How does the IDB’s new Environmental and Social Policy Framework benefit people and the environment?

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Source: Bank information Center

The IDB Board of Directors approved the final Environmental and Social Policy Framework (ESPF) last week, completing the revision process with a new set of safeguards that reflect important advances for more sustainable development. The changes reflect BIC and civil society organizations’ advocacy urging the IDB to improve its environmental and social standards. We provide a nuanced analysis of the new ESPF below.

Throughout the Inter-American Development Bank (IDB)’s revision of its environmental and social safeguards, BIC and a coalition of CSOs have advocated for policies that promote more inclusive, sustainable development. With the IDB’s recent approval of its final Policy, we recognize the achievements from our engagement in the review process and our advocacy, while continuing to urge the IDB to provide guidance on comprehensive post-approval and implementation processes that will benefit people and the environment.

In January 2020, the IDB opened the consultation process to update its environmental and social Operational Safeguards Policies. Civil society organizations engaged and participated in the first consultation phase held by the IDB to receive comments and recommendations on the first ESPF draft, which closed in April. We also submitted further input in the 30 day comment period to provide suggestions on the second ESPF draft, which closed on August 5th. On September 16, almost a month later and in an unexpectedly fast turnaround, the IDB Board of Directors approved the final Environmental and Social Policy Framework.

Civil society expressed concerns about the consultation process as it lacked opportunities for many stakeholders to engage meaningfully and effectively. However, in terms of substance, we celebrate many of the changes introduced in the final ESPF as it incorporates recommendations we made to the first and second drafts, not only strengthening the Policy, but also aligning it with the highest international standards. We highlight some of the main improvements below.

1. Borrower’s Capacity. The ESPF expresses a much clearer commitment to work with countries to strengthen their institutional capacity, environmental and social governance systems, and procurement practices.

2. IDB Commitments. The ESPF includes a definition of persons with disabilities aligned with the United Nations Convention on the Rights of Persons with Disabilities (CRPD) and adds the commitment to enhance stakeholder engagement, recognizing the Escazú Agreement’s principles. It also requires Borrowers to engage with stakeholders in meaningful consultations free of fear of reprisals; provide accessible formats for different physical, sensory, and/or cognitive needs; and develop an accessible grievance mechanism.

3. Do good principle. The IDB commits to maximizing sustainable development benefits in line with the “do good beyond the do no harm principle,” requiring the Borrower to consider and report how project design will enhance both the social and environmental good in the environmental and social assessment. If these opportunities are identified, the Bank and Borrower will consider including them in project design or mainstreaming them in the IDB country strategies.

4. Mainstreaming. In a significant victory, the IDB maintained current mainstreaming components to integrate the E&S safeguards approach into all programming, planning, and training. We advocated that these mainstreaming tools are crucial to developing an integrated safeguard system, strengthening planning, and reducing risks.

5. Borrower’s Roles & Responsibilities. The framework requires the Borrower to engage in meaningful consultations using accessible formats and disclosure. The strengthening of accessible stakeholder engagement is essential to facilitate projects that benefit affected communities, especially marginalized groups. Also, the policy adds that the form of the consultation should be tailored to the nature of the project, contextual risks, and present circumstances, thus safeguarding participants’ health and safety.

6. IDB’s Roles & Responsibilities. The final Policy includes a new provision that clarifies the IDB’s different functions and roles in carrying out the ESPF. Also, there is an explicit commitment to provide guidance and assistance to the Borrower throughout the project cycle by enhancing their capacity to assess and manage E&S risks and impacts and strengthening their national systems through IDB-financed operations.

7. Due Diligence. When carrying out its own E&S due diligence, the IDB is required to consider the commitment, track record, and capacity of the Borrower and other entities involved in developing and implementing the operation. Also, the IDB committed to conduct contextual risk assessments, which will help the IDB identify and avoid supporting projects that can exacerbate existing social conflicts in the project area.

8. Monitoring & Supervision. In case of non-compliance with the standards in the ESPF, the IDB will work with the Borrower in achieving compliance. IDB’s support includes providing additional technical assistance, increased monitoring by the Bank, and/or monitoring by stakeholders and third parties, such as independent experts, local communities, or civil society organizations, to complement or verify project monitoring information. The IDB also incorporated our requests to strengthen language for cases where the Borrower fails to re-establish compliance.

9. Grievance Mechanisms and Accountability. The final ESPF includes a new provision committing the IDB not to tolerate retaliation such as threats, intimidation, harassment, or violence against those who voice their opinion or opposition to an IDB-financed project or the Borrower. This is an important achievement for protecting human rights and environmental defenders who advocate on development projects. The Borrower is also required to inform project-affected people about the project’s grievance mechanism and the IDB’s accountability mechanism, the MICI.

10. Environmental and Social Exclusion List. The ESPF includes an exclusion list with inconsistent activities with IDB’s commitments to address climate change such as coal-fired power and upstream oil and gas exploration and development. Having an exclusion list reduces risks to the IDB and makes future decision-making clear and transparent, putting the IDB on par with peer institutions. The exclusion list represents a significant victory as we encourage MDBs to stop funding projects that support fossil fuels, and instead invest in renewable energies that advance decarbonization in the region.

CSOs appreciate how the IDB incorporated feedback, and we look forward to continuing to engage in the safeguards process through consultations on post-approval and implementation procedures. To truly serve communities and improve sustainable development benefits, the IDB must continue to develop an integrated safeguard system. This involves robust environmental and social standards, programming, and planning tools to incorporate the E&S standards into the different sectors and types of financing effectively; along with effective ESPF implementation to avoid creating loopholes, uncertainties, unaccountable judgments, or discretionary actions. We provide a more comprehensive analysis of the new ESPF and the individual Environmental and Social Performance Standards here.

For more information on civil society’s comments and recommendations throughout the ESPF revision process, see our joint document submitted on the first draft and the second draft.