Conformity of World Bank investments with International ...

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


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d) Summary of relevant IFC policies ......................................................................................... 49

Issues at stake in the EIA........................................................................................................... 49

Procedural rights and human rights ........................................................................................... 49


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.

https://www.earthrights.org/media/communities-sue-world-bank-group-us-federal-court-destructive-coal-fired-power-plant

https://www.earthrights.org/media/communities-sue-world-bank-group-us-federal-court-destructive-coal-fired-power-plant

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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



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


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


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


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


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


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



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


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


IFC, Id. note 93. At Performance Standard 1, § 1. 99


Jørgensen & Phillips (2002), Id. note 77. At page 83.

- 25 -

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


United Nations, International Covenant on Economic, Social and Cultural Rights, adopted on 16 December

1966. Article 6.

- 26 -

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


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



Van Dijk (2001), Id. note 79. At page 358-360.

- 28 -

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


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 152, 182. 115

Hunter (2007), Id. note 43. At page 468.

- 30 -

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



International Finance Corporation, Id. note 93. At Performance Standard 1, page 1.

- 31 -

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



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.

- 32 -

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.

- 33 -

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


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



Hamann (2003), Id. note 20. At page 248-249. 131

Hamann (2003), Id. note 20. At page 249. 132

Ibid.

- 34 -

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


Ibid. 136

International Finance Corporation, Id. note 93. At Performance Standard 7, § 5.

- 35 -

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


- 36 -

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



Clark (2002), Id. note 10. At page 208. 144


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.

- 37 -

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


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.

- 38 -

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


UN 61/295 Declaration on the Rights of Indigenous Peoples, Id. note 139. Article 10. 157


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


- 40 -

(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


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



Internal Audit Department (IAD), Id. note 126. At page 19.

- 42 -

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




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.

- 44 -

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


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


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


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.


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



- 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.


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




- 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


- 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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report-advisory-review-safeguards-risk-management.pdf

Web pages

BankTrack, Minas Conga mining project Peru (last updated on 3 January 2016),

available at

http://www.banktrack.org/show/dodgydeals/minas_conga_mining_project#tab_dodgydeals_ba

sics

Compliance Advisor/Ombudsman, About the CAO: Who we are (2016),

available at http://www.cao-ombudsman.org/about/whoweare/

Compliance Advisor/Ombudsman (CAO) complaints:

Complaint Yanacocha-01 (filed on 1 July 2000),

available at http://www.cao-ombudsman.org/cases/case_detail.aspx?id=110

ComplaintYanacocha-02 (filed on 1 March 2001),


Complaint Yanacocha-03 (filed on 1 March 2006),


http://www.banktrack.org/show/dodgydeals/minas_conga_mining_project#tab_dodgydeals_basics

http://www.banktrack.org/show/dodgydeals/minas_conga_mining_project#tab_dodgydeals_basics

http://www.cao-ombudsman.org/about/whoweare/

http://www.cao-ombudsman.org/cases/case_detail.aspx?id=110



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Complaint Yanacocha-04 (filed on 22 November 2012),


Complaint Yanacocha-05 (filed on 7 June 2013),


Complaint Yanacocha-06 (filed on 6 February 2014),


Complaint Yanacocha-07 (filed on 10 March 2014),


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+history#

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+Governance

International Finance Corporation, Funding (2016),

available at

http://www.ifc.org/wps/wcm/connect/CORP_EXT_Content/IFC_External_Corporate_Site/Ab

out+IFC_New/IFC+Governance/Funding/

The Inspection Panel, About Us (2016),

available at http://ewebapps.worldbank.org/apps/ip/Pages/AboutUs.aspx

Ramsar, Peru (2016),

available at http://www.ramsar.org/wetland/peru

The World Bank, History (2016),

available at http://www.worldbank.org/en/about/history

Yanacocha, Quinénes Somos (2016),

available at http://www.yanacocha.com/quienes-somos/





http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc/ifc+history/ifc+history

http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc/ifc+history/ifc+history

http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc_new/IFC+Governance

http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/about+ifc_new/IFC+Governance

http://www.ifc.org/wps/wcm/connect/CORP_EXT_Content/IFC_External_Corporate_Site/About+IFC_New/IFC+Governance/Funding/

http://www.ifc.org/wps/wcm/connect/CORP_EXT_Content/IFC_External_Corporate_Site/About+IFC_New/IFC+Governance/Funding/

http://ewebapps.worldbank.org/apps/ip/Pages/AboutUs.aspx

http://www.ramsar.org/wetland/peru

http://www.worldbank.org/en/about/history

http://www.yanacocha.com/quienes-somos/

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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.

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