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20 Apr 2023

Danish Institute for Human Rights (DIHR)

Submission by Danish Institute for Human Rights to consultation on IFC/MIGA remedial action approach

'Response to Draft IFC/MIGA Approach to Remedial Action and IFC Responsible Exit Principles'

The Institute appreciates IFC/MIGA’s past leadership in the sustainability space and their ambition to maintain that leadership. We recognise and congratulate IFC/MIGA for developing a draft Approach to Remedial Action (the draft Approach) in response to the “External Review of IFC/ MIGA Environmental Social (E&S) Accountability, including CAO’s Role and Effectiveness” (the External Review). While the draft Approach offers a useful state of play, we expected that IFC’s ambition to maintain its leadership would translate into a more robust approach to remedial action, including more specific actions to respond to adverse impacts, a broader approach covering more situations and a more forward-looking proposal to advance IFC’s mandate to improves the lives of people, especially the poor and vulnerable.

There are several useful points in the draft Approach, starting with the important recognition that remedial action is a core part of IFC’s mission and mandate. We also welcome the recognition that remedial actions can be strengthened throughout the project cycle – before, during and after concerns have been raised, with an emphasis on early action.

However, neither the draft Approach on Remedial Action nor the draft Principles on Responsible Exit are sufficient to address the evidence of the increasingly recognised “remedy gap” between commitments to “do no harm” and what happens on the ground. The draft Approach does not recognise nor provide any analysis of the gap in policy or practice around unresolved harms in IFC-finance projects as a starting basis.

The 30-year anniversary of the World Bank Inspection Panel and more than 20 years of the CAO are a testament to the World Bank Group’s recognition that accountability to those affected by its projects is important. This recognition should be the starting point for a discussion on remedy – in other words, it is not something new but rather deeply rooted in the institutions. This earlier leadership role on accountability in prompting other DFIs to establish independent accountability mechanisms is playing out again: other DFIs are waiting to see where IFC goes with this initiative. Given IFC’s past leadership, its enhanced leverage, resources, reputational advantages, and convening power, its failure to play a leading role at this critical moment has implications not only IFC but for the wider DFI community as its current approach is likely to discourage necessary and more appropriate responses to the remedy gap by others.

The draft Approach on Remedial Action is also missing important framing within broader trends. It could be usefully contextualized in the trends of sustainable finance and ESG (environmental-social-governance) that are prompting other DFIs and a far wider range of private sector financial institutions around the world to address environmental, social and human rights impacts more seriously. The draft Approach to Remedial Action also, surprisingly, misses the opportunity to make a clear link to its development mandate: It makes no mention of the positive development outcomes of remediating harms. There can be no “offsetting” of human rights, as there is with carbon credits or biodiversity offsets. Reducing and redressing adverse impacts of projects – whether on the environment or human rights – is the baseline on which positive impacts can be built.

Finally, when thinking about the draft Approach overall, it is useful to frame the roles of the different actors: IFC and its clients are voluntary risk takers; communities and workers are involuntary risk bearers. This should guide thinking about which are the most appropriate parties to be actively involved in enabling remedy if and when things go wrong. The costs and impacts of development should not fall on the shoulders of those least able to bear them.