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media advisory
friends of the earth international
london (UK) september 17, 2004

world bank plans to relax lending safeguards slammed

Plans by the World Bank to relax its environmental and social requirements when lending money to the private sector must be halted, Friends of the Earth International demanded today.

120 environment, development and indigenous groups have also written to the World Bank opposing the proposed changes, the details of which will be unveiled in London today (Friday). The groups are also unhappy about the consultation process and are threatening to boycott it unless it is changed [1].

Under the new proposals, the International Finance Corporation (IFC), the private sector arm of the World Bank, will abandon its current 10 Safeguards Policies - covering social and environmental protection issues such as pollution and the treatment of indigenous people - in favour of "performance standards" based on a more flexible and subjective approach [2].

“These flawed proposals seriously undermine the World Bank's duty to protect the environment and affected communities. It must ensure that any money it lends to private sector projects meets internationally recognized standards. These new plans will weaken already inadequate safeguards and must be abandoned,” said Hannah Ellis of Friends of the Earth.

Not only is the IFC an important global financier in its own right, but IFC standards are increasingly being accepted by other major financial institutions too.

Citibank, Bank of America and over twenty other commercial banks, called the Equator Principles Banks (which cumulatively arranged for over 75% of international project finance), have agreed to follow IFC environmental and social standards [2]. In addition, many export credit agencies have agreed to benchmark their standards against those of the IFC. The IFC has de-facto become the leading environmental and social standard-setter for international project finance.

"IFC's draft standards are far too vague and allow for subjective judgment to determine the prevailing standard for any given project. As a public institution, it needs clearly articulated and enforceable rules and standards. IFC's proposed new policies would result in double standards for the World Bank Group: one set of standards for the public sector, and another weaker, more discretionary approach for the private sector. Reasonable people must be able to understand and agree upon the bottom line standards that will be expected of IFC financed projects. These decisions should not be left to the whims of individual staff," according to Friends of the Earth International's Janneke Bruil.

Concerns with the Public Consultation Process include:

The IFC is pursuing an extremely rapid and selective plan for engaging external stakeholders on these critical policy revisions. Unlike past World Bank safeguard policy revisions, which have often involved several years of engagement on just one policy, the IFC plans to revise all ten of its safeguard policies at once (plus its disclosure policy) and to directly engage external stakeholders for only four months. The timeline appears to be driven by an arbitrary internal desire to complete the process before next February when the current Executive Vice President, Peter Woicke, is expected to leave.
Much of the relevant, key information is not publicly available yet, even though the consultation process has already formally begun. For instance, many of the details of the policy revision will be taken up in what the IFC is calling implementation guides. None of these guides are in the public domain.
Finally, IFC plans to hold regional four regional consultations during this process, but the relevant information is still not translated into all of the Bank's official languages. It was not until yesterday, September 16, with 7 days to go until the first consultation in the Latin America region, that the draft revised safeguard policies were posted in Portuguese on the IFC's website, even though the first consultation will take place in Brazil. Furthermore, the IFC has still not released in any language the Implementation Guides or Corporate Procedures that are to specify how the revised policies are to be implemented.

for more information contact friends of the earth

In London (UK) Hannah Ellis (Friends of the Earth)
+44 (0) 207 566 1601 Mobile: +44 (0)7952876929 or
Or Janneke Bruil (Friends of the Earth International)
+31 20 622 13 69 or

0917

world bank plans to relax lending safeguards slammed

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