Right to Remedy: Advancing access to remedy for corporate human rights abuses

Overview

Development finance institutions, such as the World Bank and regional development banks, face few consequences when projects they finance cause harm, while those affected are often left to suffer without remedy. This is true even when the development institutions have violated their own safeguards and due diligence policies in the planning and implementation of those projects. Civil society-led efforts to strengthen accountability and demand access to effective remedy for affected communities have opened important avenues for recourse at some institutions, but much more is needed.

Individuals and communities who endured the negative effects of publicly financed development projects had few, if any, paths for recourse until the World Bank Board established its Inspection Panel in 1993. This example led to an eventual proliferation of independent accountability mechanisms at other development finance institutions. These mechanisms aim to give voice to project-affected people’s grievances and help enforce the so-called “safeguards” policies of the institutions, which promise to “do no harm” to people or the environment. Despite this progress, three decades after the establishment of the Inspection Panel, the right to redress—a core element of the right to effective remedy for human rights violations under international law—remains elusive for many affected communities.

Even when investigations carried out by the accountability mechanisms conclude that harm has been caused as a result of non-compliance with institutional policies, there are no guarantees in place to ensure redress. Without such guarantees, including effective remediation mechanisms with adequate financing, those whose rights have been violated must rely on the goodwill of the management and boards of these institutions, as well as the cooperation of client governments and/or companies, to take appropriate remedial action. Such goodwill and cooperation is rarely forthcoming.

For over a decade, Inclusive Development International has worked alongside civil society partners from around the world to close this accountability gap and advance the right to effective remedy for people who are harmed as a result of development and corporate malfeasance.

Our Actions

1. World Bank Group Accountability

Our submission on IFC/MIGA’s proposed ‘Approach to Remedial Action’

In February 2023, the two private sector arms of the World Bank Group, the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA), published a draft Approach to Remedial Action, a proposed framework to remedy harm stemming from development projects they have financed, and to prevent future harm from occurring. While we welcomed the arrival of a remedy policy framework at the World Bank Group after so many years of demanding it, we were deeply disappointed that the proposal was vague, noncommittal, and piecemeal.

We submitted comments on IFC/MIGA’s draft, urging the World Bank Group’s members to significantly strengthen the proposal. Drawing on our work with affected communities in Guinea, Cambodia, Indonesia, the Philippines and elsewhere, we made extensive recommendations for how the IFC and MIGA can guarantee the right to redress for harms arising from their investments, including by:

  1. Contributing to remedy to where they have contributed to harm.
  2. Doing much more to exercise the existing leverage they have to ensure remedy for harm, and building additional commercial, legal and relational influence with clients.
  3. Building the capacity of their staff to assess project risks, impacts, and levels of community support for projects.
  4. Providing support to clients throughout the project cycle to identify and address problems.
  5. Providing technical support to affected communities throughout the project cycle so they can effectively engage in the development and monitoring of environmental and social risk mitigation measures themselves, and if harms occur, the development of remedial action.
  6. Establishing contingency funds to cover the cost of remedial action and ensure, through contractual provisions, that IFC/MIGA can access those funds and ensure they are used for their intended purpose.
  7. Applying this remedy framework to IFC’s financial intermediary portfolio to ensure that its financial sector clients are effectively managing their environmental and social risks and undertaking remedial actions when needed.

 

During the public consultation period following IFC/MIGA’s publication of their draft approach to remedy, Inclusive Development International also joined with many other civil society organizations and advocates for communities affected by IFC and MIGA-backed projects to demand a much more comprehensive and systematic remedy approach in line with international standards for human rights and responsible business conduct.

Joint Submission on the External Review of IFC/MIGA E&S Accountability

The proposed remedy framework released in 2023 was among the outcomes from an external review of IFC and MIGA’s Environmental and Social Accountability, which took place several years earlier. That review, which included a review of the role and effectiveness of the Compliance Advisor Ombudsman (CAO), was commissioned by the Bank’s Committee on Development Effectiveness in 2019. The Review was led by an independent group of six experts in private sector development, multilateral institutions, and environmental and social sustainability. The Review Team’s Final Report was publicly disclosed by the bank in August 2020, along with an invitation for public comments on its recommendations.

At that time, Inclusive Development International submitted Joint Comments on Realizing the Right to Effective Remedy within the IFC/MIGA Accountability Framework to the World Bank Group’s Board of Directors. The comments were prepared along with Accountability Counsel, Bank Information Centre, Center for International Environmental Law and the Arab Watch Coalition.

The Review team ultimately concluded that “most CAO non-compliance findings do not lead to effective remedy,” which it attributed primarily to the IFC’s failure to address project-level compliance findings and fulfill its remedial responsibilities when harms occur. This reflected the experience of many affected communities seeking redress for adverse impacts associated with IFC/MIGA-supported projects through the CAO complaints process, including those that Inclusive Development International had supported.

Our joint submission emphasized the critical need for remedy to be centered on the needs of communities affected by projects and to be tailored and flexible enough to respond to those needs, as well as project circumstances. It urged the IFC/MIGA Board to endorse recommendations by the External Review Team aimed at ensuring effective remedial actions by IFC/MIGA and asked the Board to instruct IFC and MIGA to propose an implementation plan for public review and input. The joint submission recommended concrete reforms and identified multiple funding options to support delivery of effective remedy when harm occurs due to projects supported by IFC. Many of our concerns and recommendations remain unaddressed, including in IFC/MIGA’s draft Approach to Remedial Action published in 2023.

Inclusive Development International and 74 global partners had also submitted a joint statement to the World Bank Group’s Board of Directors expressing concerns about the lack of transparency and external stakeholder engagement in the IFC/MIGA accountability framework review.

 

2. Equator Principles Enforceability

The Equator Principles is a social and environmental risk management framework for the financial industry, which has been adopted by more than 130 banks in 38 countries. As signatories, these institutions are agreeing to adhere to the Principles for managing the risks of large infrastructure and industrial projects—projects that can have serious and irremediable social and environmental impacts.

The Equator Principles are in theory a powerful tool for ensuring project financiers are accountable to project-affected communities. Unfortunately, they have important weaknesses that are preventing them from doing this job well—chief among them, a lack of enforceability. There is currently no requirement that institutions that have adopted the Principles establish accountability offices, or that the Equator Principles Association (EPA), the Principles’ governing body, create a centralized office to address grievances and harms related to project financing.

In 2019, Inclusive Development International joined 78 other civil society organizations to submit a joint statement to the EPA and signatory banks, expressing disappointment that the Equator Principles review process has not adequately addressed the need to strengthen accountability of project financiers or ensure access to remedy for project-affected people. We called on the Equator Principles Association (EPA) to initiate a process to develop an accountability mechanism, including a centralized and independent accountability office, to which project-affected people and other stakeholders could raise instances of alleged non-compliance with the Equator Principles by signatory banks. Establishing such an accountability mechanism would bring the EPA closer to meeting the requirements of the UN Guiding Principles on Business and Human Rights, and increase the credibility, accountability and effectiveness of the Equator Principles as a tool for risk management.

Unfortunately, despite committing to consider developing its own accountability mechanism in response to our advocacy in 2019, the EPA has yet to take meaningful steps in this direction, and the Association chair appeared to discard the possibility during a 2022 webinar.

We continue to work with partners to push the bank to find a solution, including proposing that the Association start by piloting an accountability mechanism with its most progressive members who are truly committed to human rights and environmental protection. Over time, a pilot would demonstrate to more reticent members the value of a consistent industry process for identifying and addressing environmental and social issues and risks to their investments without having to establish their own separate grievance processes. Alternatively, we have proposed that the association provide for enforceability by requiring that signatories include clauses in all financing agreements that give both the lenders and affected communities, as third party beneficiaries, rights to pursue remedy through arbitration against project developers. The Hague Rules on Business and Human Rights provide model clauses and procedures for the arbitration of the type of disputes that are common with respect to Equator Principle projects.

3. Influencing a New Chinese-Led Accountability Mechanism for the Mining Sector

The Responsible Critical Mineral Initiative (RCI)—formerly known as the Responsible Cobalt Initiative—and the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC), announced in November 2022 that they would create a new accountability mechanism for the mining sector covering environmental, social and human rights issues in mineral value chains. As the first mechanism of its kind established by a Chinese industry association, this has the potential to be a significant advancement in the corporate accountability landscape.

As part of the public consultation process, Accountability Counsel and Inclusive Development International submitted recommendations for improvements to the draft procedures to ensure the new mechanism is an effective avenue for justice for communities harmed by mining activities and related value chains.

4. Asian Infrastructure Investment Bank Complaints Handling Mechanism

In 2017, Inclusive Development International helped to coordinate the preparation of a joint submission to the Asian Infrastructure Investment Bank (AIIB) on its proposed ‘  by ten civil society organizations and networks with expertise in using independent accountability mechanisms of development finance institutions. The submission–a first of its kind–assembled the best practice from independent accountability mechanisms around the world on range of issues relating to mandates, functions and processes. It also recommends innovations that would make AIIB’s complaints mechanism the best in class and ensure AIIB investments further just, inclusive and sustainable development with effective accountability and remediation processes when unforeseen problems arise.

5. Comparative Evaluation of Development Finance Institutions’ Accountability Mechanisms

In 2015, Inclusive Development International joined 10 partners in the International Accountability Working Group (IAWG) to assess the effectiveness of the accountability systems of 11 different DFIs. This innovative comparative research was published in the report, Glass Half Full? The State of Accountability in Development Finance, which documented the hurdles placed in front of individuals and communities by financial institutions to prevent them from securing substantive financial redress. The report benchmarked each institution against criteria for effectiveness and human rights compatibility, and it concluded with a set of recommendations to improve the system. The report underscored that meaningful remedy for complainants and prevention of future harms requires more than best practices, and that a new accountability system must be established as a matter of urgency, with complaint mechanisms empowered to make binding decisions on banks and their borrowers and an end to immunity for development banks in national courts.

We have since joined with many of the same authors to publish the Good Policy Paper: Guiding Practice from the Policies of Independent Accountability Mechanisms, a roadmap for financial institutions setting up new independent accountability mechanisms (IAMs), as well as a tool for existing IAMs to evaluate the effectiveness of their current policies. The Good Policy Paper, originally published in 2021 and updated in 2024 examines the policy provisions currently in place at IAMs from the perspective of communities using them to seek redress for environmental and social harm from internationally financed projects, and identifies the most effective provisions as examples for other IAMs to follow.

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