Making the Grade: a survey of IFI Making the Grade: a survey of IFI social policies and the policies of the social policies and the policies of the European Investment Bank (EIB)European Investment Bank (EIB)

Tom Griffiths Tom Griffiths

Forest Peoples ProgrammeForest Peoples Programme

Rights to Complain: IFIs and accountability – on the way to accountability and appeals mechanisms for the European Investment

BankBrussels, November 30th, 2006

Objectives:Objectives:

To assess existing range of IFI To assess existing range of IFI policies and related international policies and related international standards on social development and standards on social development and social safeguard issuessocial safeguard issues

To compare these with EIB policiesTo compare these with EIB policies To make recommendations for To make recommendations for

strengthened EIB social standards strengthened EIB social standards and improved public accountabilityand improved public accountability

Scope of surveyScope of survey

Overview of social safeguard policies Overview of social safeguard policies of WB, IFC, IADB, AfDB, ADB of WB, IFC, IADB, AfDB, ADB = not = not exhaustiveexhaustive

Best practice standards, including Best practice standards, including World Commission on Dams and EIRWorld Commission on Dams and EIR

Relevant standards in EU regulations, Relevant standards in EU regulations, external policies and external policies and intergovernmental commitments intergovernmental commitments = not = not exhaustiveexhaustive

Why operational standards ?Why operational standards ?

Establish incentives to IFI staff and Establish incentives to IFI staff and managers address social and environmental managers address social and environmental issuesissues

Provide Provide external accountability of the IFI to external accountability of the IFI to local communities and citizenslocal communities and citizens

Constitute an agreed basis for negotiating Constitute an agreed basis for negotiating loans or contracts with borrowers and clientsloans or contracts with borrowers and clients

Establish a yardstick for project monitoring Establish a yardstick for project monitoring and evaluationand evaluation

Improve overall development quality Improve overall development quality

Effective operational Effective operational standardsstandards::

Preconditions that Preconditions that mustmust be complied with be complied with before the IFI will support a projectbefore the IFI will support a project

Procedural and substantive operational rules Procedural and substantive operational rules binding on IFI staff and managersbinding on IFI staff and managers

Implemented by well-resourced transparent Implemented by well-resourced transparent management /compliance system (public management /compliance system (public procedures)procedures)

Commitments and safeguards covenanted in Commitments and safeguards covenanted in loan or grant agreements loan or grant agreements

Linked to independent IFI Linked to independent IFI appeals and appeals and accountability mechanismsaccountability mechanisms

Social policy IBRD/IDA

IFC IADB AfDB ADB EIB ∑

Binding oper. Standards

? Except Info disclosure policy

5

Soc Assessment No OP No OP 3

Participation x-cutting x-cutting x-cutting x-cutting x-cutting ? Not clear 5

Info Disclosure ?

Resettlement 5

Gender 2

Indigenous Peoples

4

Core Labour Standards

2

Human Rights 0

Independent Appeals mechanism(s)

5

Totals 7 8 7 6 8 2

Existing IFI policies:Existing IFI policies: Address specific social issues (previous slide)Address specific social issues (previous slide) Establish objective and obligatory Establish objective and obligatory operational operational

requirementsrequirements on IFI staff, borrowers and clients… on IFI staff, borrowers and clients… (with explanatory definitions)(with explanatory definitions)

Set benchmarks for project approvalSet benchmarks for project approval Integrated with project management, procedures Integrated with project management, procedures

and oversightand oversight Complemented by Complemented by Implementation GuidelinesImplementation Guidelines Tied to accountability mechanismsTied to accountability mechanisms Starting to reference standards to international Starting to reference standards to international

lawlaw Still Still lacklack policies on key issues like human rights policies on key issues like human rights

WB IBRD/IDA Policy on IPsWB IBRD/IDA Policy on IPs

““The The Bank provides project financing only Bank provides project financing only where free, prior, and informed where free, prior, and informed consultation results in consultation results in broad community broad community supportsupport to the project by the affected to the project by the affected Indigenous PeoplesIndigenous Peoples” [para. 1. OP 4.10]” [para. 1. OP 4.10]

““The Bank does The Bank does notnot proceed further with proceed further with project processing if it is unable to project processing if it is unable to ascertain that such support existsascertain that such support exists” [OP ” [OP 4.10, para 11]4.10, para 11]

OP 4.10OP 4.10

““Free, prior, and informed consultation Free, prior, and informed consultation with the affected Indigenous Peoples’ with the affected Indigenous Peoples’ communities” refers to communities” refers to a culturally a culturally appropriate and collective decision-appropriate and collective decision-making processmaking process subsequent to subsequent to meaningful and good faith consultation meaningful and good faith consultation and informed participation regarding and informed participation regarding the preparation and implementation of the preparation and implementation of the project…” (fn 4, OP)the project…” (fn 4, OP)

IFC PS1: IFC PS1: Social and Environmental Social and Environmental Assessment and Management Assessment and Management

SystemsSystems ““Where the client identifies specific Where the client identifies specific mitigation measures and actions mitigation measures and actions necessary for the project to comply necessary for the project to comply with applicable laws and regulations with applicable laws and regulations and to meet the requirements of and to meet the requirements of Performance Standards 1 through 8, Performance Standards 1 through 8, the client will prepare an Action the client will prepare an Action Plan.” (PS1: para 16)Plan.” (PS1: para 16)

IFC Environmental and Social Review IFC Environmental and Social Review Procedures (ESRP, 2006)Procedures (ESRP, 2006)

Includes (Includes (inter aliainter alia) during the appraisal ) during the appraisal stage of the IFC project cycle:stage of the IFC project cycle:

Review of the Project Assessment Review of the Project Assessment Information and Action Plan and Information and Action Plan and identification of gaps…identification of gaps…

Review of client’s ESMS and identification of Review of client’s ESMS and identification of gaps…gaps…

IIdentification of any Supplemental Actions dentification of any Supplemental Actions to be incorporated in the client’s Action to be incorporated in the client’s Action Plan to address any gaps identified above…Plan to address any gaps identified above…

EIB existing social policiesEIB existing social policies

The Social Assessment of Projects outside The Social Assessment of Projects outside the European Union: the approach of the the European Union: the approach of the EIB,EIB, 02 October, 2006 02 October, 2006

Development Impact Assessment Development Impact Assessment Framework for Investment Facility Framework for Investment Facility ProjectsProjects, April 2005, April 2005

Public Disclosure Policy: principles, rules, Public Disclosure Policy: principles, rules, and proceduresand procedures, 28 March 2006, 28 March 2006

Statement on Corporate Social Statement on Corporate Social Responsibility, 2005Responsibility, 2005

+ Various guidelines and codes of conduct+ Various guidelines and codes of conduct

EIB Documents consultedEIB Documents consulted

The Social Assessment of Projects Outside the The Social Assessment of Projects Outside the EU: the approach of the EIBEU: the approach of the EIB,, October, 2006 October, 2006

Development Impact Assessment Framework Development Impact Assessment Framework for Investment Facility Projectsfor Investment Facility Projects, April 2005, April 2005

Public Disclosure PolicyPublic Disclosure Policy,, March 2006 March 2006 Statement on Corporate Social ResponsibilityStatement on Corporate Social Responsibility Corporate Responsibility Report 2005Corporate Responsibility Report 2005 Corporate Operational Plan 2006-2008Corporate Operational Plan 2006-2008 The Project Cycle at the European Investment The Project Cycle at the European Investment

Bank Bank (2001)(2001) EIB project eligibility and appraisal criteriaEIB project eligibility and appraisal criteria Charter for Internal Audit,Charter for Internal Audit, October 2001October 2001

EIB Social policiesEIB Social policies

Few in number and few operational Few in number and few operational standardsstandards

Rightly base standards on international Rightly base standards on international norms, regulations and best practicenorms, regulations and best practice

General principle-based statements on EIB General principle-based statements on EIB commitmentscommitments

Vague on required standards for lending in Vague on required standards for lending in non-EU countriesnon-EU countries

Not backed up by associated compliance Not backed up by associated compliance and independent complaints and appeals and independent complaints and appeals mechanismsmechanisms

EIB Social Assessment Policy, EIB Social Assessment Policy, 20062006

“…“…Attention focuses on the potential Attention focuses on the potential impacts…on population movements impacts…on population movements and resettlement, and on vulnerable and resettlement, and on vulnerable groups…Attention is given to groups…Attention is given to establishing acceptable labour establishing acceptable labour standards, ensuring the health and standards, ensuring the health and safety of the workforce and of the safety of the workforce and of the surrounding communities…”surrounding communities…”

ConclusionsConclusions

The EIB is rightly committed to ensuring its The EIB is rightly committed to ensuring its policies and practice are consistent with policies and practice are consistent with international standards and best practiceinternational standards and best practice

EU and European governments already EU and European governments already committed to most international social committed to most international social standardsstandards

However, objective operational social However, objective operational social standards to which the EIB may be held standards to which the EIB may be held accountable in its project finance outside the accountable in its project finance outside the EU remain unclear or entirely absentEU remain unclear or entirely absent

Recommendations (1)Recommendations (1)

Adopt binding and specific policies to Adopt binding and specific policies to operationaliseoperationalise its social standards its social standards consistent with international consistent with international standards and best practice, standards and best practice, including those of the WCD and EIR. including those of the WCD and EIR.

As a very minimum, EIB policies As a very minimum, EIB policies should be at least equivalent to the should be at least equivalent to the World Bank’s IFC standards.World Bank’s IFC standards.

Recommendations (2)Recommendations (2)

Establish effective internal oversight, quality Establish effective internal oversight, quality control and compliance mechanisms (with control and compliance mechanisms (with problem solving remit?)problem solving remit?)

Establish an Establish an external external independent complaints and independent complaints and appeals office (outside the EIB)appeals office (outside the EIB)

And/or strengthen existing external mechanisms, And/or strengthen existing external mechanisms, to investigate violations of social and to investigate violations of social and environmental standards and grievances of non-environmental standards and grievances of non-EU communities affected by EIB projectsEU communities affected by EIB projects

Undertake these measures to strengthen EIB Undertake these measures to strengthen EIB accountability in full consultation with civil societyaccountability in full consultation with civil society

Thank YouThank You