A rights advocacy group has accused the World Bank of secretly funding high-risk energy, agribusiness and mining projects in Africa, Asia and Latin America, in brazen disrespect of its own environmental and social requirements.
As recently as August 2016, the president of the World Bank Jim Yong Kim spoke forcefully against new coal projects. “If Asia implements the coal-based plans right now, I think we are finished,” he said.
But despite his warning and a 2013 moratorium on coal projects, the World Bank is reportedly continuing to fund coal projects across Asia.
A new investigation by Inclusive Development International has found that these projects are being funded by the IFC, the World Bank’s private-sector arm. The rights advocacy group accuses the IFC of channelling money to these projects through its “highly opaque support” for different financial institutions including commercial banks and private equity funds.
It identified a total of 91 projects that are receiving funding from the IFC, many of which are coal-fired power plants such as the proposed Rampal coal plant in Bangladesh, which will devastate the world’s largest remaining mangrove forest and harm the lives of 2 million people.
“This shocking exposé lays bare the IFC’s climate double-whammy: not only funding a boom in coal-fired power plants, but also tearing down the forests to mine the coal. It’s clear that IFC lending in the financial sector is out of control and directly undermining President Kim’s climate pledges,” said Kate Geary of Bank Information Center, which collaborated with Inclusive Development International, Accountability Counsel, Urgewald and 11.11.11 on the investigation.
According to the investigation, the IFC outsources the bulk of its development work to for-profit financial institutions. Between 2011 and 2015 alone, it provided USD 40 billion to financial intermediaries, which were allowed to invest the money as they saw fit.
The IFC claims that financial-sector lending helps small businesses in developing countries access credit, driving economic growth and reducing poverty. But David Pred of Inclusive Development International disagrees: “IFC’s intermediaries are in fact using World Bank Group funds to bankroll some of the largest, most harmful corporations in the world.”
“While the IFC has tried to distance itself from the projects funded by its intermediaries, the fact is that these banks are brazenly disregarding the IFC’s environmental and social requirements. As a result, the World Bank Group has ended up fuelling and profiting from business activities responsible for enormous human suffering, environmental devastation and in some cases serious crimes,” Pred said.