The Remedy and Responsible Exit Campaign is Set to Go!
International Finance Institutions (IFIs) fund development projects that all too often have significant adverse impacts on people and the environment. After decades of advocacy by civil society organizations, Indigenous Peoples, and communities worldwide, IFIs now have environmental and social standards and systems of accountability intended to avoid these impacts and to prevent harm to communities. Yet even with these improvements, we know that development projects are still being approved and implemented without fully complying with existing policies, and the accountability systems often fail to respond with effective solutions or remedies for affected communities.
Now, there is an acknowledgment of the role that IFI management, staff, and boards play in the system of accountability, as well as awareness that proactive and preventive measures are crucial to changing the outcome of development projects in order to avoid harm and achieve benefits for communities. However, the principle of remedy has not yet been included in a comprehensive or practical part of IFIs’ operations, actions, or mandate. Consequently, remedy for harm is still not accessible or even a realistic possibility for most affected communities under the existing systems and frameworks. Moreover, IFI divestment and early loan repayment create even more obstacles for communities seeking access to remedy.
What is Remedy and Responsible Exit?
Remedy, also sometimes referred to as reparations or remedial action, is the way to achieve justice when people’s rights have been violated. It entails recovering a right or obtaining redress for a wrong or harm suffered. Remedy has several different aspects that go beyond monetary compensation such as public apologies, memorialization of victims, and policy changes, among others.
After decades of work by civil society, Indigenous Peoples, and communities and movements worldwide, the fact that businesses should avoid infringing on human rights and should address human rights violations when they have contributed to harm is now well-known. Relatedly, International Financial Institutions (IFIs) have finally acknowledged that their projects can violate people’s rights and the environment. IFIs can contribute to adverse impacts when they fail to enforce their policies or properly monitor their borrowers and clients. So, if IFIs are contributing to harm they should contribute to remedy.
Through experience, we have seen how the accountability mechanisms of IFIs are not equipped to provide remedy. This remedy gap is also more acute when IFIs pull out of projects without addressing the harms caused to communities, through early repayment of loans or divesting, among other potential actions. (Titan case in Egypt is an example of such a divestment that left harms caused to the communities unaddressed)
Responsible exit entails a comprehensive rights-based approach by the Bank to ending involvement in a project, which must include affected communities in designing how to exit a project while also remedying harms caused. Thus, responsible exit and remedy are inextricably linked, so IFIs need to plan for remedy when they pull out of financing any project.
In the case of the International Finance Corporation (IFC) at the World Bank, after the External Review of the IFC and MIGA Environmental and Social Accountability, including the CAO’s Role and Effectiveness, a series of reforms and changes were adopted at the IFC to strengthen its accountability system, including a new policy for IFC’s accountability mechanism, the Compliance Advisor Ombudsman. But one major piece is still missing: the establishment of a framework for remedial action.
The conversation on remedy at the IFC is groundbreaking and is already having ripple effects as it is taken up at other institutions that have adopted many of the IFC policies in the past. A rights-compatible remedy framework at the IFC could serve as crucial guidance for other development finance institutions and their clients.
We hope to come together with partners from around the world in this effort to deliver on the following objectives.
- To secure the creation, adoption, and implementation of robust frameworks for remedy and responsible exit at IFIs (starting with IFC) informed by international law and standards, best practices, and experiences from affected communities.
- To secure seats at the table for communities who approach the IFC seeking remedy to voice their desires and participate directly in the design of proper resolution to harms caused by IFC-financed projects [reparation].
- To mainstream remedy, and responsible exit, as an overarching goal within the IFC that is considered throughout the project cycle, thus guaranteeing that existing harms are addressed, and new projects avoid new harms going forward.
- To improve impacts for communities seeking accountability and remedy from IFC and other IFIs.