World Bank should improve environmental record, review says

By Andrew C. Revkin
Published: July 22, 2008

NEW YORK: The World Bank and its partners need to do a far better job of considering the environmental effects of projects they finance in poor countries, its internal review group concludes in a new report.
The review, released on Tuesday, examined some of the $400 billion in investments in nearly 7,000 projects from 1990 to 2007. It found that recent commitments to environmental sustainability by the bank and sister institutions, including the International Finance Corporation, were often not matched by changes within the lenders' bureaucracies or on the ground where dollars were turned into dams, pipelines, palm plantations and the like.
Authors of the 181-page environmental report, the first by the bank's Independent Evaluation Group since 2002, said it was vital for the bank and its partners to intensify their focus on measurable environmental protection, given rising vulnerability to environmental risks and the increasing flow of financing for projects related to climate change. The report is on the Web at www.worldbank.org/oed.
"They need to begin to see the inextricable link between sustaining environment and reducing poverty," Vinod Thomas, the director-general of the evaluation group, said in an interview. "It is clear now from the Amazon to India that if environmental sustainability is not raised as a priority then all bets are off."
The report by the internal group included a response from the bank's management that acknowledged some of the gaps while asserting that in many areas it was already moving to improve its environmental accounting and find ways to make sure that beneficiaries - both developing countries and private banks and businesses - changed practices as well.

Cheryl Gray, the director of the review group for the World Bank, said the lack of consistent internal tracking of the environmental facets of projects was an indicator of how much work needs to be done.
The World Bank Group approved its first set of common environmental standards in 2001, for the first time making environmental stewardship part of its core mission of reducing poverty.
But the new evaluation found a persistent lack of environmental focus in each step along the lending chain - from the priorities that shape development projects to the environmental standards and monitoring required in the field.
Environmental campaigners largely agreed with the findings of the internal group.
Korinna Horta, an economist at the Environmental Defense Fund, described how the International Finance Corporation, the World Bank's private-sector arm, can promote the expansion of livestock herds, soy bean field and palm oil plantations, all of which tend to propel deforestation in the tropics, even as the World Bank simultaneously warns about the problems of forest loss and has created a fund to support avoided deforestation.
"Even now, the Bank does not have an appropriate accountability structure in place to ensure that its well-meaning environmental and social policies are actually implemented on the ground," Horta said.