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Global Stimulus, Human Rights and the Environment

International project financing primarily intended to generate jobs and growth should not ignore social and environmental safeguards in the name of economic stimulus.

One case in point: the International Finance Corporation (IFC), the World Bank’s private sector arm, is launching four new facilities for bank recapitalization, infrastructure financing, trade facilitation, and refocused advisory services. Combined with financing mobilized from others, these new facilities could provide more than US$30 billion over the next three years. The Bank’s Multilateral Investment Guarantee Agency (MIGA) will also provide much needed risk mitigation for flows of private finance to developing countries. These new facilities are meant to attract developing member client countries which may be facing difficulties moving forward with large-scale capital-intensive infrastructure projects such as roads, highways, power stations and industrial zones.

Earlier project experiences and evaluations indicate that environmental safeguards are indeed necessary to prevent widespread environmental damage associated with unregulated economic growth.

Many public financial institutions, such as the World Bank Group, require their clients to meet these “safeguards” as a condition of financing. But civil society organizations and community groups have argued that safeguards have weakened recently. Some financial institutions are adopting broadly worded policies that are unenforceable and unmeasurable, while others are applying the safeguard to only a small portion of their activities.

The Asian Development Bank (ADB) is currently in the process of reviewing and adopting its safeguards policy. We ask all international financial institutions to guard against dilution of environmental and social guidelines, particularly in proposed large-scale infrastructure and energy projects. Instead, the ADB should double its efforts to strengthen these guidelines and ensure full compliance with internationally accepted environmental and human rights standards.

In particular we are asking the ADB to:

  1. Incorporate the UN Declaration on the Rights of Indigenous Peoples into the ADB Safeguard Policy Statement.
  2. Require free, prior and informed consent for all projects potentially affecting indigenous peoples.
  3. Provide further policy criteria for the establishment of project-level grievance mechanisms.
  4. Strengthen the role of the ADB Accountability Mechanism in the safeguard system.
  5. Improve the process for adopting Country Safeguard Systems into ADB operations.

WRI believes attention to ecological, social and health impacts of development projects, particularly to affected communities ultimately minimizes risks and boosts the projects’ chances at being successful and sustainable.

To read the full text of WRI’s submission to the ADB, please click here.

To learn more about the issue, read WRI’s report, Development Without Conflict: The Business Case for Community Consent.

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