IFI governance


What are the trends in the energy sector?

17 April 2015 | Minutes

Sponsors: Bretton Woods Project, Mott Foundation, Heinrich Boell Foundation-North America, Latindadd, Pacific Environment, International Rivers, Eurodad, Center of Concern, and Third World Network.

Panelists: Peter Bosshard (International Rivers), Elizabeth Bast (Oil Change International), Athena Ballesteros (Project Manager, Institutions and Governance Program, World Resources Institute / WRI), Vijay Iyer (Director of Sustainable Energy Department, WBG), CHAIR: Lisa Friedman (Deputy Editor, ClimateWire)

  1.  Intro – infra financing gap/ sustainability/ green economy.

Manish – Sam Walton – former CEO Wallmart…

Focus on learning from ‘bad experiences’…

Questions vs sustainability –

  1. Governance structure – voice and votes at AIIB – will emerging economies have a strong voice?
  2. Infra bank – intended to finance infra deficit – 90 trillion in next 20 years. Low carbon/ inclusive. Low carbon will require more investments – that said, research has shown only 5% additional as initially capital intensive however less capital intensive operationally. Washes out.
  3. Safeguards: What will be the framework? Prevalent view – safeguards are costly… Test this assumption. Do ES safeguards require additional time and investments? Even is more costly how does one balance benefits?
  4. Governance – long-standing efforts to democratise governance. Accountability and stakeholder engagement.
  5. Country systems – country systems should be embraced when/ where possible. However must adapt to circumstances.

SAIS Delegation – Denise from WRI working with SAIS students on project/ practicum.

WB – formerly Asian branch SG

Former American member of ADB board. 8 years.

Began as IFI research student. Initially one anthropologist at Bank. “Bank’s conscience”.

Initially recommended that WB leave integrated rural development – too complex.

Worked on ADB safeguards framework. Developed Accountability Mechanism. Initially – forestry – no investment in forest areas.

Also involved in HIPC. Had thought about debt sustainability issues.

She was dismayed as policies had lost their teeth. They were inspectable. Not so now. Private sector was initially exempt – IFC PE.

Finance minister of Japan/ US treasury secretary – encourage WB/ ADB/ to syndicate loans together. Japan and US decided not to join AIIB. Encourage AIIB to adopt framework.

John’s Hopkins student project –

Lack of representation led to new development banks.

AIIB – authorised US $100billion (speculated that China will contribute half).

GDP/PPP combination for vote share.

Growing membership base, particularly after UK.

Concerns about safeguards – Research/ what are environmental and social consequences.

Field-based interviews in China/ Philippines (including CSOs in China).

Literature review including WB/ Fund governance progression.

Key findings:

Implementation – both MDBs and CSOs underscored importance of local context. CSOs maintain that design should ensure that obstacles are surpassed during implementation.

MDBs – focused on technical capacity strengthening.

Adequacy of current standards – MDBs/ currently adequate – use of lack of upcoming cases as evidence.

MY QUESTION – selection of CSO participants… Dilution of draft WB safeguards as perhaps example already of ‘race to the bottom’. Found odd agreement of CSOs that

Highlight potential for co-financing and complementarity between existing and new institution – risk sharing.

Harmonisation of SG seen unlikely – however new SG may be used to facilitate co-financing.

Race to the bottom potential – CSOs quite concerned. Not so MDB – no ability to dilute SG due to strong voice of stakeholders.

General cautious optimism that new institutions will positively influence progress of development finance.


Fear that SG will be disregarded are without base.

Likely to draw inspiration from existing institutions.

Co-financing will likely drive toward adoption of standards – that is, dilution from ADB/WB not on the table.

New shareholders – how will this impact development of governance/ transparency, etc.

Six CSOs… limited time and exposure…

Methodology – not weighted average.

AIIB – were any staff interviewed…

Sandra – Mott:

This is the moment in time. Important not to conflate NDB with AIIB – NDB – no SG as stated during meeting in Brazil. Much more contentious relationships. Perhaps NDB will not get off the ground.

Tracy – bi vs. multilateralism – Logic for lack of willingness to adapt SG – focus on country ownership.

NDB/ AIIB – perhaps resulting from climate negotiations/ energy policy (coal financing… ) Mitigation targets also being pushed.

As China and India tend to dominate, likely little difference between the two institutions.


Perhaps donors could have been included. It would have been interesting to ask CSOs who they consider the reference point (ADB/ WB).

Focus on implementation –

Importance of national development banks also obviously important. No focus on FI lending.

If MDBs don’t consider local conditions as key factor and yet recognise the importance of implementation a paradox seems to arise.

SAIS – CSOs… any strategy to maintain issue in limelight. NDB has taken a backseat… despite differences of opinions.

2016- China hosts BRICS summit and G20.

WRI – working with Chinese companies to apply lessons internationally.

China programme SAIS – absence of Japan will be a problem.

Sandra Smithey, Mott: American CSOs have no stance on NDB and now AIIB. Chinese colleagues find it very difficult to gather info. (UK information). Economic consideration –primacy.

Did conversation with MDBs – bring out potential for beneficial (vs. detrimental) impact of SG? A: some recognition of strong (clear?) safeguards as cost-beneficial.

CIEL – lack of complaints does not necessarily imply fewer problems. It may in fact imply a mal-functioning system. Closing of civil society space also contributes.

Supports Sandra/ BWP stance – CIEL is not well-positioned to lead (US should not lead – potentially counter productive).

SAIS – cautious optimism in the room (not so in China?).

From China – look at CDB… decisions will be taken from the top as policy instrument…

Tracey – Brazilian NGOs began to study NDBs.

SAIS – linkages between WB and AIIB – AIIB committee members cautious, particularly given entrance of UK, Europe. WB staff in China – much interaction.

Kevin Gallagher (SAIS):

What can we learn from China and LA – from preliminary findings.

Chinese Banks have been in LA for decades… Without China – financing for LA would have decreased by 30%…

Filling infra gap – at 2.6% per annum. Exim Bank, CDB very exposed.

2003- 2014 – 119 bn – more than WB and AIB combined.

China-backed development finance – silk road fund, etc… combined 343bn. 75% more than WB base capital.

MD financing is about 1% GDP/annum. 9% in Green investments.

Infra – 20% IDB also very involved. Most of energy investment in carbon intensive investments with two principal polluters (US and China).

Sustainable – IDB biggest investors.

Not one environmental impact assessment in 119bn in investments. China development assistance is normally tied aid. No top down decision to diffuse guidelines downward.

China is financing large numbers of M&A… Now moving into Greenfield projects. Many new projects online in sensitive areas of biodiversity/ indigenous areas.


October safeguard study.

Chinese safeguards may be based on new Ministry SG policy.

Chinese banks lack grievance policy, grass roots consultation. Thus CSOs in LA have had problems linking concerns to comms with Bank.

There are very good projects – eg, Bolivia has ILO core standards imbedded in constitution – Chinese withdrew from a community rejected project… Also in Peru.

Real time available on forests – map vs. Chinese funding/ projects.

GFW – will seek to link finance to forest loss.

How can info from study – be used to support lobbying efforts?

European Banks in the region doing most of the green investment… German – good record on investments in ‘green economy’. IAB – Chinese equity fund. Wind farm in Uruguay.

American CSOs should press USG – upcoming consultation with China on strategic cooperation. Must pressure USG to engage. Don’t give up on the US.

Perhaps US/ Japan are back paddling.

Dr. Wu:

China Green Credit line – policy: inclusive of international banks. Ranking of banks… Potential model. This is supposed to be implemented internationally – but not Chinese jurisdiction. Therefore can support host countries to develop legal requirements (as in China) – carrot – help banks to improve image.

ADB – discussions being driven by belief – where is the data? IABApproval system – 8 months for medium/ high risk. Operations cost 15million.

USDState –

Have been discussing forest issues with China.

BWP – importance of incentive structure.

WRI – data on CSO effectiveness?

1992 – first investment into Peru a disaster. CSOs were able to mount a very strong opposition and Chinese banks stayed out for 10 years.

US biggest violator of Peruvian law – suing Peruvian state in order to prohibit clean up. Big drivers: bottom line and image. In Peruvian case – access to market was used to convince HQ.

Quasi commercial banks – thus one must increase costs through action. Banks are susceptible to costs of behaviour.

CSOs must play bad cop. CSOs are having difficulty playing ‘good cop’ on Greenfield projects… ‘must build bridges before burning them’.

Bolivia – ILO 169 is taken seriously. ColombiaCNOPEC – case against company and government.

Fundebes – Argentina – monitoring investments in LA. Decreasing role of WB. However can it be used to set standards?

Lima – trying to use WB annual meeting to link with other players in infrastructure. Not necessarily positive development.

BNDES – engaged on transparency policy. Event in May.

Mott (Tracy):

Is there a costed figure for green infrastructure needed? Excluding mega/ regional projects? There are of course real infrastructure needs… Much of the need is really focused on provision to urban middle class.

BNDES – decentralises compliance in Brazil to partners. No transparency vs. host country law. 22 cases on Belo Monte… Court has judged BNDES culpable.

Flexibilisation of safeguardsBrazil – erosion of forest code, etc… ie, perhaps CSOs should focus on local law framework.

SAIS – what determines action by CSOs at the ground level? Political economy of CSO success/ action.

Indigenous groups on Ecuador are being torn apart in light of promises of jobs/ development, etc.

IDB – is it consideration study of SG implementation?

Country systems are always used as starting point. Problems arise when systems don’t work. IDB includes costs of implementation in low capacity countries.

KG –

LA – no regional infra plan. Does not happen at OAS, CEPAL, etc. Lost most of competitiveness to China. Re-booting 50s big push approach.

Things have become bilateralised…

Dr. Wu:

Market-based instruments … cost of capital in China.

WRI – China council – Green Finance.