SAFEGUARD AND SUSTAINABILITY POLICIES IN A CHANGING WORLD: AN INDEPENDENT EVALUATION OF WORLD BANK GROUP EXPERIENCE

Transcription

1 SAFEGUARD AND SUSTAINABILITY POLICIES IN A CHANGING WORLD: AN INDEPENDENT EVALUATION OF WORLD BANK GROUP EXPERIENCE WBG-CSO Forum October 7, 2010

2 1. Objective and Methodology First comprehensive evaluation of WBG s safeguards and performance standards since E&S policies were introduced in OBJECTIVE: How effective are the WBG s safeguards and sustainability frameworks in preventing and mitigating adverse environmental and social impacts? How effective are the WBG s safeguards and sustainability frameworks in enhancing social and environmental sustainability, and strengthening client capacity? Effect of Performance Standards on IFC/MIGA projects? Benefits and the costs of safeguards and Performance Standards?

3 KEY FINDINGS

4 Percentage of Projects World Bank Group Portfolio Trends A. WB Lending by Safeguard Category B. Trends in IFC Portfolio 100% 80% 60% 40% 20% 0% 100% 80% 60% 40% 20% 0% Percentage of Investment Commitments 60% 50% 40% 30% 20% 10% 0% B FI C A Committment year (FY) A - No. of Projects B- No. of Projects C- No. of Projects A (by volume) B (by volume) FI (by volume) C (by volume) FI- No. of Projects A - Commitments A (by number) B (by number) FI (by number) C (by number) Source: Business Warehouse In the Bank s portfolio, Category A increased from 6 to 11%, Category B increased from a third to over half of investment projects Slight decline in Category A, while FI Projects are one-third of IFC s portfolio; FI guarantees in MIGA increased from one-third to over half of the portfolio in the second half of the decade

5 Environmental &Social Policies triggered by Bank/IFC investment projects Safeguards Triggered in World Bank Projects, FY99-08 Performance Standards Triggered in IFC Investments, FY % Disputed Areas 6% Dam Safety 6% Forests 6% International Waterways 8% Pest Management 11% Natural Habitats 12% Cultural Properties 17% Indigenous Peoples 30% Involuntary Resettlement 72% Environmental Assessment 2% Indigenous Peoples (PS7) 8% CulturalHeritage (PS8) 14% Biodiversity (PS6) 23% Land Acquisition/Involuntary Resettlement (PS5) 44% Community Health and Safety (PS4) 49% Pollution Prevention and Abatement (PS3) 52% Labor and Working Conditions (PS2) 53% Environmental and Social Assessement and Management (PS1) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of projects n=2,056 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of investment Projects n=506 Source: World Bank and IFC databases EA is triggered by 2/3 and resettlement by 1/3 of Bank projects but others more rarely In IFC, four policies are triggered by over half, and 90% of category A and B projects a. Bank data are based on results for all 2,056 investment projects in the portfolio, approved in fiscal Six percent of the structural adjustment loans, approved prior to Sept 2004 that triggered OP 4.01 (Environmental Assessment), are reflected in this chart. IFC figures are based on the entire IFC portfolio, including FI- and C-category projects. b. IFC data depicted are an underestimate as they do not portray the Performance Standards triggered by FI subprojects.

6 Strengths/Weaknesses of Safeguard Management in WB projects Strengths Comprehensive coverage of environmental safeguards Priority to mitigating negative impacts Preparation (85%) Good identification of high risk projects (Cat. A): 11% Supervision of Cat. A (>80%) Compliance ensured through high quality E&S risk assessments Use of policy frameworks for FI, CDD, etc. allows rapid preparation Weaknesses Narrow coverage of social safeguards Less attention to client capacity building Supervision (61%) Over-categorization of medium risk projects (Cat. B): about10% of 51% Weak supervision of Cat. B and FI (50-60%) Poor M&E and reporting instruments lead to inattention to E&S results Poor supervision of projects with frameworks increases E&S risks

7 Strengths/Weaknesses of E&S Management in IFC projects Strengths Balanced coverage of E&S risks in 2006 PS framework Mitigation integrated with E&S sustainability Focus on client s E&S management system Preparation (85%) Clearly specified indicators to track E&S performance Well developed instruments for annual reporting by clients (AMR) Systematic use of indicators allows more accurate supervision and evaluation Better oversight of real sector projects and some improvement in FI projects Weaknesses Weaker staff capacity to address new social areas Area of influence limited to scope of project Undercategorization of high risk projects compared to WB Post-PS supervision improved from 65% to 75% But too soon to evaluate results Uneven quality of client E&S reporting, and no disclosure Independent verification of client reports TPM or community monitoring needed for higher risk projects Inadequate coverage & supervision of FI projects, listed equities and trade finance

8 LESSONS LEARNED

9 Percentage of Projects WB project performance by category Need more focus on client capacity building, in category B and FI projects 100% 80% 60% 40% 20% 74% 40% 58% 63% 62% 34% 19% 15% 15% 65% 34% 49% Need stronger links between safeguards and E&S sustainability 0% A B FI TOTAL Mitigating Negative Impacts Enhancing Positive Impacts Strengthening Client Capacity Source: Portfolio review of Cat. A, B & FI Projects, FY99-08 approvals

10 Projects with Satisfactory Supervision Projects with Satisfactory Mitigation 100% 100% 100% 91% 80% 60% 51% 71% 58% 59% 64% 80% 60% 59% 75% 56% 56% 61% 40% 40% 20% 20% 0% Environment Resettlement Indigenous People 0% Environment Resettlement Indigenous People Framework Plan Framework Plan Source: Portfolio review of Cat. A, B & FI Projects, FY99-08 approvals WB Projects with plans vs policy frameworks Projects using policy frameworks to expedite preparation should be supervised more carefully to ensure that real E&S risks are addressed

11 Regional variations in Bank supervision There is considerable regional variation in quality of supervision and M&E

12 Percent of Projects ICR reporting in WB projects ICRs for projects with significant E&S risks (Cat. A and B projects) should report on E&S performance 100% 80% 60% 40% 20% 0% 77% 81% 78% 78% 78% 54% 56% 47% 48% n=98 n=31 n=62 n=97 n=31 n=61 n=55 n=27 n=27 Overall E&S Environment Social All Projects Category A Category B Source: IEG portfolio review: Completed projects, FY99-08 approvals

13 Satisfactory rate IFC Environmental and Social Supervision Quality Supervision 100% quality has improved 90% since introduction of 80% Performance Standards but 70% FI projects still lag 15% 60% behind real sector projects 50% FY ALL PROJECTS NON FI FI Source: IEG s Environmental and Social Reviews for FY04-09 XPSRs 209 real sector (non-fi) and 139 FI projects

14 Lessons from other MDBs Procedural requirements can be adapted to ensure that policy objectives are Fit to Context Involuntary Resettlement: Projects where resettlement is a project objective, e.g. slum upgrading Projects where displacement is an adverse consequence of a broader operation not designed to benefit them Indigenous Peoples: Independent projects for Indigenous Peoples Mainstreaming projects to ensure Indigenous Peoples also receive benefits Projects causing adverse impacts on Indigenous Peoples

15 Risk adjusted benefit WB Benefits:Costs IFC Benefits:Costs Safeguards PS Source: IEG portfolio review Allocative efficiency of WB/IFC Costs-Benefits on Safeguards and Performance Standards IFC has better targeting of resources towards higher risk projects WB results are more mixed showing insufficient selectivity 0 Source: IEG; cost data from RMS IFC budgetary cost for ESHS (thousand US$)

16 Recommendations

17 IEG Recommendations - 1 Revise its policy framework, harmonize criteria to assess E&S risks for project categorization; consolidate WB policies into one social and one environmental policy, harmonizing thematic coverage across the Bank Group and removing current rigidities in social safeguards; develop approaches to apply IFC s Performance Standards to financial intermediary projects, listed equities, and trade finance; and increase MIGA s capacity to supervise its projects

18 IEG Recommendations Enhance client capacity, responsibility, and ownership Invest more in analytical work, TA/ Advisory Services Assign responsibility for safeguards monitoring to WB clients Revise guidelines, instruments, and incentives to strengthen supervision arrangements, especially at WB Strengthen safeguards M&E and completion reporting enhance transparency and third-party monitoring for higher risk FI projects and projects that use E&S policy frameworks incorporate E&S effects as essential dimensions of the PDO, as in the XPSRs in IFC Seek greater symmetry in the structure of Bank Group accountability For WB create grievance redress mechanism to complement Inspection Panel investigations For CAO introduce more independent review of audit reports.

19 Hidden Slides The following slides will not be shown during the presentation and are included as background information only