Review and Update of the World Bank’s Environmental and 

Social Safeguards Policies, Phase 3

U.S. Consultation 

Remarks by U.S. Treasury Assistant Secretary for International Markets and 

Development, Marisa Lago

February 22, 2016

I would like to open by thanking our World Bank and civil society colleagues for the thought and 

effort that has gone into planning for this consultation, as well as for all of the work and 

engagement in the four years leading up today. 

The safeguards review has been a bumpy ride with disagreements amongst stakeholders along 

the way. It is easy to look at the negatives. However, we must also look at the positives. I 

firmly believe that we all have been, and continue to be, guided by the same compass: avoiding 

harm, identifying and managing risks, and maximizing positive environmental and social 

outcomes in World Bank-financed projects. Mark King’s presentation highlighted these goals,

as well as the challenges that remain, including how a new Environmental and Social Framework 

(ESF) will be implemented. 

So, my aspiration for the next few days is that we have an open, transparent consultation with 

multiple stakeholders, and arrive at an enhanced appreciation of the issues. While I am generally 

an optimist, even I do not expect that we will have full agreement on all of the issues. But I am 

confident that we will get closer to a final ESF that delivers environmentally and socially

sustainable projects that benefit borrowing countries and their citizens. 

Let me also reinforce that the World Bank’s safeguards review is important, since the world is 

watching. The final ESF will govern World Bank investment lending for years to come. And 

given the World Bank’s leadership role, it is certain to affect the policies of other multilateral 

development banks and bilateral development agencies. Therefore, the final ESF must address 

emerging issues, strengthen existing protections, and focus on implementation. 

In events like these, the temptation is to dwell on those things that we do not like. To counter 

this, let me begin by noting that the U.S. government is pleased with much of the substance in 

the ESF, including expansion of the ESF into new areas such as labor and climate; more explicit 

prohibition of discrimination; protections for vulnerable and excluded groups, including lesbian, 

gay, bisexual, and transgender (LGBT) communities; improved social assessments; expanded 

requirements to consult with affected people throughout the project life cycle; and the 

recognition that implementation, across the project life cycle, needs to be improved. 

But, there also remain a number of concerns about this draft of the ESF and ways in which it can 

improve. As the United States prides itself on being an activist shareholder of the World Bank, 
U.S. government experts will provide detailed comments on the draft ESF in the next few days. 

My role is to begin by framing four broad, systemic concerns. 

First, Hart Schafer spoke of resources and implementation. The written document is important –

very important – but equally as important is how it is implemented in individual projects. The 

World Bank is proposing a “fit for purpose” approach in which strong standards are tailored to 

individual projects by experienced professionals. This sounds good, as you need a balance 

between prescription and the realities of individual projects. But, to be effective, this approach 

needs to be well staffed and well resourced. 

Hart’s comments about significant increases in staffing and budget for safeguards are 

encouraging. But, Treasury likes numbers. I remain concerned by the opaqueness of the 

discussion. We need to see baselines for current budget and staff. And, we need to understand 

how budget and staffing will be augmented to meet the requirements of the existing safeguards,

as well as the new issues and increased implementation requirements of the proposed ESF. 

We agree that use of borrower frameworks has the potential to lead to stronger development 

outcomes, but this is not assured. Using borrower frameworks is appropriate when the borrower 

has a solid legal framework, the capacity to implement that framework, and a track record of 

having done so. But how do you judge whether the borrower meets these tests and against what 

standard? We believe that the standard in the consultation paper – “that the standards set by the 

World Bank must always be met” – is appropriate. But we need more information on the 

proposed methodology for assessing borrower frameworks. Management should provide the 

detailed methodology to both donors and borrowers well in advance of Board consideration of 

the final ESF. Donors want reassurance that the methodology is sufficiently rigorous, while 

borrowers want assurances that World Bank decisions on using borrower frameworks are not 

arbitrary. 

We continue to believe that, in the first five years of the ESF, borrower frameworks are not 

appropriate for “high” and “substantial” risk projects. Once the World Bank has established a 

track record for managing the use of borrower frameworks, there can be a basis to expand their 

use. 

We also need more information from the World Bank on the plans to provide technical 

assistance to borrowers to help them strengthen their environmental and social risk management 

frameworks. The idea for a new multi-donor trust fund to support such capacity building is 

poorly defined. Further, we need a commitment from World Bank Management to use the

World Bank’s own financial resources. 

The World Bank is increasingly financing projects with other institutions. This is especially the 

case for large infrastructure projects, which generally tap multiple financiers, including emerging 

development institutions. We very much welcome the harmonization of requirements to avoid 

duplication and reduce the burden on borrowers. But, we must also recognize that not all 

financial institutions have the same, rigorous standards as the World Bank. We should follow 

two cardinal rules. The World Bank should insist on its environmental and social requirements 

in co-financed projects. This is especially important as we finalize the World Bank’s revised 
ESF as the new gold standard. The corollary is that the World Bank should not finance projects 

with environmental and social standards weaker than its own. 

The fourth issue – the timely disclosure of assessment and mitigation documents, coupled with

rigorous monitoring of projects – is one that puzzles me. The draft ESF looks to be a step 

backwards on timing and disclosure of key risk assessment and mitigation documents. The ESF 

should say clearly and unambiguously that the ESIAs, resettlement plans, and Indigenous 

Peoples plans should be publicly available well before the project goes to Board. The same 

standard of disclosure should also apply to the environmental and social commitment plan. 

Failure by the World Bank to be clear on this basic issue raises the possibility that timely 

disclosure will not occur. We hope for more clarity in the final ESF so that public disclosure is 

not a “tick the box” exercise, but rather allows the public and project-affected people to provide 

meaningful input to these key documents. 

We are pleased that the draft ESF puts more emphasis on project monitoring. We believe that 

communities can contribute to project monitoring, and that monitoring information should be 

disclosed and shared with affected communities. On risky and complex projects, we look for the 

increased use of independent, third-party monitoring. 

My focus on these four structural issues is to underscore their importance and to set the stage for 

the other issues that will be raised by U.S. experts in the coming days. Human rights, 

involuntary resettlement, the treatment of Indigenous Peoples, labor – all are critical issues for 

the United States.

Finally, while these discussions only cover Investment Lending, there is another important 

discussion that we will be pursuing in the coming years around the safeguards approaches that

should apply to development policy lending and program for results. As an end state, we seek a 

coherent, consistent approach to using appropriately tailored safeguards in all World Bank 

activities.