August 21, 1996

(21 August, 1996 — Washington, DC) In a letter sent today to World Bank president James Wolfensohn, the Environmental Defense Fund (EDF) along with numerous environmental and energy conservation organizations worldwide expressed deep concern and disappointment over the World Bank’s recent “eleventh-hour” downgrading of its energy policies to non-binding “good practice” documents rather than binding operational policies.

“We find this matter particularly disturbing because it weakens the recent resolve of governments worldwide to negotiate by next year a legally binding protocol to the 1992 Rio Climate Convention, with legally binding greenhouse gas emission reduction targets, ” said Karan Capoor, EDF policy analyst. “The World Bank’s issuing of its new energy policies as non-binding ‘good practices’ stands in stark contrast to where the rest of the world is moving: binding urgent action on global climate change. “

“The Bank’s recent actions constitute a wholesale dismantling of its energy-related environmental policies, ” said Capoor. “This is a high priority matter, and Mr. Wolfensohn’s response to our concerns regarding these policies will indicate how serious the Bank is about the reform he speaks of so eloquently. Mr. Wolfensohn himself has called for changing the Bank’s culture away from one of ‘approval’, where Bank environmental and social policies have been systematically ignored or not implemented in operations, to one of ‘implementation’ where Bank management and staff will be held accountable for on the ground results in ensuring the implementation of these policies. “

This lack of operational follow-through was documented in 1994 by a joint EDF-NRDC study, “Power Failure”, and confirmed by a February 1996 review of implementation of the Bank’s energy policies conducted by World Wildlife Fund, Sweden. The EDF-NRDC study found that of 46 power loans under preparation by the Bank, only two loans complied with the commitments of the 1992 policies. The 1996 WWF study examined 56 energy loans and found that only 3 complied with the policies.

In 1992, the World Bank board approved — and environmental, business and research groups had supported — energy policies that clearly stated that the Bank’s lending in the sector would be more selective and would be based on the development of integrated energy strategies including conservation based supplies and renewable energy sources. “By issuing those policies as ‘good practices’ instead of binding operational policies as promised, the World Bank management has exempted itself from its board-approved policies, ” said Capoor.

The Bank’s announcement on energy policies comes amid reports that a number of other social and environmental operational policies are being downgraded to good practice documents. “If these reports are true, then the Bank’s slow progress of the past few years will be wiped away,” said Bruce Rich, director of EDF’s International Program. “Under Bank guidelines, the Bank is only accountable for operational policies and directives. Anything else is purely voluntary and does not ensure environmental performance. “