New CAO Policy Enhances IFC and MIGA Environmental and Social Accountability

The Boards of Directors of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) have approved a new policy for the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism of IFC and MIGA. The Independent Accountability Mechanism (CAO) Policy, which becomes effective today, improves effectiveness of the complaints process in projects supported by IFC and MIGA, with an increased focus on outcomes for communities and IFC/MIGA clients, and responds to recommendations from an independent external review.

“The World Bank Group is committed to being accountable to people and communities we serve,” said World Bank Group President David Malpass. “Last September, we announced the establishment of an enhanced Accountability Mechanism for the World Bank, including strengthening the Inspection Panel’s toolkit. Today, we are pleased to announce important reforms to further strengthen environmental and social accountability for IFC and MIGA. The Compliance Advisor Ombudsman is a vital resource to help people raise and resolve concerns and make our private sector investments more effective. I am grateful to Peter Woicke, who chaired the external review, and the whole review team. I also appreciate our Compliance Advisor Ombudsman Janine Ferretti’s stewardship of the reforms based on the external review recommendations.”

Since its establishment in 1999, CAO has been a key element in IFC’s and MIGA’s approach to strengthening the sustainability of their operations, proactively managing environmental and social risks, and ensuring accountability to all stakeholders. CAO works to facilitate the resolution of complaints from people affected by IFC and MIGA supported projects, improve environmental and social project outcomes, and foster public accountability and learning through its dispute resolution, compliance, and advisory functions to enhance IFC/MIGA performance and reduce the risk of harm to people and the environment.

The new CAO Policy builds on two decades of CAO experience, incorporates key recommendations from the external review, and reflects feedback from extensive public consultations conducted online and in-person with civil society, complainant communities, IFC/MIGA clients, development finance institutions and other stakeholders. The Policy preserves CAO’s independence from IFC and MIGA management and strengthens the role of the institutions’ Boards in the CAO process. Like the independent accountability mechanism for World Bank funded projects, comprising the Inspection Panel and Dispute Resolution Service, CAO will report to the Boards under the new Policy.

“We are proud of the new CAO Policy, which was achieved after a robust review process and extensive collaboration and consultation,” said Rajesh Khullar, Chair of the Board’s Committee on Development Effectiveness. “It demonstrates IFC and MIGA shareholders’ commitment to accountability and development effectiveness. CAO has an important role in supporting IFC’s and MIGA’s ambitious development agenda and bringing value to our stakeholders, especially host communities.”

The Policy promotes people’s access to CAO and their choice in how complaints are handled, while providing more opportunities for IFC, MIGA and their clients to resolve concerns early and proactively. It provides more clarity on what complaints can be accepted by CAO, including in relation to financial intermediary investments and supply chains, where the financial relationship to IFC/MIGA may be indirect. The Policy enhances the process for compliance reviews of IFC and MIGA and the role of Management in responding to compliance findings through action plans that will be developed in consultation with clients and complainants and focus on outcomes for affected communities.

The Policy incorporates an approach to threats and reprisals in recognition that this is an area of growing concern among complainants in many countries. It also recognizes the need for communities to have access to information about CAO and project-level grievance mechanisms.

“The CAO Policy demonstrates a strong, shared commitment to problem-solving and accountability with the goal of improving the outcomes of IFC and MIGA projects on the ground,” said Janine Ferretti, Compliance Advisor Ombudsman and Vice President of the World Bank Group. “Communities come to CAO for remedy and accountability and I am pleased that the Policy addresses these issues. People will benefit from a more responsive CAO process—one that I believe will deliver for all stakeholders.”

In addition to the new CAO Policy, IFC and MIGA are undertaking other actions to strengthen environmental and social outcomes, including improving systems and procedures for environmental and social due diligence, mitigation and supervision, and strengthening grievance responsiveness both at the institutional and project-levels. These changes will reinforce World Bank Group leadership in environmental and social sustainability – starting at the earliest stages of project design and planning and continuing through project implementation and monitoring – which is essential to the overall World Bank Group mission of fighting poverty and advancing shared prosperity everywhere in the world.

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