Picture an institution that invests about $55-billion a year in the world’s economy with the mandate of alleviating poverty. This is supposed to be the World Bank, which turns 60 next month. I won’t be sending a birthday card.
The bank finances energy projects, often run by multinational energy corporations, including Shell and BP, in developing countries. More than 80% of the energy extracted is exported and used in the developed world.
World Bank money has left a legacy of environmental and social devastation, from cyanide spills in Peru to land expropriation and water pollution at oil pipelines. It has blindly chanted an “economic growth” mantra to those who query the appropriateness of such investments.
This cannot continue. The bank has already received an unwelcome early birthday present in the form of its Extractive Industries Review (EIR). Three years’ research over four continents, commissioned by the bank and with input from governments, multinationals, academics, civil society and affected communities, concludes that its involvement in oil, mining and gas has failed the world’s poor.
The research parallels an internal report, leaked last year, that weak governance inhibits projects from delivering to those for whom they are intended. A bank with a poverty-alleviating mission must prove its projects can deliver. As a provider of public subsidy, it should have environmental and social standards, as well as economic ones, guiding investments to ensure its involvement is responsible and sustainable.
The EIR concluded that free, prior and informed consent of affected communities, respect for human rights, protection of internationally established “no-go” zones of armed conflict, and high spiritual or scientific value are prerequisites to ensure extractive industry projects can promote sustainable development and alleviate poverty.
The review’s conclusions have received huge international support, ranging across governments, indigenous people and religious leaders, including Desmond Tutu. Agnes van Ardenne, The Netherlands’s Development Minister, asks “whether oil and mining can really alleviate poverty. An independent report indicates clearly that the World Bank needs to undertake other activities.”
Antonio Vitorino, European Commissioner for Justice and Home Affairs, has assured the European Parliament that “the commission supports the call for full implementation of the recommendations of the EIR, which relate to the sustainability of investments, the promotion of good governance, popular consent, social and environmental impact assessment and the respect of human rights and core labour standard”.
The bank’s board meets next month to decide what to do about the EIR. The bank has been highly critical of the review, and seems keen to bury it. The only hope for those affected by the environmental and social devastation caused by these projects is that its shareholders will demand change.
The EIR recognises that climate change will hit the world’s poor the hardest, and recommends that the bank stop financing oil and coal projects. The bank rejects this recommendation, but admits that a radical shift in its energy portfolio — currently under 20% renewables, compared to 80% fossil fuel — is required.
It has held on to its relationship with big extractive businesses, arguing it can limit the potential for social and environmental damage.
The argument misses the target. The question is not what World Bank money will do for a project, but what a project will do to alleviate poverty.
On its 60th birthday, it is time for the bank to deliver or retire. — Â