Glass Half Full? New Report Finds Development Banks Can Do More To Protect Communities’ Rights

Development finance institutions (DFIs) that operate on global and regional levels play a significant role in protecting the human rights of indigenous peoples and local communities. That is due in large part to the fact that DFIs finance infrastructure, extractive, and other development projects that can have major impacts on communities. Financing of development in this context can be viewed as three sides of a triangle made up of (1) the DFI that supplies the financing for a project, (2) the borrowing client that implements the project, and (3) the independent accountability mechanism (IAM) of the DFI that exists to hear complaints related to the impacts caused by the project. How well are DFIs playing their role?

‘Glass Half Full?: The State of Accountability in Development Finance’ is a new report written by 11 organizations, including Natural Justice, that aims to answer that question. Using the UN Guiding Principles on Business and Human Rights as a framework, the report finds that even though complainants are undoubtedly better off than they would be in the absence of any complaint procedure, the outcome rarely provides adequate remedy for the harm caused by development projects.

This is the result of several factors, including the DFIs themselves, who undermine the effectiveness of the IAMs by failing to require their clients to disclose the IAM’s existence to project-affected people and limiting the IAMs’ mandates by stopping short of allowing them to issue binding decisions. Rather, the outcome depends either on the willingness of the DFI’s client to resolve the conflict through dialogue or the DFI’s own willingness to address the violations found through an IAM investigation. The report concludes with two sets of recommendations. The first set seeks to improve the current system by identifying best practices that should be adopted by all IAMs and DFIs. The report determines, however, that simply adopting best practices will not be enough to ensure that complainants receive remedy for the harms that have occurred. Rather, a new accountability system must be established as a matter of urgency with mechanisms that are empowered to make binding decisions and DFIs that no longer claim immunity in national courts.

14 February 2016

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