'IFC/MIGA draft Approach to Remedial Action: Comments and recommendations of the UN Human Rights Office'

Key messages

1. A robust remedy framework can support informed risk-taking. There is no such thing as a perfect project. However a robust remedy framework helps to avoid mistakes, correct those that do occur, and ensure that mistakes are not repeated.

2. The remedy gap is significant and warrants an ambitious response. However many elements in the draft Approach appear to be routine in nature or already under implementation, or otherwise seem suitable for implementation without need for piloting.

3. If piloting is not strategically prioritized, in OHCHR’s view, more complex and challenging issues will not be adequately addressed, piloting resources will not be optimized, and opportunities to remedy E&S harms may be missed, along with important learning opportunities. IFC/MIGA may effectively be yielding to the market, rather than leading it, and ceding the innovation space to others.

4. International standards on remedy, and an increasing number of finance sector frameworks, have moved ahead of IFC standards in important respects. However practice on remedy is inconsistent and most DFIs are looking to IFC/MIGA for leadership. IFC/MIGA innovation, resources and convening power are needed in order to raise standards and encourage more consistent and confident practice.

5. The principle that those contributing to harms should contribute to remedy is fundamental to international human rights standards and responsible business conduct (RBC) standards, and an increasing range of emerging E&S frameworks. Should piloting fail to give attention to and operationalize this principle, it may undermine international human rights and RBC standards and foreclose remedy where it should otherwise be available.

6. Acceptance by IFC/MIGA of the principle that lenders may contribute to harm, and should therefore contribute to remedy, would make a triple contribution: it would not only create possibilities for remedy where they otherwise would not exist, but equally importantly, it would strengthen incentives for IFC/MIGA to build and exercise all available forms of leverage to ensure that clients more frequently discharge their own responsibilities, and it would help to ensure that all project costs are internalized within the project rather than externalized onto communities and the environment.

7. Concerns about litigation risk, moral hazard and cost-benefit may be overstated and would benefit from public justification and discussion.

Priority recommendations

1. The IFC Sustainability Framework should be updated to more explicitly and effectively enable remedy, and should be aligned with international human rights and Responsible Business Conduct standards and best practice.

2. The 2nd version of the draft Approach should be grounded in a clear analysis of existing remedy gaps and should reflect strategic priorities, clarity and specificity.

3. Piloting should be accompanied by an explicit accountability framework.

4. Where IFC/MIGA contribute to harms, they should contribute to remedy. This is a major gap in policy and practice and should be a priority for piloting.

5. Client contracts should make clear the requirement to remedy adverse impacts, and spell out the client’s and IFC/MIGA’s roles in this regard.

6. Client contracts should systematically require the disclosure to project-affected people of the fact of IFC/MIGA financing and availability of recourse through CAO.

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