Realizing the Right to Redress: Advancing access to effective remedy for corporate and development-related harm

Promoting Best Practices at Development Finance Institutions’ Accountability Mechanisms

Individuals and communities who endured the negative effects of publicly financed development projects had few, if any, paths for recourse until the World Bank Board established its Inspection Panel in 1993. This example led to an eventual proliferation of independent accountability mechanisms (IAMs) at other development finance institutions. These mechanisms aim to give voice to project-affected people’s grievances and help enforce the so-called “safeguards” policies of the institutions, which promise to “do no harm” to people or the environment. Despite this progress, three decades after the establishment of the Inspection Panel, the right to redress—a core element of the right to effective remedy for human rights violations under international law—remains elusive for many communities harmed by development finance.

Even when investigations carried out by the accountability mechanisms conclude that harm has been caused as a result of non-compliance with institutional policies, there are no guarantees in place to ensure redress. Without such guarantees, including effective remediation mechanisms with adequate financing, those whose rights have been violated must rely on the goodwill of the management and boards of these institutions, as well as the cooperation of client governments and/or companies, to take appropriate remedial action. Such goodwill and cooperation is rarely forthcoming.

For over a decade, Inclusive Development International has worked alongside civil society partners to increase access to effective remedy for communities harmed by development projects by identifying and promoting best practices at development banks’ independent accountability mechanisms.

In 2015, Inclusive Development International joined 10 partners in the International Accountability Working Group to assess the effectiveness of the accountability systems of 11 different development banks. This innovative comparative research was published in the report, Glass Half Full? The State of Accountability in Development Finance, which documented the hurdles placed in front of individuals and communities by financial institutions to prevent them from securing substantive financial redress. The report benchmarked each institution against criteria for effectiveness and human rights compatibility, and it concluded with a set of recommendations to improve the system. The report underscored that meaningful remedy for complainants and prevention of future harms requires more than best practices, and that a new accountability system must be established as a matter of urgency, with complaint mechanisms empowered to make binding decisions on banks and their borrowers and an end to immunity for development banks in national courts.

We have since joined with many of the same authors to publish the Good Policy Paper: Guiding Practice from the Policies of Independent Accountability Mechanisms, a roadmap for financial institutions setting up new IAMs , as well as a tool for existing IAMs to evaluate the effectiveness of their current policies. The Good Policy Paper, originally published in 2021 and updated in 2024 examines the policy provisions currently in place at IAMs from the perspective of communities using them to seek redress for environmental and social harm from internationally financed projects and identifies the most effective provisions as examples for other IAMs to follow.

In October 2023, Inclusive Development International joined with civil society partners to sound the alarm about escalating threats to the independence of IAMs, including an alarming trend of management interference with—and even capture of—IAMs that had made decisions and acted in ways that the leadership and legal departments of their respective institutions did not like.

World Bank Group Accountability

Our submission on IFC/MIGA’s proposed ‘Approach to Remedial Action’

In February 2023, the two private sector arms of the World Bank Group, the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA), published a draft Approach to Remedial Action, a proposed framework to remedy harm stemming from development projects they have financed, and to prevent future harm from occurring. While we welcomed the arrival of a remedy policy framework at the World Bank Group after so many years of demanding it, we were deeply disappointed that the proposal was vague, noncommittal, and piecemeal.

We submitted comments on IFC/MIGA’s draft, urging the World Bank Group’s members to significantly strengthen the proposal. Drawing on our work with affected communities in Guinea, Cambodia, Indonesia, the Philippines and elsewhere, we made extensive recommendations for how the IFC and MIGA can guarantee the right to redress for harms arising from their investments, including by:

1. Contributing to remedy to where they have contributed to harm.
2. Doing much more to exercise the existing leverage they have to ensure remedy for harm, and building additional commercial, legal and relational influence with clients.
3. Building the capacity of their staff to assess project risks, impacts, and levels of community support for projects.
4. Providing support to clients throughout the project cycle to identify and address problems.
5. Providing technical support to affected communities throughout the project cycle so they can effectively engage in the development and monitoring of environmental and social risk mitigation measures themselves, and if harms occur, the development of remedial action.
6. Establishing contingency funds to cover the cost of remedial action and ensure, through contractual provisions, that IFC/MIGA can access those funds and ensure they are used for their intended purpose.
7. Applying this remedy framework to IFC’s financial intermediary portfolio to ensure that its financial sector clients are effectively managing their environmental and social risks and undertaking remedial actions when needed.

During the public consultation period following IFC/MIGA’s publication of their draft approach to remedy, Inclusive Development International also joined with many other civil society organizations and advocates for communities affected by IFC and MIGA-backed projects to demand a much more comprehensive and systematic remedy approach in line with international standards for human rights and responsible business conduct.

Joint Submission on the External Review of IFC/MIGA E&S Accountability

The proposed remedy framework released in 2023 was among the outcomes from an external review of IFC and MIGA’s Environmental and Social Accountability, which took place several years earlier and found significant flaws, including a lack of effective remedy provided to communities harmed by IFC/MIGA-financed projects. That review, which included a review of the role and effectiveness of the Compliance Advisor Ombudsman (CAO), the independent complaints and accountability mechanism for people affected by IFC and MIGA projects, was commissioned by the Bank’s Committee on Development Effectiveness in 2019. The Review was led by an independent group of six experts in private sector development, multilateral institutions, and environmental and social sustainability. The Review Team’s Final Report was publicly disclosed by the bank in August 2020, along with an invitation for public comments on its recommendations.

At that time, Inclusive Development International submitted Joint Comments on Realizing the Right to Effective Remedy within the IFC/MIGA Accountability Framework to the World Bank Group’s Board of Directors. The comments were prepared along with Accountability Counsel, Bank Information Centre, Center for International Environmental Law and the Arab Watch Coalition.

The Review team ultimately concluded that “most CAO non-compliance findings do not lead to effective remedy,” which it attributed primarily to the IFC’s failure to address project-level compliance findings and fulfill its remedial responsibilities when harms occur. This reflected the experience of many affected communities seeking redress for adverse impacts associated with IFC/MIGA-supported projects through the CAO complaints process, including those that Inclusive Development International had supported.

Our joint submission emphasized the critical need for remedy to be centered on the needs of communities affected by projects and to be tailored and flexible enough to respond to those needs, as well as project circumstances. It urged the IFC/MIGA Board to endorse recommendations by the External Review Team aimed at ensuring effective remedial actions by IFC/MIGA and asked the Board to instruct IFC and MIGA to propose an implementation plan for public review and input. The joint submission recommended concrete reforms and identified multiple funding options to support delivery of effective remedy when harm occurs due to projects supported by IFC. Many of our concerns and recommendations remain unaddressed, including in IFC/MIGA’s draft Approach to Remedial Action published in 2023.

Inclusive Development International and 74 global partners had also submitted a joint statement to the World Bank Group’s Board of Directors expressing concerns about the lack of transparency and external stakeholder engagement in the IFC/MIGA accountability framework review.

Advocating for Stronger OECD Guidelines for Responsible Business Conduct

The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines) are an important global standard for responsible business practice across a range of issues, including human rights. The Guidelines apply to all multinational companies based in or with operations in OECD member states, each of which has a National Contact Point (NCP) that promotes the Guidelines and handles complaints against companies alleged to have violated them. Despite their many flaws, NCPs serve as one of few access points for communities seeking remedy for corporate abuse.

Inclusive Development International regularly advises communities and their advocates on how the NCP system could be useful in their efforts to obtain remedy for corporate abuses, often supporting them in filing NCP complaints or filing on their behalf.

We have been engaging with and advocating for a stronger NCP system for over a decade, since submitting our first complaint to the Australian NCP against ANZ Bank in 2014. We were able to secure a positive result with that complaint, including remedy for Cambodian families who had been forced from their land to make way for an ANZ-backed sugar plantation, but only after we, our partners at Equitable Cambodia, and the affected communities themselves expended immense effort and resources to engage with the NCP and to sustain a years-long public advocacy campaign to complement the NCP process.

The outcome of that complaint illustrated both what is wrong with the NCP system and what reforms are needed to make NCPs effective mechanisms for advancing corporate accountability and access to remedy.

Engaging in the OECD Guidelines Revision Process

Inclusive Development International participated in the public consultation period for the full OECD Guidelines revision starting in 2021. In our initial submission to the OECD on the update, and in several additional rounds of feedback, we advocated for reforms to the NCP process to address key weaknesses, including the lack of transparency in complaints processes, the fact that NCPs are not required and often do not make recommendations to companies on how they can improve their conduct and remediate harms, and the fact that there are almost never consequences for companies that violate the Guidelines. We have made the case for NCPs instituting consequences, for example by excluding companies from trade privileges, export finance and public procurement contracts. Beyond our NCP-related recommendations, we also urged the OECD to strengthen the Guidelines in the areas of protection of human rights defenders; corporate disclosure of human rights and environmental issues; land rights; Indigenous People’s rights; and a just energy transition.

Read our February 2023 submission here.

In June 2023, the OECD released its final Guidelines and Implementation Procedures, which among other things reflected some improvements in their recommendations for NCPs. For instance, the revised Implementation Procedures for NCPs urge a greater level of transparency in complaint processes, encourage NCPs to issue “Guidelines-compatible” recommendations to companies, direct NCPs to engage in follow-up on recommendations and agreements reached during mediations, and clarify that NCPs can publish determinations on whether a company has acted in conformance with the Guidelines as part of Final Statements. However, even the revised Procedures still largely fail to ensure that NCPs will operate effectively and deliver remedy to communities. For this reason, we and our civil society partners around the world are advocating for reform of specific NCP offices’ procedures, including at the US NCP.

Advocating for Stronger OECD Guidance for Financial Actors

In addition to its overall Guidelines update, the OECD recently released Guidance on Due Diligence for Responsible Project and Asset Finance, which outlines best practices for financial institutions engaging in project and asset-based finance (e.g., banks that lend to companies developing new mines, pipelines or other extractive projects). Inclusive Development International was invited by the OECD to participate in a cross-sectoral advisory group that provided extensive feedback throughout the paper’s drafting process.

In a series of detailed submissions made in 2021 and 2022, rooted in our experience engaging with banks on particular cases, Inclusive Development International advocated for stronger guidance regarding financial institutions’ responsibilities to conduct comprehensive human rights due diligence and to contribute to remedy for harms caused by their clients or investments.

The final OECD Project Finance guidance was published in November of 2022, containing many of our recommendations, including but not limited to:

• Encouraging financial institutions to integrate environmental and social expectations in their financing contracts, and to structure their contracts to build leverage and incentivize clients to comply with the Guidelines, including by having clear and actionable consequences (like delayed disbursement of loans) where expectations are not being met.
• Encouraging financial institutions to engage with affected or potentially affected communities to better understand a high-risk project’s risks and impacts, and to engage specialists to assess and monitor a high-risk project’s compliance with standards.
• Encouraging financial institutions, in particular commercial banks, to seek consent from a client to disclose the existence of a financing relationship, enabling external stakeholders like affected communities to more easily identify and engage with a project’s financiers.
• Clarifying when financiers can be considered to have contributed to harms and therefore to have a responsibility to contribute to remedy.
• Providing more guidance—including specific examples—on how project financiers can enable or contribute to meaningful remedy where appropriate, including by establishing mechanisms to ensure that clients and financiers have available funds to pay for remediation.
• Encouraging financial institutions to have grievance mechanisms in place to respond effectively if or when issues arise in projects that they finance.