Debate over fresh IFC guidelines
The International Finance Corporation (ifc), the private sector arm of the World Bank, has recently adopted a new set of regulations for companies borrowing from it. The new rules, called the policy and performance standards on environmental and social sustainability, add to the existing framework of the Equator Principles, (see box: Managing risk ) which addresses issues of labour rights, community health, safety and security and disclosure of information. Issues of natural habitat, indigenous peoples, involuntary resettlement, dam safety and cultural sites already find a place in the Equator Principles, an agreement chalked out to adhere to social and environment safeguards of the bank. While the ifc maintains that the new regulation would make business more accountable and minimise the negative impact of projects on environment and affected communities, environmental watchdogs say it is not enough.
According to Lars Thunell, ifc 's executive vice president, The new ifc standards are stronger, better, and more comprehensive than any other international finance institution working with the private sector. Our aim is to increase the development impact of projects in which we invest." However, not everyone agrees. While labour groups term the guidelines as a 'good start', environmental groups have termed it 'inadequate' and even 'vague'.
The Brussels-based International Confederation of Free Trade Unions (icftu) said ifc's new guidelines on labour are on par with those issued by the International Labour Organization (font class='UCASE'>ilo). icftu notes that the borrowing companies would have to abide by the 'core labour standards' rules (forced labour, child labour, wages, discriminatory practices, recognition of freedom of association, right to collective bargaining) as defined by the ilo. "Thousands of workers in ifc -financed projects stand to benefit from this new decision, which we believe should set some kind of a precedent for international lending in both the private and public sectors," said icftu general secretary Guy Ryder.
Other groups that criticised the move include the us -based Bank Information Centre, Canada-based Environmental Defence, Indian Law Resource Centre, a us -based legal advocacy group for indigenous people, and International Accountability Project, an international public interest advocacy organisation. These groups are concerned about the enforcement of the guidelines. World Track, a global coalition of ngo s, described the new ifc approach as a 'risky experiment' marked by vague language and noncommittal statements that they fear can affect local people and the environment in much worse a manner than ever before. Moreover, if past experiences are any thing to go by, there is very little hope for things to get better (see box: Low standards).
Environmental groups stress the fact that the new ifc guidelines do not provide for outside monitoring and require independent overseeing and verification of project impacts. Experts believe that engaging and promoting knowledge-based ngos in monitoring and assessment could be beneficial. There is a catch though. Although ifc says it would monitor and review the client's social and environmental performance throughout the 'life of investment', it does not define what 'life of investment means'. For some of the activities like mining and extraction, the impact remains for years, even after the project is over.
Loopholes however, remained and ifc came up with guidelines as a so-called corrective measure It is important to note that only the revised guidelines are not being questioned. The policy review that happened in three stages was filled with controversies and ngos and advocacy groups had boycotted the process because of lack of transparency and clarity in the review process.
With the changing global perceptions on corporate responsibility and the need for sustainable development, safeguard policies can be helpful. The time is right for private companies to start integrating environmental and social concerns with their business operations in the true sense of the term. However, without an effective system of monitoring during the project and more importantly, after the project, it is unlikely that private companies will follow what ifc says.
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