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FPP comments submitted to the UK government regarding the IFC's Safeguard Policy Update (of September 2005)
11 November 2005

Thomas Scholar, IMF 11-120
Executive Director
World Bank Group
IMF Building
700 - 19th Street,
Washington, D.C. 20433
USA

Dear Mr. Scholar,

IFC Safeguard Policy Update: concerns and recommendations

The Forest Peoples Programme (FPP) is writing to you to raise concerns about remaining serious deficiencies and gaps in the IFC’s proposed changes to its safeguard policy and accountability framework.

Multiple remaining flaws and weaknesses in IFC proposals

On examining the most recent documents released by the IFC in September 2005, we are concerned that there are still numerous general and specific problems in the IFC’s proposals for overhauling and replacing its existing safeguard policies (See Annex I below).[i]

The FPP remains especially concerned that the IFC plans to introduce a flexible and discretionary approach to dealing with safeguard issues without sufficient mandatory requirements for increased IFC transparency and accountability.  Given the amount of optional language that remains in the second draft of the policies, we find very few proposed minimum safeguard and disclosure standards that the IFC and client must comply with.

The FPP considers that the sum of the remaining defects and gaps in the draft IFC policies mean that the overall package remains seriously flawed.

Recommendations for improved social and environmental standards

In order to rectify these flawed proposals we recommend that a number of steps are taken before the revised framework for IFC safeguards are finalised and adopted. Essential  measures that are required to ensure that the update process results in an improved safeguard framework include the need to:

  • Incorporate objective standards on human rights in the IFC Sustainability Policy and relevant Performance Standards

  • Include human rights and poverty risk impact assessments in the requirements for Social Impact Assessments

  • Expressly prohibit the forced relocation of indigenous peoples and involuntary expropriation of their lands

  • Change PS objectives into “Objectives and General Requirements” and include mandatory language in these general requirements

  • Ensure mandatory provisions on Broad Community Support are incorporated into the relevant Performance Standards, particularly PS1, PS5 and PS7

  • Require effective and transparent verification procedures to assess the existence of Broad Community Support, including verification by affected communities and their representative organisations

  • Incorporate comprehensive procedures for ensuring compliance with the Broad Community Support  safeguard into the revised IFC Environmental and Social Review Procedures

  • Ensure that for indigenous peoples, the requirement for Broad Community Support applies to all IFC projects, as is required under OP4.10

  • Ensure that all other elements in the September 2005 proposals that fall below existing World Bank safeguards are made consistent with or higher than current IBRD/IDA standards

  • Uphold World Bank Group commitments made in response to the EIR, including policy requirements for independent monitoring and environmental and cultural no-go zones

  •  Strengthen disclosure standards, particularly with regard to requirements for full disclosure of social and environmental assessments and draft Action Plans

  • Eliminate ambiguous language and provide definitions for key safeguards such as Broad Community Support

  • Strengthen and update IFC oversight procedures to ensure effective implementation of performance standards and project-level monitoring of social and poverty impacts

  • Include new provisions for the ongoing periodic update of IFC rules and procedures to take account of emerging international norms on sustainable development and corporate accountability

The general recommendations above are complemented by more extensive and specific recommendations in Part III of the attached Annex to this letter.

The FPP is seriously worried that unless the above changes are made to strengthen the IFC’s proposals, the existing plans would be a step backwards for international development standards. We urge you and your colleagues in UKDEL to act on the recommendations in this letter and its annex and to use your influence to intervene in the IFC Safeguard Update process to ensure flaws in the IFC’s proposals are rectified as soon as is practicable.

We call on UKDEL to insist that the IFC refrain from adopting a defective safeguard framework until its proposed revised safeguard policies are fully consistent with the obligations of the IFC and World Bank Group under international law and, as a minimum, equivalent to or higher than existing IBRD/IDA standards.

I shall be in Washington DC on the 5th and 6th of December and would very much appreciate a meeting with yourself or someone else in the UKDEL team who is responsible for safeguard issues.

Yours sincerely,

Tom Griffiths 
(Policy Advisor and IFI Programme Coordinator)

cc:

DFID, London
International Development Committee, House of Commons

__________________________
[i] IFC (2005a) International Finance Corporation’s Policy and Performance Standards on Social and Environmental Sustainability Public release draft 22, September 2005; IFC(2005b) IFC Draft E&S Review Procedures Working Draft ­ Version 0.1, September 22nd , 2005



Annex I -
General and Specific Problems with the IFC's Draft Sustainability Policy, Performance Standards (PS1, PS5, PS7, PS8), Guidance Notes and Environmental and Social Review Procedures (September 2005) and recommendations for strengthened policies

I.      General concerns and problems with IFC’s proposals[ii]

One basic concern is that the proposed safeguard package involving a Sustainability Policy and Performance Standards (PPS), Guidance Notes (GN) and Environment and Social Review Procedures (ESRP) is difficult to interpret. The documents fail to set out clearly the IFC’s proposed minimum safeguard standards and lines of accountability. Unless the policy documents are made clearer, they will be difficult to use by the public and potentially affected communities who wish to hold the IFC accountable for any negative or undesired social and environmental impacts that result from IFC investments. Another major problem is that the revised draft IFC Exclusion List, which constitutes a key part of the IFC’s safeguard and accountability framework, is still not available to the public.[iii]

Other general problems with the IFC’s September 2005 proposals are that they:

  • Fail to include objective standards to ensure that IFC-financed projects uphold international law and respect and protect human rights

  • Do not recognise the accepted international standard of Free Prior and Informed Consent (FPIC) for IFC- financed plans, proposals, decisions or activities that may affect the lands and territories of indigenous peoples.[iv]

  • Propose several environmental and social standards that are weaker than existing IBRD/IDA safeguard policies (see below re. PS1, PS5 and PS7)[v]

  • Confine several critical safeguard provisions to the non-mandatory Guidance Notes, whereas they need to be in the Performance Standards in order to be effective E.g., Broad Community Support for projects affecting indigenous peoples is not included in the relevant performance standards, but restricted to guidance notes (GN7:19)

  • Lack minimum preconditions and eligibility criteria for IFC financing for the private sector (other than the critical reference to the IFC Exclusion List – yet the updated version is not available for public scrutiny as noted above)

  • Contain confusing and contradictory language. E.g., some Draft Performance Standards introduce optional language under PS “requirements.” E.g., provisions under PS1 simply note that community engagement “should” be free of intimidation and coercion, and disclosure of information “should” occur prior to project development, while effective consultation “should” begin early... etc.

  • Lack adequate disclosure standards. E.g., there is no requirement for disclosure of draft Action Plans to affected communities nor that the full Action Plan be disclosed

  • Suffer from weak or missing connections between the PPS, GN and ESRP. E.g., the draft ESRP only make a single vague reference to the critical new proposed standard on Broad Community Support[vi]

  • Fail to establish a more rigorous client selection procedure as recommended by civil society and the CAO [vii]

  • Fail to uphold several World Bank Group Commitments made in response to the Extractive Industries Review (EIR). E.g., no requirement for independent monitoring reports

  • Fall below current best practice social and environmental standards under adoption by the private sector e.g., Roundtable on Sustainable Palm Oil (RSPO)[viii]

  • Do not explain how the safeguards will be updated to take account of advances in international standards on sustainable development and corporate accountability

  • Have not all been developed according to international standards on good faith public consultation. E.g., PS7 has not been formulated on the basis of widespread face-to-face consultations with indigenous peoples who are directly affected by the policy.[ix]

  • No clear plans to improve IFC oversight procedures to address existing implementation and quality assurance weaknesses e.g., flawed categorisation of IFC projects

II.   Specific concerns

Draft IFC Policy on Social and Environmental Sustainability

  • No substantive commitment to uphold international law, including human rights law, in all IFC investments and operations

  • No commitment to screen prospective clients, including their record in dealing with social and environmental issues and human rights

  • Other than the narrow Exclusion list, few clear preconditions for IFC financing

  • No explicit commitment to withhold or suspend finance if clients fails to comply with social and environmental commitments enshrined in any legal agreement with the IFC[x]

Draft PS1: Social and Environmental Assessment and Management System

  • Eliminates fundamental safeguard that the IFC will not finance projects that contravene a host country’s obligations under relevant international environmental treaties it has ratified [as stipulated under OP4.10, paragraph 3 in current IFC policy on Environmental Assessment][xi]

  • No specific public and community participation requirements at different stages of the SEA process, thereby eliminating existing participation requirements under existing EA policy (OP4.10, para. 12).

  • No requirement that the draft Action Plan be disclosed to affected communities and the public

  • No explicit requirement that affected communities must be involved in the elaboration and agreements on the final contents of the Action Plan, nor in relation to its various possible sub-plans, including RAP and IPDP etc.

  • No requirements for third-party review of category A projects (just noted that such review may be appropriate)

  • Fails to describe IFC categorization process in the PS

  • Use of defective vague and subjective language in relation to disclosure standards e.g., “clients will disclose relevant information to affected communities” etc.

Draft Performance Standard 5: Land Acquisition and Involuntary Resettlement

  • Fails to expressly prohibit the forced relocation of indigenous peoples and permits involuntarily expropriation of their lands (see below)

  • Incorrectly treats the State’s power of eminent domain as near absolute

  • Restricts the coverage of the policy to physical and economic displacement resulting from land acquisition. This is a step backwards from the IBRD/IDA OP/BP4.12 safeguard policy that applies to all project-related activities and impacts that may result in involuntary resettlement.[xii]

  • Eliminates existing objective under OD4.30 (para. 3) that affected populations must receive benefits from any IFC-assisted resettlement

  • Has now lost language on impoverishment risks (that had been included in earlier drafts of PS5 and are covered in the existing IBRD/IDA policy[xiii])

  • Eliminates requirement that all resettlement activities should be “conceived and executed” as development programmes (OD4.30 para. 3(b))

  • Lacks requirements for socio-economic baseline studies and poverty-risk impact assessments

  • Confines recommendation for land-for-land compensation for persons displaced from land-based livelihoods to non-mandatory Guidance Notes

  • Fails to provide adequate protections for those without formal legal title to land and introduces a potentially discriminatory standard that confines compensation for loss of land to those with formal legal title

  • Loses existing policy recommendation for relocation of families as “part of pre-existing community, neighbourhood, or kinship group”

  • No requirement for post-project monitoring of rehabilitation and poverty impacts of IFC-assisted relocation

Draft Performance Standard 6: Conservation of Biodiversity and Sustainable NRM

  • Fails to identify IFC no-go zone criteria

  • Permits conversion of areas that are deemed as “non-critical habitat” without the consent of affected communities

  • Does not require the participation of affected communities in the definition of critical habitats and High Conservation Values. The Guidance Notes simply note that “the client may need to consult with affected communities” (GN6:3)

  • Lacks requirements for community consent regarding the location and size of “offset areas”

  • Does not require respect for Indigenous peoples’ customary land and resource rights in IFC-assisted certified forestry operations (nor in any other commercial use of natural resources).[xiv]

  • No direct requirement for participation of affected communities in the elaboration of a Biodiversity Action Plan.[xv]

Draft Performance Standard 7: Indigenous Peoples

There are numerous remaining deficiencies in PS7 (and in related elements of PS1 and PS5).

Inconsistent with the rights of indigenous peoples established under international law:

  • Draft PS7 and Draft PS5 fail to expressly prohibit the forced relocation of indigenous peoples and permits involuntary expropriation of their lands contrary to established protections under global and regional human rights law [xvi]

  • Draft PS7 does not contain any substantive requirements for clients to respect indigenous peoples’ rights. [xvii]

  • Fails to recognise indigenous peoples’ right to free, prior and informed consent (FPIC)

  • The client is only required to offer compensation for impacts to indigenous peoples’ lands consistent with compensation available for non-indigenous holders of property rights (PS7). This requirement disregards the special character of indigenous peoples’ land and property rights, and fails to ensure respect for indigenous peoples’ right to give or withhold their consent for activities that may affect their lands and territories, which is a right established under international law.[xviii]

  • PS1 affirms that “informed participation” only requires that the client incorporate indigenous peoples’ views in the client’s decision-making process, which may reach decisions contrary to indigenous peoples’ priorities and preferences.

  • The client is only required to assess and address impacts on customary livelihoods of indigenous peoples and not their livelihoods in general. This is a limited and discriminatory requirement as non-indigenous persons’ rights to livelihood are not confined to those that are customary.

  • The PS and Guidance Notes still allow the IFC to engage in an investment after indigenous peoples have been resettled by the government. There is a risk that this provision may create a perverse incentive for governments or companies to forcibly relocate indigenous peoples prior to requesting support from the IFC.[xix]

    Weaker standards than the existing IBRD/IDA policy on Indigenous Peoples

  • Does not contain the explicit safeguard in OP4.10 that stipulates that no physical relocation of indigenous peoples shall take place without their prior Broad Community Support (OP4.10, para 20). [xx]

  • PS7 only requires negotiated settlements with indigenous peoples for direct physical relocation, while under PS5 land may be taken compulsorily from indigenous peoples without prior agreement and negotiation.

  • There is no mandatory requirement in PS7 that the client must obtain the Broad Community Support (BCS) of affected indigenous peoples regarding investments that may affect them. This critical requirement is confined to the non-mandatory Guidance Notes (GN7:19), which are indirectly cross-referenced to vague language on BCS in the IFC’s Sustainability Policy and the ESRP. This is inconsistent with OP4.10 that includes this standard in the mandatory Bank policy.

  • Provisions on Broad Community Support in the Guidance Notes to PS7 are restricted to “large projects with significant impacts.”[xxi] This is inconsistent with OP4.10 that establishes that this essential BCS safeguard applies to all World Bank investment projects that affect indigenous peoples and at each stageof the project (OP4.10, para. 1).

  • PS1 uses defective and incomplete definitions to frame “Broad Community Support”

  • There are no explicit requirements that the draft Action Plan and draft IPDP must be made available to affected communities prior to project appraisal. This does not meet existing standards under OP4.10 (para.15)

  • PS7 only contains a vague requirement that the client provide “development opportunities” to affected indigenous peoples, while OP4.10 requires the higher standard of equitable sharing of benefits (OP4.10, para 18)

  • PS5 does not require baseline studies and socio-economic surveys of affected indigenous communities prior to resettlement activities.

    Absent and defective procedural safeguards for Broad Community Support

  • Requirements for Social and Environmental Impact Assessment under PS1 do not require the client to address the critical issue of Broad Community Support

  • The existence of “broad community support” is based only on IFC’s judgment and there is no independent verification mechanism or requirement that broad community support be documented and attested to in written agreements between the client and indigenous peoples

  • There is no requirement that any assessment of “community support” be validated by affected communities and their representative organisations and independent third parties

  • There is no requirement for BCS to be obtained at each stage of the project

  • BCS is not required in relation to the development and adoption of a Resettlement Action Plan (RAP) by the client, meaning that such a plan could be imposed on affected communities against their wishes

  • There is no requirement for community ratification of any “negotiated settlement” between the client and the representatives of affected indigenous peoples.

    Ambiguous language

  • PS7 applies vague language that notes that: “care should be taken to ensure that any indigenous peoples’ land claim is not prejudiced” under the client’s treatment of “impacts on traditional or customary lands under use”. This requirement is not mandatory as it stands (“should”). In addition, PS7 and Guidance Note 7 do not explain how the term “land claim” is to be understood. Likewise, there is no guidance about what “care” in dealing with this important issue must entail. The word “prejudice” is also open to wide interpretation, which might include interpretations contrary to indigenous peoples’ views.

  • Ambiguous language regarding the requirement for indigenous peoples’ participation in social and environmental impacts assessments: clients are only required to “inform Indigenous Peoples of risks and impacts”. There is no clear requirement to actively involve them in each stage of the assessment process.

  • No explicit requirement for informed participation and prior approval by affected communities of time-bound indigenous components, such as an Indigenous Peoples Development Plan (IPDP).[xxii]

    Draft Performance Standard 8: Cultural Heritage

  • Does not require prior agreement from holders of traditional knowledge regarding commercial use of their knowledge and intangible cultural heritage. The Draft PS thus falls below existing World Bank Policy (OP4.10, para.19).[xxiii]

  • Permits the removal and relocation of tangible cultural heritage without prior consent of the holders of such cultural resources.

    The FPP considers that the sum of the above remaining defects and gaps in the draft IFC policies mean that the overall package remains seriously flawed. It is our view that if the IFC’s draft policies are adopted with only little or minor amendments, they risk undermining the accountability of the IFC to the public and affected communities. In other words, our analysis leads us to the conclusion that the draft IFC proposals, as released publicly in September 2005, would not be step forward for international development standards and corporate accountability.

    III.   Recommendations

    Human rights and international norms

  • The IFC Sustainability Policy must include a statement that the IFC will not finance projects/activities or enter into finance or other agreements that contravene host country obligations under international law

  • Recognise that all IFC and client operations must be consistent with international human rights standards

  • Include language in the performance standards that clients must ensure that the legal agreements signed with host states do not hinder the effective regulation of projects by the host state to ensure consistency with human rights law.

  • Move the optional guidance for Human Rights Impacts Assessments (HRIA) in GN1:21 to “Requirements” in PS1

  • Use the UN Norms on the responsibilities of trans-national corporations and other Business Enterprises with regard to Human Rightsas part of the screening process for prospective IFC clients

  • Annex to the Sustainability Policy and Performance Standards a list of all potentially relevant international human rights agreements

  • Require full public disclosure of Host Government Agreements and Intergovernmental Agreements for any IFC-assisted project that may impact on human rights

    Broad Community Support:

    The accepted international consent standard in relation to development that may affect indigenous peoples and lands they traditionally own, or otherwise occupy and use, is free, prior and informed consent (FPIC). The FPP is aware that the Board of the World Bank Group has chosen not to recognise FPIC, but rather to adopt and apply the principle of free, prior and informed consultation (FPICon) leading to broad community support. As such, the Board has decided to deny the rights of indigenous peoples as established under international law. The FPP maintains that the correct consent standard that should be used by the IFC and the private sector is FPIC. However, if the IFC continues to propose the application of FPICon and broad community support, we recommend that, as a minimum, the final draft policies:

  • Ensure that the Broad Community Support (BCS) safeguard requirement is incorporated into PS1, PS5 and PS7

  • Require that BCS be obtained at each stage of the project

  • Include specific requirements for prior agreement by affected communities of the contents of Draft Action Plans and/or associated plans such as IPDP or RAP

  • Define the minimum components of Broad Community Support

  • Include comprehensive procedural safeguards for compliance with Broad Community Support in relevant PS and IFC’s revised ESRP

  • The PS must include mechanisms for independent (of the IFC and client) verification and certification that broad community support exists and has been freely obtained.

  • Effective verification procedures must involve validation by affected communities and their representative organisations, as well as by independent third parties

  • Additionally, broad community support must be confirmed and the nature of that support detailed in written agreements between the client and indigenous peoples (see draft OP 4.10, para 11(e)) and these agreements shall be incorporated into covenants in the IFC loan agreement.

    IFC Policy on Social and Environmental Sustainability

  • Include standards on human rights (see recommendations above)

  • Include commitments to develop poverty indicators and disclose project level impacts

  • Require independent monitoring of projects with serious potential adverse impacts

    • PS1:

  • Require that SA and EA must review the host country obligations under social and environmental international agreements it has ratified

  • Include mandatory language (must, shall, will etc.) on early participation and disclosure requirements for the SEA process (i.e., remove frequent usage of optional “should” language in PS requirements)

  • Include a requirement for the collection of baseline data

  • Include a mandatory requirement that IFC social assessment analyses must also include a Human Rights Impacts Assessments (HRIA)

  • Require that the social assessment process address the issue of Broad Community Support (include a new section on this safeguard in PS1)

  • Require that assessments for large projects be undertaken by experts independent of the client and the IFC

  • Require that Draft Action Plan is disclosed to the public and affected communities

  • Require monitoring indicators for key Action Plan components and enable participation of affected communities in monitoring of the Action Plan

  • Require third party monitoring for projects with potential significant social and environmental impacts

  • Retain benchmark under existing policy (OP4.01) that the IFC will not finance projects that contravene a host country’s obligations under relevant international environmental treaties it has ratified

  • Retain existing disclosure requirement under current policy (OP4.01) that public consultation on the SEA take place at specific points in the assessment process and that the full assessment be released to the public and affected communities

  • Further clarify that the client’s grievance mechanism will in no way hinder recourse to other complaints and appeals processes at the local, national and international levels

    PS5:

  • Establish that the IFC will not finance projects that involve the forced relocation and/or involuntary economic displacement of indigenous peoples

  • Broaden policy coverage to address all project-related resettlement and economic displacement impacts (as OP4.12)

  • Include Broad Community Support safeguard in PS requirements

  • Require baseline studies and poverty risk assessments with active and informed participation of affected communities prior to any displacement

  • Include preference for land-for-land compensation for persons displaced from land-based livelihoods in the PS

  • Include stronger protections for those without formal legal title to land (as a minimum equivalent to OP4.12)

  • Require monitoring and post-project reporting on rehabilitation and poverty impacts of IFC-financed resettlement and/or economic displacement operations

  • Retain the objective under existing safeguard (OD4.30) that all resettlement activities be “conceived and executed” as development programmes

  • Include provisions for performance bonds or resettlement insurance as per EIR commitments made by the World Bank

  • Enable RAP to promote realisation of rights and empowerment of displaced persons

    • PS6:

  • Establish clear IFC “no-go” zones, including important biodiversity and cultural heritage sites

  • Require participation of affected communities and civil society in determining which habitats, are “critical” and of “high conservation value”

  • Make respect for Indigenous peoples’ customary land and resource rights a sustainable use requirement for all commercial exploitation of natural resources (not just timber harvesting)

  • Require informed participation of affected communities in the elaboration of any Biodiversity Action Plan, including any plans for conservation “offsets.”

    PS7:

  • Include the broad community support safeguard in the PS requirements

  • Unambiguously require that the requirement for “broad community support” applies to all IFC-projects affecting indigenous peoples (not just large projects with significant impacts) (consistent with OP 4.10, para. 1).

  • PS7 must unequivocally state that: “The IFC will not proceed further with project processing if it is unable to ascertain that broad community support exists, including through verification by the affected Indigenous Peoples’ communities”

  • Include language that requires clients to respect indigenous peoples’ customary land and resource rights

  • Include a clear definition of customary rights to and use of lands and resources, such as that used in OP 4.10: “patterns of long standing community land and resource usage in accordance with indigenous peoples’ customary laws, values, customs and traditions, including seasonal or cyclical use rather than formal legal title to land and resources issued by the State.”

  • Clearly define the language “without prejudicing the existing claims of Indigenous Peoples to land or resources” in accordance with applicable international legal standards

  • Require compensation for negative impacts on indigenous livelihoods in general (i.e. remove restriction of compensation to customary livelihood impacts)

  • Require that IFC and clients ensure the informed participation of indigenous peoples in social and environmental impacts assessments

  • Eliminate the potential perverse incentive in GN7:29 that allows the IFC to engage in an investment operation after indigenous peoples have been resettled

  • Ensure that the participation and negotiation standards for indigenous peoples set out in PS7 are duly incorporated in the relevant parts of PS1

    PS8:

  • Ensure PS8 is consistent with OP4.10 that requires that: “Commercial development of the cultural resources and knowledge of ... Indigenous Peoples is conditional upon their prior agreement to such development (para. 19)

  • Include a requirement for equitable benefit sharing

    • Environmental and Social Review Procedures

  • Ensure ESRP are fully integrated and supportive of PPS requirements

  • Include more comprehensive language to ensure due diligence for procedural safeguards for Broad Community Support, negotiated settlements and associated disclosure standards for draft Action Plans and draft IPDP and RAPs

  • Require public disclosure of rationale for key decisions made by IFC social and environmental staff in ESRP review and processing of IFC investment projects (including rationale for supporting large new extractive projects)

  • Require Disclosure of Summary of project Investment (SPI), summary ESRP and full copy of SEA at least 120 days prior to consideration by the IFC Board

  • Incorporate CAO recommendations for improved project review and supervision into revised ESRP

    [i] IFC (2005a) International Finance Corporation’s Policy and Performance Standards on Social and Environmental Sustainability Public release draft 22, September 2005; IFC(2005b) IFC Draft E&S Review Procedures Working Draft – Version 0.1, September 22nd , 2005

    [ii] IFC (2005a) International Finance Corporation’s Policy and Performance Standards on Social and Environmental Sustainability Public release draft 22, September 2005; IFC(2005b) IFC Draft E&S Review Procedures Working Draft – Version 0.1, September 22nd , 2005

    [iii] The FPP has requested the draft revised Exclusion list from the IFC, but has been informed that the IFC does not plan to release this document for public comment (Email communication from IFC, 2 November 2005).

    [iv] The use of the term Free Prior Informed Consultation (FPICon) leading to Broad Community Support has been condemned by indigenous peoples’ organisations as failing to meet accepted international standards on the rights of indigenous peoples. See especially, a letter from 60 indigenous peoples’ organisations and indigenous NGOs to World Bank Board of Directors, July 19, 2004. See also Indigenous peoples statement on Multilateral Development Banks (MDBs) and Indigenous Peoples’ Rights, including Free, Prior Informed Consent , UN Permanent Forum on Indigenous Issues, May 2005 (Agenda Item 5). Available at: http://www.forestpeoples.org/documents/ifi_igo/wb_4_10_ip_statemnt_may05_eng.shtml

    [v] See, for example, Memorandum of Ian Johnson, ESSD World Bank, to Asaad Jabre, IFC, 5 August 2005, available at: http://www.ifc.org/ifcext/policyreview.nsf/AttachmentsByTitle/IFC+Response+and+ESSD+letter/$FILE/IFC
    +Cover+Note+_ESSD+Memo_.pdf

    [vi] IFC (2005b) at section 3.2.9

    [vii] CAO(2005) Safeguard Policy Review Revisited CAO Submission to CODE, September 7, 2005

    [viii] Production and manufacturing companies involved in setting standards for sustainable palm oil production have accepted the need to respect human rights, including the standard of Free, prior and informed consent (FPIC) for all proposed oil palm investments that may affect indigenous peoples’ lands – See
    http://www.sustainable-palmoil.org/PDF/CWG/RSPO%20Principles%20&%20Criteria%20for%20 Sustainable%20Palm%20Oil%20(final%20public%20realease).pdf

    [ix] The IFC has only held one small-scale face-to-face meeting with indigenous peoples (in May 2005).

    [x] The option to suspend IFC finance is implied in the draft revised ESRP in section 4.2.13. However, IFC’s commitment to withhold or suspend finance for non-compliance with social and environmental requirements or breach of Conditions for disbursement (COD) is not made explicit in any part of the PPS.

    [xii] OP4.12 at paragraph 4.

    [xiii] Ibid. at paragraph 1.

    [xiv] Annex B to Guidance Note 6 on “Certification of Natural Resource Management” only notes that forest certification schemes “should” show respect for customary land and resource rights.

    [xv] Guidance Note 6, Annex A, simply notes that the Biodiversity Action Plan “will be informed by... the need to engage and consult with other stakeholders (particularly local communities) who use or have interests in the biodiversity and natural resources that will be affected by client operations”. The same Annex notes that targets under the Biodiversity Action Plan “should” be “discussed with relevant stakeholders”.

    [xvi] Draft PS5 is clear that involuntary land-take from indigenous peoples may occur in IFC investments as the PS applies to acquisition of “land rights for a private sector project acquired through expropriation or other compulsory procedures.” Under PS5, the client is only expected to seek their informed participation and offer compensation for compulsory acquisition.

    [xvii] Although draft PS7 contains an important objective to ensure respect for the human rights and customary livelihoods of indigenous peoples, IFC clients are only encouraged (“should”) to respect indigenous peoples’ land use (PS7) and culture, knowledge and practices (GN7:5). In Guidance Note 6, Annex B, clients are encouraged (“should”) to respect the “customary land tenure and use rights” of indigenous peoples in all IFC assisted timber harvest operations. It is not acceptable to use optional language regarding the need to respect indigenous peoples’ resource rights. Nor is it logical that this important and essential safeguard should only be applied to logging investments and not to all commercial activities involving natural resource exploitation projects financed by the IFC.

    [xviii] See MacKay, F (2004) Indigenous Peoples' Right to Free, Prior and Informed Consent and the World Bank's Extractive Industries Review FPP, Moreton-in-Marsh. Available at: www.forestpeoples.org/documents/prv_sector/eir/eir_ips_fpic_jun04_eng.pdf

    [xix] Draft GN7:29.

    [xx] Draft GN7:28 notes that the IFC “will evaluate the client’s documentation of its engagement process to establish that Broad Community Support for...relocation exists amongst affected communities”. However, this critical safeguard procedure is not included in either PS5 or PS7. Nor is it properly dealt with in the draft revised ESRP.

    [xxi] Large projects are not precisely defined in the IFC safeguard plans, but the Draft ESRP suggest that they relate to Category A projects that have “significant adverse social and/or environmental impacts that are diverse, irreversible or unprecedented (and)... cannot be completely avoided or fully mitigated” (Section 4.2.2)

    [xxii] The latest draft PS7 does rightly stipulate that: “The client’s proposed action will be developed with the informed participation of affected Indigenous Peoples”. However, draft PS7 does not directly require that the IPDP must be developed with informed participation of indigenous peoples. Draft PS1 and PS7 are not clear if IPDP is always to form an integral part of the client’s Action Plan.

    [xxiii] OP4.10 states: “Commercial development of the cultural resources and knowledge of ... Indigenous Peoples is conditional upon their prior agreement to such development” (paragraph 19).

    		•

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