BRICS bank "ignores" transparency on environmental issues, refuses to involve civil society for policy framework

World Bank President Jim Yong Kim, NDB President KV Kamath

Amidst the high-profile BRICS summit entering the second day in Goa, two senior experts, Juana Kweitel, Programs Director of Conectas Human Rights in Sao Paulo, Brazil, and Srinivas Krishnaswamy, CEO of Vasudha Foundation in New Delhi, have said that even a year after BRICS launched the New Development Bank (NDB), it has failed to be a “tooled” as a “real engine for sustainable development.”

BRICS is acronym for Brazil, Russia, India, China and South Africa.

“The NDB is now up and running – having approved in its first year USD 911 million worth of infrastructure and energy projects within the BRICS countries”, the experts have said, adding, “This first tranche of projects includes various energy investments, with an encouraging nod to renewables, including rooftop solar, and wind.”

“Another factor distinguishing the NDB is that it has started to lend to countries in domestic currencies, rather than pegging all loans to the dollar, a practice which has tended to saddle countries with more debt”, they point out.

Following this, the experts say, the NDB “has its sights set on scaling up – adding additional member countries, allowing financing outside of the five BRICS countries, and expanding operations to include lending to the private sector.”

However, the experts warn, “The BRICS Bank works to position itself as a major player for sustainable development, several big obstacles stand in its way.”

“First and foremost”, they point out, “The NDB has not yet defined what it sees as sustainable development or set forth sustainability criteria for its investments. While the Bank has an exclusion list, which identifies certain investments as ineligible for NDB financing, that list does not include, for instance, unsustainable fuel sources like coal.”

“If the NDB is going to be something new, it will need to break away from the export-oriented, extractivist development model that has proven itself a failure. And that break will take a clear roadmap”, the experts add.

“Second”, the experts say, “While the Bank has given a nod to environmental sustainability, it has doggedly ignored the basic tenets of social sustainability – transparency and participation. The Bank did not involve civil society in the formation of its social and environmental policy framework, despite repeated calls for consultation.”

“While the Bank released an Interim Policy on Information Disclosure, it hasn’t put in place the necessary measures or mechanisms to ensure that communities who might be impacted by NDB investments have the information they need, the opportunity to influence project decisions, and access to remedy if they are harmed”, the experts underline.

“Finally”, the experts underline, “It is questionable whether the NDB’s new policy framework is robust enough to ensure sustainability or to prevent harms. In its social and environmental framework, the NDB opted for more aspirational principles rather than concrete requirements for environmental and social performance.”

In fact, they say, “the framework allows the NDB to preference the use of countries’ domestic systems, without clear criteria or processes by which such standards will be assessed. While Bank officials have stated that they will work to ensure enforcement of local laws and regulations, this loophole is a major concern since many countries are systematically dismantling their national environmental and social protections, as is the case with Brazil.”