World Bank Risks Weakening Environmental and Social Standards

The World Bank has started a process that appears likely to weaken its environmental and social safeguard policies. Although the Bank has repeatedly stated there will be no "dilution" of the policies, the Bank's scoping paper released in October and its ongoing consultations clearly reveal a desire to replace clear standards with discretion and deference to its developing country borrowers. The Bank, whose environmental and social safeguard policies have long provided important minimum standards for protecting communities affected by international development projects, now runs the risk of sacrificing its leadership role, disempowering affected communities, and forfeiting development effectiveness by once again financing projects that are human rights and environmental disasters. Of course the Bank doesn't say in so many words that it wants to deregulate, but the goals of the policy review is now clear from their scoping paper. It speaks of the desire to take a less "prescriptive" approach and one that will be more "supportive" of its developing country borrowers. Nothing in the paper speaks to protecting minimum rights or interests of affected people. The Bank anticipates that one of the risks is they will be "perceived to weaken their standards," implicitly dismissing the likelihood they will actually weaken their standards and rejecting those who want clear standards as just fighting over words. The Bank fails to recognize that a change in words from "must" to "may" disempowers communities affected by their projects when it sacrifices rights as requirements to the discretion of the Bank staff. The Bank's strategy is to follow their sister organization, the International Finance Corporation (IFC), in replacing clear environmental standards with a more "integrated approach" that relies on environmental management systems. The IFC's Environmental and Social Performance Standards apply to private sector lending. The Bank views the IFC standards as a success, in part because they have been widely followed by commercial banks conducting private finance in developing countries. Although accepted by industry, there is no evidence the IFC's discretion-laden approach has contributed to development effectiveness or protected vulnerable communities. The World Bank is also mistaken if it thinks the same discretion-laden approach will work better in the public sector.