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The challenges of advancing sustainability at the World Bank

Minutes|Bretton Woods Project|22 April 2013|url
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Panel
Jane Ebinger, World Bank
William Bulmer, IFC
Daniel Morrow, George Washington University
Steve Herz, Sierra Club
Milap Patel, World Resources Institute

Chair: Roland Widmer, WRI

 

Roland Widmer

  • how do we translate principles and strategies into effective development outcome

Milap Patel

  • we did a project level scope, around principles of sustainability with cross governance
  • 2012 projects for current snapshot, undertaken right now, how the strategy is being translated in to project level design, will talk about the WB here
  • economic and social side, two main questions re poor and vulnerable populations
  • less strong in how groups will directly benefit, eg re strengthened electricity distribution access
  • environmental aspects – a lot more work to be done,  looked deeper in climate related issues, how this is dealt with at design level
  • Two questions, what kind of assessments of GHG ex ante, what kind of actions were taken to deal with the issues identified
  • Very few projects had started integrating climate impacts
  • In many cases would benefit from vulnerability and climate assessment
  • Cote d’Ivoire, would make sense to include in flood protection project, but very few projects carried out ex ante assessments on GHG emission
  • We did see some GHG assessment without a mandate to do so, in Rio – so individual projects do this, but not many
  • Note that this is based on desk research

William Bulmer

  • IFC almost exclusively work with private sector
  • Respond to our client base, we don’t design projects
  • Principles go back to a decade, no safeguards until 1998 WB safeguards
  • 2000 IFC made strategic commitment to sustainability, one year later development of sustainable development department
  • this was a signal to staff and institutions, followed by organisational structure to reflect this
  • after experience with the safeguards were not meeting the needs of dealing with the private sector, wanted policy that is clear on articulating how IFC would fulfil our strategic commitment to sustainability which lead to the performance standards and clear policy for the institution, designed in collaboration with our investment colleagues
  • For implementation, this required a culture change in the institutions – we’re a transaction oriented institution
  • alongside strategic commitment, needed incentives for core staff into their own performance ratings – this culture change was emphasised from the top
  • 2006 implemented a training programme
  • need to talk about how this provides value for our client, not in terms of social and environmental impacts
  • if we get into more technical dialogue, then we run into problems – need to push the business case perspective
  • needed something that was a common vision with the client
  • incentives provided for staff, also for clients we have a joint FT sustainable finance award
  • how to provide financial incentives for clients performing well in social and environmental
  • incorporated an approach on ESG issues that is mainstreamed within the institutions
  • clients with environment and social issues, don’t create a risk – manages on a risk basis

Jane Ebinger

  • how climate change is articulated in WB
  • 2008 WB board endorsed strategic framework for climate change, how to mainstream across organisation
  • working with the private sector on technology, capacity building, etc
  • report back to the board last year, good news on stronger mainstreaming across the WB, eg in the country assistance strategy
  • saw big change in scope of dialogue on climate change
  • IDA 16 2011 climate change special theme, with ambition to scale up analytical and advisory, link back to national development goals, climate sensitive sectors
  • co-benefits demand from countries we support for climate action, both mitigation and adaptation
  • at the project level, investment lending and development policy lending – IBRD/IDA doubling 2011 to 2012, particular demand in particular sectors, eg clean energy
  • climate change integrated in the same way as in operational policies on climate change
  • special climate instruments, eg CIFs
  • readiness support upstream of project design
  • through CIFs and other measures, strategic programme looking more upstream at cross sectoral and transboundary issues
  • climate change is a long term development goal, often asked to come in on planning processes
  • how to look at 2030 vision for development and identify where there might be benefits, goals with less impact on climate change and build in resilience
  • how to measure the results, we’re not 100% there, lot of learning going on
  • challenge it takes time to do this work, need to manage the expectations, takes time, need to think about planning up front
  • couple of retrospectives, progressively more selective in actions, more targeted and strong, but need for better environmental impact assessments
  • increasing uptake in climate instruments
  • challenge how to measure results that take a long time to be seen
  • How to use a development policy loan to promote long term change
  • technical assistance and capacity support is critical in supporting good design, not just lending
  • we’ve made a lot of progress, but recognise areas where we need to do more, including data and support for clients and staff to use them
  • GHG accounting, committed through environment strategy 2012
  • Have activities underway, also reaching out to partners where we can work together

Steve Herz

  • WB has presented a common vision, including commitment to better accounting of natural capital impacts, moving away from narrow GDP focus
  • renewed attention to equity, narrower focus on eliminating poverty and shared prosperity
  • recognition of the need for the participation to empower local people to hold governments accountable
  • country strategy, some gaps here, best practice that needs to be made common practice
  • other nationally developed strategy, under UNFCCC developing countries are developing NAMAs and NAPAs - could feed into country strategy
  • how much the country strategy influence the lending portfolio - sectoral strategy supposed to clarify the objectives in the sector, how to advance poverty alleviation – then prioritise, focused on the area with the highest impacts and win wins
  • eg in the energy strategy there were attempts to look at benefits
  • IEG found unbalance in WB different responsibilities, need better incentive structure
  • safeguards and operations policies – safeguards policies tend to be undersold to the clients, according to IEG
  • recommendations: more rigorous accounting, systematic efforts to compare alternatives, lack of consideration of full range of social issues – lack of consistency in how social assessments are done, including human rights assessments – clarity and consistency with other policies, including borrower systems, better alignment with international treaties, soft law norms, etc – recognise that other institutions have more experience

Daniel Morrow

  • what we could do better to integrate sustainable development into operations of MDBs
  • WRI paper 2010 found that projects in the energy sectors often missed to address issues around eg pricing, reforming subsidies to reveal the true cost of fossil fuels
  • untargeted subsidies are part of a larger problem of untargeted subsidies for fossil fuels, water for agriculture
  • balance between ownership and accountability, in some circumstances would make sense for WB and others to define minimum standards, to rely on country systems
  • concept of minimum standards, should the WB consider finding minimum standards on two policy issues, remove subsidies on fossil fuels and agricultural water
  • these subsidies remain large in many countries
  • WB has tried to address this, but no effect
  • most efforts have been unsuccessful, very difficult
  • removing these subsidies will have adverse impact of the poor
  • ways to design policies, to soften the impact to the poor or to compensate them
  • is this consistent with the respect for country ownership - doesn’t mean respecting any country policy
  • policy analysis and dialogue, when this fails the WB needs to exercise conditionality
  • difficult for the WB to define the minimum standards
  • if the WB could do that, it could send strong signals
  • vulnerable and the poor on a project level, better way to do this is to work with governments to find their own country driven strategy that is more oriented towards the poor
  • mixed record over the last decade, most countries have drifted away from it, seen as an imposition
  • but still centrally important that the WB should be working to strengthen government institutions and programmes, because the problems with projects are so deep - quite easy to create islands

Questions:


Q:
IFC feedback on environmental and social policies, sense that IFC/WB not popular as they have too many policies, would like further information on this

Q:
When looking at Africa, different case scenario altogether, WB led the conditionalities the governments were supposed to use to open up the countries to private investment - WB stated the exact things to be done, which were applied. Came to situation where it is difficult to sustain these things, transparency gone out of the window. State in collaboration with the private sector, still in this situation. Is the WB ready to help African governments to decentralise further then they have already done. How to allow for participation at the local level

Q:
Development policy loan risk assessment, weak in analysis of indirect impacts, are there specific proposals for this

Q:
How to be able to measure impact when climate finance going through private equity for and financial intermediaries. Impact assessment of IFC’s use of FIs proved problematic in the CAO review.

Jane Bulmer:

  • feedback from client survey, recognise the expertise of IFC
  • need to look at the business case, there are challenges, for financial institutions don’t always understand the impacts
  • direct impact of poverty difficult, can see impacts of jobs, try to look at things more broadly where we are operating to get a broader view on poverty
  • strategically, what we might be doing with financial institutions and access to finance - FIs significant part, good particularly in terms of access to finance at an individual level
  • business huge impact to operate effectively, and at the individual and SME level
  • CIFs small part so far, but don’t differentiate on development indicators

Daniel Morrow:

  • public sector reform and decentralisation, historic track record bad
  • WB not well suited, if the WB tried to used hard conditionalities it might make the same mistakes that in the 80s
  • responsibilities must come from the countries themselves, WB shouldn’t go down that road

Jane Ebinger:

  • development policy lending  and how to improve this - have been discussions for last 2-3 years, how to move away to think about policy actions on the process side to outcome side
  • Important to have a coordinating mechanism
  • question about how do you do appropriate climate risk screening - how do you provide the guidance to screen projects, to identify climate risk, eg on long lived infrastructure
  • focus on strategic and sectoral level – trying to address that
  • CIFs, PPCR, adaptation taking a spaced approach to investments, first phase designing a programme, broadly consulted – taken some time to get that right
  • strong focus on upstreaming investment
  • CIFs also have other MDBs as implementing agencies
  • November MDBs agreed harmonised standards for GHG accounting, last June started tracking climate finance

Roland Widmer:

  • in summary a mixed bag of results, with new initiatives, but difficulties to systematically implement and improve
  • there are learning elements and cultural elements

William Bulmer:

  • if there was great country systems, that would be a huge benefit for our clients
  • attraction of performance standards narrows it down to something manageable
  • existing systems often good at the environmental and social side
  • price and externalities importance, including subsidies
  • challenge from IFC’s perspective, how do we get more private sector funding going into client’s countries delivered in a sustainable way
  • challenge how to bring in non-traditional funding, eg private equity, how do we promote this in a way in a good environmental and social governance way

Milap Patel:

  • a lot of the things we call for definitely takes time
  • lot of organisations work on developing tools and data, collaborative approach is the only way to get the urgency
  • incentives for integrating poverty and safeguards, staff focus is good, but should be a normal thing – part of institutional DNA, not siloed to training people into climate
  • need to think about it in an integrated holistic manner

Steve Herz:

  • polices and strategies, how they filter down and affect the impacts and outcomes
  • failure to adequately account for externalities, focus on new opportunities, etc, can lead to sub optional development outcomes against sustainable development

Daniel Morrow:

  • how to mainstream sustainability, should be how to get governments to mainstream sustainability
  • WB and other agencies should take seriously what the government takes forward, quality can be very mixed, but some very thoughtful with country ownership - that needs to be supported
  • Means to measure GHG emissions in a project context – fragmentation of efforts have been detrimental, ignores what the rest of the government is doing

Jane Ebinger:

  • WB released the Turn down the heat report in November, emphasised for the WB to step up action on mitigation
  • there’s a president task force, get the carbon price right, get finance flowing, agriculture triple win, sustainable urban development
  • on getting prices right, dialogue on fossil fuels, to help understand and support action on this front in countries
  • social vulnerability work on 2-4 degrees scenarios should come out later in the year, including some development issues, including water security and sea level rise

 

Published: 22 April 2013 , last edited: 16 September 2013

Viewings since posted: 1198

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