9 December 2003
Recommendations for Inclusion in the US Government's Comments on the Draft ADB Environmental Policy
compiled by the Bank Information Center
January 14, 2002
Printable version (Acrobat pdf 356 KB)
Table of Contents
I. Introduction
II. Strong Areas to be Maintained
1. International Agreements
2. Inclusive Stakeholder Definition
3. Strategic Environmental Assessments
4. Inclusion of Policy under Inspection Function
5. Strengthening Regulatory Systems for Environmental Management
6. Development of Environmental Indicators
7. Training of ADB Staff in Use of New Guidelines
III. Issues to be Improved
1. Stronger, Clearer Language and Well-Defined Terms
2. Enforcement and Implementation
3. Stakeholder Consultation and Participation
4. Information Disclosure
5. Mitigation of Environmental Problems
6. Environmental Categories
7. Program Lending
8. Sector Lending
9. Private Sector Lending and Financial Intermediaries
10. Green Procurement
11. Strengthening and Extending Strategic Environmental Assessments
IV. Issues to be Included
1. Integrated Pest Management
2. Line of Accountability
3. Budget Allocation in the Institution and ADB Projects/Programs
4. Promoting Department and Staff Incentives for Environmental Achievements
5. Integration of Policy Compliance Language in Loan Agreements
6. Environmental Safeguard Guidelines for Emergency Lending Operations
V. Conclusion
Annexes:
A. List of Contributing NGOs
B. Letter to ADB President Tadao Chino
I. Introduction
We applaud the Bank for its effort of drafting the first ADB Environment Policy - a long awaited demonstration of its leadership in the region as a development institution with poverty reduction as its overarching goal. Together with a number of citizen groups in Asia and outside the region, we have been following the drafting process of this policy from the initial consultations to the content development. We witnessed the Bank's commitment to the consultation process. The consultation process in the member countries has been extensive and the second and third version of the working paper included recommendations from civil society.
We support several provisions in the December 2001 working paper (available at http://www.adb.org/Environment) and encourage the ADB to integrate these in the final draft. We applaud the working paper's references to international agreements, inclusive stakeholder definition, upstream Strategic Environment Assessments, inclusion of the policy under the Inspection Function, strengthening of regulatory systems for environmental management, the development of environmental indicators, and the training of Bank staff to use new environmental guidelines.
In addition to these pronouncements, we would like to see stronger provisions in the policy concerning three main areas:
- enforcement of environmental considerations in the Bank's own operations
- stronger provisions on implementation and enforcement
- clearer and more detailed elaboration in some key areas, such as program lending, benchmark for environmental categorization, and mitigation
The Environment Policy can only be effective if it has clear provisions on implementation and enforcement, and therefore these issues should to be adequately addressed in the Policy. We strongly urge the Bank Management to improve the working paper in the three areas above before submitting a working paper for Board discussion.
II. Strong Areas to be Maintained
We support several provisions in the December 2001 working paper and encourage the ADB to integrate these in the final draft. We think the following provisions should be maintained to ensure a strong policy.
1. International Agreements:
In the December draft, Annex 5 clearly outlines the provisions of the key international environmental agreements relevant to the ADB's participation in these agreements. These descriptions are very helpful because they show in concrete terms which provisions the ADB intends to comply with. We strongly recommend maintaining this annex for the final version of the policy.
2. Inclusive Stakeholder Definition
We are pleased with the policy's definition of stakeholders in para. 66 that includes "interested and affected citizens, and government, civil society and private sector representatives at local, intermediate and national levels". In maintaining this definition in the final version of the policy, the ADB could realize its commitment to a broad participatory approach that includes a wide range of stakeholders.
3. Strategic Environmental Assessments:
We applaud the policy's provision on strategic environmental assessments (SEAs). Such assessments move the identification of problems more upstream in the process and prevent wasting cost and energy on problems that were assessed too late. This is a very important provision for policy lending. We encourage the ADB to maintain and strengthen this provision in the final policy and consider extending SEAs to sector and financial intermediary lending. It is clear that the upstream, strategic nature of the SEA is a superior approach for program lending and country development strategies compared to the conventional project-focused EIA.
4. Inclusion of Policy under Inspection Function
We support the provision in para. 29 that the policy section relevant to integration of environmental considerations is subject to the ADB's Inspection Policy. This provision demonstrates the Bank's commitment to accountability. We strongly recommend maintaining this provision in the final policy.
5. Strengthening Regulatory Systems for Environmental Management
The provision for strengthening regulatory systems for environmental management in DMCs is laudable (para 43). With the trend of increasing privatization, it is essential for DMCs to have strong regulatory systems that ensure sound environmental standards. The provision on the ADB's commitment to technical assistance for strengthening regulatory frameworks should be included in the final policy.
6. Development of Environmental Indicators
We support the ADB's intention to develop clear and monitorable environmental indicators (para. 21). These are essential to ensuring sound environmental management at the project level. We recommend including this provision under the actual policy section of the final version instead of the introduction.
7. Training of ADB Staff in the Use of New Guidelines
Paragraph 88 on the ADB providing training to staff for the use of the new Environmental Assessment Guidelines is commendable and should be included in the final policy.
III. Issues to be Improved
1. Stronger, Clearer Language and Well-Defined Terms
The policy draft should not use vague language, particularly in areas that require concrete actions. Instead, the policy should define in concrete terms the nature of ADB assistance and lay out clear guidelines for their implementation. The policy should include clear definitions of terms used in the policy. For example, it is unclear what the Bank refers to by:
- serious vs. significant (para. 59 )
- due diligence (para. 61 )
- environmental liabilities (para. 65 )
- diligent screening of potential environmental impacts (para. 62)
- environmental sustainability (para. 89)
It is important to be clear and precise so that intended follow-up actions can be carried out and assessed.
2. Enforcement and Implementation
While the paper is strong in its statement of issues, the main responsibility for the implementation of environmental considerations mentioned in the paper lies on ADB borrowing countries. There are several references to the ADB's intention to assist and encourage borrowing countries to integrate environmental considerations, but the paper does not address how the ADB itself will guarantee and implement environmental considerations for its own projects and policies.
The policy should give priority to the Bank's activities for enforcing and implementing strong environmental standards in its lending operations. The policy should define in a detailed manner the exact nature of the ADB's assistance and set benchmarks for evaluating these goals.
Para 21: We support the idea of clear and monitorable environmental indicators during project design. These indicators should be defined in the policy. To prevent poor progress reports, the ADB should develop a format for these reports and provide technical assistance to borrowing member countries in compiling such reports. The ADB cannot use the lack of institutional capabilities and resources in DMCs as an excuse for weak monitoring.
Para 30, 31, 32: Instead of delegating the responsibility to DMCs, the Policy should lay out in clear terms how the ADB will assume this role. However, the policy should clarify how the Bank is going to implement its assistance to DMCs and include benchmarks for evaluating the ADB's follow-through on this intention.
3. Stakeholder Participation and Consultation
We are pleased with the definition of stakeholders in the December draft (para. 66). However, the provisions on participation and consultation in the December draft are weaker than in the earlier versions. The policy must include a clear definition of stakeholder participation and consultation. This is particularly important because consultation and public participation are not elaborately addressed in other Bank policies.
The consultations should be based on a two-way communication that gives affected communities the right to influence planned projects or programs. This implies that disagreement on a project or program should also be acceptable.
In accordance with the recommendations of the World Commission on Dams (WCD), we recommend that decisions on projects or programs should be negotiated in an open and transparent manner with informed participation of all stakeholders. We strongly urge the ADB to include the principles for participation as outlined in the WCD report in the Policy. As first principle, the ADB should insist on a public, participatory needs assessment prior to any decisions on project or program options. The second principle calls for selecting alternatives from a range of possibilities. The screening of options should be comprehensive and should give social and environmental aspects the same significance as economic and technical factors. Following these two principles, stakeholders should be involved both in preparatory studies as well as project design. Most importantly, stakeholders should have the right to negotiate outcomes that affect them and their mitigation.
Para 19: "Experience shows that at DMC level, the extent of consultation is very much dependent on country-specific laws, regulations and practices. Where environmental laws and regulations are less developed, the consultation process tends to be short and ad hoc."
The extent of consultations should not be dependent on the conditions in member countries, but should follow ADB standards as a minimum in all cases.
Para 45: "Without popular support for these decisions, changes will be difficult and well-designed policies may fail". The crucial component for designing good policies is stakeholder consultation. Once the policy has been developed in a participatory manner, enforcement should not be dependent on popular support. Instead, the ADB should have the authority to enforce environmental standards in all areas affected by its lending operations. This implies subjecting borrowing governments to policy compliance as a condition for all ADB-funded projects and programs.
Para 67: This paragraph should define public participation in detail. We recommend including the following provisions: (i) consultations should be conducted in the language of project-targeted communities which should be facilitated through independent professional translators; (ii) background information should be adequately available in the local language at least a month prior to the consultation; (iii) notice of the consultation should be made available at the local level at one month prior to the consultation; (iv) the consultation should discuss the positive and adverse impacts of the project, and the mitigation plans, if any, as well as discussion on no-project options; (v) the consultation should discuss ADB safeguard policies relevant to the project and the complaint mechanisms of the Bank (Inspection Function and Anticorruption Unit) and the information should be made available in the local language; (vi) consultations must be conducted in an environment conducive to free expression and discussions; (vii) the Bank should arrange for regular multi-stakeholder evaluation during project or program cycles.
4. Information Disclosure
The Bank's existing Policy on Confidentiality and Disclosure of Information has not included issues that have become crucial in the past years. We therefore strongly suggest integrating provisions for information disclosure in the policy. We recommend that
- The ADB, not the borrowers, should make the full IEEs and EIAs public, instead of just the summaries. (para 60)
- The ADB should require borrowers to make semi-annual reports on the implementation of EMPs publicly available. (para 69)
- Documents pertaining to the Annual Environmental Review Mission should also be made publicly available and this paragraph should clarify who will be responsible for conducting these reviews. (para 69)
- The policy should include a provision that enables the ADB to request financial intermediaries to make IEEs and EIAs publicly available. (para 65)
5. Mitigation
The draft policy of December lacks the provision of the August version that "environmental assessment and management plans should aim to ensure that there is no (significant) unmitigated environmental harm to (innocent) third parties". We believe that this provision is crucial to the protection of affected stakeholders and ask that it be reintegrated in the policy in a modified version that omits the words "significant" and "innocent" as these are open to interpretation.
The policy should include a section that clearly lists and defines mitigation measures. This section should define guidelines for general mitigation measures that can be applied to specific projects and programs. Stakeholders must be involved in determining mitigation measures for ADB-funded projects or programs.
In addition, the policy should address mitigation of environmental problems that were not identified and thus not mitigated in the planning stage. This is particularly important because the level of uncertainties of adverse environmental and social impacts in program, sector lending, and financial intermediary lending is high. The provision should include the responsible parties for the actual mitigation efforts, the budget, and the supervision.
Para 68: This paragraph should clarify that all ADB-funded projects that are likely to have environmental impacts, should require the development of Environmental Management and Monitoring Plans that outline specific mitigation measures and environmental monitoring requirements (MMEMRs).
6. Environmental Categories
The language on Environmental Categories is vague and does not include actual definitions of the criteria for the categories. Without these definitions it is impossible to evaluate the policy in terms of its significance. In addition, the lack of definitions may lead to high impact projects and programs being reduced to category B, for which no environmental impact assessment is required. We recommend that the ADB policy follow the internationally recognized system of environmental categories.
Para 59: This paragraph should be rewritten to include the criteria for the different categories and benchmarks for how these categories were established. In addition, the words "serious" and "significant" should be defined in order to prevent arbitrary determination of environmental categories.
7. Program Lending
We are concerned that the language on program loans is vague and does not include provisions on participation and consultation for program loans.
Para 62: This paragraph refers to the evaluation and mitigation of environmental impacts. It is not clear, however, whether program loans will be subject to the same process of environmental categorization as other loans. This paragraph should specify that program loans fall under the same process as other loans concerning categorization, information disclosure, and mitigation measures.
8. Sector Lending
The policy does not address the process of IEEs and EIAs for sector loans. The fact that sub-projects are often not known at the time of loan approval should not affect adequate environmental impact assessments. The policy should include (i) a requirement for EIAs for entire sector loans including its policy and program components (ii) a provision that the ADB requires borrowing governments to conduct environmental assessments for subprojects that fall under the respective environmental category (iii) the steps of assessment, including public consultation and transparency, (iv) a provision that allows the Bank to delay or cancel sub-projects that turn out to have below-standard environment assessments and/or inadequate mitigation plans, or that do not comply with the ADB Environment Policy.
9. Private Sector Lending and Financial Intermediaries
Paragraph 39 refers to the ADB's intention to promote private sector participation in reducing industrial pollution. We believe that the main challenge concerning increased privatization will be to ensure the establishment of regulatory frameworks for enforcing environmental regulations on the private sector. The policy should first address these safeguards before moving on to increasing private sector participation.
When the ADB lends through a financial intermediary, the actual project activities being funded are unknown at the time of the loan preparation, and hence it is also not known when environmental categorization takes place. Currently, the ADB Environment Policy relies on a commitment by the financial intermediary to do environmental due diligence. The recent trend of the Bank to lend more money through financial intermediaries emphasizes the importance for the ADB to implement a formal mechanism to track the subproject activities of financial intermediaries and apply appropriate environmental impact assessments.
Para 61: To ensure that the ADB is not ultimately funding activities that violate its environmental policy goals, the ADB should implement an official mechanism to track the subproject activities of Category D lending and follow up with the appropriate ADB environmental categorization process. The tracking system should function as an upstream reporting mechanism before funds are disbursed for specific activities [unlike the proposed audit in para 90]. Details of the tracking and environmental categorizing requirements should be included in all Category D loan covenants.
10. Green Procurement
We applaud the ADB's progressive move to include green procurement as part of the Environmental Policy. We suggest including green procurement as part of the EIA process, which would facilitate the integration of green procurement in loan and project agreements as well as bidding documents (para. 72).
11. Strengthening and Extending the Scope of SEAs
The ADB should strengthen the policy's language under Policy Integration (para. 41) to say that in addition to encouraging DMCs to adopt SEAs, the ADB will provide technical assistance to demonstrate the benefits of strategic environmental assessment and planning in the national development strategies and policies.
Regarding the Trial Application of Strategic Environmental Assessment of Country Strategies and Programs (para. 57), the ADB should collaborate with civil society organizations and other relevant organizations to ensure that the trial run is successful in demonstrating the feasibility and benefits of the SEA tool. To begin with, the ADB should publicly disclose the four pilot countries for the trial run and the planned SEA methodology to be used.
IV. Issues to be Added
1. Integrated Pest Management
The draft Environment Policy states that any attempt to reduce poverty -the overarching mission of the Bank-must necessarily "anticipate critical environmental needs and intervene in the most appropriate manner to support poverty reduction." It is therefore of concern that the policy's discussion of environmental problems facing the rural and urban poor today fails to mention the enormous health and environmental costs of pesticide poisoning plaguing virtually every developing member country of the Bank (not to mention the rest of the world). In fact, the entire text of the Environment Policy is utterly devoid of any mention of the problem and of any commitment to address the problem.
We urge the ADB to address pesticide-related contamination in the Environmental Policy. The policy should articulate how the Bank will implement these policy commitments, monitor pesticide-related impacts of Bank lending activities, procurement and choice of private sector partnerships, evaluate the Bank's progress in reaching its commitments and ensure policy compliance.
In addition, we urge the ADB to develop a separate Safeguard policy on pesticides and pest management. This would bring the ADB into harmonization with the standard set by the World Bank. The World Bank began developing its first policy on pesticides and pest management in the 1980s. After numerous revisions, the World Bank approved its current policy on pesticides and pest management, Operational Policy 4.09, in 1998. This policy makes very clear and strong commitments to
- Promoting farmer-led ecologically based methods of pest management;
- Reducing dependence on synthetic chemical pesticides; and
- Integrated pest management (IPM), defined as a mix of biological and cultural practices in which pesticides are only used as a last resort.
The World Bank policy also specifically prohibits the use of WHO (World Health Organization) Class Ia, Ib and II (extremely hazardous and severely hazardous) pesticides in its projects, whenever basic requirements of proper use, storage and handling cannot be met. Since these requirements are almost never met in borrower countries, the use of WHO Class I and II pesticides is effectively forbidden in virtually all lending situations. Given the ADB's wide range of lending activities that influence agriculture and the use of pesticides, we urge the ADB to create similar guidelines to prevent environmental contamination through pesticides.
2. Line of Accountability
The Policy should address who in the ADB will be responsible for implementation of the Environment Policy. Each project team should be responsible for the implementation of the Action Plan for each separate loan. We support the provision (para. 94) that the project teams are responsible for the environmental assessment process. This provision should be taken a step further to include the project team's responsibility for policy compliance. Ultimately the relevant Regional Directors and Vice Presidents as Heads of Operations should be responsible for both environmental assessment and policy compliance.
3. Budget Allocation in the Institution and ADB Projects/Programs
While the Bank may have implicitly redone its budgeting mechanism and allocation, we think it is important to state in the Policy that:
- the implementation of the Environment Policy is ensured by adequate funding in the institution, in terms of human resources and other costs incurred by Bank staff in implementing and enforcing the Policy
- costs for the implementation and enforcement of the Environment Policy are incorporated in the total budget of the project/program funded by the ADB.
4. Promoting Department and Staff Incentives for Environmental Achievements
The Policy should clearly state that staff performance evaluation and promotion include their adherence to the Environment Policy and, vice-versa, non-compliance should also reflect in performance evaluations. In addition, the Policy should also include a provision that departments are evaluated on how they have adhered to the Environment Policy in their operations. A clear mechanism on how these evaluations will be conducted should be developed and included in the Policy annex.
5. Integration of Policy Compliance in Loan Agreements
In order to ensure enforcement of the Environment Policy, every ADB loan agreement should include a standard provision on the borrowing government's compliance with the Environment Policy and other relevant policies and consequences for non-compliance, including delay of loan disbursement or cancellation of loans. The Report and Recommendations of the President (RRP) should include a list of all ADB policies and guidelines relevant to the particular project or program.
6. Environmental Safeguard Guidelines for Emergency Lending Operations
Currently, the ADB Environment Policy omits emergency lending operations altogether. This is a serious oversight considering that pressures on the environment most often increase during economic crises. Environmental and social impacts will typically arise from environmental externalities, social dislocations, and from the change in rate and composition of natural resource use. Moreover, these environmental stresses can have a significant bearing on economic recovery. Due diligence requires that the potential negative environmental outcomes should be adequately addressed prior to disbursing public resources for emergency lending operations.
To ensure consistent environmental standards, the Policy should address environmental safeguard and natural resource management guidelines for emergency lending under Section 2 Lending Operations. Given the urgency for lending during a crisis, it is often difficult to address environmental impacts once a crisis is taking place. Therefore, it is recommended that safeguard guidelines for emergency lending utilize the SEA for country development strategies. Specifically, the SEA should include a section to address a strategy for economic crisis management.
During crisis situations, the ADB should provide for the monitoring of environmental indicators to trigger a review process of the structural/sectoral adjustments and policy reforms that may be resulting in unintended significant adverse environmental and social impacts. In addition, the environmental safeguards and natural resource management strategies should apply to IMF negotiated emergency loan packages in which the ADB provides funding. The ADB, given its areas of expertise, should advise the IMF on environmental safeguards and natural resource management for emergency lending.
V. Conclusion
A strong Environment Policy is not a hindrance to economic development but rather will bring the ADB closer to its over-arching goal of poverty reduction. Therefore, an enforceable Environment Policy is not only in the interest of the environment and stakeholders that rely on sustainable natural resource management for their livelihood but for the ADB itself if its credibility is to be maintained and its mission achieved. We strongly encourage the US Government to ensure that Bank management improves and strengthens the working draft of December 2001, especially in the areas of clarity and implementation/enforcement, prior to the submission to the Board. The NGO community has written a sign-on letter to ADB President Chino (Annex B) urging him to take action and ensure an enforceable environment policy. We encourage to the US Government to participate in the effort to ensure a sound policy.
Concerning the consultation process on the policy, we would like to see an update of civil society comments that were included in the latest draft and those that were not, with an explanation for exclusions. With input from civil society and its own experts, nothing should prevent the ADB from drafting a policy that will ensure sound environmental management in its lending operations.
In regard to the drafting of the Environmental Policy, we would like to suggest that the ADB first finalize the policy, instead of drafting the new Environmental Assessment Guidelines at the same time it is developing the policy. These guidelines should be derived from the policy and therefore it seems incongruous that the ADB is completing both documents at the same time. Despite our recommendations for improvement and strengthening of the policy, we would like to emphasize again that we strongly approve of the ADB's consultation process on the Environmental Policy. We believe this has been one of the best consultations in the ADB's history and encourage the Bank to use this process as a model for strengthening ADB consultation mechanism on future policies and projects.
Annex A: List of organizations commenting on the draft policy
These recommendations were compiled by the Bank Information Center and include comments and suggestions from Southern and Northern NGOs, experts, and citizen groups. They are:
1. Bank Information Center
2. Friends of the Earth
3. Environmental Defense
4. Pacific Environment Center
5. Oxfam America
6. World Wildlife Fund, Macroeconomics Program Office
7. Pesticide Action Network North America
8. International Rivers Network
9 Globalization Challenge Initiative
10. Consumers Choice Council
11. Conservation Melanesia
Annex B: Sign-on Letter to ADB President Tadoa Chino
December 3, 2001
President Tadao Chino
ASIAN DEVELOPMENT BANK
6 ADB Avenue, Mandaluyong City 0401
Metro Manila, Philippines
Fax: (632) 636 2000 Total pages: four Ensuring the Quality, Implementation and Enforcement of the Proposed ADB Environment Policy Dear President Chino: We, 40 non-governmental organizations and civil society groups from 15 countries, are writing to express our deep concern with the October 31, 2001 draft of the ADB Environment Policy. Although the ADB has conducted extensive community consultations, we are very disappointed with how little civil society input has actually been integrated into the draft policy. In fact, the October draft policy is inferior to the previous working papers the ADB distributed prior to the community consultations. We applaud the Bank for drafting the first ADB Environment Policy - this is a long-awaited and necessary move for the region's leading development institution with poverty reduction as its overarching goal. However, we believe that the ADB must make concrete commitments
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