World Bank review shows flaws in social, environment safeguards process

WASHINGTON (Reuters) - The World Bank has systemic defects in its procedures to ensure that people and the environment are not harmed in development projects, according to an internal review obtained by Reuters.

The global development lender is undergoing the first major update to its social and environmental protections in decades, which are likely to influence other international institutions.

Non-profit groups fear the bank may weaken its protections to speed up lending approval and better compete with development rivals, although it has said it aims to keep the safeguards as strong as ever in its efforts to combat poverty worldwide.

But even the current management of safeguard risks has problems, according to the review, conducted by the bank’s internal audit department.

Employees who focus on reducing social and environmental damage from projects lack independence or incentives to do a good job, and the World Bank has little oversight over how well their advice is followed and how much money is devoted to safeguards. The most experienced specialists are not necessarily assigned to the riskiest projects, according to the review.

One employee wrote that safeguards are treated as a “check the box” measure rather than an integral part of designing projects.

The person’s comments jibed with 77 percent of surveyed World Bank specialists, who believed the bank’s management did not value their safeguards work.

The audit, dated June 16, relied on a survey of 138 World Bank employees and interviews with key staff, as well as an analysis of the bank’s projects and procedures.

World Bank rules stipulate that every new project must comply with social and environmental safeguards, after facing criticism for displacing people and harming the environment with massive projects in the 1980s and 1990s. But the safeguards have not changed in more than a decade, and the bank in October 2012 launched a process to update them according to new global standards.

World Bank spokesman Frederick Jones said the bank’s management requested its internal auditor to review current practices as part of the update to its policies.

“We are assessing our staff skills, accreditation, and management of staff working on environment and social safeguards,” he said. “We are also improving our data collection and better calibrating our support to different levels of risk.”

He declined to comment further on the leaked report.

The bank’s board is due to hold a technical briefing on the updated safeguards Thursday, according to an online calendar.

World Bank President Jim Yong Kim just finished a major reorganization of the institution to make it more efficient and attuned to countries’ needs.

Long criticized for a slow bureaucratic process for approving lending, the World Bank has more recently had to contend with greater competition for development funds. Many middle-income countries, for example, can rely more on private funding and bilateral loans as they grow.

The BRICS emerging market nations are launching their own development bank and China is pushing a $50-billion Asian Infrastructure Investment Bank, which is unlikely to have the World Bank’s strict loan conditions. [ID:nL4N0PB0IW]

Reporting by Anna Yukhananov; Editing by James Dalgleish