CAO (WBk)

→ Visit the CAO website

The Compliance-Advisor/Ombudsman
of the World Bank (IFC/MIGA)

On this page you will find:
– a brief history
– an overview of some key mandate and procedure points of the current version of the CAO Operational Guidelines:

1- The threefold role of the CAO
2- The first steps: filing a complaint, eligibility and assessment of the case
– Who can submit a complaint?
– How must complaints be submitted?
– Are there some kinds of complaints which are excluded?
– Eligibility of the complaint
– Assessment phase
3- CAO Dispute Resolution (formerly Ombudsman)
Purpose of the dispute resolution procedure
– Overview of the procedure and outcome
– Monitoring
4- CAO Compliance
– Purpose of the procedure
– How is CAO Compliance triggered?
– Overview of the procedure and outcome
– Monitoring
5- CAO Advisor

– direct links to the relevant CAO and IFC websites’ pages

 

« CAO’s mandate is to:
• Address complaints from people affected by IFC/MIGA projects (or projects in which those organizations play a role) in a manner that is fair, objective, and equitable; and
• Enhance the environmental and social outcomes of IFC/MIGA projects (or projects in which those organizations play a role).
 » (*)

A brief history of IFC’s and MIGA’s grievance mechanism

The first ever created multilateral development bank’s grievance mechanism, the Inspection Panel of the World Bank, was established in 1993 and examines the requests submitted by people who allege they are or will be affected by a project which is supported by the International Bank for Reconstruction and Development (IBRD) or the International Development Association (IDA). In November 1995, the Inspection Panel received its fifth complaint, submitted by the Grupo de Acción por el BioBío (GABB). A petition was also sent to the then-World Bank President James Wolfensohn. The complaint was about the decision of the IFC, made in December 1992, to support the construction of the Pangue dam on the Biobío river basin in Chile by ENDESA, a Chilean electric utility. The Inspection Panel had not choice but to reject the complaint, as the IFC’s doings are outside its remit.(1) However, the project showed such violations of indigenous peoples’ rights and negative environmental impacts, and such an absolute disregard for the fact the Pangue dam was planned in the framework of a series of dams which cumulative impacts had been neglected, that Wolfensohn decided to ask Jay Hair, the then-President of the International Union for the Conservation of Nature (IUCN), to perform an independent review of the Pangue dam project. The Hair report released in July 1997, even heavily redacted by the World Bank, is damning. The Pangue dam had been inaugurated in March, this same year…
One of the positive outcomes of this nasty business was nonetheless the establishment of an IFC disclosure policy, IFC environmental and social safeguards and the creation of the Compliance-Advisor/ Ombudsman, as the Pangue dam case had highlighted the need for an accountability mechanism for the activities of the World Bank Group aimed at promoting private sector’s investment in development, namely, the activities of both IFC and MIGA. CAO’s Terms of Reference were endorsed by the President of the World Bank Group in 1999. The first CAO Operational Guidelines were adopted in 2000.

The Operational Guidelines have been revised several times (in 2004, 2007 and 2013) to reflect the evolution of its practice and lessons learnt. Following extensive consultations with external experts, internal authorities and the public, a new version of the Operational Guidelines was made effective in 2013.
The main novelties for requesters are:
– direct access to the compliance function: requesters no longer need to undergo a dispute resolution phase if they don’t want to and believe that the harm alleged results from the IFC’s and/or the MIGA’s failure to live up to their policies and procedures in the course of formulating, processing, or implementing an IFC/MIGA-assisted project; it had actually already been the practice of the CAO in recent years.
– changes in the terminology used: the « Ombudsman role » becomes the « Dispute resolution role »; in its Compliance role, CAO used to conduct « compliance audits » and now conducts « compliance investigations. »

1- The threefold role of the CAO

From the very beginning, the CAO has always had three inter-related roles.
– The Ombudsman / Dispute resolution function: « to help resolve issues raised about the environmental and/or social impacts of IFC/MIGA projects and improve outcomes on the ground. As a nonjudicial, nonadversarial, neutral forum, CAO’s approach provides a process through which parties may find mutually satisfactory solutions. » (para. 3.1);
– The Compliance role: « CAO Compliance oversees compliance appraisals and investigations of the environmental and social performance of IFC/MIGA at the project level. The focus of CAO Compliance is on IFC and MIGA, not their client. This applies to all IFC’s business activities including the real sector, financial markets, and advisory services. CAO assesses how IFC/MIGA assured itself/themselves of the performance of its business activity or advice, as well as whether the outcomes of the business activity or advice are consistent with the intent of the relevant policy provisions. In many cases, however, in assessing the performance of the project and IFC’s/MIGA’s implementation of measures to meet the relevant requirements, it will be necessary for CAO to review the actions of the client and verify outcomes in the field. » (para. 4.1);
– The Advisory role: « advice to the President and IFC/MIGA on broader environmental and social issues related to policies, standards, guidelines, procedures, resources, and systems established to improve the performance of IFC/MIGA projects. (…) CAO’s advice aims to improve IFC/MIGA performance systemically. CAO does not give advice on specific projects, thereby preserving its independence and impartiality should the project(s) be subject to a subsequent CAO process. » (para. 5.1.1)

Requesters can then resort to the CAO if they seek a problem-solving exercise or they claim the harm they suffer or are likely to suffer was caused by IFC/MIGA’s non-compliance with applicable policies and procedures. Please note that you cannot have both a problem-solving exercise and a compliance investigation at the same time. You can access compliance investigation either if you directly choose to go for it, or if dispute resolution was unsuccessful and you believe there have been breaches by the IFC and /or MIGA of applicable standards.
The standards applicable to IFC and MIGA are contained in the 2012 IFC Sustainability Framework, that includes the « Policy on Environmental and Social Sustainability, which defines IFC’s commitments to environmental and social sustainability, the Performance Standards, which define clients’ responsibilities for managing their environmental and social risks, the Access to Information Policy, which articulates IFC’s commitment to transparency, and the Environmental and Social Categorization.

2- The first steps: filing a complaint, eligibility and assessment of the case

• Who can submit a complaint?
The CAO is clearly geared towards problem-solving and, as a result, it is the most open among all the grievance mechanisms of multilateral development banks.
Complaints can be made by individuals or groups who believe they are affected, or potentially affected, by the environmental and/or social impacts of an IFC/MIGA project. This includes grievances about the « processes followed in the preparation of a project; the adequacy of measures to mitigate environmental and social impacts of the project; arrangements for involvement of affected communities, minorities, and vulnerable groups in the project, and; the manner in which the project is implemented. » (para. 2.1.1) « If a complaint is lodged by a different organization or individual on behalf of those affected, the organization should clearly identify the people on whose behalf the complaint is made, and provide explicit evidence of authority to present the complaint on their behalf. » (para. 2.1.2)

• How must complaints be submitted?
In writing, whatever the language used. Complaints can be directly submitted to the CAO in Washington DC by postal mail:
Office of the Compliance Advisor Ombudsman
2121 Pennsylvania Avenue NW
Washington, DC 20433 USA

or by e-mail: CAO@worldbankgroup.org
or else by fax: +1 202-522-7400
The CAO phone number is + 1 202-458-1973

A model for letter of complaint is provided at page 32 of the CAO Operational Guidelines.
Potential complainants may also contact CAO for clarification before lodging a complaint.

Although there is no formal requirement for filing a grievance, please try to include the following elements (para. 2.1.4 of the 2013 CAO Operational Guidelines):
– The complainant(s)’s name(s), address, and other contact information.
– In case the complainant(s) is/are represented, on whose behalf the complaint is made and evidence that the representative has been appointed by the project-affected person/people.
– if complainants want their identity to be kept confidential, please explain why.
– what project is at issue (identity and nature of the project)
– state the way in which the complainant believes it has been, or is likely to be, affected by
environmental and/or social impacts of the project.The identity and nature of the IFC/MIGA project.

Complainants may add information on what has been done to attempt to resolve the problem, « including specifically any contact with IFC/MIGA staff, the client, or host government », on the fact they believe some policies and procedures have been breached, on what kind of outcome the complainant seeks…

• Are there some kinds of complaints which are excluded?
Yes.
Complaints that are malicious or generated to gain competitive advantage cannot be eligible. Fraud and corruption cases are outisde of CAO’s remit and will be transferred to the World Bank Office of Institutional Integrity (INT).  Also, complaints relating to procurement are not eligible for CAO assessment. Complaints relating to World Bank (IBRD or IDA) projects will be referred to the Inspection Panel. (para 2.2.1)

• Eligibility of the complaint
Within 15 working days after receiving a complaint, the CAO checks whether is it eligible. In order to be eligible, a complaint must not belong to any category of excluded complaints (please see just above); it must pertain to a project that IFC/MIGA is participating in, or is actively considering; raise issues that pertain to CAO’s mandate to address environmental and social impacts of IFC/MIGA projects; and the complainant is, or may be, affected by the environmental and/or social impacts raised in the complaint. In case the initial complaint is unclear, the CAO seeks clarification from the complainant.

• Assessment phase (para 2.3)
Within 120 working days of the date a complaint was determined eligible for assessment, the CAO dispute resolution experts perform an assessment of the case to « develop a thorough understanding of the issues and concerns raised in the complaint; engage with the complainant and IFC/MIGA client (the parties); identify the local communities and any additional stakeholders relevant to the complaint; explain to the stakeholders the different roles of CAO; determine which CAO role the parties seek to initiate. » On the basis of this assessment, CAO determines if there is a will to conduct a dispute resolution exercise (in which case the complaint goes to the CAO Dispute resolution process) or not (in which case the complaint goes to the CAO Compliance process.) CAO provides an Assessment Report to the parties, the President, the Board, and the public.

(c)CAO

3- CAO Dispute Resolution

• Purpose of the dispute resolution procedure

The Ombudsman / Dispute resolution function’s purpose is « to help resolve issues raised about the environmental and/or social impacts of IFC/MIGA projects and improve outcomes on the ground. As a nonjudicial, nonadversarial, neutral forum, CAO’s approach provides a process through which parties may find mutually satisfactory solutions. » (para. 3.1). The dispute resolution procedure does not aim at assessing whether there’s been a breach of the commitments of IFC/MIGA, or of the client’s. It aims at finding some kind of agreement between the project-affected community and the client on a voluntary basis. « The major objective of a dispute resolution approach is to address the issues raised in the complaint—and any other significant issues relevant to the complaint identified during the assessment or the dispute resolution process—in a way that is acceptable to the parties. »

• Overview of the procedure and outcome

The CAO uses varied techniques: facilitation and information sharing; joint fact-finding; dialogue and negotiation; mediation and conciliation (« Mediation involves the intervention by a neutral third party in a dispute or negotiation with the purpose of assisting the parties in voluntarily reaching their own mutually satisfying agreement, » para. 3.2.1). The relevant techniques(s) are chosen in consultation with the stakeholders, depending of what is seen as acceptable and more suited to find an agreed outcome.
« The objective, nature, and requirements of agreements should be specific. Incentives or disincentives, time-bound or otherwise, may form a part of any agreement. In pursuit of resolution, CAO will not support agreements that would coerce one or more parties, be contrary to IFC/MIGA policies, or violate domestic laws of the parties or international law. » (para. 3.2.2.)
« If at any point in this process a party no longer wishes to pursue dispute resolution, the case is transferred to Compliance. » (para. 2.4.)

• Monitoring

The CAO Dispute Resolution team monitors the implementation of agreements and publicly disclose the outcomes on CAO’s website (para. 3.2.3.) When the agreement is considered to be implemented, the CAO Dispute Resolution team releases a Conclusion Report that summarizes core process steps and outcomes (para. 3.2.4.)

4- CAO Compliance

• Purpose of the procedure

« CAO Compliance oversees compliance appraisals and investigations of the environmental and social
performance of IFC/MIGA at the project level. The focus of CAO Compliance is on IFC and MIGA, not their
client. This applies to all IFC’s business activities including the real sector, financial markets, and advisory
services. CAO assesses how IFC/MIGA assured itself/themselves of the performance of its business activity
or advice, as well as whether the outcomes of the business activity or advice are consistent with the intent
of the relevant policy provisions. In many cases, however, in assessing the performance of the project and
IFC’s/MIGA’s implementation of measures to meet the relevant requirements, it will be necessary for CAO to review the actions of the client and verify outcomes in the field. When conducting compliance appraisals and investigations, CAO will consider how IFC/MIGA assured itself/themselves of compliance with national law, along with other compliance investigation criteria » (para 4.1.)

How is CAO Compliance triggered?

Compliance appraisals  are initiated when:
• The CAO Vice President request a compliance appraisal based on project-specific or systemic concerns resulting from CAO Dispute Resolution and Compliance casework.
• The President or senior management of IFC/MIGA requests a compliance appraisal.
• The outcome of the CAO assessment process determines that the Compliance role should be triggered.
• CAO Dispute Resolution transfers a case to CAO Compliance.

Overview of the procedure and outcome

The Compliance function is based on a two-step process.

The case first undergoes a compliance appraisal.
« The purpose of the appraisal process is to ensure that compliance investigations are initiated only for those projects that raise substantial concerns regarding environmental and/or social outcomes, and/ or issues of systemic importance to IFC/MIGA (para. 4.2.1.) »
Hence, the compliance appraisal might conclude that a compliance investigation isn’t warranted in cases where the appraisal concludes that, although there are hints of negative environmental/social impacts on the ground, it is not considered significant enough and a full investigation would yield limited information and be of limited value beyond what this appraisal has identified.
The compliance appraisal assesses in particular whether:
« – There is evidence of potentially significant adverse environmental and/or social outcome(s) now, or in the future.
– There are indications that a policy or other appraisal criteria may not have been adhered to or properly applied by IFC/MIGA.
– There is evidence that indicates that IFC’s/MIGA’s provisions, whether or not complied with, have failed to provide an adequate level of protection » (para. 4.2.1.)
« Once CAO concludes an appraisal, it will advise IFC/MIGA, the President, and the Board in writing. If
an appraisal results from a case transferred from CAO’s Dispute Resolution role, the complainant will
also be advised in writing. A summary of all appraisal results will be made public. » (para. 4.2.2.)

The second step might then be the investigation.
« An investigation is a systematic, documented verification process of objectively obtaining and evaluating evidence to determine whether environmental and social activities, conditions, management systems, or related information are in conformance with the compliance investigation criteria.  The compliance investigation criteria include IFC/MIGA policies, Performance Standards, guidelines, procedures, and requirements whose violation might lead to adverse environmental and/or social outcomes. Compliance investigation criteria may have their origin, or arise from, environmental and social assessments or plans, host country legal and regulatory requirements (including international legal obligations), and the environmental, social, health, or safety provisions of the World Bank Group, IFC/MIGA, or other conditions for IFC/MIGA involvement in a project. In the case of specific IFC business activities such as Advisory Services and special financing, compliance investigation criteria will include and observe the specific policy provision paragraphs of the IFC Sustainability Framework relating to that particular business activity. » (para. 4.3.)
The scope of the investigation is the scope that has been defined by the compliance appraisal. « Should additional issues or concerns emerge during an investigation, these will be subject to a separate appraisal at the discretion of the CAO Vice President (para. 4.4.1.) »
The investigation report includes a brief description of the project, a brief description of the issues at hand, the objectives and scope of the investigation, the criteria (the standards) against which the investigation was made and the findings of compliance and non-compliance and any adverse environmental and/or social outcomes (para. 4.4.5.) A draft report is circulated to IFC/MIGA Senior Management and relevant departments so that Management can comment the draft report within 20 working days of receipt. The CAO then finalizes its report. The final report is sent to IFC/MIGA Senior Management, who issue their official response within 20 working days. CAO sends its final investigation report together with the Management’s response to the President of IFC/MIGA. The President « has no editorial input as to the content of the compliance Investigation Report, but may take the opportunity to discuss the investigation findings with CAO. Once the President is satisfied with the response by IFC/MIGA senior management, the President will provide clearance for the Investigation Report and the response. The President retains discretion over clearance. After clearance, CAO will disclose the Investigation Report and the IFC/ MIGA response to the Board. CAO will also alert relevant stakeholders of the disclosure of both documents on CAO’s website, and in cases where the investigation was initiated by a complaint, share the documents with the complainant (para. 4.4.5.) »

Monitoring

If IFC/MIGA has been found to be in compliance, the investigation is closed. Otherwise, the compliance
investigation remains open and CAO monitors the situation « until actions taken by IFC/MIGA assure CAO that IFC/ MIGA is addressing the noncompliance. CAO will then close the compliance investigation » (para. 4.4.6.) »

5- CAO ADVISOR

CAO gives advice to the President and IFC/MIGA on broader environmental and social issues related to policies, standards, guidelines, procedures, resources, and systems established to improve the performance of IFC/MIGA projects (para. 5.1.1.) Contrary to the IRM/CRMU of the African Development Bank Group, CAO « does not give advice on specific projects, thereby preserving its independence and
impartiality should the project(s) be subject to a subsequent CAO process. » « CAO advice is derived from experience gained through its dispute resolution and compliance work » and aims at systematically improve the work of IFC/MIGA by informing on broader environmental and social policies, guidelines, procedures, strategic issues, trends, and systemic concerns (para. 5.1.2.)

 

Links to relevant CAO-related pages

– CAO website
– CAO 2013 Operational Guidelines
– 2012 IFC Sustainability Framework, which includes the « Policy on Environmental and Social Sustainability, the Performance Standards, the Access to Information Policy, and the Environmental and Social Categorization.

 


Notes