On 24 October, as CSOs were submitting their comments to the Asian Development Bank’s Environmental and Social Framework (ESF) R-paper, an invitation to a consultation on a proposed Full Mutual Reliance Framework (FMRF) between the World Bank and the ADB was circulated.
This proposed framework has a significant bearing on the draft ESF. We believe the two are incompatible and urge you to withdraw the Full Mutual Reliance Framework while the ESF is being finalised and approved.
CSOs welcomed the commitment in the draft ADB ESF to apply a “common approach” in co-financed projects, where the ADB would always seek to apply the “requirements among the co-financier (s) that are most stringent or protective of the project-affected persons and/or the environment” (R-paper, page 9, para 20.) We were also reassured that the ADB’s Accountability Mechanism would apply to all ADB investments, even when borrower systems were applied.[1]
It was therefore confusing to receive, in the same week as soliciting final comments on the ESF, a proposal from the ADB to derogate from the ESF. The FMRF proposes to use a lead approach, which allows project-affected people to approach only the accountability mechanism of the lead financier. This means that the ADB would not be accountable for the projects it invests in if they are not the lead, contrary to the commitments in its ESF.
This is a fundamental contradiction. If such a proposal had been included in the ESF consultations – which have been thorough over several years – civil society would have had the opportunity to properly present arguments for why the proposal is misguided, based on ample experience from the Asian Infrastructure Investment Bank. Instead, we were invited to consultations with scant information and no more than five working days’ notice while the draft ESF was being finalized. This is unacceptable – we were asked to consult on a proposal that directly contradicts the ESF we have spent the past few years engaging with shareholders and ADB management on.
There are grave concerns around the issue of multilateral development banks delegating accountability to a lead financier. These include:
Prioritizing remedy: While IAMS need to coordinate to ensure that multiple processes do not impose undue burdens on communities - in fact, several IAM policies have provisions for facilitating cooperation – it is wrong to assume that affected communities prioritize transaction costs more than receiving remedy.
Independent Accountability Mechanisms offer different opportunities: IAMs are evolving bodies and consequently, IAMs are neither all the same nor constant over a long period. At any given time, an IAM can operate at different levels of effectiveness and offer different protections to affected communities, which can have an impact on whether communities want to approach them. Communities should thus have the choice and agency to decide which IAM (or in some cases both) to approach.
Responsibility for remedy is tied to investment: If the ADB or World Bank invests in a project, then it must be accountable for that investment, and not be able to delegate that accountability and responsibility for remedy.
In the ADB all financing modalities are covered under the ESF whereas there are limitations in the WB scope of the ESF on several financing modalities. The issue then arises where some cases may be eligible under the ADB Accountability Mechanism in grievance cases, but not under the World Bank Inspection Panel as the ESF does not apply. We urge the FMRF to ensure that all financing modalities in co-financing projects will be subject to the Accountability Mechanism. Given the differences between the two IAMs, we foresee situations where cases that may be eligible in one Bank’s IAM be rejected under the other Bank’s IAM should that Bank be the Lead. This is an injustice to communities and unless both IAMs are aligned, an alternative approach must be put forward under FMRF.
There are urgent recommendations regarding transparency, disclosure, and accountability in the application of the Full Mutual Reliance Framework (FMRF), including the following:
Full Project Cycle Disclosure:
There must be full disclosure throughout the entire project cycle, especially before Board approval, regarding the FMRF application for co-financed projects.
Communities and civil society must be informed if a project is being considered for the FMRF prior to project approval.
Disclosure of all proposed FMRF projects before approval is essential to ensure transparency and provide stakeholders an opportunity to raise concerns, especially during the project’s risk assessment at the pre-approval stage.
Disclosure of Comparative Reports and Policies:
A comparison report between the ADB and World Bank (WB) Environmental and Social Frameworks (ESFs) must be publicly disclosed.
Any reports or analysis regarding the operational policies and safeguards of both banks should also be shared, ensuring full transparency on where the two banks' policies align or differ. This will enable communities and civil society to better understand the potential impacts of the FMRF’s application and ensure consistent outcomes.
Independent Accountability Mechanisms (IAM) Participation and Mid-term Review:
We recommend that the Trail Bank’s IAM participate as an observer at the Lead Bank’s IAM if complaints arise concerning projects financed under the FMRF.
The FMRF must undergo a mid-term review through public consultations to assess its effectiveness, ensuring that all stakeholders have an opportunity to provide feedback.
Considering the concerns above we the undersigned urge shareholders to intervene and uphold the highest standards that protect communities. The ADB’s ESF must be agreed upon, signed into policy, and come into practice before proposals relating to common approaches are considered. This request has some urgency as the consultations have already taken place on 30 October and 7 November and comments close on 20 November.
PLEASE ACT NOW.
Respectfully.
NGO Forum on ADB
Recourse
Endorsed by the following organizations:
350.org Asia, Asia
350.org Pilipinas, Philippines
AbibiNsroma Foundation, Ghana
Adarsha Samajik Progoti Sangstha, Bangladesh
Alternative Law Collective (ALC), Pakistan
Alyansa Tigil Mina (ATM), Philippines
Asia Indigenous Peoples Pact, Thailand
Bangladesh Working Group on External Debt (BWGED), Bangladesh
Bank Climate Advocates, United States of America
xBuilding and Wood Workers International Asia Pacific, Philippines
Centre for Human Rights and Development (CHRD), Mongolia
CEPR - Centre for Environment and Participatory Research, Bangladesh
CLEAN (Coastal Livelihood and Environmental Action Network), Bangladesh
Ecological Public Society, Armenia
Global Alliance for Incinerator Alternatives (GAIA), Asia-Pacific
GongGam Human Rights Law Foundation, Republic of Korea
Growthwatch, India
Indian Social Action Forum (INSAF), India
Indus Consortium, Pakistan
Legal Rights and Natural Resources Center, Inc. - Friends of the Earth Philippines (Kasama sa Kalikasan), Philippines
Oil Workers' Rights Protection Organization Public Union, ,Azerbaijan
Oyu Tolgoi Watch, Mongolia
Participatory Research & Action Network (PRAAN), Bangladesh
Public Association for Assistance to Free Economy, Azerbaijan
Rivers without Boundaries Coalition, Mongolia
Rural Reconstruction Nepal, Nepal
[1] Page 16, para 45: “Any decision to use all, or parts, of the borrower’s E&S systems will not relieve ADB of its responsibilities set out in the E&S Policy, and ADB’s Accountability Mechanism Policy (2012) will continue to apply.”
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