Multilateral Development Banks: Public Consultation on Environmental Assessments
Published: 1998-09-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO reviewed certain aspects of the environmental assessment and information disclosure policies and practices of the multilateral development banks, focusing on the: (1) steps the banks have taken to ensure meaningful public consultation on the environmental implications of proposed projects and timely public access to relevant project documents; (2) quality of consultation that occurs on bank-supported projects and the documentation on the consultation that is provided to executive directors; and (3) extent to which the banks provide broad, timely public access to project information, including environmental assessment reports.
section_title: What GAO Found
paragraphs: GAO noted that: (1) the multilateral development banks, led by the World Bank, have taken significant steps to ensure that meaningful public consultation takes place on the environmental implications of the projects they fund; (2) GAO believes, however, that the banks can take further steps to build on the progress that has been achieved by ensuring that executive directors receive complete and accurate documentation about the consultation practices that have been employed in developing proposed projects, and by more consistently providing the public with timely access to environmental information on these projects; (3) the banks have adopted guidelines that require sponsors to consult with the public in developing projects, and created systems to provide worldwide public access to information about these projects--including information on their environmental implications; (4) generally, public consultation on the projects that GAO reviewed was adequate or better, and bank intervention improved sponsor practices on nearly every project; (5) several factors contributed to the quality of consultation; (6) for example, good consultation was associated with projects employing community-based approaches to project development, as well as those having a high profile because of recent adverse publicity on similar projects; (7) also, in general, World Bank-supported projects received higher ratings than the projects supported by the other banks GAO reviewed; (8) nevertheless, consultation on 25 percent (11 of 44) of the projects, primarily projects supported by the International Finance Corporation or sponsored by the government of China, was less than adequate; (9) also, documentation given to the executive directors provided incomplete or inaccurate information about the consultation measures employed on many of the projects; and (10) the banks' Internet home pages were inconsistent in meeting their own guidelines for providing public information concerning project profiles and environmental assessment reports.

section_title: Letter
paragraphs: This report responds to your request that we review certain aspects of the environmental assessment and information disclosure policies and practices of the multilateral development banks.
We are sending copies of the report to the Secretaries of the Treasury and of State; the Administrator, U.S. Agency for International Development; the Presidents of the institutions we included in our review (the World Bank and the International Finance Corporation, the Asian Development Bank, and the Inter-American Development Bank); and other interested parties. Copies will also be made available to others on request.
Please contact me at (202) 512-4128 if you or your staff have any questions concerning this report. Major contributors to this report are listed in appendix V.
subsections: section_title: Introduction
paragraphs: In the 1980s, multilateral development bank-supported projects around the world were criticized for imposing unacceptable environmental and social costs on borrowing countries. The World Bank, the oldest and largest of the multilateral development banks, was the focal point for much of this criticism. Several World Bank projects became the targets of highly publicized international campaigns aimed at convincing officials to withdraw bank support. Two examples—both the subject of congressional inquiries—were the following: The Polonoroeste Project: This project, which received major World Bank support beginning in 1982, encouraged impoverished Brazilians to take up farming in a previously inaccessible area of the Amazon basin. In 1985, the Bank suspended payments to Brazil when it became clear that the region’s soils could not actually support farming and that, rather then alleviating poverty, the project was resulting in environmental destruction and maltreatment of local indigenous people. Bank support for development in the region was renewed after the adoption of measures to protect the environment and local peoples.
The Sardar Sarovar Dam: In 1985, the World Bank committed to supporting this project—a portion of a larger Indian government plan for developing the Narmada River basin—even though a full assessment of the project’s likely environmental and social impacts had not been completed. The Bank ceased supporting the project in 1993, after years of controversy centering on the forced relocation of tens of thousands of people and the publication of an independent assessment that found substantial flaws in both project preparation and implementation.
Concern about such projects prompted Congress to convene a series of hearings on the environmental impacts of bank-supported projects. One Senate report resulting from these hearings concluded that the banks had not “adequately considered the potential unacceptable environmental consequences of many of the projects that are selected for funding” before deciding to proceed. These inquiries and other critiques provided the impetus for the introduction of bank policies requiring environmental assessments (EA) on proposed projects. Figure 1.1 describes the EA process.
subsections: section_title: The Project Development Process
paragraphs: Throughout most of their existence, the banks imposed few requirements on project sponsors (borrowing government agencies or private companies) regarding public consultation on proposed projects. The banks also made few provisions themselves to permit or elicit public involvement in bank decisions on whether to support sponsor proposals. The extent of public consultation in decision-making was regarded as lying within the discretion of individual borrowing governments. The banks themselves did not, as a rule, independently engage the public in dialogue on proposed projects. When working with private companies, the banks also cited the need to safeguard information submitted by these companies so as not to compromise their competitive positions as a reason for limiting public involvement in project development. Bank critics said that the relatively closed nature of the processes the banks used to develop projects was an important cause of unsatisfactory project results. While these processes differ in many details, the banks employ a broadly similar procedure for developing project plans. This process is outlined in figure 1.2.
Bank critics raised two distinct but interrelated problems with the banks’ project development processes. These were inadequate consultation and a lack of transparency.
subsections: section_title: Consultation
paragraphs: Bank critics believed that greater public consultation was needed throughout project preparation. They argued that public consultation could improve the quality of the EA process, as well as decisions deriving from it, by helping to ensure that (1) all important issues raised by a proposal would be identified and examined from diverse points of view and (2) alternatives and possible mitigation measures would be fully explored.
The critics’ main concern was that the measures employed by project sponsors to consult with local people—that is, those living in the vicinity of proposed projects—while preparing project proposals for bank consideration were inadequate. Bank critics noted that project sponsors often did not conduct meaningful consultations with those who would likely be directly affected by the proposed project and other concerned members of the public (for example, local nongovernmental organizations—NGO). The lack of consultation during the early phases of project development (including EA preparation) was of particular concern, as opportunities for the public to affect project designs are greater in these early phases, when alternative designs and approaches can still be explored at comparatively little cost.
section_title: Transparency
paragraphs: The banks critics’ main concern about bank transparency was that there was almost no access to EA reports for proposed projects. Critics believed that interested members of the public, both within borrowing countries and in the broader community, should have access to these documents in advance of final action by the banks’ boards of executive directors. This access would permit them to review the EA reports’ content and bring matters of concern to the attention of bank staff, project sponsors, and/or executive directors.
Bank guidelines did not provide for making such information available for public review before projects were taken up by the executive directors. The banks did not require project sponsors to share information on such matters, nor did the banks themselves provide public access to EA reports or related documents through either their headquarters offices or their field offices in borrowing countries. Critics contended that this limited the banks’ accountability to the public. They said that because of this lack of transparency, neither citizens in borrowing countries, international NGOs with expertise on environmental and social issues, nor officials of the banks’ member countries were able to critique EA reports or raise concerns that may not have been adequately examined or addressed.
section_title: Congressional Action
paragraphs: While the United States cannot unilaterally mandate changes in bank policies and procedures, it has historically exercised considerable influence over bank operations. Within the executive branch, the Department of the Treasury has the lead role in working with the staffs of the U.S. members of the banks’ boards of executive directors to develop and implement U.S. policy regarding the banks. Since 1985, Congress has repeatedly called upon the Department and the U.S. executive directors to work for changes in bank policies and procedures that would improve the manner in which environmental impacts are taken into account during project development. Among other things, Congress instructed the U.S. executive directors to seek improvements in bank guidelines regarding (a) the steps that project sponsors take to engage in meaningful consultation with peoples whom the projects might affect and other concerned members of the public during project preparation and (b) the steps that the banks themselves take to improve transparency. In 1987, Congress enacted legislation calling upon U.S. executive directors to vigorously promote participation by borrowing country NGOs at all stages of preparation for loans that may have adverse environmental or sociocultural impacts.
In 1989, the “Pelosi Amendment” instructed the Secretary of the Treasury to seek, through negotiations with other bank member countries and bank management, the adoption of policies and procedures within the banks that would (a) provide interested members of the public in all bank member countries with access to EA reports on proposed projects (or summaries thereof) at least 120 days prior to board action and (b) encourage public participation in reviewing project-specific environmental issues.
The amendment’s legislative history emphasized the important role that international NGOs play in facilitating thorough public review of proposed bank projects. (See fig. 1.3.)
In commenting on a draft of this report, the U.S. Agency for International Development pointed out that Congress has also mandated a substantial role for the Agency in identifying potential environmental and social problems associated with projects being prepared for consideration by the banks’ boards of executive directors. The Agency’s written comments, reproduced in appendix III, provide details on the legal provisions in question and the efforts that the Agency has undertaken in response.
The Pelosi Amendment sought to bring U.S. influence to bear in favor of effective implementation of such policies by barring U.S. executive directors from voting in favor of certain proposed actions. U.S. executive directors were called upon to refrain from supporting projects that would have significant impacts on the environment unless project sponsors had prepared EA reports and made the reports—or summaries thereof—available for review by affected groups and local NGOs, as well as bank staff and executive directors, for at least 120 days before the executive directors vote on the proposed actions. It also required the Secretary of the Treasury, in his role as leader of the U.S. government’s interagency process for reviewing proposed loans, to take public comments on environmental matters into consideration in determining the position that the United States should take on proposed loans.
In November 1997, Congress amended the International Financial Institutions Act to make clear that the Secretary of the Treasury should regard the Pelosi Amendment as applying to U.S. participation in the International Finance Corporation—a member of the World Bank Group that works exclusively with private sector partners—as well as to U.S. participation in the banks’ lending programs for developing country governments. The amendment also instructed U.S. executive directors to “strongly encourage” systematic consultation with local communities on proposed loans.
section_title: Objectives, Scope, and Methodology
paragraphs: In response to a request from Representatives Nancy Pelosi and Barney Frank, we reviewed the multilateral development banks’ record in ensuring that meaningful public consultation takes place on the projects they support. Our specific objectives were to describe the steps the banks have taken to ensure meaningful public consultation on the environmental implications of proposed projects and timely public access to project documents; evaluate the quality of consultation that occurs on bank-supported projects and the documentation on the consultation that is provided to executive directors; and determine the extent to which the banks provide broad, timely public access to project information on proposed projects, including environmental assessment reports.
We also sought to identify factors that help to account for differences in the quality of the consultation practices employed in different types of projects. Our study included the World Bank, the Inter-American and Asian Development Banks, and the International Finance Corporation.Together, these four institutions receive approximately 90 percent of the amounts that Congress annually appropriates for the support of the multilateral development banks. As an agency of the United States, we have no direct authority to review the operations of the multilateral development banks. Through the Department of the Treasury and the staffs of the U.S. executive directors in each institution, however, we interviewed bank staff at all levels, including the presidents of the World and Inter-American Development Banks, and obtained official bank documents and reports.
To describe the banks’ steps to ensure consultation and transparency, we reviewed bank documents and guidance and met with bank staff to gain an understanding of their guidance with regard to public consultation and the systems they have established to provide broad public access to bank documents.
To evaluate the quality of public consultation, we developed rating criteria based on the banks’ guidance on public consultation and environmental assessment, as well as other relevant materials, such as bank studies on best practices. These criteria provided a framework for assessing project sponsor consultation practices, including the extent to which  (a) concerned members of the public were informed about proposed projects, (b) public concerns were identified, and, subsequently (c) opportunities were provided for public comment on the manner in which public concerns had been addressed. The criteria also provided a framework for evaluating the measures that were adopted to respond to public concerns identified through the consultation process. We applied these criteria to a group of 44 out of 256 projects with significant environmental implications (generally referred to as category A and B projects) in Latin American and Asia that were submitted for approval by the banks’ boards of executive directors during calendar year 1996. (See fig. 1.4 for a description of project categories.)
To evaluate the impact that the banks had on the consultation practices employed on these projects, we employed a computational matrix that took into consideration the extent to which these projects employed practices that were upgraded from local norms and the extent to which these improvements could be directly linked to bank involvement. Our findings from this portion of the review apply only to the projects included in the sample.
To assess bank transparency during project development—that is, the extent to which the banks provide timely public access to information on proposed projects—we obtained data on access to (a) project profiles and (b) EA reports between mid-1996 and mid-1997 via the banks’ internet home pages. Although the banks have adopted policies and procedures that are intended to provide public access to project documents (in hard copy) through their headquarters and field offices, we did not assess document availability at these locations. Instead, we focused on the banks’ internet home pages to provide a single, unified overview of bank performance in providing worldwide access to information on proposed projects.
The banks have each established their own requirements regarding timeliness for providing public access to EA reports. We report each bank’s performance against its own criteria. The Pelosi Amendment, a U.S. law, does not create a direct legal obligation for the banks but does instruct the Secretary of the Treasury to seek, through negotiation with other bank member countries and bank management, the adoption of policies and procedures that will result in interested members of the public in all bank member countries having access to EA reports at least 120 days before board consideration. Therefore, for comparative purposes, we also report on whether the banks’ internet home pages met this time frame.
Our methodology is discussed in more detail in appendix I.
We conducted our work from January 1997 to June 1998 in accordance with generally accepted government auditing standards.
We received written comments on a draft of this report from the Department of the Treasury, the U.S. Agency for International Development, and the World Bank. These organizations generally concurred with the report. The Treasury stated that the report provided a fair presentation and that it would work with U.S. executive directors, bank management, and executive directors representing other bank member countries to seek implementation of our recommendations. The U.S. Agency for International Development expressed its full agreement with the report’s conclusions and recommendations. The President of the World Bank Group commented that his organization had benefited from both the positive comments and the criticisms contained in the report and described a number of actions that are being pursued, both at the World Bank and the International Finance Corporation, to improve consultation and transparency.
section_title: Bank Efforts to Ensure Consultation and Transparency
paragraphs: Over the past decade, the operations of the multilateral development banks have been the object of a number of critical reviews, and bank management has responded by developing reform programs to improve project effectiveness. Public consultation and increased transparency in designing and implementing projects are acknowledged to be key elements in improving project effectiveness. With the World Bank taking the lead, the banks have taken steps in this direction. These steps have included (1) developing guidelines for consultation, including the preparation of environmental assessments; (2) hiring staff to improve the banks’ capacity to undertake consultation; (3) developing working relationships with NGOs; and (4) placing a priority on developing environmentally and socially sustainable projects. To provide transparency, the banks have developed guidelines for making key documents on proposed projects available to the public and have set up public information centers and internet home pages to make this information broadly accessible. Finally, the banks—with the exception of the International Finance Corporation—have created inspection panels to investigate complaints about violation of their policies.
The banks recognize that their efforts are as yet incomplete, and they continue to take steps to further strengthen consultation and advance transparency. The International Finance Corporation, in particular, has recently adopted revised procedures designed to improve performance in both areas.
subsections: section_title: Public Consultation Measures
paragraphs: Guided by various studies of the banks’ operations, the banks have adopted measures aimed at improving guidance on consultation, enhancing their capacity for ensuring adequate consultation, developing better working relationships with NGOs, and placing a higher priority on environmental and social sustainability in project design.
subsections: section_title: Adopting Consultation Policies and Guidelines
paragraphs: The banks have devised policies, directives, and other guidance intended to ensure that project sponsors identify public concerns about the environmental impacts of proposed projects and take such concerns into account in completing project designs. The World Bank, which issued its initial EA policy in 1989, was the first to take steps in this direction. It required sponsors to complete EAs when appropriate (that is, when the nature and magnitude of a project’s potential impacts appear to require systematic examination) as part of their project proposals. In doing such assessments, and in implementing projects, the policy required project sponsors to “take the views of affected groups and local NGOs fully into account.”
The other banks subsequently adopted similar policies and procedures. In 1990, the International Finance Corporation adopted its first environmental review procedure, which was intended to be consistent with World Bank procedures. Also in 1990, the Inter-American Development Bank adopted procedures calling for public consultation in preparing the terms of reference for project EAs (that is, specifying the assessment’s scope and objectives) and in reviewing the results of the EA process. The Inter-American Development Bank also issued guidance that established a policy framework for assessing the environmental and sociocultural impacts of proposed projects, including the need for public consultation on these issues. In 1997, the Inter-American Development Bank adopted new procedures for evaluating social and environmental impacts through an internal bank Committee on the Environment and Social Impact. In 1993, the Asian Development Bank adopted EA procedures and requirements for public consultation similar to those adopted by the World Bank. Each of the banks has added to these basic policy statements with additional clarification and advice for both staff and project sponsors.
Bank guidance generally advises project sponsors to provide concerned members of the public with relevant information (for example, a description of the project and its likely beneficial and adverse impacts) before asking for comments. International Finance Corporation guidelines, for example, note that truly meaningful public consultation can only take place when project sponsors have first provided affected groups and other interested parties with substantive information on the proposed project. Finally, project sponsors are generally expected to provide feedback to those consulted—for example, through making draft EA reports available for local review prior to completing the report to be submitted to the bank.
section_title: Building Capacity for Public Consultation
paragraphs: In addition to developing guidelines, the banks—especially the World Bank—have improved their capacity for ensuring that meaningful consultation takes place. As part of implementing the “Strategic Compact” announced in early 1997, the World Bank has relocated staff, functions, and authority to the field. By mid-1997, 20 of the World Bank’s 49 country directors were based in field missions. The World Bank also created an internal Environmentally and Socially Sustainable Development Network, including a corps of over 360 social development and environmental specialists, a number of whom are now stationed overseas.
The Inter-American Development Bank has also taken some steps to augment its consultation capabilities, including increasing the number of staff dealing with these issues. As of September 1997, the Inter-American Development Bank’s environmental unit had 12 professional staff, the Indigenous Peoples and Community Development Unit had 4 staff, and the Modernization of the State and Civil Society Division had 24 staff.
In 1995, the Asian Development Bank gave environmental and social issues increased stature within the Bank by combining previously separate units to create an Office of Environment and Social Development. The office employs 24 environmental and social specialists, all located in headquarters. Although its field presence is limited, the Asian Development Bank has also strengthened representation in donor countries and broadened access to its staff. In 1996, the Bank opened 2 representative offices and approved 2 new resident missions—bringing the Bank’s total field presence to 10 resident missions, 3 representative offices, and 1 regional mission.
The International Finance Corporation has a very limited field presence but is working to better address environmental and social issues by adding to its staff. In fiscal year 1997, the Corporation increased the number of senior level staff in its Environment Division from 18 to 24 and added 1 social scientist. In fiscal year 1998, the Corporation plans to add six new senior level staff to its Environmental Review Unit, including three new environmental specialists and two social sector specialists.
All of the institutions we examined are developing ways to incorporate social analysis and participatory approaches into projects and analytical work. For instance, the World Bank has established the Social Development Family—comprised of about 120 World Bank staff—to increase community-based participation in its projects and to link social and environmental assessments. The Asian Development Bank has issued staff guidelines on mainstreaming participation in bank operations and hosted seminars for its staff on participatory methods. It has also established a regional technical assistance grant fund to catalyze the implementation of participatory approaches to bank operations. In commenting on a draft of this report, the Department of the Treasury stated that the Asian Development Bank has also recently established internal networks for staff with expertise in environmental and social issues.
section_title: Forging Relations With NGOs and Other Members of the Public
paragraphs: Legislation passed by Congress in 1990 urged the World Bank to develop and implement mechanisms to substantially improve the ability of bank staff to interact with NGOs and other local groups that are affected by bank-supported projects. Among other things, Congress urged the World Bank to assign at least one professional staff member in each field office to be responsible for relations with local NGOs. In 1997, the World Bank completed appointing NGO liaison staff to all 72 World Bank resident missions. More than half of these are full-time NGO specialists working to strengthen communication and information-sharing between the World Bank and NGOs. According to World Bank documents, nearly half of the World Bank’s projects in fiscal year 1997 involved NGOs in some capacity.
In addition, the World Bank (1) approved special programs to provide NGOs, as well as academics and others, with small grants (in the $10,000 to $15,000 range) for conferences, publications, networking activities, and other information-related activities; (2) recruited NGOs to help prepare the Bank’s economic and sector work, country assistance strategies, and poverty assessments; and (3) established partnerships with NGOs on a variety of operational issues, including a program to monitor stakeholder participation in bank projects.
The other banks have also taken a number of steps in this direction. Beginning in 1995, for example, the Inter-American Development Bank sponsored a series of country focus groups for civil society organizations, government officials, and Bank staff. Through these groups, the Inter-American Development Bank encouraged and supported efforts to strengthen the capacity of civil society organizations in borrowing countries to become integrally involved in developing projects. The Asian Development Bank has updated its policy on cooperation with NGOs and is improving its outreach efforts, for example by inviting NGOs to comment on draft policy proposals. The Bank has also appointed NGO liaisons in each of its resident missions. In commenting on a draft of this report, the Treasury Department stated that the Asian Development Bank has also increased the number of projects with NGO involvement and is providing technical assistance to help borrowers improve their own capacity for performing environmental assessments.
section_title: Refocusing Bank Operations
paragraphs: As part of their overall reform efforts, the banks have increased their emphasis on ensuring that project designs are environmentally and socially sustainable. This action has reinforced the heightened importance placed on public consultation during project development. For example, the members of the Inter-American Development Bank, on the occasion of the eighth replenishment of the Bank’s resources (August 1994), agreed on fundamental changes in the Bank’s operations. The members committed the Bank to strengthening environmental institutions and legal frameworks and fostering environmental awareness in borrowing member countries and to improving the environmental quality of bank-financed projects. The members also reaffirmed the Bank’s commitment to meaningful public consultation on the environmental impacts of proposed projects and greater transparency in Bank operations.
Asian Development Bank policies on public consultation have changed in response to donor demands and internal evaluations and to accommodate changes in lending structure. Senior Bank staff, for example, stated that during recapitalization and replenishment of Asian Development Fundresources in the last few years, donor countries have mandated greater consultation on project design and more consideration for the impact of Bank activities on indigenous peoples. The Bank has also changed its lending structure to increase its focus on environment and social development projects, which often require participation of NGOs and local residents for project implementation.
section_title: Transparency Measures
paragraphs: The banks have (a) adopted policies that provide for public disclosure of information on proposed projects and (b) created public information systems to provide access to key project documents.
subsections: section_title: Adopting Disclosure Policies
paragraphs: In August 1993, the World Bank approved an expanded disclosure policy, providing for an increased number of operational documents to be made available to the public. Among the documents the Bank determined should be made public were basic project profiles and project EA reports. The International Finance Corporation adopted its disclosure policy in 1994 and updated it in 1996 and 1998. The policy requires the Corporation to “operate with a presumption of disclosure.” However, the availability of timely information to the public is tailored to the requirements of the private sector, including the confidentiality of some information and the later disclosure of information.
In January 1995, the Inter-American Development Bank’s Policy on Disclosure of Information became effective. Among other things, it requires that draft EA reports be made locally available before Bank staff conduct project analysis missions. According to the Department of the Treasury, these missions typically occur more than 120 days before board consideration. As for the Asian Development Bank, its Policy on Confidentiality and Disclosure of Information became effective January 1, 1995. The policy emphasizes a presumption in favor of disclosure where disclosure would not materially harm the interests of the Bank and its member countries, borrowers, and private sector clients.
The banks have also required that information on EA efforts be made available for the executive directors’ consideration before they vote on project proposals. Since EA reports themselves are often very lengthy and difficult to readily understand, the banks generally require that summaries of the reports’ findings be made available for the executive directors’ consideration.
section_title: Establishing Public Information Systems
paragraphs: Beginning with the World Bank in 1994, the banks have instituted systems for providing public access to key project documents in their possession, including EA reports. Generally speaking, these systems rely on public information centers in the banks’ headquarters cities to provide interested parties with copies of particular documents. The World Bank established its center in January 1994 to support its efforts to increase accountability and transparency in Bank operations. The center attempts to make a more extensive range of Bank information—including project documents, EA reports, and other studies—available to a wider audience. In 1994, the International Finance Corporation also began making certain information available through the World Bank center. In February 1995, the Inter-American Development Bank began making information available through its newly established headquarters center. The Asian Development Bank established a center within its existing Information Office in 1996.
To extend these centers’ effective reach, the banks have established internet home pages, which provide direct access to some (relatively short) documents and list others that can be obtained by request. The banks have also made provisions for public access to documents through their field offices in developing countries, especially for those documents pertaining to bank programs in the country in question. The banks consider access through field offices to be important because many residents of developing countries do not have access to the internet. The World Bank and the Asian Development Bank also make documents available through depository libraries in developing countries. The World Bank center makes documents available through the Bank’s field offices in Paris, London, and Tokyo and maintains relations with about 240 depository libraries worldwide. As of December 31, 1996, the Asian Development Bank had 98 depository libraries in 38 member countries. Publications sent to the libraries monthly include annual reports, country and economic studies, and documents on loans and technical assistance projects, including EA reports. During this review, international and developing country NGOs expressed concern about uneven access to documents through bank field offices in developing countries, as well as through the banks’ headquarters public information centers.
section_title: Inspection Panels
paragraphs: To ensure that bank operations adhere to each of the respective institution’s own policies and procedures regarding project design and implementation, three of the four banks we reviewed have established an inspection panel. Any group of individuals who may be directly or adversely affected by a bank-supported project can ask the panel to investigate complaints that the bank has failed to abide by its policies and procedures.
The World Bank established its inspection panel in September 1993, and it became operational the following year. In 1994, the Inter-American Development Bank approved its Independent Investigation Mechanism, which received its first request for an investigation in 1996. The Asian Development Bank adopted its inspection policy in late 1995 and appointed an Inspection Committee as a standing committee of the board of executive directors in March 1996. The inspection policy and panel of experts became operational in October 1996. The International Finance Corporation has not established an inspection panel.
section_title: Ongoing Efforts to Strengthen Bank Systems
paragraphs: Bank staff and officials of the U.S. executive directors’ offices in the banks acknowledged that the banks’ efforts to ensure meaningful consultation and public access to key documents are as yet incomplete. Despite the banks’ commitments in this regard, staff still sometimes find it difficult to ensure that sufficient time and resources are built into project schedules to develop project-specific strategies for obtaining and addressing comments. Bank staff, particularly those with responsibility for environmental and social matters, also commented that some bank staff, as well as project sponsor officials, had simply not yet fully appreciated the value and importance of public consultation and transparency. These views were confirmed at the World Bank and International Finance Corporation by a number of recent studies showing that these institutions’ consultation and transparency systems continued to produce mixed results.
Since we initiated this review, the banks—particularly the International Finance Corporation—have taken additional steps toward improved consultation and transparency. In July 1998, the Corporation adopted revised EA and information disclosure policies and procedures. A primary objective of this revision was to eliminate confusion by bringing the Corporation’s policies into line with those applied by the World Bank, and to clearly delineate differences in policy when the Corporation’s private-sector orientation makes such differences appropriate. The revised policies strengthen the Corporation’s consultation and transparency provisions in a number of ways. Figure 2.1 provides an illustration. The International Finance Corporation has also prepared a “Good Practices Manual” to guide project sponsor consultation efforts.
Among other things, the revised procedures bolster the Corporation’s local consultation provisions by mandating proactive dissemination of EA summaries for category A and B projects in local languages in borrowing countries at least 60 days and 30 days, respectively, before the board votes. They strengthen transparency provisions by eliminating management’s authority to waive public disclosure of EA reports on category A projects and specifying that the Corporation will suspend further consideration of a project if the sponsor does not agree to public release of EA reports. The revision also increases access to information on projects that the Corporation’s board has approved—for example, through the World Bank’s public information center making updated project environmental action plans publicly available for the first time.
World Bank staff have also drafted revised EA policies and procedures, and the draft is being discussed by members of the board of executive directors. The draft strengthens existing policies and procedures regarding public consultation on projects with significant environmental impacts and eliminates ambiguity in the existing guidance by explicitly extending most provisions to include category B projects. Figure 2.2 provides an example of these changes.
For category A projects, the draft also strengthens requirements regarding staff reporting to the board on consultation matters. In addition, to address shortcomings in making project profiles available, the Bank is developing a computerized document flow system directed at ensuring that project profiles, and updates to those profiles, are provided to the Bank’s public information center as soon as Bank staff create them.
The Inter-American and Asian Development Banks also continue to refine their guidelines and practices. For example, to provide the Inter-American Development Bank public information center with a stronger mandate for obtaining copies of EA reports, the Bank has just recently adopted a new policy requiring staff to provide both the center and relevant bank field offices with copies of EA reports as soon as sponsors submit them. (Inter-American Development Bank staff informed us that they were not previously required to provide EA reports to the center.) The Inter-American Development Bank is also developing a policy on consultation and transparency designed specifically for private sector projects. Asian Development Bank staff are working with private sector sponsors to eliminate business-confidential information from the final reports of the President on project proposals so that these reports may be released to the public upon board approval and has issued several such public versions of final private sector project reports. The Asian Development Bank has also installed a new computer system which, according to Bank staff, should facilitate improved internet access to Bank documents.
section_title: Conclusions
paragraphs: The banks have adopted guidelines and created systems to provide for meaningful public consultation during project development, complemented by efforts to enhance public access to relevant information through bank public information centers. All of the institutions, led by the World Bank, are taking steps to further improve their current procedures and systems.
section_title: Agency Comments
paragraphs: In commenting on this report, the President of the World Bank Group discussed the measures that the World Bank and the International Finance Corporation are pursuing to facilitate strengthened performance with regard to both consultation and transparency. These include the Corporation’s adoption of revised policies and procedures, and elements of the Bank’s operational policy reform initiative, such as enhanced training for staff and pursuit of comprehensive audits for environmentally sensitive projects at critical stages in the project cycle.
section_title: Meaningful Public Consultation Occurs on Most Projects
paragraphs: As discussed in chapter 2, the banks have instituted a number of measures over the past several years to improve the public consultation process for environmentally sensitive projects. Using the rating criteria we developed based on the banks’ guidelines on public consultation—the details of which are explained in appendix I—we examined a sample of 44 of 256 projects in Latin America and Asia approved by the banks’ boards of executive directors during 1996 and tested whether the measures instituted by the banks had produced the consultation results they desired.
We found that the quality of consultation was adequate or better on 75 percent (33 of 44) of the projects we examined, and project sponsors took positive steps to respond to public concerns, when raised. On such projects, for example, sponsors used radio and print media to inform nearby communities about the project and its potential impacts, held community meetings to provide the public with opportunities to voice their concerns during project preparation, and provided opportunities for concerned parties to review and comment on draft EA reports. On almost all projects, sponsors addressed public concerns through actions such as relocating pipelines or modifying resettlement plans. Several factors contributed to the quality of consultation on the projects we examined. Bank intervention was an important factor and improved sponsor practices beyond the country norm on nearly every project. Consultation was particularly good on projects using a community-based approach to project development and on projects with high visibility. World Bank-supported projects also employed comparatively good consultation practices.
Public consultation on 25 percent (11 of 44) of the projects was less than adequate. Most of these projects were supported by the International Finance Corporation or sponsored by the government of China. On many of these projects, the banks became involved after much of the project development process was already complete. Thus, their opportunity to influence the consultation practices employed—particularly during the early stages of project development when public consultation can have its greatest impact—was diminished. In deciding whether to proceed with such projects, bank officials said they must balance the need for adequate consultation against the development benefits of the proposed projects.
Providing a complete and accurate summary of the consultation practices employed during project development is an important part of the process and helps the executive directors provide oversight of bank policies. However, in nearly 40 percent (17 of 44) of the projects we reviewed, the documents provided to the executive directors before voting were incomplete or inaccurate about the consultation practices employed.
subsections: section_title: Consultation Adequate or Better in Most Cases
paragraphs: Bank guidance generally calls for project sponsors to (1) inform concerned groups about proposed projects and their potential environmental impacts, (2) identify and clarify public concerns through such means as community meetings, and (3) ensure that concerned members of the public have meaningful opportunities to comment on the results of the EA process. Table 3.1 provides examples of the types of consultation practices that we rated as exemplary, good, adequate, borderline, and unacceptable.
For our sample, consultation was adequate or better on 75 percent (33 of 44) of the projects. As shown in figure 3.1, consultation on 50 percent of the projects (22 of 44) was exemplary or good, while it was adequate on 25 percent (11 of 44) of the projects. The remaining 11 projects employed practices that we found to be less than adequate.
A major infrastructure project supported by the Inter-American Development Bank provides an example of the eight projects in which consultation with the public was exemplary. In this case, project plans were announced in local media, an information office was created with full-time community liaisons to respond to citizen inquiries, a consultant was hired to ensure that affected peoples were thoroughly consulted and their views taken into account in planning resettlement, and public meetings were held to discuss issues of public interest. The Bank retained consultants to evaluate the project sponsor’s EA report and resettlement plan in light of Bank standards, and the results were discussed in public and made available for further public comment.
On the projects we rated as good, sponsors employed consultation practices similar to the project described in the preceding paragraph, though they were not as extensive. One World Bank-supported project that we found to have employed good practices, for example, solicited public input to project design through (a) two regional seminars for professionals in relevant fields (including NGO representatives) and (b) an iterative series of community meetings in affected areas.
An example of the 11 projects we found to have adequate consultation was another Inter-American Development Bank project. Town meetings were held to inform the public about the project. After completing a draft EA report, the project sponsor made it available for public review at a site accessible to local residents. A well-publicized public hearing was subsequently held. The hearing was covered by the local media, and the results were made available for public review.
Among the projects where we found consultation practices to be less than adequate was an International Finance Corporation-supported project that we visited in Asia. Consultation on this proposal was limited to local traditional leaders. In accordance with local custom, women were not invited to participate. In another, supported by the Asian Development Bank, surveys were undertaken to identify public concerns. However, project documents indicated that public participation for a major portion of the project did not occur. In addition, local residents were not given an opportunity to review or comment on the results of the EA process. In 8 of the 11 projects where we found consultation to be less than adequate, the first phase of the consultation process—informing the public about the proposal—was also less than adequate.
subsections: section_title: Public Concerns Taken Into Account
paragraphs: Bank guidance calls for sponsors to take public concerns fully into account through such steps as undertaking additional studies to explore previously unconsidered impacts and/or adopting measures to mitigate or compensate for adverse impacts. We deemed the measures employed to take public concerns into account to be adequate or better in the 39 cases where concerns were raised. (On five projects we examined, we found no evidence that the public raised substantive concerns.)
In most instances, members of the public were concerned about project impacts that would directly affect their livelihood. On one Asian Development Bank project, for example, proposed highway rights-of-way were relocated in response to residents’ concerns that proposed routes would adversely affect productive cropland. Additional interchanges were also added in response to villagers’ requests for improved highway access. The sponsor of another Asian Development Bank project responded to local concerns by developing methods to mitigate adverse impacts on migratory fish. In two private sector projects that we examined, one supported by the Inter-American Development Bank and the other by the International Finance Corporation, pipelines were rerouted to avoid agricultural and/or forested areas. In another International Finance Corporation project in Asia, the sponsor made a number of alterations in project design in response to concerns that villagers raised about adverse impacts on fishing grounds, shrines, homes, and schools.
In some cases, there was no record of any NGO commentary or involvement. However, when activist NGOs did offer comments, the banks generally ensured that the issues raised were taken into account. For example, information provided by an environmental NGO led the Asian Development Bank to decline support for one proposed agricultural development site in an environmentally sensitive forest region. In another Asian Development Bank-supported project, NGO concerns about protecting environmentally sensitive forest areas were addressed by adding several features to the project design, including designation of a portion of project proceeds to support conservation efforts.
section_title: Factors Affecting the Quality of Consultation
paragraphs: Several factors were associated with better or worse consultation on the projects in our sample. Bank intervention generally improved sponsor practices. Comparatively good consultation practices were also associated with projects that (1) used community-based approaches in design and implementation, (2) had a “high profile” because of recent adverse publicity on similar projects, and (3) were supported by the World Bank. Bank critics have suggested that the banks’ private sector projects were less likely to employ good consultation practices than the banks’ public sector projects. Our analysis indicated that this perception was true if community-based development projects were included in the sample universe. However, after removing community-based development projects—which are generally not supported by private companies—from our analysis, we found little difference in the quality of the practices employed on private sector projects as compared with those sponsored by the public sector.
Of the 11 projects where consultation was inadequate, 5 were supported by the International Finance Corporation and 3 were sponsored by the government of China. In many of these cases, the Bank began working with project sponsors after much of the design and consultation work was already complete.
subsections: section_title: Bank Intervention Improved Sponsor Practices
paragraphs: In all but four of the cases we examined, bank intervention, such as insisting on public access to draft EA reports, resulted in at least a marginal improvement in the sponsors’ consultation practices and/or in the measures that sponsors employed to respond to public concerns. As shown in figure 3.2, bank impact on sponsor practices was great or very great on 41 percent (18) of the projects and at least moderate in another 25 percent (11) of the projects. The banks had at least a marginal impact on most of the remaining projects.
One country that we visited provides an example of very great bank impact on project development practices. Government officials, NGOs, and others in this country credited the World Bank and the Inter-American Development Bank with fostering highly participatory approaches to developing both the poverty alleviation and infrastructure projects that we examined. Government officials and NGO representatives commented that these practices contrasted dramatically with prior government approaches that lacked any provision for public comment. Officials charged with project implementation credited bank staff with introducing mechanisms for engaging concerned members of the public that had not previously been employed in their ministries but that worked very well in practice.
Project documents showed that International Finance Corporation intervention in one project in rural Asia had a very great impact on both the process and the measures taken to respond to identified concerns. In this case, neither an EA nor consultation was required by the government. However, the Corporation required that an EA be conducted and that the results be made available for public review. The Corporation was also instrumental in changing the proposed project site to avoid disrupting existing cultivation sites.
On several projects, bank staff indicated that they had suggested innovative approaches to overcome local barriers to effective consultation. One example was a World Bank-supported effort directed at providing small-scale infrastructure for a number of isolated communities populated largely by illiterate people. This project employed a variety of unconventional communication techniques, including dramatic presentations, to effectively inform residents about the proposal.
In several instances, the banks placed conditions on loans to ensure that the sponsors addressed the concerns raised by members of the public. For example, on one of the projects we examined, the World Bank required the borrowing government to take action to address outstanding claims of persons adversely affected by a previous bank-financed project in the same area. In another, the World Bank required the borrowing government to address environmental and social risks on a proposed project by implementing a separate bank-financed project. Satisfactory progress on the latter project had to be demonstrated before the Bank would consider financing the original proposal.
subsections: section_title: Limits on Bank Intervention and Impact
paragraphs: Despite the banks’ impact in improving sponsor practices, public consultation on 11 of the projects in our sample (25 percent) was less than adequate. In many of these cases, the banks’ relatively late involvement in the project development process limited their influence on sponsor consultation practices—particularly those measures employed in the early phases of project development when public consultation can have its greatest impact. Bank staff noted that they are generally involved in guiding borrowing governments’ project planning efforts from the very beginning of the project development process. This early entry gives the banks the opportunity to influence the approach that sponsors take to preparing project proposals and EA reports. In contrast, bank staff and private sector representatives both noted that private sector projects are typically submitted for bank consideration only after much project planning has been completed. Bank officials also commented that, like private companies, the government of China typically submits projects for bank consideration that are already well on the way to having completed designs ready for approval, placing bank staff in a position similar to that which they occupy on many private projects.
section_title: Community-based Projects Employed Good Practices
paragraphs: Development agencies, including the banks, have found that certain types of objectives—like providing basic infrastructure, ensuring basic services for poor communities, and managing natural resources—can be addressed in a highly effective manner by using community-based approaches to project design and implementation. By definition, control and accountability in such projects are largely transferred to the communities involved. Figure 3.3 describes one such project.
On average, the 12 community-based projects in our sample employed consultation practices that we viewed as good. These projects’ average rating for taking public concerns into account was also good. In contrast, the other projects in our sample received an average rating of adequate in both dimensions. Seven of the community-based projects in our sample (more than half) employed exemplary consultation practices, while only 1 of the 32 other projects in our sample achieved this high a rating.
section_title: High-profile Projects Employed Comparatively Good Practices
paragraphs: Six of the projects in our sample entered development shortly after similar bank-financed projects in the same countries had generated substantial adverse publicity because of environmental impacts and resettlement of affected peoples. Five of these six employed consultation practices that we viewed as good or exemplary. On these projects, sponsors and bank staff were well aware of the adverse publicity and took steps to ensure that consultation with the local residents on the new projects was good. For example, one World Bank-supported infrastructure project took place in a location where the borrowing government and the Bank had previously been criticized for poor consultation practices and adverse environmental impacts in a project in the same sector. On the new project, the sponsors took extraordinary measures to ensure that affected persons were actively engaged in extensive consultation early in the project design. These steps included establishing public information centers at the project site and, with NGO assistance, creating a development organization to facilitate ongoing consultations among the stakeholders involved. Among other things, these community consultations—one of which is shown in figure 3.4—resulted in project design and engineering changes to minimize resettlement of local people. World Bank staff had a very great impact on the sponsor’s practices in this case. At the Bank’s behest, for example, efforts to respond to public concerns were greatly expanded and compensation rates for resettled persons were substantially increased.
section_title: Bank Affiliation Made a Difference
paragraphs: On average, World Bank-supported projects’ consultation practices rated highest among the four banks included in our study. More than half of the World Bank projects we examined employed good or exemplary consultation practices. On average, the World Bank also had a great impact on improving sponsor practices compared to a moderate impact on improving sponsor practices by the other banks. The World Bank also provided the most complete information for the executive directors’ consideration. (Documentation quality is discussed later in this chapter). International Finance Corporation-supported projects had the lowest average rating on consultation and the other dimensions we examined. The average ratings for Inter-American- and Asian Development Bank-supported projects fell between the World Bank and International Finance Corporation averages.
The World Bank’s better performance on consultation stems from the fact that, among the multilateral banks, it was the lead institution in developing participatory approaches to development. Among the banks, it has published the most comprehensive guidance on environmental assessment and consultation and has the greatest resources at its disposal to address such matters. For instance, it has over 360 environmental and social development staff, a number of whom are assigned to overseas missions. In selected overseas missions, such as one that we visited in Jakarta, Indonesia, the World Bank has a fully staffed environmental and social impact unit. The resident mission in New Delhi, India, which we also visited, has a social development unit. The International Finance Corporation has relatively few staff in these fields, and none of them are assigned to overseas missions.
section_title: Type of Sponsor Not Associated With Consultation Quality
paragraphs: Bank critics have expressed concern about the quality of consultation practices employed on the banks’ private sector projects as compared with those employed on public sector projects. However, when we removed community-based development projects (which are generally not supported by private companies) from the analysis, we found little difference between the quality of the practices employed on public and private sector-sponsored projects. This observation applies when we include all private sector projects in our analysis. But as will be discussed in the next section, many of the projects supported by the International Finance Corporation employed less than adequate consultation. Figure 3.5 compares the quality of consultation on private and public sector projects, absent community-based development projects. 38% (6 projects)
44% (7 projects)
25% (4 projects)
38% (6 projects)
31% (5 projects)
section_title: Consultation Less Than Adequate on Some Projects Sponsored by the International Finance Corporation and the Government of China
paragraphs: Each of the four banks included in our review supported at least one project that we found to have employed less than adequate consultation practices. However, 8 of the 11 projects in our sample where we found consultation to be less than adequate were supported by the International Finance Corporation or sponsored by the government of China. Five of the 10 International Finance Corporation projects (including one in China) and 3 of the 5 projects in our sample sponsored by the government of China had less than adequate consultation. The median rating for consultation on the projects supported by the Corporation or sponsored by the government of China was less than adequate compared to the median rating of good for all other projects.
As noted previously, substantive bank involvement in project development generally begins relatively late in the process for private sector projects, including those supported by the International Finance Corporation, and for projects sponsored by the government of China. International Finance Corporation and other bank officials acknowledged that consultation sometimes is not as good as they would like in such circumstances. However, in deciding whether to proceed with proposed projects, these officials observed that other factors also had to be considered, including the beneficial development impacts that the project promised to deliver. Another factor in deciding to proceed with a project, according to International Finance Corporation officials, is the opportunity to remedy or ameliorate attendant environmental problems that might never be corrected if the project proceeded without bank sponsorship. In these cases, bank officials said that governments or private firms might find alternative financing without conditions.
section_title: Consultation on Some Projects Not Adequately Documented
paragraphs: We examined whether key documents presented for executive directors’ consideration before they voted on proposed projects provided complete and accurate information about consultation on the projects. These documents included, for example, summaries of EA reports and project appraisal reports prepared by bank staff. Adequate documentation summarized the consultation steps, the concerns raised, and the measures taken to address them. Unacceptable documentation provided little or no information other than a brief statement that consultation occurred.
Documentation submitted to the executive directors was adequate or better for 61 percent (27 of 44) of the projects we reviewed. For example, documents submitted for executive directors’ review on several infrastructure projects in Asia described in detail the public consultation processes employed at each step in project development. In one project supported by the Asian Development Bank, the documents provided a detailed discussion on consultation activities—listing where meetings were held, who attended, the issues that were discussed, and how the issues were handled.
On the other hand, we found that 39 percent (17 of 44) of the projects provided less than adequate information. Shortcomings were particularly evident in project documents presented for board consideration at the Asian Development Bank and the International Finance Corporation. Documentation was less than adequate for more than half (12 of 22) of the projects we examined at these two institutions. A number of the EA report summaries submitted to the Asian Development Bank executive directors, for example, contained only short statements that the residents had been consulted and all were in favor of the project. They contained no discussion of what, if any, concerns had been raised, or how they were addressed. Seven of 10 International Finance Corporation projects had less than adequate documentation about consultation. We generally found that the documentation on these projects forwarded to the board members contained little, if any, mention of the actual steps taken to consult with the public, the parties consulted, the concerns raised, and/or the measures intended to address these concerns.
In a few instances, materials submitted for the consideration of the International Finance Corporation and Asian Development Bank boards presented the consultation measures in an excessively favorable light. In one project, for example, the report submitted to the board asserted that the sponsoring company had undertaken a comprehensive public consultation program. However, the report did not provide details of such a consultation program, and other documents and interviews with staff did not indicate such consultation had actually taken place. For another project that consisted of four subprojects, the summary EA report stated that the residents were informed about the subprojects and were generally in favor of them. However, the consultant’s report (which is not routinely submitted to the executive directors but is available to them upon request) stated that half of the residents affected by two of these subprojects had no knowledge of them and that participation was lacking throughout the design of another subproject. Furthermore, the report mentioned some residents’ concerns that were not reflected in the EA report summary.
subsections: section_title: Documentation Important to Executive Directors’ Role
paragraphs: According to officials at the U.S. executive directors’ offices, providing good summary information is a key point in the consultation process. It provides an official record of what happened and helps executive directors exercise effective oversight of U.S. policy and law—ensuring that meaningful public participation and consultation take place during project development. U.S. officials also indicated that, while they rely on several sources of information before making decisions, reliable documentation helps them by summarizing relevant information on consultation in one convenient place.
Other officials of the U.S. executive directors’ offices said that tracking down information is time-consuming and that, in some instances, they are faced with spending considerable time collecting and analyzing information that should already be prepared for them. For example, officials of the U.S. executive director’s office at the Asian Development Bank had to spend considerable effort getting information on a project in which resettlement was to take place. (The documentation provided for the executive directors was incomplete and did not discuss the consultation steps taken.) The information obtained ultimately revealed that the project sponsor had not consulted with the residents until after bank officials required it. By then, decisions on resettling the residents had already been made, according to project documents. The U.S. executive director decided not to vote in favor of this project. Officials of the executive director’s office expressed concern because this investigative effort cannot be made on all projects where information is incomplete. Our analysis of sample projects supports this concern. Several of the poorly documented projects that we reviewed had in fact employed consultation practices that were adequate or better. However, in 65 percent of the projects we examined where consultation was inadequate (7 of 11), the summary documentation for executive directors was incomplete or inaccurate.
section_title: Conclusions
paragraphs: The banks have taken significant steps toward ensuring that meaningful public consultation becomes an integral part of their project development processes. Meaningful consultation occurred on most of the projects we examined, and bank intervention nearly always improved sponsor practices. Nonetheless, consultation on some projects was not adequate. In many of these cases the sponsors asked the banks to fund the projects only after the sponsors had completed much of the project preparation and consultation. In these instances, the executive directors are presented with a dilemma. Critical to their decision in these cases is complete and accurate information on the projects, including a description of the public consultation that has taken place. Given that the executive directors must balance multiple factors in considering these projects, the lack of a complete record of the consultation that has taken place is a distinct disadvantage to efficient and effective decision-making.
section_title: Recommendation
paragraphs: We recommend that the Secretary of the Treasury instruct the U.S. executive directors at the banks to work with other executive directors and bank management to seek improvements that will result in executive directors being provided with a complete and accurate record of public consultation on all proposed projects with significant environmental implications.
section_title: Agency Comments and Our Evaluation
paragraphs: The Department of the Treasury agreed with our findings regarding consultation and committed to continuing its efforts to work with U.S. executive directors, bank management, and executive directors representing other member countries to ensure rigorous and consistent implementation of bank public consultation policies. The Treasury also said that, as we recommended, it would work with U.S. executive directors, bank management, and other executive directors to ensure that executive directors are provided with complete and accurate records of public consultation on proposed projects with significant environmental implications.
The U.S. Agency for International Development also agreed with our findings and noted that there is room for improvement in the consultation practices employed in preparing bank-supported projects. The Agency also pointed out that good implementation of environmental and social mitigation measures during the active life of a project is another important indicator of bank commitment to sustainable development.
The President of the World Bank Group commented that the World Bank and the International Finance Corporation are continuing their efforts to improve performance in this area. He noted that the Bank will shortly be undertaking the third in a series of evaluations of EA practices on bank-supported projects (including both impacts during implementation and the quality of the public consultation practices employed.) With regard to our findings on the consultation practices employed on International Finance Corporation-supported projects, the President acknowledged our recognition of the different circumstances faced by Corporation staff as compared with their counterparts in the World Bank’s public sector lending programs but reiterated that there should be no qualitative difference in the consultation standards employed on public or private sector projects.
section_title: Banks Provided Inconsistent Public Access to Key Project Documents
paragraphs: The banks have established information systems, including public information centers and internet home pages, to provide timely public access to information on proposed projects. We focused on the performance of one part of these systems—the bank’s home pages. We determined whether, as expected by the banks, their home pages provided timely internet access to key documents on proposed projects, including EA reports. We found that the home pages often did not provide timely access to these documents.
subsections: section_title: Project Documents
paragraphs: Bank public information systems are generally expected to provide public access to two key documents. These are the following: Project profiles: The purpose of project profiles is to provide “as much information to the public as early as possible” so that proposed project designs can benefit from consultation with all concerned parties, beginning at the projects’ formative stages. These profiles are expected to include an outline of the main environmental issues raised by proposed projects and are to be posted on the banks’ home pages and made available in hard copy at headquarters public information centers. According to bank guidelines, field offices are also supposed to make profiles available for borrowing country residents to review. Profiles should be periodically updated through board approval.
EA reports: As explained in chapter 1, the banks generally assign projects with significant environmental implications to a category for assessment purposes. The banks inform the worldwide general public that EA reports for category A projects are available by listing them on internet home pages. These listings are sometimes accompanied by a summary of the report’s contents. The full reports—which may be several hundred pages long—are made available on request from public information centers and field offices. The banks also generally require that environmental information on category B projects be accessible through their home pages. Sometimes this information is directly available on the home pages. In other cases, relevant documents are listed on the home page and may be obtained by request. As noted in chapter 1, the Inter-American Development Bank no longer assigns projects to categories for EA purposes. Bank policy is to provide broad access to all sponsor EA reports by listing them as available on the Bank’s home page.
section_title: Project Profiles Often Not Available on the Internet
paragraphs: Project profiles for category A and B projects are supposed to be directly available on the banks’ home pages. As shown in table 4.1, profiles were available for all of the International Finance Corporation projects for which we obtained data, but this was not the case at the other banks. Profiles were available for about 71 percent of World Bank projects and for about half of Inter-American and Asian Development Bank projects. For example, profiles were provided for 10 of the 20 Asian Development Bank projects for which we obtained data.
With regard to timeliness, World Bank, Inter-American Development Bank, and Asian Development Bank guidelines specify that project profiles should be made available early on in project development—that is, when projects are identified and enter the bank’s “pipeline” of projects under development. The International Finance Corporation, in contrast, ties issuance of project profiles to the end, rather than to the beginning, of the project development cycle. Corporation policy states that profiles should be made available at least 30 days before board consideration. Corporation staff explained that their guidelines were designed with private sector concerns about limiting access to information about prospective projects in mind. Private companies we interviewed were concerned that widespread disclosure of project information could provide competitors with financial and other data to develop or strengthen a competing proposal after they had invested heavily in project preparation.
On average, project profiles for the World, Asian, and Inter-American banks were available on these institutions’ home pages about 2-1/2 years prior to board votes. On average, International Finance Corporation project profiles were available about 68 days before board consideration.
section_title: Timely Access to EA Reports Sometimes Not Provided
paragraphs: The banks have different requirements for when, and where, public access to EA reports is to be provided. The World Bank specifies that sponsors should provide category A project EA reports to the Bank and make them available in the borrowing country before Bank staff appraise the proposals. When the EA report has been officially received by the Bank, a copy is sent to the public information center and its availability noted on the Bank’s home page. Asian Development Bank criteria state that category A project reports must be provided to the executive directors at least 120 days prior to scheduled board consideration of the project. Bank officials added that Bank practice is for public access to these reports to be simultaneously provided via the Bank’s public information center and their availability posted on the Bank’s home page. The International Finance Corporation requires that these reports must be made available to the public (via the Corporation’s home page and the World Bank’s public information center) at least 60 days before board consideration.
The Inter-American Development Bank requires that EA reports be made available in the borrowing country before appraisal missions begin. Though Bank policy is for broad access to be provided to these reports through their posting on the Bank’s home page, the Bank did not, during the period for which we collected data, require staff to also send these reports to the public information center, nor did the Bank systematically record these reports’ arrival at the public information center or the date of their posting on the Bank’s home page. We could not, therefore, report on access to EA reports via the Inter-American Development Bank home page. We did, however, obtain data on when these reports were made available in the borrowing countries.
As shown in table 4.2, the banks’ home pages sometimes did not provide notice that category A project EA reports were available or did not provide such notice within the banks’ expected time frames. About 8 percent of the reports for category A World Bank projects in our sample were posted on the Bank’s home page in the required time. Forty-six percent were not posted at all. Most Asian Development Bank reports for category A projects were posted in the required time. The International Finance Corporation met its 60-day standard for the sample of category A projects we examined. EA reports for Inter-American Development Bank projects were made available in the borrowing country in all cases, though about 33 percent of the reports were not made available for the required time.
Table 4.3 shows the performance of the banks’ internet home pages in providing access to EA reports for proposed category A projects, using the 120-day time frame advanced by the Pelosi Amendment for comparative purposes.
The banks generally met their own requirements with regard to providing access to information on EA reports on category B projects. However, these requirements contain several features that limit the timeliness of public access to this information. For example, the Asian Development Bank divides category B projects into “sensitive” and “non-sensitive” subcategories. No information on EA results is provided on “non-sensitive” projects until after the board has voted. The International Finance Corporation does not require that information on the results of category B project EA reports be posted until 30 days before board votes.
section_title: Conclusions
paragraphs: The banks are not consistently meeting their goal of providing the public with timely access to key project information through the internet. The information that has been made publicly accessible is useful, and the banks have clearly taken the initial steps in providing worldwide access to project information. However, the banks are not fully meeting their commitments on a regular basis.
section_title: Recommendation
paragraphs: We recommend that the Secretary of the Treasury instruct the U.S. executive directors at the banks to work with other executive directors and bank management to have the banks improve compliance with their guidelines on providing timely public access to project profiles and EA reports through their internet home pages.
section_title: Agency Comments and Our Evaluation
paragraphs: In commenting on a draft of this report, the U.S. Agency for International Development noted that its experiences in attempting to monitor bank projects reflect our findings regarding difficulties in obtaining access to project profiles and EA reports. The Agency reiterated the importance of the banks’ ensuring timely public access to these documents.
The Treasury Department agreed with our findings and said that the Department would work with U.S. executive directors, bank management, and executive directors representing other member countries to ensure timely access to project information for concerned members of the public, particularly affected populations, via the banks’ information centers, the internet, and local venues in borrowing countries.
The President of the World Bank Group agreed with our conclusion that performance in this area should be improved. He said that performance had improved since the completion of our review but that the Bank and the Corporation both need to perform even better. Because the actions described by the President of the World Bank Group have only recently begun to take effect, we did not attempt to verify their impact.