Post on 21-Jul-2022
Faculty of Law
Academic Year 2015-16
Exam Session [1]
Conformity of World Bank investments with International
Environmental Law
The credibility of the International Finance Corporation’s Environmental
and Social Performance Standards
LLM Paper
by Eva Christiaens
Student number : 01103940
Promoter : Prof. Dr. An Cliquet
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TABLE OF CONTENTS
Abstract ................................................................................................................................................... 5
List of acronyms ...................................................................................................................................... 6
I. Introduction .......................................................................................................................................... 7
II. State of the Art .................................................................................................................................... 9
A. Sustainable development in international law and policy ........................................................... 9
B. The World Bank and the International Finance Corporation .................................................... 11
a) Origins and structure ............................................................................................................. 11
b) Accountability mechanisms................................................................................................... 12
c) Development agenda ............................................................................................................. 13
C. Criticism on the World Bank’s development agenda ................................................................ 14
III. Methodology ................................................................................................................................... 18
Choice of data ............................................................................................................................ 18
Choice of methods ..................................................................................................................... 19
IV. Analysis: Assessing the credibility of the IFC’s Performance Standards ....................................... 22
A. Discursive analysis: A critical discourse analysis of the Performance Standards ..................... 22
a) Textual analysis: Deconstructing linguistic devices .............................................................. 22
The requirement of an Environmental Impact Assessment ....................................................... 22
Respect for human rights ........................................................................................................... 24
Biodiversity protection .............................................................................................................. 25
b) Discursive analysis: Context of the text ................................................................................ 26
c) Social analysis: Ideology behind the text .............................................................................. 27
d) Interim conclusion ................................................................................................................. 29
B. Normative analysis: Comparing the Performance Standards to international law .................... 29
a) The requirement of an Environmental Impact Assessment ................................................... 30
b) Procedural rights in an EIA ................................................................................................... 32
c) Human Rights ........................................................................................................................ 36
d) Biodiversity protection .......................................................................................................... 39
e) Interim conclusion ................................................................................................................. 40
C. Evaluative analysis: Comparing the Performance Standards to the case of Minera Yanacocha in
Peru ................................................................................................................................................... 42
a) Background ........................................................................................................................... 42
b) Overview of the complaints................................................................................................... 44
c) Legal framework for environmental protection in Cajamarca, Peru ..................................... 45
Issues at stake in the EIA........................................................................................................... 46
Procedural rights and human rights ........................................................................................... 47
Biodiversity protection .............................................................................................................. 48
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d) Summary of relevant IFC policies ......................................................................................... 49
Issues at stake in the EIA........................................................................................................... 49
Procedural rights and human rights ........................................................................................... 49
Biodiversity protection .............................................................................................................. 50
e) Interim conclusion: Analysis of the issues raised by the case study ..................................... 51
V. Discussion......................................................................................................................................... 52
Bibliography .......................................................................................................................................... 54
Annex 1: Critical Discourse Analysis ................................................................................................... 60
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Acknowledgments
Special thanks to my supervisor, Prof. Dr. An Cliquet, for her guidance and assistance
throughout the research process.
I would also like to thank CATAPA vzw for their input and data on the Yanacocha projects
and the general inspiration for this paper.
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Abstract
This study wishes to examine the credibility of the International Finance Corporation’s (IFC)
sustainability policy through a threefold research on its Environmental and Social
Performance Standards. The aim is to reveal inconsistencies between the written policy text
and the actual implementation in practice, and as compared to international environmental
law. First, a critical discourse analysis is conducted on the written policy text, with the
purpose of unravelling the underlying discourse and ideology of the IFC. Second, a normative
analysis aims to compare the Performance Standards to International Environmental Law and
practice. Third, an evaluation of the case of Minera Yanacocha in Peru, a mining project
which is enabled and supported by the IFC, is made to demonstrate the inconsistencies
between the IFC’s sustainability on paper and in its practical implementation. The results of
all three analyses show that the IFC’s sustainability standards are lacking in credibility, both
on a discursive level as well as compared to international practice and cases in the field.
Several policy recommendations are briefly discussed, mostly focusing on the need for
transparency, procedural rights and accountability of the IFC.
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List of acronyms
CATAPA Comité Académico Técnico de Asesoramiento a Problemas Ambientales
CAO Compliance Advisor Ombudsman
CDA Critical Discourse Analysis
CSR Corporate Social Responsibility
EIA Environmental Impact Assessment
ESMS Environmental and Social Management System
GEL (Peruvian) General Environmental Law
GIIP Good international industry practice
IAD Internal Audit Department
ICIJ International Consortium for Investigative Journalists
ICSID International Centre for the Settlement of Investment Disputes
IDA International Development Agency
IFC International Finance Corporation
ILO International Labour Organisation
IMF International Monetary Fund
IO International Organisation
IOIA International Organizations Immunities Act
IBRD International Bank for Reconstruction and Development
MDB Multilateral Development Bank
MIGA Multilateral Investment Guarantee Agency
NGO Non-Governmental Organisation
UN United Nations
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I. Introduction
In April 2015, the International Consortium for Investigative Journalists (ICIJ) shed light on
the negative consequences of the World Bank investments through numerous case studies
worldwide.1 Whereas the World Bank was designed to bring development to countries in the
Global South, its investments often seem generate opposite effects by harming the
environment and human rights and by displacing local communities.
This paper wishes to examine how the World Bank investments contradict international law
on sustainable development. The focus is on the International Finance Corporation (IFC), the
private sector branch of the World Bank, which invests in private companies in developing
states instead of offering direct investments to governments.2
In 2015, some Indian fishermen brought the first large-scale court case against the IFC,
claiming that their human and environmental rights were breached by IFC investments in a
coal plant.3 The case was dismissed before the U.S. Court due to the International
Organisations Immunities Act. However, it might open the door for further judicial
proceedings, as similar controversies in Peru,4 Honduras
5 and other states are widely present.
In light of the multiple complaints, this study wishes to examine if the sustainability policy of
the IFC (and thus the World Bank) is conform to international law and practice. Aside from
its internal inspection mechanisms, enforcement of the World Bank’s sustainability standards
and policy seems very difficult under international law. However, as the World Bank member
states are often party to other multilateral agreements and bound by international
1 Hudson, M. How 50 reporters exposed the World Bank’s broken promises (ICIJ, 24 June 2015), available at
http://www.icij.org/blog/2015/06/how-50-reporters-exposed-world-banks-broken-promises. 2 International Finance Corporation, About IFC (2016), available at
http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc_new 3 The Indian fishermen are represented by EarthRights and the case is held before the U.S. District Court for the
District of Columbia. See EarthRights International, Communities Sue World Bank Group In U.S. Federal Court
for Destructive Coal-Fired Power Plant (23 April 2015, Washington D.C.), available at
https://www.earthrights.org/media/communities-sue-world-bank-group-us-federal-court-destructive-coal-fired-
power-plant; United States District Court for the District of Columbia, Tata Mundra case (Budha Ismail Jam, et
al., Plaintiffs, v. International Finance Corporation, Defendant). Civil Action No. 15-612 (JDB). 24 March 2016.
Available at https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2015cv0612-31. 4 In Cajamarca, Peru, mineries – supported and financed by the IFC – have led to enormous forced
displacements and environmental disasters. See Hallman, B. & Olivera, R. Gold Rush: How the World Bank is
Financing Environmental Destruction (Huffington Post, 15 April 2015), available at
http://projects.huffingtonpost.com/worldbank-evicted-abandoned/how-worldbank-finances-environmental-
destruction-peru. 5 Lakhani, N. World Bank's ethics under scrutiny after Honduras loan investigation (The Guardian, 13 January
2014), available at http://www.theguardian.com/global-development/poverty-matters/2014/jan/13/world-bank-
ethics-scrutiny-honduras-loan-investigation.
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environmental law, it is worth questioning the immunity of the Bank and critically examining
its shortcomings in adopting a solid sustainability framework.
Analysing the development agenda and the accountability of the World Bank is relevant for
two purposes. From a policy perspective, the need for sustainable development is widely
recognised.6 The cooperation of international organisations such as the World Bank might be
essential to encourage sustainable initiatives in other corporations.7 Hence, international
organisations may operate as a role model for ethical investing or corporate social
responsibility.8 From an academic point of view, Dann points out that “the internal law of
global development aid institutions has hardly been analysed so far.”9 Moreover, scholars
have mainly focused on the World Bank’s (non-)commitment to human rights,10
whereas the
environmental aspects of World Bank investments are not as widely covered.
This paper combines a social policy approach with a legal review on sustainable practices. By
combining a critical discourse analysis (CDA) of the IFC’s Environmental and Social
Performance Standards with an evaluation of a case study from within the field, the
development agenda is unravelled and examined on the basis of international environmental
law.
First, the state of the art of the relevant literature is given. The concept and evolution of
sustainable development are examined both from a public policy perspective and from a legal
point of view. The World Bank’s and IFC’s structure is explained to examine its internal
inspection and enforcement mechanisms. Second, the used methodology is explained in detail
as three distinct methods of analysis are employed. Third, the threefold analysis is conducted:
a critical discourse analysis (CDA) is made of the IFC’s Performance Standards; a normative
analysis aims to compare the standards to the relevant international law provisions; and finally
an evaluative analysis serves to assess the usefulness of the standards in a concrete case study,
namely the case of Minera Yanacocha in Peru. All three specifically focus on the aspects of
Environmental Impact Assessments (EIA), human rights, and biodiversity conservation. The
reason for this is that most complaints against the IFC concern these aspects, and further
6 Giddings, B., Hopwood, B., & O'brien, G. (2002). Environment, economy and society: Fitting them together
into sustainable development. Sustainable development, 10(4), 187-196. At page 188. 7 Neu, D., & Gomez, E. O. (2006, March). The ethics of World Bank lending. In Accounting Forum (Vol. 30,
No. 1, pp. 1-19). Elsevier. At page 2. 8 Neu & Gomez (2006), Id. note 7, at page 16-17.
9 Dann, P. (2006). Accountability in Development Aid Law: The World Bank, UNDP and Emerging Structures
of Transnational Oversight. Archiv des Völkerrechts, 44(4), 381-404. At page 383. 10
Clark, D. L. (2002). The World Bank and Human Rights: The Need for Greater Accountability. Harvard
Human Rights Journal, 15, 205-226. At page 206; Dann (2006), Id. note 9, at page 383.
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impacts such as climate change are more difficult to assess on the short term. Finally, this
study discusses the findings of the analysis and considers the overall credibility of the IFC’s
Performance Standards and practice.
II. State of the Art
A. Sustainable development in international law and policy
The concept of sustainable development is most easily presented as the interconnection and
aspired balance between the economy, environment and society – three sectors which are seen
as distinct from each other.11
A downside of the concept is the assumption that ‘trade-offs can
be made between the three sectors’, for example through capitalising environmental
damage.12
Giddins et al. point to the facts that politics often prioritise the economic sector,
although the economy should in their view actually be nested into the society and the
environment. They propose a new perspective on sustainable development which grasps the
three sectors as holistic.13
In fact, development scholars have made numerous attempts to define the notion of
development in itself. Amartya Sen identifies development as “a process of expanding
freedoms equally for all people.”14
Such a notion broadens the scope from merely economic
considerations such as the gross national product (GNP) or income increases, to a broader
notion wherein people’s freedoms are widened. Freedoms also include the enjoyment of
societal and environmental services, such as community life, human rights, nature
conservation and many more. Through this definition of development, sustainable
development can be framed much better.
Meanwhile, sustainable development has found its way into international law and practice.
Principle 1 of the 1992 Rio Declaration stipulates:
“Human beings are at the centre of concern of sustainable development. They are
entitled to a healthy and productive life in harmony with nature.”15
11
Giddings et al. (2002), Id. note 6. At page 189. 12
Giddings et al. (2002), Id. note 6. At page 189. 13
Giddings et al. (2002), Id. note 6. At page 192. 14
Sen, A. (2001) Development as Freedom. Oxford, United Kingdom: Oxford University Press. At page 3. 15
United Nations (UN), 1992 Rio Declaration on Environment and Development, 14 June 1992, Rio de Janeiro,
Brazil. UN Doc. A/CONF.151/26 (vol. I) / 31 ILM 874 (1992). Principle 1.
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This principle emphasises the role of humans, i.e. society, as well as nature. Furthermore,
Principle 3 of the Rio Declaration includes intergenerational and intragenerational equity
values, calling for so-called “environmental justice”,16
by stating:
“The right to development must be fulfilled so as to equitably meet developmental and
environmental needs of present and future generations.”17
Finally, Principle 4 of the said Declaration emphasises the importance of environmental
protection in the framework of sustainable development, and stipulates:
“In order to achieve sustainable development, environmental protection shall
constitute an integral part of the development process and cannot be considered in
isolation from it.”18
This international framework has served as a basis for the sustainable policy in numerous
fields. With regard to the private sector and investment banks, the rise of corporate social
responsibility (CSR) may be considered from this angle. CSR means that companies or banks,
who have traditionally mainly economic motivations, take part in social and environmental
initiatives in order of doing business in a sustainable manner.
The new emphasis on corporate social responsibility can partially be explained by the
growing power of social movements, NGOs and indigenous peoples, who each have gained in
organisational capacity and cooperation since the 1980s.19
Such an extended influence of civil
society actors puts more pressure on the companies, who have to adopt their strategies.
Furthermore, international agencies such as the World Business Council for Sustainable
Development (WBCSD) and the Centre for International Private Enterprise (CIPE) have
encouraged (transnational) companies to become more socially responsible.20
Hamann explains that any decent corporate policy should be supported by the top
management on three levels.21
First, by incorporating international standards within the
company’s policies (e.g. the Universal Declaration of Human Rights, or the Rio Declaration);
16
Nanda, V. & Pring. G.R. (2012) International environmental law and policy for the 21st century.
Leiden/Boston: Martinus Nijhoff Publishers. At page 34. 17
UN 1992 Rio Declaration on Environment and Development, Id. note 15, Principle 3. 18
UN 1992 Rio Declaration on Environment and Development, Id. note 15, Principle 4. 19
Kapelus, P. (2002). Mining, corporate social responsibility and the" community": The case of Rio Tinto,
Richards Bay minerals and the Mbonambi. Journal of Business Ethics, 39(3), 275-296. At page 278. 20
Hamann, R. (2003). Mining companies' role in sustainable development: the 'why' and 'how' of corporate
social responsibility from a business perspective. Development Southern Africa, 20(2), 237-254. At page 238;
Kapelus (2002), Id. note 19. At page 278. 21
Hamann (2003), Id. note 20. At page 244.
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secondly, by setting measureable indicators for the company’s sustainability targets; and
thirdly, by having clear accounting and reporting structures to continually improve the policy
implementation in the field. Such requirements are precisely what is needed to be critically
assessed regarding the sustainability policy of the IFC.
B. The World Bank and the International Finance Corporation
a) ORIGINS AND STRUCTURE
The World Bank was founded in 1944 in Bretton Woods, USA, as part of the General
Agreement on Tariffs and Trade (GATT). In combination with the International Monetary
Fund (IMF), the World Bank was designed to promote development and reconstruction after
World War II.22
Meanwhile, its mission expanded to alleviating poverty worldwide.
The International Finance Corporation (IFC) was formed in 1956 as a separate branch of the
World Bank, focusing on private sector investments.23
The World Bank Group is based on five separate, but complementary institutions: the
International Bank for Reconstruction and Development (IBRD), the International
Development Agency (IDA), the International Finance Corporation (IFC), the Multilateral
Investment Guarantee Agency (MIGA) and the International Centre for the Settlement of
Investment Disputes (ICSID).24
Whereas the first two branches primarily lend to governments, the IFC functions as a separate
branch and invests in private entrepreneurs and agencies in low-income countries, with the
aim of boosting the economy.25
The IFC has 184 member countries and the same president as
the World Bank Group.26
22
The World Bank, History (2016), available at http://www.worldbank.org/en/about/history 23
International Finance Corporation, IFC History (2016), available at
http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc/ifc+history/ifc+his
tory# 24
International Finance Corporation, IFC Governance (2016), available at
http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc_new/IFC+Govern
ance 25
Mundy, K., & Menashy, F. (2014). Investing in private education for poverty alleviation: The case of the
World Bank's International Finance Corporation. International Journal of Educational Development, 35, 16-24.
At page 17. 26
International Finance Corporation, Id. note 24.
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The IFC funds are made up of contributions by the member countries and through the
issuance of debt obligations in international capital markets.27
The investments are often
addressed at sectors that the IFC considers to be essential for the needs of the poor: financial
markets, infrastructure, health and education, and agribusiness (i.e. any business in the food
supply chain).28
b) ACCOUNTABILITY MECHANISMS
The IFC, as part of the World Bank Group, is an international organisation and thus enjoys
immunity under international law.29
This raises questions about its accountability, which will
be explained further on in this paper. However, the World Bank Group has several in-house
control mechanisms in place to guard the implementation and enforcement of its development
investments.
The Inspection Panel was created in 1993 and is “an independent complaints mechanism for
people and communities who believe that they have been, or are likely to be, adversely
affected by a World Bank-funded project.”30
The Inspection Panel only operates for the IBRD
and the IDA.
For the IFC (and the MIGA), a similar mechanism has been in place since 1999, namely the
Compliance Advisor Ombudsman (CAO).31
The CAO is more flexible than the Inspection
Panel as it concerns the control of private investments.32
Both complaints mechanisms report
directly to the President of the World Bank Group. When the IFC is directly involved in a
private sector project and this project affects individuals, communities, or any other party,
those may file a complaint at the CAO33
– in accordance with the CAO’s first case, the
27
International Finance Corporation, Funding (2016), available at
http://www.ifc.org/wps/wcm/connect/CORP_EXT_Content/IFC_External_Corporate_Site/About+IFC_New/IFC
+Governance/Funding/ 28
Mundy & Menashy (2014), Id. note 25. At page 17. 29
International Finance Corporation, Articles of Agreement (as Amended through June 27, 2012, Washington
D.C.), available at
http://www.ifc.org/wps/wcm/connect/1c95b500484cb68d9f3dbf5f4fc3f18b/IFC_Articles_of_Agreement.pdf?M
OD=AJPERES. At Article VI: Status, Immunities and Privileges. 30
The Inspection Panel, About Us (2016), available at
http://ewebapps.worldbank.org/apps/ip/Pages/AboutUs.aspx 31
Compliance Advisor/Ombudsman, About the CAO: Who we are (2016), available at http://www.cao-
ombudsman.org/about/whoweare/ 32
Park, S. (2005). How transnational environmental advocacy networks socialize international financial
institutions: A case study of the International Finance Corporation. Global Environmental Politics, 5(4), 95-119.
At page 112. 33
International Finance Corporation, Policy on Environmental and Social Sustainability (1 January 2012),
available at
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Pangue case.34
The goal is to enhance “environmental and social outcomes on the ground and
fostering greater public accountability of IFC.”35
c) DEVELOPMENT AGENDA
As stated, the World Bank’s mission is to end worldwide poverty. The specific mandate of the
IFC is contained in its own Articles of Agreement. Article I of the IFC’s Articles of
Agreement stipulates:
“The purpose of the Corporation is to further economic development by encouraging the
growth of productive private enterprise in member countries, particularly in the less
developed areas, thus supplementing the activities of the International Bank for
Reconstruction and Development (hereinafter called the Bank). In carrying out this
purpose, the Corporation shall:
(i) in association with private investors, assist in financing the establishment,
improvement and expansion of productive private enterprises which would
contribute to the development of its member countries by making investments,
without guarantee of repayment by the member government concerned, in
cases where sufficient private capital is not available on reasonable terms;
(ii) seek to bring together investment opportunities, domestic and foreign private
capital, and experienced management; and
(iii) seek to stimulate, and to help create conditions conducive to, the flow of
private capital, domestic and foreign, into productive investment in member
countries.
The Corporation shall be guided in all its decisions by the provisions of this Article.”36
In recent years, more attention has been devoted to sustainability concerns within this
development mission, mainly as a result of outside pressure coming from non-governmental
organisations and other stakeholders.37
However, the consideration of societal and
http://www.ifc.org/wps/wcm/connect/7540778049a792dcb87efaa8c6a8312a/SP_English_2012.pdf?MOD=AJPE
RES. At para. 57. 34
Compliance Advisor/Ombudsman, The CAO’s First Case: Pangue Hydroelectric Project, Chile (June 2010),
available at http://www.cao-ombudsman.org/cases/document-
links/documents/PangueCAOConclusionReport_2010.pdf 35
IFC Policy on Environmental and Social Sustainability, Id. note 33. At para 56. 36
IFC Articles of Agreement, Id. note 29. Article I. 37
Clark (2002), Id. note 10. At page 205; WWF & BankTrack (2006), Shaping the Future of Sustainable
Finance: Moving the Banking Sector from Promises to Performance, available at
http://www.wwf.org.uk/filelibrary/pdf/sustainablefinancereport.pdf. At page 11.
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environmental outcomes is sometimes limited by an inherent feature of the World Bank
Group, being its purely economic mandate. As is the case for the IBRD and the IDA,38
the
IFC’s Articles of Agreement contain an important provision regarding the “political
prohibition”. Article III, Section 9 provides that:
“The Corporation and its officers shall not interfere in the political affairs of any
member; nor shall they be influenced in their decisions by the political character of the
member or members concerned. Only economic considerations shall be relevant to their
decisions, and these considerations shall be weighed impartially in order to achieve the
purposes stated in this Agreement.”39
Such ‘political prohibition’ clause has served as justification for the lack of attention for
human rights in several cases in the past, as reported by the UN Special Rapporteur on
extreme poverty and human rights.40
The economic sector is still the most important aspect of
the World Bank’s and the IFC’s development agenda and thus can be subjected to a critical
assessment.
C. Criticism on the World Bank’s development agenda
The World Bank’s development agenda has been subjected to criticism from various angles.
For example, its macroeconomic growth effects are widely contested and not always as good
as foreseen.41
Yet, also from a non-economic perspective, many concerns arise. The famous
book by Naomi Klein, the Shock Doctrine, has been the most extensive effort in this regard to
document the detrimental effects of certain World Bank (and IMF) loans on local trade,
communities and the environment.42
I choose to highlight several criticisms in this section.
Firstly, the World Bank’s contribution to sustainable development is contested. Whereas
sufficient evidence exists that the IFC’s environmental and social standards have improved
38
UN General Assembly, Report of the Special Rapporteur on extreme poverty and human rights No. A/70/274
(4 August 2015). At page 1, para.6. 39
IFC, Articles of Agreement, Id. note 29. Article III, Section 9. 40
UN Report of the Special Rapporteur on extreme poverty and human rights, Id. note 38. At page 4-5, para. 6-8. 41
Bowles, I. A., Rosenfeld, A. B., Kormos, C. F., & Reining, C. (1999). The Environmental Impacts of
International Finance Corporation Lending and Proposals for Reform: A Case Study of Conservation and Oil
Development in the Guatemalan Peten. Environmental Law, 29, 103-132. At page 104; Dreher, A. (2006). IMF
and economic growth: The effects of programs, loans, and compliance with conditionality. World
Development, 34(5), 769-788. At page 781. 42
Klein, N. (2007) The Shock Doctrine, London: Penguin Books.
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project performance in specific instances,43
the opposite is also true. The ICIJ report of 2015
revealed numerous case studies wherein environmental issues are not dealt with properly and
contradict the IFC’s Performance Standards.44
Among the examples are investments to
companies that are linked to forced evictions and assassinations in Honduras,45
to mining
industries in Peru that cause enormous environmental damage and human displacements,46
or
to an environmentally destructive power plant in India.47
A frequent counter-argument made
by multilateral development banks (“MDBs”) in this matter is that “MBD-financed projects
are arguably implemented in more environmentally and socially sound ways than projects
where MDBs are not involved.”48
Secondly, as the World Bank is an international organisation, it depends on input of its
member states. High-income states and especially the United States exert a stronger influence
over de Bank’s investments. The U.S. Government controls the largest share of the Bank’s
funds, unilaterally appoints the president and has the largest block of votes in the executive
board.49
Therefore, some scholars assert that the World Bank’s policy agenda reflects the
interests of the United States.50
For example, a study by Kilby found that significant
differences exist in the enforcement of loan disbursements between countries that are friendly
with the U.S. and countries that are not.51
Such alleged imparity within the World Bank led to criticism on its democratic functioning52
and its accountability.53
However, other scholars bring more nuance to the role of the United
States.54
The interests of the United States vary according to the presidency,55
other states and
43
Hunter, D. B. (2007). Civil Society Networks and the Development of Environmental Standards at
International Financial Institutions. Chicago Journal of International Law 8(2), 437-478. At page 474-475. 44
ICIJ report, Id. note 1. 45
The Guardian, 13 January 2014, Id. note 5. 46
The Huffington Post, 15 April 2015, Id. note 4. 47
The IFC is financing the Tata Mundra project in India, which is harming the local communities and the
environment and causing enormous displacements; see Kennard, M. & Provost, C. Fishermen and farmers sue
World Bank lending arm over power plant in India (The Guardian, 10 November 2015), available at
http://www.theguardian.com/global-development/2015/nov/10/fishermen-farmers-sue-world-bank-lending-arm-
ifc-power-plant-india. 48
Hunter (2007), Id. note 43. At page 469. 49
Nielson, D. L., & Tierney, M. J. (2003). Delegation to international organizations: Agency theory and World
Bank environmental reform.International organization, 57(2), 241-276. At page 241. 50
Fleck, R. K., & Kilby, C. (2006). World Bank independence: A model and statistical analysis of US
influence. Review of Development Economics, 10(2), 224-240. At page 237. 51
Kilby, C. (2009). The political economy of conditionality: An empirical analysis of World Bank loan
disbursements. Journal of Development Economics, 89(1), 51-61. At page 59. 52
Daugirdas, K. (2013). Congress Underestimated: The Case of the World Bank. American Journal of
International Law, 107(3), 517-562. At page 517. 53
Dann (2006), Id. note 9. At page 388. 54
Daugirdas (2013), Id. note 52. At page 518. 55
Kilby (2009), Id. note 51. At page 51.
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regions have had substantive influence in the past as well,56
and the U.S. influence can also be
used to positively adapt environmental policy.57
Thirdly, the question of transparency is raised, also through internal criticism. A topic of great
concern is the alleged lack of documenting. For example, with regard to involuntary
resettlement, the majority of the sampled cases lacked information on “what happened to
people after they were forced from their land or homes”, or “about whether anyone had
complained and whether complaints were resolved.”58
Lastly, an alarming concern is the lack of (effective) accountability mechanisms for the World
Bank. The World Bank and the IFC, being international organisations, enjoy immunity under
international law. They cannot be held accountable before national courts. This is included in
Article VI, Section 3 of the IFC’s Articles of Agreement, which states that:
“Actions may be brought against the Corporation only in a court of competent
jurisdiction in the territories of a member in which the Corporation has an office, has
appointed an agent for the purpose of accepting service of process, or has issued or
guaranteed securities. No actions shall, however, be brought by members or persons
acting for or deriving claims from members. The property and assets of the
Corporation shall, wheresoever located and by whomsoever held, be immune from all
forms of seizure, attachment or execution before the delivery of final judgment against
the Corporation.”59
While some actions are thus possible, the IFC may claim its immunity from individual
complaints. For example, in the recent Tata Mundra case, several Indian fishermen and local
community residents attempted to sue the International Finance Corporation before the United
States District Court for the District of Columbia.60
They alleged that the construction of the
Tata Mundra coal-fired power plant, which was enabled and financed by the IFC, led to
changes in the local marine systems, air pollution and water contamination, with an enormous
loss of fish stocks and grazing lands as a result, and consequently economic and physical
56
E.g. The EU Member States and Japan, see Nielson & Tierney (2003), Id. note 49. At page 241. 57
E.g. in 1980s the U.S. threatened to stop its funding, unless the World Bank Group changed its practices
concerning sustainability (with support of the EU and Japan). see Nielson & Tierney (2003), Id. note 49. At page
241. 58
ICIJ report, Id. note 1. 59
IFC Articles of Agreement, Id. note 29. Article VI, Section 3. 60
United States District Court for the District of Columbia, Tata Mundra case (Budha Ismail Jam, et al.,
Plaintiffs, v. International Finance Corporation, Defendant). Civil Action No. 15-612 (JDB). 24 March 2016.
Available at https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2015cv0612-31.
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displacement for the local communities.61
The case seemed to be a promising effort to claim
accountability of the World Bank, considering the complaint at stake is only one in a longer
list, as demonstrated by the ICIJ. Yet, it was dismissed before the District Court of Columbia
on the grounds of the International Organizations Immunities Act (IOIA) of 24 March 2016.
Without such formal accountability in international law, the World Bank has set up in-house
control mechanisms and regularly publishes reports on the matter. However, these (in-house)
control mechanisms of the World Bank are similarly being criticised for lacking credibility.
For example, the World Bank’s in-house ‘safeguards’ are not consistently considered when
deciding on project financing, according to the ICIJ report.62
Safeguards are scientists such as
anthropologists or sociologists, who allegedly only “have a place at the table in debates over
how much the bank is required to do to protect people.”63
In practice, however, whistle-
blowers and witnesses have revealed that these safeguards are frequently ignored and
undervalued.64
A 2014 internal Advisory Review of the Bank’s Safeguard Risk Management revealed several
concerns by safeguards, 65
mostly relating to the lack of attention for their work, or the lack of
resources to ensure that the environmental and social specialists can travel to the project sites
to assess the risks. One of the testimonies in the said review claimed that safeguards are
treated “as a "check in the box" rather than an integral part of project design and delivery by
both client and task team.”
61
United States District Court for the District of Columbia, Tata Mundra case (Budha Ismail Jam, et al.,
Plaintiffs, v. International Finance Corporation, Defendant). Class Action Complaint for Damages and Equitable
Relief. 23 April 2015. Available at
https://www.earthrights.org/sites/default/files/documents/ifc_tata_mundra_complaint.pdf. At Part III. 62
ICIJ report, Id. note 1. 63
Ibid. 64
Ibid. 65
The World Bank Group, Draft Report on an Advisory Review of the Bank’s Safeguard Risk Management. 16
June 2014, available at http://pubdocs.worldbank.org/pubdocs/publicdoc/2015/3/317401425505124162/iad-
draft-report-advisory-review-safeguards-risk-management.pdf. At page 18.
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III. Methodology
This study aims to examine the credibility of the World Bank’s development policy by
focusing on the IFC’s Performance Standards on Environmental and Social Sustainability.
The Performance Standards are part of the IFC’s Sustainability Framework66 and specifically
relate to the roles and responsibilities of the clients with respect to sustainability. The
Sustainability Framework was updated in 2012 after reviewing the earlier version of 2006.67
Choice of data
The updated IFC Performance Standards “are the first among similar initiatives undertaken
by other international financial institutions that clearly identify the responsibility of the
private sector and reference international environmental agreements and principles.”68
As
the World Bank’s sustainability policy may have an important influence on other private
investment activities69
, the IFC Performance Standards may as well be considered as
benchmarks for other financial institutions.70
It is thus important to assess the credibility of
Performance Standards, considering their potential function as role model for multilateral
development institutions and commercial banks.71
Indeed, The World Bank Group's
environmental and social safeguard policies have previously influenced similar developments
at most other international financial institutions.72
Furthermore, the IFC in itself is the largest multilateral source of financing for private sector
projects in the developing world.73
Aside from its influence on the definition of environmental
standards for the private sector, the IFC still reaches numerous projects, people and
environments on its own. The Performance Standards thus have “a significant degree of
66
International Finance Corporation, IFC’s Sustainability Framework: From Policy Update to Implementation
(December 2012), available at
http://www.ifc.org/wps/wcm/connect/62595d004df3e8cf8c02ac7a9dd66321/IFC_SF_Update-
Implementation_2012.pdf?MOD=AJPERES. At page 1. 67
International Finance Corporation, Environmental and Social Performance Standards and Guidance Notes
(2016), available at
http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/ifc+sustainability/our+appr
oach/risk+management/performance+standards/environmental+and+social+performance+standards+and+guidan
ce+notes. 68
Morgera, E. (2007). Significant trends in corporate environmental accountability: the new performance
standards of the international finance corporation. Colorado Journal of International Environmental Law &
Policy, 18, 151-188. At p. 152 69
Morgera (2007), Id. note 68. At page 182; Neu & Gomez (2006), Id. note 7. At page 17. 70
Hunter (2007), Id. note 43. At page 445; Morgera (2007), Id. note 68. At page 182. 71
Ibid. 72
Hunter (2007), Id. note 43. At page 442; UN General Assembly, Report of the Special Rapporteur on extreme
poverty and human rights, Id. note 38. At page 4, para. 2. 73
Morgera (2007), Id. note 68. At page 152.
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influence on how major development projects are designed and implemented in developing
countries”74
.
Other scholars are more critical about the influence of the Performance Standards, such as
Hunter, who points out that such standards are “not, nor intended to be, limited to
constraining the behaviour of the underlying institution. The standards are directed at the
borrowers from these institutions.”75
A critical assessment of what the IFC considers as corporately responsible investing is
therefore widely needed. In this study, the analysis is threefold.
Choice of methods
First, a critical discourse analysis (CDA) is conducted of the IFC’s Performance Standards. A
CDA is a qualitative research method, used to deconstruct the discourse of the World Bank on
sustainable development and link it to the broader social context. As the rhetoric of the World
Bank on paper may differ widely from the implementation in practice,76
a CDA aims to
analyse the discourse behind these policy texts. Box 1 provides more information on the
usefulness of discourse analysis in policy research.
A CDA is a critical, systematic analysis77
to assess the credibility of a text or statement and is
therefore used as a first, explorative step in this research. A CDA is a linguistic analysis of a
discourse in its social context.78
“Rather than merely describing the discourse structures, it
tries to explain them in terms of properties of social interaction and especially social
structure.”79
However, as it is a qualitative research method, a fair amount of reflexivity is
required.
74
Morgera (2007), Id. note 68. At page 182. 75
Hunter (2007), Id. note 43. At page 469. 76
Clark (2002), Id. note 10. At page 206. 77
Jørgensen, M. W., & Phillips, L. J. (2002) Discourse analysis as theory and method. London: Sage. At page 5. 78
Fairclough (2001) Critical discourse analysis as a method in social scientific research. In Wodak, R. & Meyer,
M. (Eds.) Methods of Critical Discourse Analysis (pp.121-138). London: Sage. At page 121. 79
Van Dijk, T. (2001) Critical Discourse Analysis. In Schriffrin, D., Tannen, D. & Hamilton, H.E. (Eds.) The
Handbook of Discourse Analysis. Malden/Oxford: Blackwell Publishers (pp. 352-371). At page 353.
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Box 1: Discourse as an indicator of social attitudes and ideology
A discourse is “a particular way of talking about and understanding the world (or an
aspect of the world)”.80
Within this social constructivist paradigm, language and semiotics
are considered as integral elements of social practice, that create our understanding of
reality.81
Language is considered to manifest a discourse, and a discourse is considered to
reflect the broader social context and ideology. A particular discourse is inherently
positioned and contingent – “differently positioned social actors `see' and represent social
life in different ways, different discourses.”82
Analysing the discourse of central policy
documents thus reflects the ideology and mission of the IFC, which relates to the credibility
of its investments.
“Given the role of political discourse in the enactment, reproduction and legitimation of
power and domination,”83
a discourse analysis is highly relevant is public policy research.84
Furthermore, “For critical discourse analysts, discourse is a form of social practice which
both constitutes the social world and is constituted by other social practices.”85
In this
paradigm, a discourse is considered to influence the recipient’s ideas of the social reality –
in this sense the readers’ views on the ethics and sustainability of the IFC.
Secondly, a normative analysis is conducted on the Performance Standards by comparing
them to relevant international environmental law. The current international laws and practice
are considered to be normative benchmarks. This part of the analysis looks at which aspects
of environmental law are included in the Performance Standards and which are left out. The
focus is mainly on the requirement for an environmental impact assessment, the respect for
human rights and procedural rights, and the conservation of biodiversity. This choice is
motivated by the prevalence of complaints on these subjects. In addition, the role of the IFC’s
projects is more clear to analyse with respect to these relatively tangible indicators, rather than
for example with regard to climate change, which is dependent upon much more factors.
80
Jørgensen & Phillips (2002), Id. note 77. At page 1. 81
Fairclough (2001), Id. note 78. At page 122. 82
Fairclough (2001), Id. note 78. At page 123. 83
Van Dijk (2001), Id. note 79. At page 370. 84
For more information on social constructivism and discourses, see for example Jørgensen & Phillips (2002),
Id. note 77. 85
Jørgensen & Phillips (2002), Id. note 77. At page 61.
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The conformity of the performance standards to international law on these aspects is seen as
an indicator of credibility, because the international laws are made in agreement between
States and indicate a general willingness to cooperate regarding the environment. The
Performance Standards’ conformity with these international standards indicates the World
Bank Group’s willingness to adopt the same standards, which are internationally agreed upon.
A lack of such conformity would therefore point to a less credible sustainability policy.
Thirdly, an evaluative analysis of the IFC’s policy is conducted by focusing on concrete case
studies of IFC funded projects and the extent of compliance with the Performance Standards
in these cases. Special attention is given to the case of Cajamarca, Peru, in which the IFC
funded mining operations with harmful effects on the environment and the local
communities.86
The choice for this case study was made because of the available
information87
and the international attention that was given to the case.88
86
BankTrack, Minas Conga mining project Peru (3 January 2016), available at
http://www.banktrack.org/show/dodgydeals/minas_conga_mining_project#tab_dodgydeals_basics. 87
Information obtained through the Belgian NGO CATAPA. 88
Columbia Law School Human Rights Clinic. Conga No Va. An Assessment of the Conga Mining Project in
Light of World Bank Standards (September 2015), available at
http://static1.squarespace.com/static/560b18b0e4b067a54c32c76a/t/560d9754e4b059118c4843c6/14437312848
71/CongaNoVa_Assessment.pdf.
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IV. Analysis: Assessing the credibility of the IFC’s Performance
Standards
A. Discursive analysis: A critical discourse analysis of the Performance
Standards
To assess the credibility of the IFC’s environmental and social policy framework, a Critical
Discourse Analysis (CDA) is conducted on one of the central policy documents of the IFC
regarding sustainability: the Performance Standards. As explained in the methodology
section, a CDA is based on the premise that language should be analysed in its social
context.89
The CDA is conducted on the introductions of each Performance Standard, and can
be consulted in Appendix 1.
A CDA is typically conducted in three parts: a textual analysis, a discursive analysis and a
social analysis.90
a) TEXTUAL ANALYSIS: DECONSTRUCTING LINGUISTIC DEVICES
The textual analysis analyses the literal text to deconstruct the so-called linguistic devices, the
linguistic features of the text.91
Such linguistic devices are considered to reflect an underlying
discourse.92
The full textual analysis of the introductions to each performance standard can be
found in Appendix 1.
In accordance with the subsequent structure of the paper, three aspects are highlighted. First,
the requirement of an EIA; second, the respect for human rights; and third, the conservation of
biodiversity.
The requirement of an Environmental Impact Assessment
The first Performance Standard concerns the Assessment and Management of Environmental
and Social Risks and Impacts, roughly referring to the requirement of an environmental
impact assessment for IFC funded projects (see infra). It explains the client’s responsibility to
conduct an Environmental Impact Assessment (herein called an Environmental and Social
Management System, “ESMS”). The examples provided below are from the introductions of
this first Performance Standard.
89
Jørgensen & Phillips (2002), Id. note 77. At page 62. 90
Jørgensen & Phillips (2002), Id. note 77. At page 68. 91
Ibid. 92
Ibid.
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The introduction of the respective performance standard is characterised by vague wording
and blurring of responsibilities. The highlighted parts distinguish several noteworthy
linguistic devices that are used to obtain this result.
First, the precise avoidance of a clear subject is an important textual device. The linguistic
structure of the sentences often reflects a focus on the processes rather than on the subject or
object of the policy. For example, in the below excerpt, verbs are replaced by nouns –
stressing the process aspect (assessing, managing) and leaving the actor (the clients, the
subject) out of focus.
“At times, the assessment and management of certain environmental and social risks
and impacts may be the responsibility of the government or other third parties over
which the client does not have control or influence.”93
Such nominalisation of verbs reduces the agency of the supposed subject, namely the client.94
Similarly, most phrases are constructed without an acting subject, such as the following:
“An effective ESMS (…) involves engagement between the client, its workers, local
communities (…) and, where appropriate, other stakeholders.”95
In the above example, the ESMS is the subject of the sentence – leaving a passive role for the
supposedly acting parties.
Secondly, the grammatical structure of the sentences increase the vagueness of several
obligations. Often long sentences are used and/or the essence is put in between peripheral
information, which covers up the actual obligation. This sentence from §2 provides a good
example:
“[While the client cannot control these government or third party actions,] an
effective ESMS should identify the different entities involved and the roles they play,
the corresponding risks they present to the client, and opportunities to collaborate
with these third parties [in order to help achieve environmental and social outcomes
that are consistent with the Performance Standards.]”96
93
International Finance Corporation, Performance Standards on Environmental and Social Sustainability (1
January 2012), available at
http://www.ifc.org/wps/wcm/connect/115482804a0255db96fbffd1a5d13d27/PS_English_2012_Full-
Document.pdf?MOD=AJPERES. At Performance Standard 1, § 2. 94
Jørgensen & Phillips (2002), Id. note 77. At page 83. 95
International Finance Corporation, Id. note 93. At Performance Standard 1, § 1. 96
IFC, Id. note 93. At Performance Standard 1, § 2.
- 24 -
Finally, the modality of the text is the most important indicator of credibility. Modality refers
to the relationship between the author or spokesman and the statements that are made,97
and
thus relates to the certainty involved in the statements. Less certain constructions include ‘I
believe that’, ‘may’, ‘can’, ‘possibly’ and the like. The introduction of Performance Standard
1 includes several of those uncertain constructions and undermines the credibility of the
source. See for example the use of can instead of will in the following excerpts:
“In addition, this Performance Standard supports the use of an effective grievance
mechanism that can facilitate early indication of, and prompt remediation for those
who believe that they have been harmed by a client’s actions.” 98
Overall, the introduction of Performance Standard 1 lacks a solid credibility and fails to
clearly define the responsibilities of the clients within the conduct of an ESMS. The
responsibility of the source itself (the IFC) is not even mentioned – thus avoiding possible
liability in case of environmentally or socially damaging investments.
Respect for human rights
No performance standard is fully devoted to the human rights aspects of the ESMS. Rather,
the issue of human rights is peripherally raised in several of the provisions.
Where mentioned, the use of wording immediately strikes to the attention, mostly reflecting
soft language or vague obligations. Provision §3 of Performance Standard 1 offers a good
example, with four vague words in one sentence:
“Business should respect human rights, which means to avoid infringing on the
human rights of others and address adverse human rights impacts business may cause
or contribute to.”99
The excerpt above shows that the responsibility obligations to the clients (i.e. ‘business’) are
framed in very open and vague terms. Using the word should instead of must indicates a
guideline rather than an obligation – which relates to the transitivity aspect, the extent to
which processes are linked to subjects or objects.100
The focus here is more on the process of
the policy (“respect human rights”) than on who is supposed to implement it (“businesses”).
Furthermore, the client is only required to avoid and address adverse impacts, without further
97
Jørgensen & Phillips (2002), Id. note 77. At page 83. 98
IFC, Id. note 93. At Performance Standard 1, § 1. 99
IFC, Id. note 93. At Performance Standard 1, § 3. 100
Jørgensen & Phillips (2002), Id. note 77. At page 83.
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specification on how to address such impacts. Nor is there any reference to liability or control
mechanisms.
In the same line, the responsibility aspect is divided between the client and the Indigenous
Communities, and consequently very unclear. For example, provision §7 of Performance
Standard 6 provides:
“Private sector projects can create opportunities for Indigenous Peoples to
participate in, and benefit from project-related activities that may help them fulfill
their aspiration for economic and social development.”101
It is not clear what these opportunities are expected to encompass and neither how much is
expected of the Indigenous Peoples themselves, in ‘fulfilling their aspirations’. The
introduction of this sixth performance standard is characterised by numerous vague words that
do not pose binding obligations upon the client, such as may, can, or should.
In addition, Performance Standard 2 relates to worker’s rights, but does not link this to human
rights such as the right to work (entailed in Article 6 of the International Covenant on
Economic, Social and Cultural Rights).102
The emphasis is instead put on the economic
turnover that will result from respecting labour rights.
Performance Standard 4 deals with the protection of health and safety, but is surprisingly brief
on the matter and does not use any explicit reference to human rights. The same goes for
Performance Standard 5 on land acquisition and involuntary resettlement. Both the fourth and
the fifth Performance Standard use many nominalisations, hence avoiding an active subject,
i.e. a responsible actor.
Biodiversity protection
With regard to biodiversity conservation, Performance Standard 6 provides the necessary
provisions. In addition, Performance Standard 8 relates to cultural heritage and also refers to
biodiversity protection.
101
International Finance Corporation, Id. note 93. At Performance Standard 6, § 2. 102
United Nations, International Covenant on Economic, Social and Cultural Rights, adopted on 16 December
1966. Article 6.
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In the introductions of both performance standards, it is clear that the language is not as vague
anymore. Both texts highlight the importance of protection biodiversity sites, which is even
seen as ‘fundamental’ in sustainable development.103
Furthermore, both performance standards explicitly refer to the Convention on Biological
Diversity, an official international instrument that will be explained further in the normative
analysis of this paper. Such referral is called intertextuality and increases the credibility of the
document, as it is founded on official texts and running discourses.
Taken this into account, the textual analysis seems to point to a more certain position of the
IFC regarding biodiversity protection than with respect to human rights or its own
responsibilities. The further discursive and social analysis aim to explain this use of language.
b) DISCURSIVE ANALYSIS: CONTEXT OF THE TEXT
The linguistic structure of the text largely shows that the responsibility aspect is blurred,
either through transitivity constructions, nominalisations or the absence of an acting subject,
but also literally through the choice of wording. Whereas most of the responsibility is shifted
to the client rather than the investor (i.e. the IFC), the client still has an overall passive role
throughout the text. The focus is put largely on the process of the ESMS, instead of on the
actors that are supposed to conduct it. This already puts some question marks to the credibility
of the document.
Also, most of the text focuses on the policy itself, rather than on the aspired effects of the
policy. One might call this reluctance to mention effects suspicious, as good effects are worth
bragging about.
Such blurring of responsibility fits into the context in which the (updated) Performance
Standards were made. The second part of a CDA specifically looks at this context, which is
composed of all elements relating to the production and consumption of the text and
discourse.104
It concerns the setting (time, place) wherein the text was produced, as well as the
goals, opinions and attitudes of the writers, and references to other texts and discourses.
The updated Performance Standards were published in 2012 after earlier criticism on the 2006
version. For example, the Compliance Advisor/Ombudsman (CAO) published a review
document in 2010, recommending better implementation of the Action Plans from the
103
International Finance Corporation, Id. note 93. At Performance Standard 6, § 1. 104
Jørgensen & Phillips (2002), Id. note 77. At page 68; Van Dijk (2001), Id. note 79. At page 358.
- 27 -
Performance Standards, and calling for more attention to communities and migrant workers,
amongst others.105
It seems to be that the updated Performance Standards offer more of a
symbolic answer than an actual change of policy, considering the discourse is still very
reluctant to recognise such human rights aspects.
This also relates to the attitudes of the source of the document. The World Bank Group has
been dominated by economists since its creation in 1944, and is today still a very technocratic
institution.106
This composition affects how its institutional goals are shaped, and will
therefore also have influenced the language of the Performance Standards. In combination
with the ‘political prohibition’ clause, provided in Article III, Section 9 of the IFC’s Articles
of Agreement, this explains the overall focus on economic development. Such a focus on
economic development is reflected in the language of the Performance Standards, for example
in the introduction of Performance Standard 2 on labour rights, the focus is mainly put on the
beneficial economic effects of the required measures.
Lastly, as is the case for the biodiversity aspects, some standards are explicitly guided by
international instruments, like the Convention on Biological Diversity and the Convention
Concerning the Protection of the World Cultural and Natural Heritage. By mentioning these
instruments, the IFC is copying the discourse of these respective conventions, which leads to
interdiscursivity – the blending of different discourses.107
c) SOCIAL ANALYSIS: IDEOLOGY BEHIND THE TEXT
As a last part of a CDA, “the wider social practice to which the communicative event
belongs”108
is analysed. This relates to the broader social attitudes and ideology behind the
text. Social-constructivism considers such linguistic expressions as means by which powerful
actors can control the meaning, form, style and topic of the text.109
Language then both
articulates and reproduces these meanings. The question thus relates to the meaning and
message that the IFC wants to send out to the public through its performance standards.
105
The Office of the Compliance Advisor/Ombudsman, Advisory Note. Review of IFC’ s Policy and
Performance Standards on Social and Environmental Sustainability and Policy on Disclosure of Information
(May 2010). At page 29-32. 106
UN General Assembly, Report of the Special Rapporteur on extreme poverty and human rights, Id. note 38.
At page 11, para. 35. 107
Jørgensen & Phillips (2002), Id. note 77. At page 73. 108
Jørgensen & Phillips (2002), Id. note 77. At page 68. 109
Van Dijk (2001), Id. note 79. At page 358-360.
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Obviously, considering the genesis of the Performance Standards and the development of the
sustainability policy in general, the IFC aims to respond to growing civil society concerns on
its sustainability.
However, it is also demonstrating its power in the field. As the IFC is itself not liable under
international law, the responsibility aspect is largely shifted towards the client. This is clear
through several linguistic structures. Furthermore, the IFC has delimitated the specific topics
under the Performance Standards, inevitably excluding others. For example, human rights
receive particular little attention or emphasis, whereas economic development aspects do. The
choice of topic thus contributes to the reader’s understanding of what is considered as
sustainable development: the meaning of the concept is defined by what the IFC includes in
its standards.
It therefore seems that the IFC does not consider human rights as an integral element of
sustainable development. Also, sustainable development does not seem to imply a sharing of
responsibilities – in contradiction to the Rio Convention – but rather a focus on the client’s
responsibilities, often in combination with the host State and/or other stakeholders.
How to explain the World Bank Group’s overall focus on economic development and
negligence of other factors? Underlying factors might be the fear of competing development
banks applying looser standards.110
However, this is a worrying reason because competition
arguments might lead to a race-to-the-bottom.
Overall, the economic focus of the World Bank and the IFC is no surprise. The World Bank
institutions were created to provide economic reconstruction after World War II and have
followed the Washington Consensus in the 1980s later on. As explained by Naomi Klein in
‘The Shock Doctrine’,111
the World Bank investments are following a neoliberal logic with a
large focus on the private sector responsibility. The State (or international institutions as
itself) are believed better not to intervene in the market, as privatisation will lead to better end
results.
Such a privatisation dogma emphasises the role of the clients rather than the investors or
governments, and might be otherwise read as a means to avoid responsibility, and
contradictory to sustainable development. The focus is on macro-economic growth effects,
shifting societal and environmental aspects aside.
110
Hunter (2007), Id. note 43. At page 458. 111
Klein, N. (2007) Id. note 42.
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d) INTERIM CONCLUSION
The discursive analysis of the IFC Performance Standards has shown that the IFC is using
linguistic structures to avoid its own responsibilities and emphasises the economic topics
rather than societal ones, most particularly with respect to human rights.
A possible explanation for this responsibility blurring, is the neoliberal ideology underlying
the World Bank Group, which puts the emphasis on private companies (i.e. the clients) as the
primary actors to obtain development.
The importance of such discourse distribution is that it influences people’s minds and what
we believe to be the role and job of the World Bank Group.112
Any disadvantageous effects of
the IFC’s investments must therefore be analysed critically to rephrase the texts and
consequently our meanings of development.
B. Normative analysis: Comparing the Performance Standards to
international law
For the second part of this analysis, the IFC Performance Standards are compared to
international environmental standards. Such a normative analysis can evaluate the credibility
of the IFC environmental policy as it benchmarks the given standards against internationally
agreed norms. As Morgera states, “an alignment of the IFC Performance Standards with
other documents adopted at the international level would contribute to the legitimacy and
perhaps credibility of these initiatives in the eyes of international civil society.”113
Conformity
to international environmental law and principles is in this perspective an important
determinant of the credibility of the IFC Performance Standards. On the other hand, a lack of
such conformity has caused numerous complaints worldwide, as explained above.
The IFC Performance Standards are considered as a major step towards corporate
environmental accountability as they are expressly based on “the targets, objectives, and
principles of international environmental treaties and other legal documents”.114
Indeed,
several important aspects of international environmental law are to be found in the
Performance Standards and adequately reflect the current international standards.115
However,
112
Van Dijk (2001), Id. note 79. At page 356. 113
Morgera (2007), Id. note 68. At page 158. 114
Morgera (2007), Id. note 68. At page 152, 182. 115
Hunter (2007), Id. note 43. At page 468.
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despite the importance of such standards, they neither constitute treaties nor custom and thus
may not be labelled as international law.116
Moreover, other well-established environmental principles or human rights standards are not
specified in the Performance Standards, causing some concern for their credibility.
This part of the analysis assesses the most considerable international environmental principles
with regard to the Performance Standards. The main focus of this normative analysis is the
requirement of an environmental impact assessment, as this is the main aspect of the IFC
Performance Standards and all of the other Performance Standards are based upon this
requirement. For example, the necessity to respect biodiversity is a requirement that needs to
be assessed in the IFC’s ESMS.
Therefore, this chapter considers whether and to what extent international law on
environmental impact assessment is incorporated into the IFC Performance Standards.
Furthermore, the analysis specifies on three specific requirements in this regard: first, the right
to information and public participation; second, the respect for human rights; and third,
biodiversity conservation. The choice of these topics is motivated in the methodology section
above.
a) THE REQUIREMENT OF AN ENVIRONMENTAL IMPACT ASSESSMENT
According to Hunter, the environmental assessment policy is “the cornerstone of the World
Bank's safeguard policy system.”117
The requirement of an EIA is included in Performance
Standard 1 and aims “to identify and evaluate environmental and social risks and impacts of
the project”, as well as “to adopt a mitigation hierarchy to anticipate and avoid, or where
avoidance is not possible, minimize, and, where residual impacts remain, compensate/offset
for risks and impacts to workers, Affected Communities, and the environment.”118
It is clear that such risk assessment involves the project’s impacts on multiple aspects, such as
the environment, climate change, pollution prevention, human rights and more. These aspects
are included in the subsequent Performance Standards, but cannot all be explained in this
paper. Therefore, the choice is upon procedural requirements such as the right to information,
human rights, such as the right to local development, and biodiversity protection. The reason
for this choice is that the World Bank has been subjected the most to criticism on these
116
Hunter (2007), Id. note 43. At page 437. 117
Hunter (2007), Id. note 43. At page 442. 118
International Finance Corporation, Id. note 93. At Performance Standard 1, page 1.
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matters, and not as much for climate change, for example. Furthermore, as the EIA should be
conducted by the client and the IFC merely performs an overviewing function, it is more
difficult to assess long-term aspects such as climate change, than for example involuntary
resettlements.
Internationally, Principle 17 of the Rio Declaration stipulates:
“Environmental impact assessment, as a national instrument, shall be undertaken for
proposed activities that are likely to have a significant adverse impact on the
environment and are subject to a decision of a competent national authority.”119
Not only should the EIA be conducted as a purely national instrument, it is also supposed to
take note of transboundary environmental influence. This follows the no harm principle, the
prohibition of negative transboundary environmental effects, which represents a cornerstone
of international environmental law.120
Through the Pulp Mills case, the ICJ established that
an environmental impact assessment is now a general requirement under international law,
stating that:
“(…) it may now be considered a requirement under general international law to
undertake an environmental impact assessment where there is a risk that the proposed
industrial activity may have a significant adverse impact in a transboundary context,
in particular, on a shared resource.”121
Likewise, an EIA is not supposed to be limited to environmental risks. The Convention on
Biological Diversity of 1992 specifies the need for assessing biodiversity aspects within an
environmental impact assessment in Article 14(1):
“Each Contracting Party, as far as possible and as appropriate, shall:
(a) Introduce appropriate procedures requiring environmental impact assessment of
its proposed projects that are likely to have significant adverse effects on biological
diversity with a view to avoiding or minimizing such effects and, where appropriate,
allow for public participation in such procedures;”122
119
UN 1992 Rio Declaration on Environment and Development, Id. note 15, Principle 17. 120
Morgera (2007), Id. note 68. At page 184. 121
International Court of Justice, Case concerning Pulp Mills on the River Uruguay (Argentina v. Uruguay),
Judgment of 20 April 2010. At para. 204. 122
United Nations Convention on Biological Diversity, adopted on 5 June 1992, Rio de Janeiro, Brazil. Article
14.
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On paper, the IFC Performance Standards seem to recognise the need for an EIA in their
client’s projects on all of these elements. Each Performance Standard elaborates on one of the
aspects, such as pollution prevention, community engagement, and biodiversity conservation.
However, the actual implementation of the standards might not be as far-reaching or efficient
as desired. This is analysed in the following sections.
b) PROCEDURAL RIGHTS IN AN EIA
An efficient EIA is supposed to include the opinions of several stakeholders, in order to
present their interests in the decision-making process. Such procedural rights include the right
to information and the right to public participation during the entire process of the EIA.
A noteworthy regional instrument on this matter is the Aarhus Convention123
of 1998, but the
procedural rights are also widely recognised on the international level. Principle 10 of the Rio
Declaration specifies the procedural requirements of environmental decisions:
“Environmental issues are best handled with participation of all concerned citizens, at
the relevant level. At the national level, each individual shall have appropriate access
to information concerning the environment that is held by public authorities, including
information on hazardous materials and activities in their communities, and the
opportunity to participate in decision-making processes. States shall facilitate and
encourage public awareness and participation by making information widely
available. Effective access to judicial and administrative proceedings, including
redress and remedy, shall be provided.”124
The IFC Performance Standards are relatively vague about these procedural rights.
Firstly, with regard to the access to environmental information, some provisions are made to
ensure the right to information. For example, provision 10 of Performance Standard 5
stipulates:
“(…) Disclosure of relevant information and participation of Affected Communities
and persons will continue during the planning, implementation, monitoring, and
evaluation of compensation payments, livelihood restoration activities, and
123
UNECE Convention on Access to Information, Public Participation in Decision-Making and Access to Justice
in Environmental Matters, 25 June 1998, Aarhus, Denmark. 124
UN 1992 Rio Declaration on Environment and Development, Id. note 15, Principle 10.
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resettlement to achieve outcomes that are consistent with the objectives of this
Performance Standard.(…)”125
Such a provision seems to imply that the Affected Communities receive sufficient information
during the project planning phase and beyond. However, it must be noted that this precise
information might not always be consistently managed. A 2014 leaked report on an advisory
review of the Bank’s Safeguard Risk Management126
revealed that, for the IBRD at least, the
safeguard risk management process has numerous flaws concerning the documentation, rating
and measurement of risks. For example, an internal survey among the environmental and
social development specialists showed that many of them (77%) have the impression that their
work is not appreciated and their input not valued in the decision-making process.127
The
internal audit also revealed that “over half of the projects are not rated for safeguard risk
although such rating is mandatory”,128
and that “the implementation of mitigation measures
has not been consistently tracked and documented during project implementation.”129
These
quotes are only excerpts of a larger report on the lack of transparency during the risk
assessment process. With biased or absent information, it is of course very difficult to provide
the public with the right to information.
Secondly, concerning the right to public participation, the Performance Standards only
explicitly grant participation rights to indigenous communities. It must then first be
delimitated who is considered to be a relevant and valid stakeholder in the process. For
example, a central element of the human rights of the indigenous communities concerns the
notion of ‘prior informed consent’,130
which means that “the local community should have the
power and right to stop a project that they do not want, or, at a minimum, have an active
involvement in its definition.”131
However, a ‘community’s voice’ does not necessarily have
to be a stable opinion on a certain project, and thus might lead to complex consultation
processes.132
The question thus arises as to who falls into the category of indigenous peoples.
125
International Finance Corporation, Id. note 93. At Performance Standard 5, § 10. 126
Internal Audit Department (IAD), Report No. IBRD FY14-XX. Draft Report on an Advisory review of the
Bank’s Safeguard Risk Management (16 June 2014), available at
http://pubdocs.worldbank.org/pubdocs/publicdoc/2015/3/317401425505124162/iad-draft-report-advisory-
review-safeguards-risk-management.pdf 127
Internal Audit Department (IAD), Id. note 126. At page 25. 128
Internal Audit Department (IAD), Id. note 126. At page 12. 129
Internal Audit Department (IAD), Id. note 126. At page 17. 130
Hamann (2003), Id. note 20. At page 248-249. 131
Hamann (2003), Id. note 20. At page 249. 132
Ibid.
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Defining “the community” is often a difficult exercise and consequently it is tough to decide
upon whose rights deserve adequate protection and may be affected by certain projects.133
Communities may be defined by objective demographic characteristics, such as religion or
geographical territory, but also by more complex notions such as culture. Such identities may
shift and do not necessarily construct stable entities.134
In the same regard, difficulties may
arise when consulting these communities. For example, whereas in some traditional
communities it might be sufficient to consult the chief,135
in modern forms of affected
communities this might not be appropriate and wider consultations should be held.
The IFC, too, offers a flexible definition of indigenous communities that might leave certain
groups unprotected, within paragraph 5 of Performance Standard 7:
“In this Performance Standard, the term “Indigenous Peoples” is used in a generic sense
to refer to a distinct social and cultural group possessing the following characteristics in
varying degrees:
- Self-identification as members of a distinct indigenous cultural group and recognition
of this identity by others;
- Collective attachment to geographically distinct habitats or ancestral territories in the
project area and to the natural resources in these habitats and territories;
- Customary cultural, economic, social, or political institutions that are separate from
those of the mainstream society or culture; or
- A distinct language or dialect, often different from the official language or languages
of the country or region in which they reside.”136
Such a definition seems flexible to apply to a wide range of affected communities, but this
flexibility brings along a certain vagueness as well. It could be used to exclude certain groups
of the definition, for example when these groups lack certain characteristics from the above
list. However, non-indigenous communities can be significantly affected by IFC funded
projects, but are not addressed by the Performance Standards.
To compare this notion to international definitions of indigenous peoples, the 1989 ILO
Indigenous and Tribal Peoples Convention (No. 169) defines indigenous peoples largely on
the same grounds, but does not mention this notion of ‘varying degrees’, therefore leaving
133
Hamann (2003), Id. note 20. At page 248; Kapelus (2002), Id. note 19. At page 280. 134
Kapelus (2002), Id. note 19. At page 281. 135
Ibid. 136
International Finance Corporation, Id. note 93. At Performance Standard 7, § 5.
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less space for interpretation. It also does not require the indigenous groups to have a distinct
language or dialect, as the Performance Standards do.137
Rather, Article 1(2) of the said
Convention states that:
“Self-identification as indigenous or tribal shall be regarded as a fundamental criterion
for determining the groups to which the provisions of this Convention apply.”138
The United Nations, as well, recognise this fundamental importance of self-identification as
the dominant criterion to identify indigenous groups, encompassed in Article 3 of the UN
Declaration on the Rights of Indigenous Peoples.139
Whereas the ILO and the UN thus place self-identification as the central criterion for
indigenous peoples, the definition in Performance Standard 7 only considers this as a
characteristic “in varying degrees”, and further specifies that “The client may be required to
seek inputs from competent professionals to ascertain whether a particular group is
considered as Indigenous Peoples for the purpose of this Performance Standard”140
, thus
ignoring this self-determination aspects. This is questionable as it might leave certain groups
unprotected, despite their self-determination. In addition, the mere protection of indigenous
peoples poses many problems for human rights of other stakeholders, such as affected
communities who do not determine themselves as indigenous.
This right to public participation is clearly not sufficiently incorporated in the Performance
Standards, as the example of the indigenous peoples demonstrates.
Thirdly, the right to access to justice in environmental matters is not included in the
Performance Standards. There is no provision dealing with the possibility to challenge IFC
funded projects in Court. Projects can be challenged through the CAO, but due to the
immunity of the World Bank Group, the IFC cannot be held liable under international law.
This is a clear shortcoming with regard to the access to justice.
137
International Labour Organization (ILO), Indigenous and Tribal Peoples Convention (No. 169), 27 June 1989,
Geneva, Switzerland. Article 1(1). 138
ILO Convention No. 169, Id. note 137. Article 1(2). 139
UN 61/295 Declaration on the Rights of Indigenous Peoples, 13 September 2007. Article 3. 140
International Finance Corporation, Id. note 93. At Performance Standard 7, § 7.
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c) HUMAN RIGHTS
Within sustainable development, protection of local communities’ interests is a key
concern.141
This clearly involves human rights of the affected communities, which are not all
equally reflected in the IFC Performance Standards.
Several scholars criticise the World Bank Group for failing to ‘formally adopt a human rights-
based approach’, as stated by Morgera.142
Moreover, Clark points out that the World Bank
refuses to consider “the political dimensions of human rights”, which he finds to represent an
old-school approach.143
In this sense, the Bank would mostly focus on social and economic
human rights, aimed to lift people out of poverty, rather than civil and political human rights,
aimed to respect human life and dignity, prevent discrimination and the like. This is also
confirmed by Hunter, who states that most MDBs “could do better and have never
systematically agreed to follow international law, particularly with respect to human
rights.”144
Furthermore, the IFC Performance Standards “fail to reflect the normative
standards of multilateral human rights instruments.”145
Such normative standards are not limited to international human rights law, but are
increasingly present in international environmental agreements. For example, the preamble of
the recent Paris Agreement (UN Framework Convention on Climate Change, 2015) stipulates:
“Acknowledging that climate change is a common concern of humankind, Parties
should, when taking action to address climate change, respect, promote and consider
their respective obligations on human rights, the right to health, the rights of
indigenous peoples, local communities, migrants, children, persons with disabilities
and people in vulnerable situations and the right to development, as well as gender
equality, empowerment of women and intergenerational equity,”146
The IFC Performance Standards, on the contrary, do not refer to all of these human rights
aspects – or even to human rights aspects that were established before the adoption of the
revised Performance Standards in 2012. As was clear from the CDA, the IFC uses fairly soft
141
Hamann (2003), Id. note 20. At page 248. 142
Morgera (2007), Id. note 68. At page 184. 143
Clark (2002), Id. note 10. At page 208. 144
Hunter (2007), Id. note 43. At page 468. 145
Ibid. 146
United Nations Framework Convention on Climate Change (UNFCCC), draft decision, 12 December 2015,
Paris, France (FCCC/CP/2015/L.9/Rev.1). Available at
https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf . At preamble, page 1-2.
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language to define their clients’ obligations with respect to human rights, who are mostly only
recommended to avoid human rights infringements.147
In fact, the only explicit referral to human rights is under Performance Standard 7, relating to
the rights of indigenous peoples and their livelihoods, which is clearly lacking in concreteness
and inevitably leaves certain groups unprotected – as explained under the procedural rights
part.
In addition to the rights of indigenous peoples, many other human rights aspects must be
considered in an effective EIA. The preamble of Paris Agreement (UNFCCC) mentions
amongst others the human right to health and the right to development. The right to a healthy
environment was already implied by Principle 1 of the Rio Declaration (see supra).148
Furthermore, previous case-law has emphasised the importance of the right to health, the right
to housing, or the right to private life in environmental cases. The Ogoni Case149
before the
African Commission on Human and People’s Rights provides a good example, wherein water
and soil contamination resulting from oil exploitation was condemned as a breach of the
human right to health,150
the right to a general satisfactory environment,151
and the right to
housing.152
The World Bank Group is criticised for focusing mainly on economic and social rights, but
lacking to respect civil and political human rights153
– which it claims not to be empowered
to, following the political prohibition clause in its Articles of Agreement.154
Indeed, in the
Performance Standards, no explicit reference is given to civil or political human rights. This is
a pity, but international environmental law in general offers little references to these political
human rights.
However, with regard to economic and social rights, there too can be put considerable
question marks at the Performance Standards.
147
International Finance Corporation, Id. note 93. At Performance Standard 1, § 3. 148
Nanda & Pring (2012), Id. note 16. At page 31. 149
African Commission on Human and People’s Rights, Communication No. 155/96 (Social and Economic
Rights Action Center (SERAC) and Center for Economic and Social Rights (CESR) v. Nigeria). 27 October
2001. Available at http://www.achpr.org/files/sessions/30th/comunications/155.96/achpr30_155_96_eng.pdf 150
OAU, African (Banjul) Charter on Human and People’s Rights, 27 June 1981, OAU Doc. CAB/LEG/67/3
rev. 5, 21 I.L.M. 58. Article 16. 151
African Charter on Human and People’s Rights, Id. note 149. Article 24. 152
African Charter on Human and People’s Rights, Id. note 149. Article 14. 153
WWF & BankTrack (2006), Id. note 37. At page 16. 154
IFC, Articles of Agreement, Id. note 29. Article III, Section 9.
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The right to a healthy environment may be derived from Performance Standard 4 relating to
community health, safety, and security. Provision 5 of this Performance Standard stipulates:
“The client will evaluate the risks and impacts to the health and safety of the Affected
Communities during the project lifecycle and will establish preventive and control
measures consistent with good international industry practice (GIIP), such as in the
World Bank Group Environmental, Health and Safety Guidelines (EHS Guidelines) or
other internationally recognized sources.”155
However, these ‘other internationally recognised sources’ are not specified and nowhere in
the performance standards is there any reference to official human rights instruments such as
the International Covenant on Economic, Social and Cultural Rights (ICESCR) or the
International Covenant on Civil and Political Rights (ICCPR). The fourth Performance
Standard does specify that the ESMS should take into account the required ecosystem services
for the community, safety requirements concerning hazardous materials and project design,
and community exposure to disease.
The human right to housing – and thus to livelihood, possibly relating to the right to private
life – is not explicitly mentioned in the Performance Standards. Yet, Performance Standard 5
on Land Acquisition and Involuntary Resettlement offers some aspects of it. The recognition
that indigenous peoples may not be forcibly removed from their territories is conform to
Article 10 of the UN Declaration on the Rights of Indigenous Peoples.156
In addition to
physical displacement, the fifth performance standard also applies to economic displacement,
the “loss of assets or access to assets that leads to loss of income sources or other means of
livelihood.”157
The notion of economic displacement might be extended to a right to local
development, following Article 1(2) of the UN Declaration on the Right to Development,
wherein development is also understood as the sovereignty over natural wealth and resources:
“The human right to development also implies the full realization of the right of
peoples to self-determination, which includes, subject to the relevant provisions of
both International Covenants on Human Rights, the exercise of their inalienable
right to full sovereignty over all their natural wealth and resources.”158
155
International Finance Corporation, Id. note 93. At Performance Standard 4, § 5. 156
UN 61/295 Declaration on the Rights of Indigenous Peoples, Id. note 139. Article 10. 157
International Finance Corporation, Id. note 93. At Performance Standard 5, § 1. 158
UN Declaration on the Right to Development, A/RES/41/128, 4 December 1986. Article 1(2).
- 39 -
Economic displacement might in this perspective be seen as a breach of this Article, as people
would be displaced from their wealth and resources. Its indirect inclusion in Performance
Standard 5 might thus be a step towards human rights recognition. Still, it is questionable
whether this happens in reality – as the displacement only relates to indigenous communities,
for which considerable conceptual issues exist (see supra).
Human rights are thus included in only very vague and indirect terms, leaving little space for
true accountability. Although several economic and social rights seem to be in conformity
with international practice, they are addressed only briefly and without much specification.
Civil and political rights are fully left out of the scope.
d) BIODIVERSITY PROTECTION
Performance Standard 6 provides for biodiversity conservation as a required consideration
under the ESMS. This Performance Standards explicitly mentions the Convention on
Biological Diversity as its guiding source,159
consequently increasing its conformity and
credibility as compared to international law.
Article 8 of the Convention on Biological Diversity of 1992 specifies the need for in-situ
conservation of biodiversity, which is the most relevant to the IFC projects. It could be
supposed that a solid ESMS by the IFC would have to include the same aspects as this precise
Article 8 with regard to conserving biodiversity. Article 8 stipulates:
Each Contracting Party shall, as far as possible and as appropriate:
(a) Establish a system of protected areas or areas where special measures need to be
taken to conserve biological diversity;
(…)
(c) Regulate or manage biological resources important for the conservation of
biological diversity whether within or outside protected areas, with a view to ensuring
their conservation and sustainable use;
(d) Promote the protection of ecosystems, natural habitats and the maintenance of
viable populations of species in natural surroundings;
(e) Promote environmentally sound and sustainable development in areas adjacent to
protected areas with a view to furthering protection of these areas;
159
International Finance Corporation, Id. note 93. At Performance Standard 6, § 1.
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(f) Rehabilitate and restore degraded ecosystems and promote the recovery of
threatened species, inter alia, through the development and implementation of plans
or other management strategies;
(…)
(h) Prevent the introduction of, control or eradicate those alien species which threaten
ecosystems, habitats or species;
(i) Endeavour to provide the conditions needed for compatibility between present uses
and the conservation of biological diversity and the sustainable use of its components;
(…)
(m) Cooperate in providing financial and other support for in-situ conservation
outlined in subparagraphs (a) to (l) above, particularly to developing countries.
The sixth Performance Standard indeed concerns many aspects of biodiversity conservation,
such as habitat protection, ecosystem services, alien species, and sustainable conservation of
living natural resources – largely in line with Article 8 of the Convention on Biological
Diversity. Only the cooperation aspect of Article 8(m) is not mentioned.
In addition, no reference is made to transboundary degradation of ecosystems. This might be
interpreted as contradictory to the well-established no harm-principle, which refers to the
prohibition of transboundary environmental damages.160
Despite the international
establishment of this environmental principle, the IFC Performance Standards do not
specifically address negative transboundary pollution.161
Yet, with regard to biodiversity
conservation, IFC funded projects can have significant negative effects on cross-border
ecosystems, migratory species and the like. Also, air or water contamination does not limit
itself to one state’s territory, and should be considered in a transboundary context in the EIA.
This is not addressed by the Performance Standards. However, as the ESMS is supposed to
obey to the national laws of the host State of the project, it could be assumed that the no
harm-principle is still required under customary international law.
e) INTERIM CONCLUSION
In its Performance Standards, the IFC indeed referred to some multilateral treaties and
agencies, such as the Convention on Biological Diversity, the International Labor
Organisation, and the United Nations. According to Morgera, “any such reference is intended
160
Morgera (2007), Id. note 68. At page 184. 161
Ibid.
- 41 -
to acknowledge the international consensus and support on these instruments, but not to
create borrower obligations to comply with these agreements, as the obligations under these
agreements rest with signatory states, and not with businesses.”162
Morgera further notes that
such incorporations of international standards creates binding obligations for the clients and
“directly translates the inter-State obligations into contractual conditions for private
companies.”
Precisely because of this importance of an adequate reflexion of international law in the IFC
standards, it is a pity that many of the Performance Standards do not use such explicit
references to international treaties, nor reflect important principles into their provisions.
Hunter criticises the IFC’s performance standards for “their failure to reflect the normative
standards of other international legal processes, including multilateral environmental
agreements, human rights, and international labor standards.”163
As the analysis has shown, the lack of such references is the most striking with regard to
human rights. Civil and political rights are not reflected, and economic and social rights only
to a limited extent. The same goes for procedural requirements such as the right to
information, public participation and access to justice. While the access to information and
public participation are recognised as a necessity, it only relates to indigenous peoples and the
provided information is not always complete – as an internal audit of the World Bank has
revealed in 2014.164
By focusing solely on indigenous peoples, certain stakeholders will be
left out of the procedural rights. In addition, the access to justice is impeded due to the
international organisation’s immunity. The only means to challenge IFC funded projects is
through the CAO.
On the other hand, the Performance Standards provide relatively good reference to
international law with respect to the requirement of an EIA, and to biodiversity conservation.
It follows that the standards on these aspects are found to be more credible than the human
rights provisions. However, a concrete case analysis might reveal whether the said standards
are also implemented correctly in the field.
162
Morgera (2007), Id. note 68. At page 159. 163
Hunter (2007), Id. note 43. At page 468. 164
Internal Audit Department (IAD), Id. note 126. At page 19.
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C. Evaluative analysis: Comparing the Performance Standards to the case of
Minera Yanacocha in Peru
Through a concrete case study, the aim is to highlight some of the implementation concerns
with the IFC’s sustainability policy. The choice of case study depends on the availability of
data on it, in combination with the relatively broad international attention given to it (see
supra in methodology section).
A brief background of the case and overview of the concerns at stake are given first to
illustrate the context of the problem. For the purpose of this case study, the case is looked at
from two angles. First, from the angle of local and international environmental protection in
the affected region. Second, from the view of the IFC’s sustainability policy. In conclusion, I
will analyse the issues raised by this case study to point out broader problems within the
enforcement of the IFC standards, or within the public consultation processes, and with regard
to the overall development benefits of the project.
Again, the focus is mainly on the same aspects as explained above: environmental impact
assessments, human rights, and biodiversity conservation.
a) BACKGROUND
Minera Yanacocha S.R.L. (“Yanacocha”) is a Peruvian mining company and owner of the
largest gold mine in South America, comprised of six open pit mines, four leach pads and
three processing facilities.165
Yanacocha is a joint venture between the U.S. based Newmont
Mining Corporation (accounting for 51,35% of the investments), the Peruvian company Cía.
de Minas Buenaventura (43,65%) and the IFC (5%).166
The mine is located in the Andes
mountains, in the Department of Cajamarca, in Northern Peru.167
The mine has been contested for several reasons and already seven complaints were made to
the CAO, due to the IFC’s involvement in the Yanacocha mining project since its beginnings
in 1993.168
The complaints include land acquisition without adequate compensation,169
labour
165
Compliance Advisor/Ombudsman (CAO), Complaint Yanacocha-03 (filed on 1 March 2006), available at
http://www.cao-ombudsman.org/cases/case_detail.aspx?id=112. 166
Yanacocha, Quinénes Somos (2016), available at http://www.yanacocha.com/quienes-somos/. 167
BankTrack, Minas Conga mining project Peru (3 January 2016), available at
http://www.banktrack.org/show/dodgydeals/minas_conga_mining_project#tab_dodgydeals_basics. 168
CAO Complaint Yanacocha-05 (filed on 7 June 2013), available at http://www.cao-
ombudsman.org/cases/case_detail.aspx?id=204. 169
CAO Complaint Yanacocha-07 (filed on 10 March 2014), available at http://www.cao-
ombudsman.org/cases/case_detail.aspx?id=220; CAO Complaint Yanacocha-04 (filed on 22 November 2012),
- 43 -
rights infringements,170
and complaints on the detrimental health effects of an enormous
mercury spill by one of the contractors in 2000.171
This precise mercury spill poisoned more
than 900 inhabitants of the surrounding communities, with permanent health effects as a
result, and was first held silent by the Yanacocha companies.172
In addition, other complaints
concern Yanacocha’s harmful effects on the environment, water quality and agriculture in the
region.173
The operations have led to an enormous alteration of natural waterways and
displaced millions of tons of earth, across a surface of more than 100 square metres.174
The necessity for mining companies to include a solid corporate social responsibility policy is
affirmed by several scholars. For example, Hamann175
points to the fact that social
responsibility in the mining sector is an important determinant of bottom line profits, as mines
may become more competitive when the mining companies maintain good relations with the
local communities. Namely, the lack of such prosperous relations might cause production
delays due to protests or strikes, lower demands due to customers’ concerns over the social
sustainability standards, and lower the overall reputation of the company and its staffers.
These economical downsides of social and environmental negligence are also stated by
Kapelus.176
In the case of Yanacocha, several NGOs and human rights activists have already aimed to
elucidate on its unsustainable practices by publishing reports and press releases and lobbying
against it, thus potentially damaging the reputation of the company. Among the efforts are
reports by local social movements, supported by the Columbia Law School Human Rights
Clinic, 177
and by the Belgian NGO CATAPA.178
available at http://www.cao-ombudsman.org/cases/case_detail.aspx?id=193; CAO Complaint Yanacocha-05, Id.
note 166. 170
CAO Complaint Yanacocha-06 (filed on 6 February 2014), available at http://www.cao-
ombudsman.org/cases/case_detail.aspx?id=216. 171
CAO Complaint Yanacocha-01 (filed on 1 July 2000), available at http://www.cao-
ombudsman.org/cases/case_detail.aspx?id=110; CAO Complaint Yanacocha-03 (filed on 1 March 2006),
available at http://www.cao-ombudsman.org/cases/case_detail.aspx?id=112. 172
BankTrack (2016), Id. note 167. 173
CAO Complaint Yanacocha-02 (filed on 1 March 2001), available at http://www.cao-
ombudsman.org/cases/case_detail.aspx?id=111; CAO Complaint Yanacocha-03, Id. note 169. 174
BankTrack (2016), Id. note 167. 175
Hamann (2003), Id. note 20. At page 242. 176
Kapelus (2002), Id. note 19. At page 278. 177
Columbia Law School Human Rights Clinic. Conga No Va. An Assessment of the Conga Mining Project in
Light of World Bank Standards (September 2015), available at
http://static1.squarespace.com/static/560b18b0e4b067a54c32c76a/t/560d9754e4b059118c4843c6/14437312848
71/CongaNoVa_Assessment.pdf. 178
BankTrack (2016), Id. note 167.
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Since 2004, Yanacocha advanced with a new copper-gold mining project in the region, named
Minas Conga.179
The Environmental Impact Study was approved by the Peruvian Ministry of
Energy and Mines (MEM) in 2008 and the drilling activities started in 2009. A second EIA in
2010 also led to further approval of the project.
In 2011, protests were organised by local interest groups, which were violently repressed by
the local government. 180
A local state of emergency was declared after several strikes, leading
to numerous human rights violations against the protesters and their criminal prosecution.
During later strikes in 2012, five protesters were shot to death.
Concerning the involuntary evictions of farmers in the Cajamarca region, the Peruvian farmer
woman and Goldman Environmental Prize winner, Máxima Acuña de Chaupe, already won a
case against Newmont and Buenaventura before the Peruvian the Court of Appeal in 2014.181
This is a promising case which received a lot of international attention. However, it is not
directed at the IFC, but at the other investors in Minera Yanacocha. The present case analysis
focuses mostly on the contradictions in the IFC’s involvement as compared to Peruvian and
international law, which it is supposed to obey to in an ESMS in the host State,182
on the one
hand, and as compared to its own Performance Standards, on the other hand.
b) OVERVIEW OF THE COMPLAINTS
The Conga project is subject to much criticism from local actors, and also from international
human rights activists and NGOs.183
Namely, the Conga project is said to have caused
detrimental effects on the water, the environment, human health and local livelihoods.184
Firstly, it is necessary to point out the harmful environmental effects of the project. The
mining operations have raised specific concerns with regard to the quality and availability of
water in the Cajamarca region.185
For example, the extraction process uses cyanide, which
later on ends up in waterways as sediments of the mine slide away. This leads to water
contamination and consequently to the death of fish species, in specific trout, and to a reduced
quality of drinking water.
179
BankTrack (2016), Id. note 167. 180
Ibid. 181
Lazare, S. How One Indigenous Woman Took On a Multinational Mining Corporation... And Won. (Common
Dreams, 19 December 2014), available at http://www.commondreams.org/news/2014/12/19/how-one-
indigenous-woman-took-multinational-mining-corporation-and-won. 182
International Finance Corporation, Id. note 93. At General Introduction/Overview, § 5. 183
Conga No Va report (2015), Id. note 177. 184
BankTrack (2016), Id. note 167. 185
Ibid.
- 45 -
Furthermore, local interest groups claim that the extraction of gold and copper will destroy the
local, complex ecosystem in the area. The ecosystem consists of nearly forty lakes, wetlands
and marshlands and provides the main source of water in the province of Cajamarca. By
extracting gold and copper from the high Andean lakes or by dumping mining waste in them,
the mountain lakes will be destroyed, as well as the wetlands, leading to further water
contamination, according to a Joint Statement by several NGOs and interest groups that was
submitted to the Human Rights Council in 2013.186
The BankTrack report further states that
the Conga project area is home to numerous endemic species, including plants, mammals and
birds.
It is clear that such concerns relate both to water pollution as well as to biodiversity
conservation, and must therefore be looked at from both perspectives.
Secondly, the social effects of the Conga project are important to note. As mentioned,
Yanacocha has failed to respect human rights on several occasions, for example by breaching
its duty to prior informed consent, or by its involvement in land-grabbing without adequate
compensation.187
Moreover, the environmental damages pose severe threats to local
livelihoods, with regard to agriculture, livestock breading and fisheries.188
These sectors
account for 67 percent of the local employment, whereas mining only provides employment
to 1,5 percent of the population in the region, according to CATAPA’s figures on the
BankTrack website.189
By hampering water quality and displacing land, the Conga project
will inevitably lead to a loss of jobs in the agricultural sector and thus to the livelihood of
local communities.
c) LEGAL FRAMEWORK FOR ENVIRONMENTAL PROTECTION IN CAJAMARCA, PERU
The Conga project is, aside from the IFC’s sustainability policy, subjected to local and
international environmental law as well. Namely, the IFC requires its clients to obey to
national laws of their project countries, including international laws that the host countries are
186
Human Rights Council, 24th
session, Agenda item 3 (A/HRC/24/NGO/10, 28 August 2013). Joint written
statement submitted by Centre Europe - Tiers Monde - Europe-Third World Centre, World Federation of
Democratic Youth (WFDY), non-governmental organizations in general consultative status; France Libertes :
Fondation Danielle Mitterrand, International Association of Peace Messenger Cities, Women's Human Rights
International Association, non-governmental organizations in special consultative status; Indian Council of
South America (CISA), International Educational Development, Inc., Mouvement contre le racisme et pour
l'amitié entre les peuples, nongovernmental organizations on the roster), The right to water in Peru lacks
effectiveness when faced with mining projects, available at https://documents-dds-
ny.un.org/doc/UNDOC/GEN/G13/164/79/PDF/G1316479.pdf?OpenElement. At page 2-3. 187
BankTrack (2016), Id. note 167. 188
Ibid. 189
Ibid.
- 46 -
subjected to.190
The complaints therefore relate to alleged breaches of these regulations, which
are explained below. If the IFC would conduct credible checks on its project sites, breaches of
national environmental law would also have to be categorised as an insufficient ESMS.
Therefore, the applicable laws are briefly explained to demonstrate the lack of such
enforcement.
Concerning the substantial protection of the environment, Peruvian and international law
provide several applicable articles on the prevention of water pollution on the one hand, and
biodiversity conservation on the other, which are the most relevant for the present case. Both
are considered within the framework of an Environmental Impact Assessment.
Issues at stake in the EIA
Article 25 of the Peruvian General Environmental Law incorporates the international
requirement for an EIA, following Principle 17 of the Rio Declaration. In the Conga case,
such an EIA should primarily take into account the relevant risks concerning water pollution.
With regard to water protection, the Peruvian General Environmental Law (GEL)191
provides
particular articles to prevent pollution of water sources. Article 90 of the said environmental
code concerns the protection of inland waters, which are the most affected through the Conga
project:
“The state promotes and controls the sustainable use of inland waters through the
integrated management of water resources, preventing the affectation of their
environmental quality and of the natural conditions of their environment, as part of the
ecosystem where they are;
regulates its allocation on the basis of social, environmental and economic goals;
and promotes investment and private sector involvement in sustainable use of the
resource.”192
In addition, Article 114 concerns the protection of water for human consumption, recognizing
it as a right of the population, and stipulates that the State has the responsibility of providing
safe drinking water for its citizens and must prefer this use over other water uses.193
Finally,
190
International Finance Corporation, Id. note 93. At General Introduction/Overview, § 5. 191
Ley General del Ambiente, Ley N° 28611 (15 October 2005, Ministerio del Ambiente, Peru), available at
http://www.minam.gob.pe/wp-content/uploads/2013/06/ley-general-del-ambiente.pdf. 192
Ley N° 28611, Id. note 191. Article 90, own translation. 193
Ley N° 28611, Id. note 191. Article 114.
- 47 -
Article 120 relates to the protection of water quality and specifies that the State is responsible
for ensuring the quality of its water reserves.194
In the case of Yanacocha, the mining operations also use cyanide, which generates hazardous
wastes under Annex I of the Basel Convention.195
It is clear from the facts of the case that
such wastes cause severe pollution to the soil, ground water and rivers in the area of the
mines, with subsequent harmful effects on human health and biodiversity protection.
Procedural rights and human rights
An EIA is also required to include the “prior informed consent” of the affected communities.
The Peruvian environmental code provides for the right to information (Article 41), the
State’s obligation to inform (Article 43) and the right to public participation (Article 46).196
These rights are asserted to be breached by several actors. For example, concerning this
precise public participation, human rights activist have claimed that the violent repression of
previous protests and strikes against the Conga project were breaching the right of assembly,
following Article 20 of the Universal Declaration of Human Rights.197
Peaceful resistance
was suppressed, which allegedly “violate the rights of every person to defend themselves in a
dignified and fair matter (articles 10 and 11 of the Universal Declaration of Human Rights
and article 14.3 of the International Covenant on Civil and Political Rights, ratified and
signed by Peru).”198
Furthermore, the requirement of “prior informed consent” of the affected communities is most
clearly incorporated in Convention 169 of the International Labour Organisation, and
translated into Peruvian law since 2011.199
However, this prior consultation law only applies
to projects that started after the publication of the law.200
As the Conga project was launched
194
Ley N° 28611, Id. note 191. Article 120. 195
United Nations Environment Program (UNEP), Basel Convention on the Control of Transboundary
Movements of Hazardous Wastes and their Disposal, 22 March 1989, Basel, Switzerland. At Annex I, page 47-
48. 196
Ley N° 28611, Id. note 191. At Capítulo 4: Acceso a la Información Ambiental y Participación Ciudadana (In
accordance with Decreto Supremo N° 002-2009-MINAM on Transparency, Access to Environmental
Information and Civil Participation and Consultation in Environmental Matters). Articles 41, 43 and 46. 197
Human Rights Council, 24th
session, Joint written statement (2013). Id. note 186. At page 3. 198
Ibid. 199
Ley de Derecho a la Consulta Previa a los Pueblos Indígenas u Originarios Reconocido en el Convenio 169
de la Organización Internacional de Trabajo (OIT), Ley N° 29785, adopted on 8 September 2011. Available at
http://ht.ly/6b5HO. 200
Decreto Supremo N° 001-2012-MC, Regulation of the Law N° 29785, Law of the Right to Prior Consultation
to Indigenous or Native Peoples, recognized in the Convention 169 of the International Labour Organization
(ILO), 3 March 2012, Lima.
- 48 -
before this date, the law is not applicable – in contradiction to Convention 169 of the ILO,
which Peru ratified in 1993.
With regard to the notorious mercury spill of 2000, one could also pose a question about the
human right to health. Article 66(1) of the Peruvian Environmental Code stipulates that:
“The prevention of risks and damages to the health of people is a priority in
environmental management. It is the responsibility of the State, (…), to contribute to the
effective management of the environment and of the factors that generate risks to the
health of people.”201
According to this Article, the Peruvian State is considered to be responsible for the prevention
of environmental health issues. An effective EIA on Peruvian territory would therefore also
have to include these issues.
Biodiversity protection
With regard to the concerned water reserves, biodiversity law is also applicable. Articles 93
and 94 of the Peruvian General Environmental Law concern ecosystem services, and the
second Chapter of the code is devoted to biodiversity conservation. In Article 99(2), ‘fragile
ecosystems’ are defined “to include, amongst others, (…) mountains, swamps, marches, bays,
small islands, wetlands, highland lakes, (…).”202
The inclusion of highland lakes, wetlands and marshlands into this definition is particularly
interesting considering the presence of such ecosystems in the Cajamarca region. For
example, the Ramsar-certified site ‘Lagunas Las Arreviatadas’, a wetland complex covering
four main high Andean lagoons of glacial origin, is located in the region.203
As the region is
such a ‘fragile ecosystem’, it requires special protection under Peruvian (and international)
biodiversity law.
Furthermore, Article 102 concerns the protection of species. All of the above articles fall
under Article 8 of the Convention on Biological Diversity, concerning in-situ biodiversity
protection.204
201
Ley N° 28611, Id. note 191. Article 66(1), own translation. 202
Ley N° 28611, Id. note 191. Article 99(2), own translation. 203
Ramsar, Peru (2016), available at http://www.ramsar.org/wetland/peru. In accordance with the Ramsar
Convention on Wetlands, adopted in 1971, Ramsar, Iran. 204
United Nations Convention on Biological Diversity, adopted on 5 June 1992, Rio de Janeiro, Brazil. Article 8.
- 49 -
d) SUMMARY OF RELEVANT IFC POLICIES
Issues at stake in the EIA
Again, the most important aspect for environmental protection in the present case concerns
the protection of water quality and availability, as well as biodiversity protection.
Firstly, with regard to water protection, Article 9 of Performance Standard 3 (on Resource
Efficiency and Pollution Prevention) relates to the project’s efficient water usage. Namely,
“the client shall adopt measures that avoid or reduce water usage so that the project’s water
consumption does not have significant adverse impacts on others.”205
In addition, Article 10 of the same performance standard stipulates:
“The client will avoid the release of pollutants or, when avoidance is not feasible,
minimize and/or control the intensity and mass flow of their release. This applies to the
release of pollutants to air, water, and land due to routine, non-routine, and accidental
circumstances with the potential for local, regional, and transboundary impacts. (…) If it
is determined that the client is legally responsible, then these liabilities will be resolved in
accordance with national law, or where this is silent, with GIIP.”206
It is clear that such considerations were not all taken into account in the present EIA, or
respected during the project management. More specifically, concerning wastes – in this case
applicable to mining sediments that contain harmful substances such as cyanide –
Performance Standard 3, Article 12 provides that the clients must avoid, reduce and recover
the generation of hazardous and non-hazardous waste materials in a way that is safe for
human health and the environment. If this is not possible, the client should dispose the waste
in an environmentally sound matter. Considering the continuous water pollution by the
mining sediments, the disposal of this waste does not seem to happen in an environmentally
sound matter in the Conga case.
Procedural rights and human rights
Considering the human rights and procedural rights of the case, the IFC Performance
Standards offer less clarification on these matters, as explained in the normative analysis of
this paper. However, the protection of Indigenous Peoples would have to entail their consent
205
IFC, Id. note 93. At Performance Standard 3, § 9. 206
IFC, Id. note 93. At Performance Standard 3, § 10.
- 50 -
during the entire life-time of the process, following provision 10 of Performance Standard 5
(relating to their economic displacement).
Performance Standard 5 concerns the client’s responsibilities to compensate affected
communities for economic displacement. Paragraph 26 provides:
“If land acquisition or restrictions on land use result in economic displacement defined as
loss of assets and/or means of livelihood, regardless of whether or not the affected people
are physically displaced, the client will meet the requirements in paragraphs 27–29
below, as applicable.”
The following paragraphs include measures to “improve, or at least restore, [the affected
people’s] means of income-earning capacity, production levels, and standards of living.”207
Some elements of Performance Standard 5 remain vague though, as paragraph 6, for example,
provides that this standard does not apply to resettlement that results from voluntary land
transactions.208
It is often difficult to distinguish whether land was sold lawfully in these
cases, as there might be much pressure to sell, but this does not necessarily mean it is
completely voluntary.
Lastly, some elements of the right to health are included in Performance Standard 4. For
example, paragraph 7 of this standard concerns the required “[avoidance or minimisation] of
community exposure to hazardous materials and substances that may be released by the
project.”209
The 2000 mercury spill clearly falls short within this provision, but also the
pollution of drinking water by cyanide can be considered as negligence on this matter.
Paragraph 8 relates to adverse health effects deriving from degraded ecosystem services.
However, the client’s responsibility on this matter is mainly to avoid the impacts on
ecosystem services, without further addressing the resulting health issues.
Biodiversity protection
As explained in the normative analysis, Performance Standard 6 encompasses the IFC’s
policy with regard to biodiversity protection. This performance standard is explicitly based
upon the Convention on Biological Diversity, and applies the same definition of biodiversity,
namely: “the variability among living organisms from all sources including, inter alia,
207
IFC, Id. note 93. At Performance Standard 5, § 28. 208
IFC, Id. note 93. At Performance Standard 5, § 6. 209
IFC, Id. note 93. At Performance Standard 4, § 7.
- 51 -
terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they
are a part; this includes diversity within species, between species, and of ecosystems.”210
This performance standards addresses the client’s responsibility with regard to biodiversity
and ecosystem services, which are benefits that humans derive from biodiversity, throughout
the life-cycle of a project. The reason for this management and mitigation is that impacts on
biodiversity can adversely affect the delivery of ecosystem services, with resulting downsides
for humans.
Provision 20 of the sixth performance standard relates specifically to legally protected areas
or internationally recognised areas. In this case, the Ramsar site should thus be granted special
attention following this provision.
e) INTERIM CONCLUSION: ANALYSIS OF THE ISSUES RAISED BY THE CASE STUDY
The case of Yanacocha demonstrates that the IFC’s Environmental and Social Management
System can show severe deficiencies in practices. The case relates to severe water
contamination and human rights infringements, with negative consequences for the
biodiversity and livelihoods in the region.
Of course, this is only one case of many IFC investments, and the IFC only has 5% of the
shares in the Yanacocha company. Still, it is worth special attention as it reflects
inconsistencies in the IFC’s sustainability policy, relating to the public consultation process,
and to the enforcement of the sustainability standards. Also, it can be linked back to the
discursive analysis which has shown that most of the IFC’s focus is on economic
development. Indeed, in the case of the Conga project, one could question the public, societal
and environmental benefits of the mining operations.
210
IFC, Id. note 93. At Performance Standard 6, § 1.
- 52 -
V. Discussion
This paper aimed to analyse the credibility of the IFC’s sustainability policy from three
separate angles. First, through a critical discourse analysis of its performance standards;
second, by comparing these precise standards to international environmental law and practice;
and third, by focusing on the concrete case of Minera Yanacocha in Peru, an IFC funded
project which has been subjected to much criticism for the lack of sustainability
considerations in its implementation.
All three analyses demonstrated a lack of credibility of the IFC’s Performance Standards.
Discursively, they reveal a neoliberal state of mind with a main focus on the economy, rather
than on societal or environmental aspects. Little reference is made to official international
instruments, making it difficult to be held liable for their investments.
This lack of reference to international law is also shown through the normative analysis.
Whereas the necessity for an environmental impact assessment is relatively well reflected in
the Performance Standards, the concrete content of such a risk assessment is often vague.
Particularly with respect to human rights standards, the Performance Standards are reluctant
to recognise international standards. Concerning biodiversity protection, there is explicit
reference to the Convention on Biological Diversity and adequate reflection of the substantial
biodiversity protection standards.
However, when looking at the case of Yanacocha, this precise biodiversity aspect is also
falling short in the implementation phase. The case demonstrates the lack of water pollution
considerations during an Environmental and Social Management System set up by the IFC,
with negative effects on the ecosystems and species in the Cajamarca region. In addition, the
case is a striking example of human rights infringements in the context of an IFC funded
project.
Through these analyses, this study wishes to raise awareness about the role of the World
Bank, and possibly other multilateral development banks, in sustainable development.
Considering the World Bank’s immunity to individual complaints, this paper cannot serve as
a complaint against the Bank. However, if more studies would contribute to the critical
assessment, a certain pressure can be put on MDBs to take up a more responsible role.
This paper is not intended to condemn the entire World Bank approach to development.
Multilateral development banks are still important actors in ensuring development in many
- 53 -
countries in the global south, by supporting vital segments of society such as education,
agriculture, or health infrastructure.211
Still, it is worth questioning some of the practical
implications of the mainly economical focus with regard to human rights and the
environment.
Further research could extent this critical approach by focusing on additional aspects. The
choice of interest in this paper was on the requirement of an environmental impact
assessment, with a specific focus on the human rights and biodiversity aspects that are
supposed to be included in it. Subsequent research may analyse other aspects of international
environmental law, such as specific pollution prevention, waste management or climate
change prevention.
Recommended reforms could include an enhanced transparency policy, in order to provide all
relevant stakeholders with the necessary information so that they could enjoy their procedural
rights adequately and be granted effective public participation rights. Likewise, more
supervision mechanisms from the IFC on its clients could be installed to divide the
responsibility and ameliorate the management of e.g. involuntary resettlement, environmental
damage or human rights infringements. The current emphasis on the client’s responsibility
shades the role of the IFC. Such anonymity, in combination with its immunity for judicial
proceedings, are currently enormous obstacles to fair accountability of the IFC practices.
Although some external initiatives such as BankTrack exist to increase this accountability by
revealing different stories, there is much more left to solve. Discussing the accountability
mechanisms for the World Bank Group would fall outside of the scope of this paper, but is
interesting for future research.
Overall, this paper hopes to contribute to a general debate about the role of the World Bank,
and possibly other international banks and organisations, in obtaining sustainable
development, considering their potential in spreading responsible business across other
sectors.212
211
Mundy & Menashy (2014), Id. note 25. At page 17. 212
Neu & Gomez (2006), Id. note 7, at page 16-17.
- 54 -
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Annex 1: Critical Discourse Analysis
Legend
- Vague language
- Subject of the (sub)phrase
- Modality; lack of credibility
- Nominalisation
- Interdiscursivity/intertextuality
- Responsibility claims
- Aimed results
***
Performance Standard 1 Assessment and Management of Environmental and Social Risks and
Impacts (Introduction)
1. Performance Standard 1 underscores the importance of managing environmental and social
performance throughout the life of a project. An effective Environmental and Social Management
System (ESMS) is a dynamic and continuous process initiated and supported by management, and
involves engagement between the client, its workers, local communities directly affected by the
project (the Affected Communities) and, where appropriate, other stakeholders. Drawing on the
elements of the established business management process of “plan, do, check, and act,” the ESMS
entails a methodological approach to managing environmental and social risks and impacts in a
structured way on an ongoing basis. A good ESMS appropriate to the nature and scale of the project
promotes sound and sustainable environmental and social performance, and can lead to improved
financial, social, and environmental outcomes.
2. At times, the assessment and management of certain environmental and social risks and impacts
may be the responsibility of the government or other third parties over which the client does not have
control or influence. Examples of where this may happen include: (i) [when early planning decisions
are made by the government or third parties which affect the project site selection and/or design;
and/or] (ii) [when specific actions directly related to the project are carried out by the government or
third parties such as providing land for a project which may have previously involved the resettlement
of communities or individuals and/or leading to loss of biodiversity.] [While the client cannot control
these government or third party actions], an effective ESMS should identify the different entities
involved and the roles they play, the corresponding risks they present to the client, and opportunities to
collaborate with these third parties in order to help achieve environmental and social outcomes that are
consistent with the Performance Standards. In addition, this Performance Standard supports the use of
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an effective grievance mechanism that can facilitate early indication of, and prompt remediation for
those who believe that they have been harmed by a client’s actions.
3. Business should respect human rights, which means to avoid infringing on the human rights of
others and address adverse human rights impacts business may cause or contribute to. Each of the
Performance Standards has elements related to human rights dimensions that a project may face in the
course of its operations. Due diligence against these Performance Standards will enable the client to
address many relevant human rights issues in its project.
Performance Standard 2 Labor and Working Conditions (Introduction)
1. Performance Standard 2 recognizes that the pursuit of economic growth through employment
creation and income generation should be accompanied by protection of the fundamental rights of
workers. For any business, the workforce is a valuable asset, and a sound worker-management
relationship is a key ingredient in the sustainability of a company. Failure to establish and foster a
sound worker-management relationship can undermine worker commitment and retention, and can
jeopardize a project. Conversely, through a constructive worker-management relationship, and by
treating the workers fairly and providing them with safe and healthy working conditions, clients may
create tangible benefits, such as enhancement of the efficiency and productivity of their operations.
2. The requirements set out in this Performance Standard have been in part guided by a number of
international conventions and instruments, including those of the International Labour Organization
(ILO) and the United Nations (UN).
Performance Standard 3 Resource Efficiency and Pollution Prevention (Introduction)
1. Performance Standard 3 recognizes that increased economic activity and urbanization often generate
increased levels of pollution to air, water, and land, and consume finite resources in a manner that may
threaten people and the environment at the local, regional, and global levels. There is also a growing
global consensus that the current and projected atmospheric concentration of greenhouse gases (GHG)
threatens the public health and welfare of current and future generations. At the same time, more
efficient and effective resource use and pollution prevention and GHG emission avoidance and
mitigation technologies and practices have become more accessible and achievable in virtually all
parts of the world. These are often implemented through continuous improvement methodologies
similar to those used to enhance quality or productivity, which are generally well known to most
industrial, agricultural, and service sector companies.
2. This Performance Standard outlines a project-level approach to resource efficiency and pollution
prevention and control in line with internationally disseminated technologies and practices. In
addition, this Performance Standard promotes the ability of private sector companies to adopt such
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technologies and practices as far as their use is feasible in the context of a project that relies on
commercially available skills and resources.
Performance Standard 4 Community Health, Safety, and Security (Introduction)
1. Performance Standard 4 recognizes that project activities, equipment, and infrastructure can
increase community exposure to risks and impacts. In addition, communities that are already subjected
to impacts from climate change may also experience an acceleration and/or intensification of impacts
due to project activities. While acknowledging the public authorities’ role in promoting the health,
safety, and security of the public, this Performance Standard addresses the client’s responsibility to
avoid or minimize the risks and impacts to community health, safety, and security that may arise from
project related-activities, with particular attention to vulnerable groups.
2. In conflict and post-conflict areas, the level of risks and impacts described in this Performance
Standard may be greater. The risks that a project could exacerbate an already sensitive local situation
and stress scarce local resources should not be overlooked as it may lead to further conflict.
Performance Standard 5 Land Acquisition and Involuntary Resettlement (Introduction)
1. Performance Standard 5 recognizes that project-related land acquisition and restrictions on land use
can have adverse impacts on communities and persons that use this land. Involuntary resettlement
refers both to physical displacement (relocation or loss of shelter) and to economic displacement (loss
of assets or access to assets that leads to loss of income sources or other means of livelihood) as a
result of project-related land acquisition and/or restrictions on land use. Resettlement is considered
involuntary when affected persons or communities do not have the right to refuse land acquisition or
restrictions on land use that result in physical or economic displacement. This occurs in cases of (i)
lawful expropriation or temporary or permanent restrictions on land use and (ii) negotiated settlements
[in which the buyer can resort to expropriation or impose legal restrictions on land use if negotiations
with the seller fail.]
2. Unless properly managed, involuntary resettlement may result in long-term hardship and
impoverishment for the Affected Communities and persons, as well as environmental damage and
adverse socio-economic impacts in areas to which they have been displaced. For these reasons,
involuntary resettlement should be avoided. However, where involuntary resettlement is
unavoidable, it should be minimized and appropriate measures to mitigate adverse impacts on
displaced persons and host communities should be carefully planned and implemented. The
government often plays a central role in the land acquisition and resettlement process, including the
determination of compensation, and is therefore an important third party in many situations.
Experience demonstrates that the direct involvement of the client in resettlement activities can result
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in more cost-effective, efficient, and timely implementation of those activities, as well as in the
introduction of innovative approaches to improving the livelihoods of those affected by resettlement.
3. To help avoid expropriation and eliminate the need to use governmental authority to enforce
relocation, clients are encouraged to use negotiated settlements meeting the requirements of this
Performance Standard, even if they have the legal means to acquire land without the seller’s consent.
Performance Standard 6 Biodiversity Conservation and Sustainable Management of Living
Natural Resources (Introduction)
1. Performance Standard 6 recognizes that protecting and conserving biodiversity, maintaining
ecosystem services, and sustainably managing living natural resources are fundamental to sustainable
development. The requirements set out in this Performance Standard have been guided by the
Convention on Biological Diversity, which defines biodiversity as “the variability among living
organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and
the ecological complexes of which they are a part; this includes diversity within species, between
species, and of ecosystems.”
2. Ecosystem services are the benefits that people, including businesses, derive from ecosystems.
Ecosystem services are organized into four types: (i) provisioning services, which are the products
people obtain from ecosystems; (ii) regulating services, which are the benefits people obtain from the
regulation of ecosystem processes; (iii) cultural services, which are the nonmaterial benefits people
obtain from ecosystems; and (iv) supporting services, which are the natural processes that maintain the
other services.
3. Ecosystem services valued by humans are often underpinned by biodiversity. Impacts on
biodiversity can therefore often adversely affect the delivery of ecosystem services. This Performance
Standard addresses how clients can sustainably manage and mitigate impacts on biodiversity and
ecosystem services throughout the project’s lifecycle.
Performance Standard 7 Indigenous Peoples (Introduction)
1. Performance Standard 7 recognizes that Indigenous Peoples, as social groups with identities that are
distinct from mainstream groups in national societies, are often among the most marginalized and
vulnerable segments of the population. In many cases, their economic, social, and legal status limits
their capacity to defend their rights to, and interests in, lands and natural and cultural resources, and
may restrict their ability to participate in and benefit from development. Indigenous Peoples are
particularly vulnerable if their lands and resources are transformed, encroached upon, or significantly
degraded. Their languages, cultures, religions, spiritual beliefs, and institutions may also come under
threat. As a consequence, Indigenous Peoples may be more vulnerable to the adverse impacts
associated with project development than non-indigenous communities. This vulnerability may
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include loss of identity, culture, and natural resource-based livelihoods, as well as exposure to
impoverishment and diseases.
2. Private sector projects can create opportunities for Indigenous Peoples to participate in, and benefit
from project-related activities that may help them fulfill their aspiration for economic and social
development. Furthermore, Indigenous Peoples may play a role in sustainable development by
promoting and managing activities and enterprises as partners in development. Government often
plays a central role in the management of Indigenous Peoples’ issues, and clients should collaborate
with the responsible authorities in managing the risks and impacts of their activities.
Performance Standard 7 Cultural Heritage (Introduction)
1. Performance Standard 8 recognizes the importance of cultural heritage for current and future
generations. Consistent with the Convention Concerning the Protection of the World Cultural and
Natural Heritage, this Performance Standard aims to ensure that clients protect cultural heritage in the
course of their project activities. In addition, the requirements of this Performance Standard on a
project’s use of cultural heritage are based in part on standards set by the Convention on Biological
Diversity.