IFC must demonstrate its commitment to respect human rights Joint Civil Society Statement on IFC's Draft Sustainability Framework
Statement||7 March 2011|
IFC must demonstrate its commitment to respect human rights
Joint Civil Society Statement on IFC’s Draft Sustainability Framework
In December 2010, the International Finance Corporation (IFC) published the final proposed draft of its revised Sustainability Framework, which is intended to manage social and environmental risks associated with IFC activities. The undersigned civil society organisations are writing to express our deep concern that the current draft does not include adequate safeguards to ensure that the human rights of people and communities affected by IFC’s activities are respected and protected. Indeed, the removal of references to human rights that were included by IFC in its previous draft creates an impression that IFC is willing to pursue investment and development at the expense of human rights.
We believe this lack of attention to human rights is not consistent with IFC's stated commitment to fighting poverty and improving people’s lives, and unacceptable for an institution governed by states that are parties to international human rights treaties. We strongly urge IFC to reconsider its current approach in the final phase of its review. IFC’s role in setting standards for risk management, that are adopted by other financial institutions worldwide, requires it to show a clear commitment to respecting human rights in its activities. This includes being consistent with emerging standards on business and human rights.
We therefore urge IFC and its governing board of member states to ensure that:
Despite the welcome inclusion of the standard of Free Prior and Informed Consent affecting Indigenous Peoples, the standard only applies to a narrow set of ‘special circumstances’. Furthermore, IFC’s current approach does not include a clear commitment to ensuring that human rights are respected and protected in the context of its activities. IFC’s approach is also inconsistent with, and undermines, the emerging international consensus on the responsibility of companies to take concrete actions to ensure that they respect human rights - following the work of the Special Representative of the UN Secretary-General on the issue of human rights and transnational and other business enterprises (UN SRSG), Professor John Ruggie. This outlines that a human rights due diligence framework is necessary for corporate actors to discharge their responsibility to respect human rights. While IFC acknowledges companies’ responsibility to respect human rights, the due diligence requirements that it outlines fall short of standards recommended by the UN SRSG in his 2008 report, Protect, Respect and Remedy: a Framework for Business and Human Rights.
While IFC acknowledges the need for an effective grievance mechanism for those affected by activities it supports, it does not require that its clients’ grievance mechanisms conform fully to principles outlined by the UN SRSG that such mechanisms be legitimate, accessible, predictable, equitable, transparent and compatible with internationally recognised human rights standards. IFC’s proposed draft also fails to refer to the need for IFC and its clients to respect the right to an effective remedy, despite the fact that private actors can hinder access to legal and other remedies for affected communities.
1) Failure to ensure human rights due diligence by IFC and its clients
IFC’s proposed draft fails to require its clients to carry out a human rights due diligence process, allowing, instead, purely voluntary assessments of potential human rights impacts for high risk activities. IFC implies that its requirement for social and environmental due diligence demonstrates its commitment to respecting human rights. This approach is flawed. In the impact assessment stage, environmental and social impacts do not cover the range of human rights impacts a project is likely to have. This point was expressly recognised by the UN SRSG, who has stated that, “While these assessments can be linked with other processes like risk assessments or environmental and social impact assessments, they should include explicit references to internationally recognized human rights”. Both IFC’s Policy on Social and Environmental Sustainability and its Performance Standards should explicitly include a requirement to carry out human rights due diligence.
IFC’s current approach also fails to include a clear and explicit commitment by IFC to carry out its own due diligence. At a minimum, IFC must commit to not supporting activities that lead, or contribute, to human rights abuses, and to ensuring respect for human rights in all its activities. The removal by IFC, from the previous draft, of the statement that some risks - including complicity in gross human rights violations – may require IFC to refrain from supporting some activities, is extremely worrying.
Also troubling, is the inaccessibility of basic information about Financial Intermediary (FI) sub-projects that would enable an assessment of their potential impacts on human rights. Despite the fact that activities funded through FIs represent nearly half of IFC’s investments, IFC is proposing to disclose information related to its FI sub-projects only in very limited circumstances - restricting disclosure of information to so-called 'high risk' sub-projects and only 'periodically.' In this approach, there is great potential for significant human rights abuses that create community suffering and harm IFC's reputation and operations.
2) Failure to uphold human rights standards
Overall, IFC’s current draft fails to reflect human rights standards in a number of key areas, despite the fact that IFC often invests in activities that can have serious impacts on a range of human rights:
This statement is endorsed by the following organisations:
This text may be freely used providing the source is credited.
Published: 7 March 2011 , last edited: 8 March 2011
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