It calls for a wholesale new approach that starts by recognizing affected communities—not as passive stakeholders as they are currently treated—but as rights-holders with the capability and the power to exercise agency over decisions that may fundamentally alter their lives,” said Natalie Bugalski, senior legal and policy director at Inclusive Development International, and the lead author of the proposal.  

“This is not actually a radical proposition—it just means incorporating concrete measures into the Performance Standards that will give effect to the commitment that the IFC and other institutions already make to realizing broad community support for their projects.” 

The post Rights Groups Call for an End to Forced Displacement to Advance a Just Energy Transition  appeared first on Inclusive Development International.

• Germany’s OECD National Contact Point for Responsible Business Conduct has issued a statement responding to complaints over Heidelberg Materials’ controversial plans to construct a cement mine and factory in Central Java.  
• Local and Indigenous communities oppose the planned mine, which could threaten critical ecosystems and water supplies for an entire region.
• In its statement, the National Contact Point calls on Heidelberg Materials to provide the affected communities with the environmental and social impact assessment for the project.  

Germany’s OECD National Contact Point for Responsible Business Conduct (NCP) has published a final statement in response to a complaint filed against Heidelberg Materials regarding the company’s controversial plans to build a cement mine and factory in Central Java. Community groups and ​​​​the Indonesian government have warned that mining in the area would do irreparable harm to Indigenous and other local populations. The complaint states that the project jeopardizes the water supply and agriculture of at least 35,000 people and threatens sites of spiritual importance to the Indigenous Samin people. The project also threatens the sensitive local karst system, which acts as a natural ​​carbon sink and prevents soil erosion and landslides in the area. In its final statement, the NCP calls on Heidelberg Materials to provide the affected communities with its environmental and social impact assessment, as recommended by the OECD Guidelines. 

The statement follows a nearly four-year process facilitated by the NCP, including an attempt at mediation between the company and complainants that ultimately failed to progress due to the company’s insistence on excessive confidentiality requirements. “The secrecy demanded by the company would have prevented the community representatives involved from freely consulting those affected about the process. Such excessive confidentiality rules are not only unnecessary, they also threaten to destroy trust and solidarity within the communities during a potentially lengthy mediation process,” says Mathias Pfeifer from FIAN Germany. 

“[The mediation] was only ended because we couldn’t agree on the issue of confidentiality. During the mediation, we actually wanted to explain the situation on site, the problematic consultation process and much more to Heidelberg Materials. We were unable to convey all of this because the process had to be ended prematurely,” says community spokesperson Bambang, who was involved in the mediation. 

Heidelberg Materials, one of the world’s largest cement manufacturers, has faced strong public pressure to cancel the Central Java project. This has included numerous protests in Indonesia and at Heidelberg’s annual general meetings in Germany, and a lawsuit in Indonesian courts. The company, formerly known as HeidelbergCement, is currently trying to raise its profile in the areas of environmental and social responsibility. Its activities in Central Java and other problematic projects call its commitments into question. 

“Heidelberg Materials has a responsibility under international human rights law to disclose the project impact assessment to affected communities and explain how they would be affected by the project. These communities have a right to participate in decision making, including on whether such a high risk project should proceed,” said Natalie Bugalski, senior legal and policy director at Inclusive Development International, which has been serving as one of the advisors to communities in Central Java impacted by the project.  “In failing to take these steps, Heidelberg Materials is failing in its human rights and environmental due diligence responsibilities and risks material harm to future operations should the project be developed.” 

Inclusive Development International and FIAN Germany supported the community representatives in the complaints process. Together with the Heinrich Böll Foundation, Watch Indonesia!, Rettet den Regenwald and the Stiftung Asienhaus, they will continue to support the affected communities. “We will continue our fight to prevent the construction of the cement factory in our village. The land is a legacy of our ancestors. It is for agriculture to feed our children and grandchildren. The Kendeng Mountains are also an important water reservoir, and limestone mining will damage this water reservoir. If there is a water shortage, we women will be the first to be affected,” explains Suparmi, a community representative from the village of Tambakromo. 

“The project in Pati would disrupt access to water and threaten the food security for thousands of people. This would be a clear violation of the German Supply Chain Act,” adds Mathias Pfeifer from FIAN Germany. Heidelberg Materials and its subsidiaries are subject to the German Supply Chain Act, which came into force in January 2023. 

Further information:  

• The OECD Guidelines for Multinational Enterprises, a set of principles and standards for responsible business conduct, require OECD member states to establish a National Contact Point to deal with complaints against multinational enterprises that do not comply with the regulations.  
• The final report of the NCP is available at: https://www.bmwk.de/Redaktion/DE/Beschwerdefaelle-NKS/Abschliessende-Erklaerung/kendeng-gebirge-gegen-heidelberg-cement-ag.pdf?__blob=publicationFile&v=13
• The OECD complaint is available at: https://www.inclusivedevelopment.net/wp-content/uploads/2020/09/Complaint-to-German-NCP-Regarding-HeidelbergCement_9Sept2020_Redacted-for-pub.pdf
• More information on the importance of karst systems in mitigating climate change and natural disasters can be found at: https://th.boell.org/en/2021/03/03/why-we-should-protect-karst-landscapes 
• A 2017 ​​special impact assessment by the Indonesian Presidential Office and Ministry of Environment and Forestry outlines significant risks posed by mining in this region, including stating that “several rare, protected animals will face further degradation or even become extinct” if development in the Kendeng Mountains continues.
• Heidelberg Materials’ social and environmental record has been in the spotlight before, including: 
  • In 2016, Human Rights Watch released a report detailing how the company’s quarry in the occupied Palestinian territories is contributing to violations of international humanitarian law and human rights abuses.  
  • For years, Western Sahara Resource Watch has raised concerns regarding the company’s operations in Western Sahara potentially contributing to illegal military occupation.  
  • Local communities in South Wales, UK, are also seeking to challenge the expansion of a quarry by a Heidelberg subsidiary that they allege threatens local wildlife, homes, and public health.

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MUFG’s withdrawal follows that of Sumitomo Mitsui Financial Group (SMBC Group), reinforcing the growing opposition to the pipeline. The StopEACOP campaign welcomes MUFG’s decision, underscoring the need for financial institutions like Standard Bank to follow suit and withdraw support for the project. With all three Japanese megabanks distancing themselves from EACOP, the spotlight now turns to Chinese lenders considering involvement in the project. Read the full press statement here.

The post Mitsubishi UFJ Financial Group Joins Growing List of Banks Distancing Themselves from East African Crude Oil Pipeline appeared first on Inclusive Development International.

This announcement is huge because SMBC also served as a financial advisor on EACOP. The coalition urges the remaining financial advisors, Standard Bank and ICBC, to emulate SMBC and disassociate themselves from the controversial pipeline. The StopEACOP coalition emphasizes the need for financial institutions to align their investments with sustainable and responsible solutions while advocating for transparency and a shift towards renewable energy alternatives. Read the full press release here.

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IFC and MIGA’s proposed Approach to Remedial Action was supposed to explain how the institutions would address the well-known human rights and environmental harms caused by some of their investments. Instead, IFC and MIGA’s response to the well-documented remedy gap is to publish a short paper that heralds its existing prevention and mitigation practices and does not admit that the institutions have a human rights obligation to remedy harms to which they have contributed. Thankfully, the document is only a proposal subject to public consultations, and we call upon IFC and MIGA to make significant changes.

IFC and MIGA have known for years that some of their investments cause environmental and social harm and that under international human rights standards, those who contribute to harm should contribute to providing remedy. An independent expert review, led by a former IFC president and requested by the World Bank’s board, confirmed this standard and recommended that the institutions contribute to and promote access to remedy for project-related harms. The review deemed IFC and MIGA’s current accountability system inadequate and remedial actions practically nonexistent. We are surprised, therefore, that the Approach to Remedial Action commits to very few new actions. 

The proposed Approach includes some necessary elements, including a commitment from IFC and MIGA to facilitate and support clients’ remedial actions, explore and pilot arbitration, and exercise leverage over clients, including through contractual provisions and the use of various financing instruments. IFC and MIGA largely failed to respond to the board’s assignment, however, as they left out the following necessary components:

1. Types of remedy: Despite “Remedial Action” in its title, the proposed Approach does not provide a plan for delivering any type of remedy. Further, the draft policy does not include any examples of remedy that IFC and MIGA have provided in the past or how IFC and MIGA will contribute to and promote specific types of remedy available in the future. Remedy can take many forms, including compensation, apology, rehabilitation, satisfaction, and commemoration, among others. The Approach must detail how IFC and MIGA are prepared to provide each type of remedy when the circumstances arise.  
2. Financial contribution by IFC and MIGA: Even though it is evident that remedy often costs money, “the Approach does not contemplate a systemic process for the financing of direct contribution to remedial action” (page v). This is a major gap. IFC and MIGA refer vaguely to directly financing remedy in “exceptional circumstances,” but don’t define them. IFC and MIGA don’t even commit to directly remedying the cases in which its accountability mechanism, the Compliance Advisor Ombudsman (CAO), found that projects did not comply with the IFC’s own Sustainability Policy and, as a result, contributed to harm. In line with the recommendations of the external review and per international standards, IFC and MIGA are obligated to financially contribute to remedy when their actions or inactions contribute to harm or when a client cannot provide financial contributions. 
3. Access to remedy after the end of a project: While the proposed Approach to Remedial Action references its draft Responsible Exit Principles, it does not describe specific actions IFC and MIGA will take to provide access to remedy after a project is complete. We expect IFC and MIGA to commit to not exiting a project subject to an ongoing CAO process without the consent of community complainants or until all remedial actions have been delivered to communities, commitments not included in the draft Responsible Exit Principles. This directly contradicts established norms and must be amended accordingly. Further, the proposed Responsible Exit Principles fail to adequately recognize the importance of including impacted communities as full stakeholders in the process. Delivering responsible exit depends on IFC and MIGA’s ability to provide holistic and inclusive remedy in line with communities’ expectations. 
4. Addressing the past: Even though IFC and MIGA’s failure to remedy harm in the past is the impetus for this proposed Approach, the institutions appear to only commit to implementing their remedial obligations going forward, with the document stating that IFC and MIGA would implement this approach to “new” projects. This fails the communities who are currently experiencing harm and need remedy.

The Approach to Remedial Action is risk-averse from an institutional perspective but expects a risk tolerance from rightsholders. Communities adversely affected by development projects have a right to remedy that is co-designed by them. Prioritizing the bottom line over the people these development institutions serve is unacceptable and a missed opportunity.

IFC and MIGA have an opportunity to demonstrate leadership among development finance institutions and the wider financial sector by bringing this proposal in line with prevailing international human rights norms. A failure to do so would mark a concerning precedent and setback for the realization of the right to remedy. We hope that IFC and MIGA provide sufficient opportunities for civil society and project-affected communities to provide feedback on the draft policy, and deliver a revised proposal that meets the moment. 

Endorsed by:

Accountability Counsel

Bank Information Center

Center for International Environmental Law (CIEL)

American University Center for Human Rights and Humanitarian Law

Sustentarse (Chile)

Association of ESPOD Morocco

Inclusive Development International

NGO Forum on ADB

Recourse

ATGL Tunisia 

Social Justice Platform

Studies and Economic Media Center

Oxfam

Yemene Observatory for Human Rights

Green Development Advocates (GDA)

Foundation for Environmental Management and Campaign against Poverty (FEMAPO)

Observatory of Food Sovereignty and Environment

Observatoire d’Etudes et d’Appuis a la responsabilité Sociale et Environnementale (OEARSE)

Centre for Citizens Conserving Environment & Management (CECIC)

The post Joint CSO Statement Calls on IFC and MIGA to Strengthen its New Approach to Remedial Action Policy appeared first on Inclusive Development International.

Inclusive Development International and Accountability Counsel recently submitted comments for the revision of the National Action Plan, recommending ways in which the U.S. government can increase accountability for environmental, social, human rights, and labor harms overseas. Based on our experience working with communities harmed by internationally financed projects to seek justice, we advise that the revised plan require an accountability framework to apply to all U.S. money that might harm individuals or the environment. In doing so, the revised plan needs to significantly increase the U.S.’s commitment to ensuring that accountability and remedy are achieved when negative impacts occur from projects or investments, whether these projects or investments are put forward by the U.S. government, U.S.-supported multilateral institutions, or by U.S. based companies.

Our full recommendations can be found here.

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“Development banks should be leading the way to address the climate crisis, but with investments like this the IFC is taking us backwards,” said Aaron Pedrosa, Legal Counsel of the Philippine Movement for Climate Justice. “Communities in the Philippines are suffering both the direct impacts of living near coal-fired power plants and the devastating effects of climate change. This isn’t the kind of development we want.” 

The CAO investigation was launched in response to a complaint brought by the Philippine Movement for Climate Justice, with support from Inclusive Development International and Recourse, on behalf of affected communities across the Philippines. The complaint relates to IFC’s $228 million investment in Rizal Commercial Banking Corporation (RCBC), which went on to become a leading financier of coal expansion in the Philippines, including through the construction of at least 10 new coal-fired power plants. 

In its report, the CAO confirmed that IFC’s failure to ensure that RCBC applied its environmental and social Performance Standards to the financing of these plants very likely caused grave harm to surrounding communities. The coal plants have caused serious impacts on the livelihoods, health and well-being of affected communities due to air and water pollution and physical and economic displacement, among other harms. Local community activists who opposed the projects faced reprisals from the project developers, with one prominent environmental and human rights defender Gloria Capitan being murdered on July 1, 2016. The report also notes that, once operational, the plants will produce approximately 40 million tons of CO2 annually – equivalent to roughly 30 percent of the Philippines’ annual emissions in 2019 – exacerbating a global climate crisis to which the Philippines is acutely vulnerable.

“This case is not an aberration – it exemplifies  IFC’s extremely problematic indirect lending practices,” said David Pred, Executive Director of Inclusive Development International. “IFC has contributed to serious harms to local communities and the environment by failing – over the course of a decade and still to this day – to ensure that RCBC and other financial intermediaries adhere to basic environmental and human rights standards.” 

This is the first investigation ever undertaken by the CAO to specifically examine IFC’s contribution to climate change through its indirect investments in fossil fuels. Despite the World Bank’s climate commitments, including a 2013 pledge to stop funding coal, IFC financing has continued to flow to financial intermediaries like RCBC that support new fossil fuel investments.  

“Given its mission, it’s shocking that IFC has enabled the dramatic expansion of coal in the Philippines,” said Kate Geary, Co-Director of Recourse. “Sadly, this is not an isolated case – in 2020 we saw IFC backing coal plants in Indonesia via Hana bank. So it is vital this report leads to the systemic reforms needed, including stopping clients funding new coal and ensuring IFC investments are aligned with the Paris Agreement.” 

IFC’s board of directors has adopted a Management Action Plan to address CAO’s findings, which goes part way toward addressing the CAO’s recommendations. In response to a request by the Complainants, who were concerned that the plan overly relied on the cooperation of the coal companies to provide redress, IFC agreed to return to the board within 9 months to provide a progress update and make adjustments to the plan if needed. The Complainants have called on the board to ensure that IFC’s response is robust and effective, including by:

• Ensuring  meaningful remediation of harms that local communities have suffered, informed by genuine community consultation.  
• Taking actions  to reduce and/or offset the greenhouse gas emissions produced by the 10 plants financed with IFC money. 
• Implementing systemic reforms to address huge gaps in IFC’s climate policies and financial intermediary lending practices to prevent similar harms in the future. These should include: 
  • Aligning its indirect lending policies and practices with the Paris Agreement on Climate Change by prohibiting financial intermediary clients from funding new coal projects. 
  • Ensuring that its financial sector clients only finance companies and projects that adhere to IFC’s environmental and social performance standards.   

For more information, please see:

• CAO’s full investigation report and press release
• Complaint filed with CAO concerning IFC investments in and financing to RCBC  
• Disaster for Us and the Planet: How the IFC is quietly funding a coal boom
• Broken Promises: The World Bank, international investors and the fight for climate justices in the Philippines 
• Coming clean: Can the IFC help end coal finance?

The post Watchdog Slams World Bank Group for Helping Bankroll Philippines Coal Boom appeared first on Inclusive Development International.

The Good Policy Paper is authored by Accountability Counsel, Bank Information Center, Center for International Environmental Law (CIEL), Centre for Research on Multinational Corporations (SOMO), Community Empowerment and Social Justice Network (CEMSOJ), Gender Action, Green Advocates International (Liberia), Inclusive Development International, International Accountability Project, Jamaa Resource Initiatives, and urgewald.

The authors identified 69 good policy provisions currently on the books at 19 different financial institutions, including multilateral development banks, national development finance institutions, and other financiers. To decide which provisions constitute good practice, the authors analyzed the policies of IAMs that are members of IAMNet, using the UN Guiding Principles on Business and Human Rights effectiveness criteria for grievance mechanisms and their own years of experience working alongside project-affected communities through the IAM complaints process. The good policies highlighted also reflect feedback solicited from IAMNet members in 2019.

Key recommendations include:

• An IAM should have a two-fold mandate: (1) to prevent harm and provide effective remedy to project-affected people and the environment, and (2) to ensure institutional accountability and continuous improvement for the financial institution.
• An IAM should have three functions: (1) Compliance Review, (2) Dispute Resolution, and (3) Advisory.
  • Compliance review investigates a financial institution’s compliance with its own environmental and social policies and international standards. Compliance review should result in recommendations and an action plan to address non-compliance with a financial institution’s policies and redress past harms to  complainants.
  • Dispute resolution brings the complainants together with the financial institution’s client and other stakeholders to generate and agree on solutions and remedies for negative impacts. To be effective, the dispute resolution function must take measures to rectify power imbalances that often exist between the parties.
  • Through the advisory function, the IAM provides pragmatic evidence-based recommendations gleaned from the mechanism’s compliance review and dispute resolution casework to illuminate gaps in the financial institution’s policies and their implementation.
• An IAM’s structure should maximize its impartiality, credibility, legitimacy, and independence from the financial institution’s management.
• An IAM’s scope and admissibility rules should minimize barriers to accessing the mechanism’s complaint process and allow complaints to proceed in a predictable, transparent, and effective manner.
• Financial institutions should transparently disclose information about the IAM’s procedures, operations, and cases.

The Good Policy Paper presents the minimum policy provisions of an effective IAM; the featured provisions represent a floor rather than a ceiling. As the paper explains, “Even if there were an IAM that had all of the best existing provisions, which there is not, it would still not be a model policy.” For that reason, the authors also include suggestions for making the existing policies even stronger. For example, IAMs and financial institutions can improve on existing policies by: (1) developing remedy funds to ensure resources for remedial actions; and (2) developing public policies on how financial institution staff engage with the accountability mechanism process.

The Good Policy Paper is a resource that will be updated regularly as existing IAM policies improve and new IAMs are developed. Better policies will feed back into stronger recommendations, a cycle which, the authors hope, will translate into better outcomes for communities.

Click here to download the Good Policy Paper: Guiding Practice from the Policies of Independent Accountability Mechanisms.

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