The Inter-American Development Bank and its Opportunity to Promote Truly Sustainable Development in Latin America

By: Vanessa Torres, Deputy Director of Ambiente y Sociedad.

Also published by El Espectador – Blog 

The Inter-American Development Bank continues to be the lending institution with the largest investment in Latin America, and in 2018 it approved US$ 13.5 billion in loans for sectors such as infrastructure and energy. Therefore, the announcement that it would update its social and environmental policies in 2019 is relevant for civil society organizations and communities in the region, considering that many of these projects have generated major social and environmental impacts.

IDB Invest –an entity of the IDB Group that is responsible for supporting the private sector–  based on an express request from civil society, decided to hold public consultations in four of the region’s countries in September 2019. The consultation was held to receive comments on the draft environmental and social sustainability policy during the updating phase.

Considering the lessons learned during the implementation of these megaprojects, Asociación Ambiente y Sociedad believes that active participation from communities is essential in the creation of social and environmental standards for the multilateral banks, given their preponderant role in the financing of development projects. At the same time, AAS highlights the sad fact that Colombia is one of the countries with the highest number of social-environmental conflicts in Latin America, and that it currently holds first place, internationally, as the country with the highest number of murdered social and environmental leaders, according to Global Witness’s last report from 2020.

Among the organizations that participated in the consultation, held in Bogotá in September 2020, were leaders of indigenous and Afro-Colombian communities affected by IDB Invest financed projects, such as Hidroituango, the Ruta del Cacao, or the Perimetral de Oriente. During the consultation we shared a variety of technical recommendations, including the following:  

Emphasize the importance that new social and environmental frameworks should not be exact copies existing standards, such as the performance standards for the International Financial Corporation (IFC) or the private branch of the World Bank, which may have regulations on indigenous peoples or environmental procedures, but these were last updated in 2012. Hence, the IDB must take on the challenge of establishing procedural standards and guidelines in accordance with the current needs, internationally, in relation to climate change or the difficult security situation faced by social leaders.

“A new social and environmental policy from an institution like the Inter-American Development Bank must have a “generation of benefits” as a central focus, beyond “do no harm.” This is why its content cannot solely focus on mitigating the damages generated by a given project, but it must focus on the inclusion and recognition of a sustainability framework that benefits the communities, based on the investment portfolio. This is necessary for an effective prevention of social-environmental conflicts.

In addition to requesting the inclusion of specific and clearly defined environmental procedures,  we believe that the general and non-specific language in this kind of instruments generates confusion and a lack of credibility towards the Bank itself. This is why clear and precise language is fundamental in relation to the obligations of the Bank and its clients, in this case private companies.

Finally, we believe it is fundamental that the IDB considers creating a new and specific performance standard on community participation, given that the lack of community participation and dialogue is the principal cause of project cost overrun, the non-fulfillment of timelines, and environmental and social impacts from projects, as we have seen in projects like Hidroituango.

The region’s civil society organizations applaud that institutions like the Inter-American Development Bank have created this dialogue, and we reiterate the importance of establishing participatory processes for the construction of this kind of standards, which, more than a challenge represent an innovation opportunity for the institutions, if they truly seek to strengthen efficient and sustainable development in Latin America.