Given their nature and context, some development finance institution (DFI) investments or projects will inevitably involve the risk of adverse environmental or social outcomes. It is important that DFIs have robust systems in place that can manage and mitigate these risks before, during, and after an investment. This work stream focuses on two key themes. First, it analysed the ways in which DFIs measure and manage environmental, social, and governance (ESG) outcomes and which standards are being reported to. Secondly, this work stream assessed the transparency of accountability mechanisms including the occurrence and reporting of community consultations, the accessibility of independent accountability mechanisms (IAMs) and the availability of information regarding ongoing or settled disputes.

Our working paper, published in February 2021, found that the transparency practices of DFIs rarely match up to their policies on the disclosure of ESG risks and accountability. Our research examined the transparency of 20 bilateral and multilateral DFIs and found that:

• DFIs do not systematically provide assurance that community disclosure has taken place for their projects.
• DFIs do not directly communicate to affected communities that options for recourse such as IAMs are available, and they do not require their clients to do this. In general, however, they do provide details of IAMs on their websites.

• Global disclosure of project information is mixed – there is greater transparency among multilateral development banks, and for projects categorised as high risk. Many bilateral DFIs do not disclose any meaningful environmental or social information at the project level.

You can download our working paper below:

Download

You can watch a recording of our webinar, featuring an overview of our findings and discussion of the issues they raise, below: