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Joint CSO Statement Calls on IFC and MIGA to Strengthen its New Approach to Remedial Action Policy

Published

3 months ago

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Accountability Counsel joins an alliance of civil society organizations to assert that a newly released proposal on remedial action by the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) falls short of expectations and fails to provide a comprehensive plan for delivering remedy to affected communities. If IFC and MIGA cannot guarantee remedy for project-related harm, they should not be funding development projects in the first place.

IFC and MIGA’s proposed Approach to Remedial Action was supposed to explain how the institutions would address the well-known human rights and environmental harms caused by some of their investments. Instead, IFC and MIGA’s response to the well-documented remedy gap is to publish a short paper that heralds its existing prevention and mitigation practices and does not admit that the institutions have a human rights obligation to remedy harms to which they have contributed. Thankfully, the document is only a proposal subject to public consultations, and we call upon IFC and MIGA to make significant changes.

IFC and MIGA have known for years that some of their investments cause environmental and social harm and that under international human rights standards, those who contribute to harm should contribute to providing remedy. An independent expert review, led by a former IFC president and requested by the World Bank’s board, confirmed this standard and recommended that the institutions contribute to and promote access to remedy for project-related harms. The review deemed IFC and MIGA’s current accountability system inadequate and remedial actions practically nonexistent. We are surprised, therefore, that the Approach to Remedial Action commits to very few new actions.

The proposed Approach includes some necessary elements, including a commitment from IFC and MIGA to facilitate and support clients’ remedial actions, explore and pilot arbitration, and exercise leverage over clients, including through contractual provisions and the use of various financing instruments. IFC and MIGA largely failed to respond to the board’s assignment, however, as they left out the following necessary components:

  1. Types of remedy: Despite “Remedial Action” in its title, the proposed Approach does not provide a plan for delivering any type of remedy. Further, the draft policy does not include any examples of remedy that IFC and MIGA have provided in the past or how IFC and MIGA will contribute to and promote specific types of remedy available in the future. Remedy can take many forms, including compensation, apology, rehabilitation, satisfaction, and commemoration, among others. The Approach must detail how IFC and MIGA are prepared to provide each type of remedy when the circumstances arise.
  2. Financial contribution by IFC and MIGA: Even though it is evident that remedy often costs money, “the Approach does not contemplate a systemic process for the financing of direct contribution to remedial action” (page v). This is a major gap. IFC and MIGA refer vaguely to directly financing remedy in “exceptional circumstances,” but don’t define them. IFC and MIGA don’t even commit to directly remedying the cases in which its accountability mechanism, the Compliance Advisor Ombudsman (CAO), found that projects did not comply with the IFC’s own Sustainability Policy and, as a result, contributed to harm. In line with the recommendations of the external review and per international standards, IFC and MIGA are obligated to financially contribute to remedy when their actions or inactions contribute to harm or when a client cannot provide financial contributions.
  3. Access to remedy after the end of a project: While the proposed Approach to Remedial Action references its draft Responsible Exit Principles, it does not describe specific actions IFC and MIGA will take to provide access to remedy after a project is complete. We expect IFC and MIGA to commit to not exiting a project subject to an ongoing CAO process without the consent of community complainants or until all remedial actions have been delivered to communities, commitments not included in the draft Responsible Exit Principles. This directly contradicts established norms and must be amended accordingly. Further, the proposed Responsible Exit Principles fail to adequately recognize the importance of including impacted communities as full stakeholders in the process. Delivering responsible exit depends on IFC and MIGA’s ability to provide holistic and inclusive remedy in line with communities’ expectations.
  4. Addressing the past: Even though IFC and MIGA’s failure to remedy harm in the past is the impetus for this proposed Approach, the institutions appear to only commit to implementing their remedial obligations going forward, with the document stating that IFC and MIGA would implement this approach to “new” projects. This fails the communities who are currently experiencing harm and need remedy.

The Approach to Remedial Action is risk-averse from an institutional perspective but expects a risk tolerance from rightsholders. Communities adversely affected by development projects have a right to remedy that is co-designed by them. Prioritizing the bottom line over the people these development institutions serve is unacceptable and a missed opportunity.

IFC and MIGA have an opportunity to demonstrate leadership among development finance institutions and the wider financial sector by bringing this proposal in line with prevailing international human rights norms. A failure to do so would mark a concerning precedent and setback for the realization of the right to remedy. We hope that IFC and MIGA provide sufficient opportunities for civil society and project-affected communities to provide feedback on the draft policy, and deliver a revised proposal that meets the moment.

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Endorsed by:

  • Accountability Counsel
  • Bank Information Center
  • Center for International Environmental Law (CIEL)
  • American University Center for Human Rights and Humanitarian Law
  • Sustentarse (Chile)
  • Association of ESPOD Morocco
  • Inclusive Development International
  • NGO Forum on ADB
  • Recourse
  • ATGL Tunisia
  • Social Justice Platform
  • Studies and Economic Media Center
  • Oxfam
  • Yemeni Observatory for Human Rights
  • Green Development Advocates (GDA)
  • Foundation for Environmental Management and Campaign against Poverty (FEMAPO)
  • Observatory of Food Sovereignty and Environment
  • Observatoire d’Etudes et d’Appuis a la responsabilité Sociale et Environnementale (OEARSE)
  • Centre for Citizens Conserving Environment & Management (CECIC)
  • Centre for Nature Conservation and Development (CNCD)
  • Synaparcam (Synergie Nationale des Paysans et Riverains du Cameroun)
  • Bretton Woods Project
  • TINDZILA
  • Espace de Solidarité et de Coopération de l’Oriental
  • Wedyan Association For Society Development
  • Association Talassemtane for Environment and Development (ATED)
  • Resonate! Yemen
  • Lumière Synergie pour le Développement (LSD)
  • IFI Synergy Group
  • Gender Action
  • urgewald
  • Community Assistance in Development (COMAID)
  • Crude Accountability
  • Interamerican Association for Environmental Defense (AIDA)
  • Fundeps – Fundación para el Desarrollo de Políticas Sustentables
  • Action Research for Rural Development (RADER)
  • Global Labor Justice-International Labor Rights Forum (GLJ-ILRF)
  • International Trade Union Confederation
  • International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF)
  • Centre for Financial Accountability, (India)
  • Just Ground
  • Util
  • Abna Alnazihein Organization
  • Social Justice Platform
  • Yemeni Observatory for Human Rights

Source: Accountability Counsel

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A corporate cartel fertilises food inflation

Published

2 weeks ago

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May 24, 2023

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Last year’s financial results from the world’s largest fertiliser companies are now in — and it’s a shocker. Given the sky high fertiliser prices of 2022, it was anticipatedthat their revenues would break records, but no one could have predicted this scale of profiteering. As the world grappled with a severe food crisis and farmers saw costs rise, the world’s largest fertiliser firms ramped up their margins and more than tripled their profits from two years ago.

Graph 1

Graph 1 shows the total profits of the big nine fertiliser companies over the past five years. They exponentially grew from an average of around US$14 billion before the Covid-19 pandemic to US$28 billion in 2021 and then to an astounding US$49 billion last year. International agencies like the World Bank blamed the spike in fertiliser prices on the Russian war in Ukraine, resulting in high natural gas prices (used to produce nitrogen fertiliser) from shortages and trade disruptions. But as can be seen in Graph 2, a major part of the story is the monopoly power of the fertiliser companies. These companies increased prices far beyond the increases in production costs and boosted their profit margins to a massive 36% in 2022.
Graph 2
There are signs that fertiliser prices are coming down from their stratospheric heights earlier this year, but the effects of the price spike are still being felt. The high prices and lack of supply in some countries caused farmers to cut fertiliser use, thereby reducing production levels and contributing to an alarming rise in global food insecurity. The high prices also pushed many farmers deeper into debt. Farmers from Cameroon to the U.S. say they are still spending three times as much on fertilisers as they were a few years ago. And in countries where fertilisers are heavily subsidised, the price spike has saddled governments with huge debts. In India alone, the central government’s expenditure on fertiliser subsidies last year surged from US$9.8 billion to US$17.1 billion. People are paying the price for the fertiliser industry’s price gouging.
The costs are also rising for the planet. Chemical fertilisers are a major source of environmental pollution and greenhouse gas emissions, with nitrogen fertilisers alone accounting for one out of every 40 tonnes of annual emissions. New reports from the UN’s Food and Agriculture Organisation and Earth4All, a global collective of leading scientists and economists, make it clear that steep and immediate reductions in global fertiliser use are required to avert catastrophic climate change. Both recommend a near phase-out of nitrogen fertiliser consumption by 2050 (see Graph 3). The idea is not to recklessly crash production levels, but a planned transition toward more sustainable, agroecological farming systems that require less or no fertiliser.
Graph 3
It is increasingly clear that today’s food inflation is a product of both corporate greed and ecological breakdown. Obscene levels of profit-taking by corporations are happening across the food system, from fertilisers to processing to retail, and this is pushing up prices. But the way these corporations organise our food production and distribution is also driving climate change and, undermining the capacity for the global food system to deliver affordable and accessible food, now and over the long term.
Bold new approaches are urgently needed to reign in corporate power in the food system and turn the food crisis around. When it comes to fertilisers, policy actions like windfall taxes and price controls can help. But to deal with both profiteering and environmental catastrophe we need to transition food production to rely far less on chemical fertilisers. The fertiliser industry will be pushing for the opposite when it gathers for its annual meeting in Prague this week, yet around the world there are farmers and rural movements already leading a transition away from chemical fertilisers, with plenty of successful examples to learn from. What’s holding us back is the structural political change needed at all levels to address the excess profiteering from the fertiliser industry, and chart a new path toward more resilient food systems.
Source: grain.org

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The Black Sea Grain Initiative: When the United Nations Brokers Profits for Corporations, Bankers, and Oligarchs

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2 weeks ago

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May 23, 2023

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“I am so moved watching the wheat fill up the hold of the ship. It was the loading of hope for so many around the world,” said United Nations Secretary-General, Antonio Guterres, as a cargo ship was loaded up with Ukrainian grain in August 2022. Mr. Guterres was launching the Black Sea Grain Initiative, purportedly to prevent famines and a global food crisis by enabling food exports from Ukraine, amidst the Russian military blockade. USAID claimed that the “lifesaving deal”, which was renewed on May 18, 2023, “helps people in need across the globe by delivering desperately needed grains to lower income countries and bringing down food prices.” The European Commission celebrated the initiative as a “a critical step forward in efforts to overcome the global food insecurity caused by Russia’s aggression against Ukraine.”

Mr. Guterres’ hope, loaded on the cargo ship, has however since gone missing at sea.

Despite the hype in political circles and the Western media that the Initiative was essential to secure food supply for those in need — particularly in Africa — data released by the United Nations offers a starkly different reality. As of May 2023, only 3 percent of the food commodities exported from Ukraine under the initiative has gone to low-income countries. Out of the 30.3 million tons exported, a mere 2 percent — 625,000 tons — went to the World Food Programme for food aid operations around the globe.
Charts showing grain exports from Ukraine by income group and country.

The top destination for Ukraine’s agricultural exports is the European Union, with China being second. Spain is the largest recipient in Europe. Instead of offering relief, Ukrainian exports are threatening the livelihoods of millions of European farmers — to the extent that Hungary and Poland banned imports from Ukraine in April 2023 to protect their farmers. As Ukraine and the European Commission pressured for the ban to be lifted, Hungarian and Polish farmers pushed back, asking the critical question: Who actually benefits from these exports?

The Oakland Institute’s report, War and Theft: The Takeover of Ukraine’s Agricultural Land, answers the question. It exposed that the producers exporting commodities from Ukraine are mostly large-agribusinesses and oligarchs, associated with European and North American financial interests. Furthermore, the report detailed how these producers are heavily indebted to Western financial institutions, in particular the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the International Finance Corporation (IFC) — the private sector arm of the World Bank. Together, these institutions are major lenders to Ukrainian agribusinesses, with close to US$1.7 billion lent to just six of Ukraine’s largest landholding firms in recent years. Other key lenders are a mix of mainly European and North American financial institutions — both public and private.

Renewing the Black Sea Initiative and maintaining the flow of exports from Ukraine has nothing to do with supporting the struggling Ukrainian farmers or the trumpeted goal to prevent a global food crisis — which has been largely triggered by speculation on global food markets. Food prices skyrocketed when global stocks of cereals were at historically high levels according to the World Bank.

Pretending their goal is to fight world hunger is appallingly deceitful, when, with the Black Sea Grain Initiative, the United Nations has become a business broker for agribusiness corporations. In violation of its values and the principles of the United Nations Charter, together with the Western banks and financial institutions, the United Nations is supporting large food trading companies, oligarchs, and their lenders and shareholders, to sustain export business and grow profits despite the carnage of war.

Source: oaklandinstitute.org

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Grain trader Cargill faces legal challenge in US over Brazilian soya supply chain

Published

4 weeks ago

on

May 8, 2023

By

World’s biggest grain trader accused of ‘shoddy due diligence’ on deforestation and alleged rights violations.

The world’s largest grain trader, Cargill, is facing a first-ever legal challenge in the United States over its failure to remove deforestation and human rights abuses from its soya supply chain in Brazil.

ClientEarth, an environmental law organisation, filed the formal complaint on Thursday, accusing Cargill of inadequate monitoring and a laggard response to the decline of the Amazon rainforest and other globally important biomes, such as the Cerrado savannah and the Atlantic Forest.

The case, which was submitted under the guidelines of the Organisation for Economic Co-operation and Development, argues that Cargill’s “shoddy due diligence raises the risk that the meat sold in supermarkets across the world is raised on so-called ‘dirty’ soy”. ClientEarth says this breaches the international code on responsible business conduct.

The lawyers behind the complaint have stressed the urgency of the issue because Amazon degradation is approaching a tipping point, after which scientists say the rainforest will turn into dry grassland, emitting vast amounts of carbon dioxide. The Amazon’s sister biome, the Cerrado, has already lost half of its tree cover.

The lawyers say they hope the legal challenge will raise standards at Cargill – which is the biggest privately owned company in the US, with revenues last year of $165bn (£131bn) – and set an example across the industry.

Laura Dowley, a lawyer at ClientEarth, said: “Cargill has vast resources at its disposal to implement due diligence. The technology is already there. We aren’t asking it to do anything it doesn’t have the resources to do. We hope it will show leadership.”

Cargill has promised to be “deforestation-free” in the Amazon and Cerrado by 2025 and completely eradicate deforestation from all its supply chains by 2030. The company says it has put in place a sophisticated monitoring operation at ports, warehouses and other points in its supply chain. ClientEarth said it identified several shortcomings in this system, including a lack of environmental due diligence on:

  • Soya beans bought from third-party traders, which make up 42% of all Brazilian soya Cargill purchases.
  • Soya beans owned by other companies that passes through Cargill ports.
  • Indirect land use change.
  • Soya sourced from the Cerrado savannah.
  • Soya sourced from the Brazilian Atlantic Forest.

ClientEarth also cites reports alleging Cargill suppliers have been involved in rights violations of Indigenous, Afro-Brazilian and other forest-dependent communities.

Cargill told the Guardian it had not seen the full complaint but it had an “unwavering commitment” to eliminate deforestation and conversion in South America. In line with this, it added: “We do not source soy from farmers who clear land in protected areas and have controls in place to prevent non-compliant product from entering our supply chains. If we find any violations of our policies, we take immediate action in accordance with our grievance process.”

The company’s website notes: “Cargill is committed to transforming our agricultural supply chains to be free of deforestation by 2030. Our policy on forests lays out our overarching approach to achieving this target globally across our priority supply chains. It is founded on our belief that farming and forests can and must coexist.” A spokesperson added that Cargill was also “strongly committed” to protecting human rights in its operations, supply chains and communities.

However, journalists revealed last year that one of Cargill’s soya suppliers grows crops on land deforested and burned in the Brazilian biome. In 2020, the Guardian and partners uncovered evidence that Cargill supplied Tesco, Asda, McDonald’s, Nando’s and others with chicken fed on imported soya linked to thousands of forest fires and at least 300 sq miles (800 sq km) of tree clearance in the Cerrado savannah. Similar reports were broadcast this year by Sky News.

Source: The Guardian

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