The World Bank Group aspires to “eradicate global poverty and create sustainable development,” but its projects and policies have often led to the opposite result, with devastating environmental and human rights consequences throughout the world. The World Bank persists in propping up and investing in natural resource-based megaprojects in developing countries– like big dams and coal mining - despite displacement of communities, harm to Indigenous Peoples, release of greenhouse gases, and other serious negative impacts.
Deforestation accounts for some 20 percent of global greenhouse gas emissions, but the Bank continues to promote industrial logging and agrofuels. Throughout tropical rainforest areas, the International Finance Corporation (IFC) – the private sector lending arm of the World Bank Group – finances soy and oil palm plantations and cattle ranching, as well as financing shrimp farming in mangrove forests.
From logging and gold mining to building big dams and gas pipelines, the World Bank is behind many initiatives dangerous to people and the planet. But the decision to fund these initiatives is far from democratic. The World Bank’s decision-making structure, based on how much money a country contributes to the Bank, marginalizes developing countries. For example, the United States has the most voting power of all countries, and it is also the sole country that determines who will be the World Bank’s president.
Fossil fuel projects extract a heavy toll on people and the planet, leaving toxic legacies of social injustice, degraded water, land and air, and global warming pollution. Yet the World Bank Group funded over $3 billion in fossil fuels between 2007 and 2008. Despite professed concern regarding climate change, the World Bank Group increased its fossil fuel lending by 94 percent. Lending for coal – the dirtiest of the fossil fuels - increased 256 percent.
The World Bank’s own 2004 Extractive Industries Review recommended an immediate end to coal financing and a phase out of investments in oil production by 2008 and found that "…oftentimes the environment and the poor have been further threatened by the expansion of a country's extractive industries sector." Yet in April 2008, the Bank approved a $450 million loan for a massive 4,000 megawatt coal project in India, expected to be one of the 50 largest greenhouse gas emitters in the world. The World Bank is continuing its long history of aid for fossil fuel projects.
Among the World Bank-funded fossil fuel projects is the West Africa Gas Pipeline, which runs from the Niger Delta through Benin and Togo to Ghana. It is just one of many examples of such projects with severe environmental and human rights impacts.
Friends of the Earth, Oil Change International, the Institute for Policy Studies, and Campagna per la Riforma della Banca Mondiale released a report titled "Dirty is the New Clean: A Critique of the World Bank's Strategic Framework for Development and Climate Change." The report argues that the World Bank's track record disqualifies it from managing clean technology transfer and climate adaptation funds. Instead, the groups argue, such funds should be established under the United Nations Framework Convention on Climate Change, in order to ensure they are used equitably and effectively, in accordance with the principle of common but differentiated responsibility, and that nations receiving financing are thoroughly involved in funds' design and implementation.
Dirty is the New Clean Report (pdf) | Dirty is the New Clean Analysis | Pres Release
Friends of the Earth International releases a new report in concert with 8 other organizations exposing the the World Bank's new energy framework, mandated by the G8, as business as usual. Despite the promises to "green" their lending practices, it has been shown that the World Bank is still spending upwards of 3 billion dollars on greenhouse gas-producing energy projects.
The World Bank Group has emphasized the global leadership role it hopes to play in addressing climate change and financing for renewable energy. But this report shows that the World Bank group is missing a tremendous opportunity - and failing to fill an urgent need - by not adequately financing renewable energy and energy efficiency in developing countries. If the World Bank Group is to deliver on the potential of renewable energy to promote development and poverty alleviation, it will have to dramatically increase its funding for renewable energy, both in absolute terms and as a proportion of its overall energy funding.
Much of IFC's portfolio is oriented toward the interest of corporations, not necessarily the interest of the poor or environmental protection in the developing world. The report highlights certain sectors that often cause more developmental problems than benefits, such as the extractive industries -- oil, gas and mining -- which tend to cause severe environmental and social problems for communities.
The World Bank Group has steadily increased its support of the private sector over the years and its private sector lending arm, the International Finance Corporation (IFC), is an increasingly important facilitator of private investment in the developing world. A part of the World Bank Group whose mission as a development institution is to promote development and alleviate poverty, IFC's lending to the private sector is often at odds with this mission.
In a major new water strategy paper issued in February 2003, the World Bank's management asserted: "To be a more effective partner, the World Bank will re-engage with high-reward/high-risk hydraulic infrastructure, using a more effective business model." In October 2002, the Bank's Board of Directors also endorsed a high-risk approach to the forestry sector; the new Forest Policy allows Bank support for commercial logging operations in rainforests.
The environmental destruction, social upheaval, corruption and repression that are associated with the World Bank's high-risk projects have created tremendous public controversy since the 1980s.2 This is particularly true for large dams, for projects that affect tropical forests, and for investments in the oil, gas and mining sectors.
This report examines the World Bank Group's support for extractive industries (oil, gas, and mining) in Africa over the last 20 years in light of the World Bank's self-proclaimed mission of poverty reduction. It describes the obstacles to using extractive industries as a vehicle for poverty alleviation and sustainable development, and poses a series of research questions related to the role of the World Bank Group in extractive industries.
The exploitation of petroleum and mineral reserves has long been the predominant source of revenue for a number of resource-rich countries in sub- Saharan Africa. Sub-Saharan states such as Angola, Botswana, Sierra Leone, and Zambia are among the most mineral or oil dependent in the world, and the region as a whole is second only to the Middle East in its dependence on extractive industries for foreign exchange earnings.
The 1992 Earth Summit in Rio de Janeiro over a decade ago represented one of the more significant global attempts to make the link between environment and development issues, in order to deepen understanding of the root causes of environmental degradation. Agenda 21, a key outcome from the Earth Summit, recognized that environmental sustainability cannot be achieved in a world with vast wealth disparities, extreme poverty, and a lack of control over natural resources by local communities.>
At the same time, powerful governments, influenced by large corporations, refused to define key terms in the outcomes, terms such as over-consumption or "sound macro-economic policies that promote efficient use of resources," let alone development. Similarly, efforts to expose the links between specific economic policies, poverty and environmental degradation were thwarted. The World Bank's 1992 World Development Report (WDR), Development and the Environment, contributed to the Rio Summit's compromises. The 1992 WDR, while emphasizing that environment is a cross-cutting issue, raised the profile of the concept of an "Environmental Kuznets Curve" which can be translated simply to 'grow now and fix the environment later.'
The Multilateral Investment Guarantee Agency (MIGA) is a little-known publicly funded institution whose environmental and social impact spans the globe. MIGA is part of the World Bank Group. Unlike the better-known parts of the Bank that provide loans to governments, MIGA underwrites the private sector. The agency guarantees the investments of corporations and banks against political risk. Since its 1985 inception, MIGA has provided more than $7 billion in political risk insurance for projects in 75 countries.
Although it is a public institution, MIGA often operates with the secrecy of a private corporation. Despite the difficulty in accessing information about MIGA's investments, however, the agency's anti-environmental record is apparent. So is the agency's failure to achieve the World Bank's mission to promote economic development and poverty alleviation. MIGA has supported projects including Coca-Cola plants, breweries, a Marriott hotel and casino, a Citibank office building, a barge-mounted diesel power plant, a cross-border gas pipeline that traverses fragile ecosystems, and several large mines that have caused significant environmental damage and social dislocation.
