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19 Apr 2023

Inclusive Development International

Submission by Inclusive Development International to consultation on IFC/MIGA remedial action approach

'Comments on IFC/MIGA’s proposed Approach to Remedial Action'

[...] In our experience engaging with commercial sector lenders and major corporations, there is great and immediate demand from the private sector for IFC to play an active and effective role in addressing environmental and social (E&S) risks of projects, including the remediation of harms when they arise. The proliferation of mandatory human rights due diligence laws coupled with the increased interest in ESG investing is placing an unprecedented degree of pressure on the market to ensure respect for human rights throughout investment and supply chains. In many cases, the IFC E&S Performance Standards are used to set expectations of suppliers and clients. For investments in high-risk countries and regions in particular, the market looks to IFC for assurance that projects can meet acceptable E&S standards in undertaking their own due diligence to inform investment and procurement decisions. This presents a critical opportunity IFC/MIGA to advance responsible and sustainable investment for the good of communities, the environment, and the market. [...]

While we recognize that a degree of flexibility is essential for effective approaches to remedy, we believe that the Approach adopted should contain affirmative policy commitments to, inter alia: adopt new contractual requirements to enable and compel remedy from clients and effectively exercise that contractual leverage; provide support to clients whenever their capacity is not commensurate to risks; provide technical support to affected communities so they can participate effectively in the development of environmental and social (E&S) measures and, where necessary, remedial measures; provide technical support to CAO-facilitated dispute resolution processes upon request by the CAO or the parties; and establish remedial funding mechanisms for all higher risk projects, with a clear menu of available and effective instruments for different circumstances.

Moreover, in line with international human rights norms, when IFC/MIGA contributes to harm through failures in their due diligence and supervision, they must commit to contributing to remedy. We believe that if IFC/MIGA commit to the principle that they will contribute to remedy when they contribute to harm, the institutions and their staff will be much more motivated to exercise robust due diligence and ensure effective E&S management systems that will prevent significant harms in the first place. We also believe that as a premier development institution, IFC should actively look for ways to contribute to the development aspirations of project affected communities, who should share in the benefits of investment projects on their land and in their vicinities. [...]

Importantly, IFC/MIGA must begin implementing this new approach to remedy through measures that enable or provide remedy for communities who have already suffered harm from IFC and MIGA supported projects. This includes communities that have undergone CAO compliance or dispute resolution processes and have still not received a full and effective remedy. [...]