U.S. Statement on the FY2016 CAO Annual Report and IFC Management Response –

Committee on Development Effectiveness August 3, 2016

The United States (U.S.) thanks the Office of the Compliance Advisor Ombudsman (CAO) for 

its FY2016 Annual Report and Management for its response. The U.S. notes the continuing 

disagreement between International Finance Corporation (IFC) and CAO with respect to the 

preparation and scope of “action plans” in response to compliance investigations, and the U.S. 

wishes to provide the following observations and recommendations.

The U.S. agrees with IFC that project-specific actions in response to particular findings of noncompliance may not be relevant, depending on the facts and circumstances. The U.S. further 

agrees with IFC that, for certain findings of non-compliance, a systemic-level response may be 

most effective, and recognition should be given to systemic-level improvements to policies, 

procedures, and practices that have been made in response to the case under investigation.

At the same time, the U.S. agrees with CAO that accountability requires a transparent, 

comprehensive, and systematic response to each finding of non-compliance. The U.S. agrees 

with CAO that IFC should reflect upon each finding, and enumerate the actions that have been, 

are being, or will be taken to remedy the non-compliance and associated harm. Only with this 

accounting can the U.S. be assured that all findings will be adequately addressed.

Therefore, the U.S. urges IFC to implement the following:

First, an “action plan” should be prepared in response to every CAO investigation that contains 

findings of non-compliance – regardless of whether IFC still has a relationship with the project 

or with the client that gave rise to the investigation. Second, the “actions” should not be limited 

to actions that the client is taking, but should also include actions that IFC is taking. This is 

especially important, since CAO findings pertain to IFC’s own non-compliance. And it is 

particularly important when IFC believes it can no longer “compel former clients” to take 

meaningful action. Third, the “actions” need not be wholly forward-looking, but could also 

include actions already underway, or policies and procedures already adopted, that remedy the 

non-compliance. Fourth, noting IFC’s concern about the lack of leverage with former clients, the 

U.S. recommends that any new IFC engagement with a former client be conditional on 

completion of any action plan relating to that client.

Specifically, an action plan should articulate, for each finding of non-compliance:

• all of the actions (project-specific, and/or systemic) that have been, are being, and/or will 

be taken to address that finding of non-compliance,

• by whom (IFC, client, sub-client, other),

• and by when.

CAO could facilitate such action plans by expanding the table of “Key Findings” in its 

investigation reports to include a short paragraph for each finding that summarizes the 

information relevant to that finding. IFC could then copy this table into its Management 

response, comment on each finding, and enumerate the actions that have been, are being, and/or 
will be taken to address each finding, by whom, and by when. This is similar to the process and 

format that the World Bank follows for Inspection Panel cases.

The U.S. believes this process responds to both CAO’s call for greater responsiveness, 

transparency, and accountability; and IFC’s call for recognition that, in some cases, it may be 

unable to compel former clients to take action or it may have already taken the actions needed to 

improve its environmental and social performance.

Finally, the U.S. notes the disagreement between IFC and CAO on consultation with 

complainants in the preparation of “action plans.” The U.S. notes that there is no express 

requirement in the 1999 CAO Terms of Reference for such consultation. However, best practice 

has evolved since 1999. The U.S. is concerned by reading in paragraph 53 of the CAO Annual 

Report that Management declined a recent consultation request from complainants. Consultation 

on an action plan would not require the complainants’ consent to the final plan. But it would 

provide an opportunity for the complainants to give feedback and help improve the action plan 

that is being prepared as a result of non-compliance in the very project that has adversely 

affected them. The U.S. urges IFC not to deny project-affected communities the opportunity to 

provide this input, and the President’s Office to consider the extent of IFC’s consultations when 

it reviews IFC’s response and proposed action plans. The U.S. further urges that, at a minimum, 

the table of “Key Findings” be shared with the complainants in advance of any such 

consultations.