World Bank Group: Five Institutions, One Group

Overview

The World Bank Group1 provides funding and knowledge for developing countries guided by its
mission to end extreme poverty within a generation and boost shared prosperity.

The World Bank Group consists of five organizations:

1. The International Bank for Reconstruction and Development (IBRD) lends to
governments of middle-income and creditworthy low-income countries.
2. The International Development Association (IDA) provides interest-free loans — called
credits — and grants to governments of the poorest countries.
NOTE: Together, IBRD and IDA make up the World Bank.
3. The International Finance Corporation (IFC) is the largest global development
institution focused exclusively on the private sector. It helps developing countries achieve
sustainable growth by financing investment, mobilizing capital in international financial
markets, and providing advisory services to businesses and governments.
4. The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to promote
foreign direct investment into developing countries to support economic growth, reduce
poverty, and improve people’s lives. MIGA fulfills this mandate by offering political risk
insurance (guarantees) to investors and lenders.
5. The International Centre for Settlement of Investment Disputes (ICSID) provides
international facilities for conciliation and arbitration of investment disputes.

The World Bank Group operates out of more than 130 offices worldwide and most of the staff are
based within each of the six geographic regions: Africa, Europe and Central Asia, Latin America and
the Caribbean, Middle East and North Africa, and South Asia.2

There are two complaints mechanism for the World Bank Group: the Inspection Panel and the
Office of the Compliance Advisor/Ombudsman. The Inspection Panel is an independent
complaints mechanism for people and communities who believe that they have been, or are likely to
be, adversely affected by a World Bank-funded project (i.e., projects funded by the IDA and IBRD).
The Panel is an impartial fact-finding body, independent from the World Bank management and
staff which reports directly to the Board.3

1 For more information on the World Bank, visit http://www.worldbank.org/en/about (accessed June 2017)
2 For a list of the Country Offices and their contact information, visit its website
http://www.worldbank.org/en/about/contacts (accessed June 2017)
3 For more information on the Inspection Panel, visit http://ewebapps.worldbank.org/apps/ip/Pages/AboutUs.aspx

(accessed June 2017)

The Office of the Compliance Advisor/Ombudsman (CAO)4 is the independent recourse
mechanism for IFC and MIGA, the private sector lending arms of the World Bank Group. The
CAO's mission is to address complaints by people affected by IFC/MIGA projects and to enhance
the social and environmental accountability of both institutions. The CAO is not identified with or
beholden to any sector or interest, and reports direct to the President of the World Bank Group.

Project Category

a. World Bank (IDA/IBRD): Environmental Screening5

The Bank undertakes environmental screening of each proposed project to determine the
appropriate extent and type of environmental assessment required. The Bank classifies the proposed
project into one of four categories, depending on the type, location, sensitivity, and scale of the
project and the nature and magnitude of its potential environmental impacts
 Category A: A proposed project is classified as Category A if it is likely to have significant
adverse environmental impacts that are sensitive, diverse, or unprecedented. These impacts
may affect an area broader than the sites or facilities subject to physical works.
 Category B: A proposed project is classified as Category B if its potential adverse
environmental impacts on human populations or environmentally important areas--including
wetlands, forests, grasslands, and other natural habitats--are less adverse than those of
Category A projects. These impacts are site-specific; few if any of them are irreversible; and
in most cases mitigatory measures can be designed more readily than for Category A
projects.
 Category C: A proposed project is classified as Category C if it is likely to have minimal or
no adverse environmental impacts. Beyond screening, no further EA action is required for a
Category C project.
 Category FI: A proposed project is classified as Category FI if it involves investment of
Bank funds through a financial intermediary, in subprojects that may result in adverse
environmental impacts.

b. IFC: Environmental and Social Categorization6

As part of the review of environmental and social risks and impacts of a proposed investment, IFC
uses a process of environmental and social categorization to reflect the magnitude of risks and

4 For more information on the Office of the Compliance Advisor/Ombudsman, visit its website at http://www.cao-
ombudsman.org/about/ (accessed June 2017)
5 World Bank, Operations Manual, January 1999, revised April 2013, accessed June 2017. Available at

https://policies.worldbank.org/sites/ppf3/PPFDocuments/090224b0822f7384.pdf
6 International Finance Corporation, Environmental and Social, accessed June 2017. Available at

http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-
standards/es-categorization
impacts. The resulting category also specifies IFC’s institutional requirements for disclosure in
accordance with IFC’s Access to Information Policy.

These categories are:

 Category A: Business activities with potential significant adverse environmental or social
risks and/or impacts that are diverse, irreversible, or unprecedented.
 Category B: Business activities with potential limited adverse environmental or social risks
and/or impacts that are few in number, generally site-specific, largely reversible, and readily
addressed through mitigation measures.
 Category C: Business activities with minimal or no adverse environmental or social risks
and/or impacts.
 Category FI: Business activities involving investments in financial institutions (FIs) or
through delivery mechanisms involving financial intermediation. This category is further
divided into:
o FI–1: when an FI’s existing or proposed portfolio includes, or is expected to include,
substantial financial exposure to business activities with potential significant adverse
environmental or social risks or impacts that are diverse, irreversible, or
unprecedented.
o FI–2: when an FI’s existing or proposed portfolio is comprised of, or is expected to
be comprised of, business activities that have potential limited adverse environmental
or social risks or impacts that are few in number, generally site-specific, largely
reversible, and readily addressed through mitigation measures; or includes a very
limited number of business activities with potential significant adverse environmental
or social risks or impacts that are diverse, irreversible, or unprecedented.
o FI–3: when an FI’s existing or proposed portfolio includes financial exposure to
business activities that predominantly have minimal or no adverse environmental or
social impacts.

Safeguards

a. World Bank: Environmental and Social Safeguard Policies

In 2016, the World Bank’s Board of Executive Directors approved a new Environmental and Social
Framework (ESF) which is expected to go into effect in early 2018. 7 The ESF set out ten
Environmental and Social Standards (ESS) which set out the mandatory requirements for the World
Bank, in relation to the projects it supports. Below lists the ten ESS categories:
ESS1: Assessment and Management of Environmental and Social Risks and Impacts
ESS2: Labor and Working Conditions

7World Bank, World Bank Environmental and Social Framework, 2016, accessed June 2017. Available at
http://documents.worldbank.org/curated/en/383011492423734099/pdf/114278-WP-REVISED-PUBLIC-
Environmental-and-Social-Framework.pdf
 ESS3: Resource Efficiency and Pollution Prevention and Management
ESS4: Community Health and Safety
ESS5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement
ESS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
ESS7: Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local
Communities
ESS8: Cultural Heritage
ESS9: Financial Intermediaries
ESS10: Stakeholder Engagement and Information Disclosure

However, for projects implemented prior to the effectivity of the ESF, the current Operational
Policies apply:
A. Environmental Assessment
B. Natural Habitats
C. Pest Management
D. Involuntary Resettlement
E. Indigenous Peoples
F. Forests
G. Physical Cultural Resources
H. Safety of Dams

b. IFC: Performance Standards on Environmental and Social Sustainability8

The IFC requires its clients to apply the Performance Standards (PS) to manage environmental and
social risks and impacts so that development opportunities are enhanced. The following are the
Performance Standards which the client is required to meet throughout the life of an investment by
IFC:
PS 1: Assessment and Management of Environmental and Social Risks and Impacts
PS 2: Labor and Working Conditions
PS 3: Resource Efficiency and Pollution Prevention
PS 4: Community Health, Safety, and Security
PS 5: Land Acquisition and Involuntary Resettlement
PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
PS 7: Indigenous Peoples
PS 8: Cultural Heritage

8
International Finance Corporation, Performance Standards on Environmental and Social
Sustainability, January 1, 2012, accessed June 2017. Available at
http://www.ifc.org/wps/wcm/connect/115482804a0255db96fbffd1a5d13d27/PS_English_2012_Full-
Document.pdf?MOD=AJPERES