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Earth Talk
EarthTalk®
From the Editors of E/The Environmental Magazine

Dear EarthTalk:
           The World Bank is often cast in a bad light by green groups and in the press.
What are their eco-crimes, and are there any reforms in the making?                 
-- J. Bloch, Newark, NJ


Originally created to finance the rebuilding of Europe after World War II, the World Bank later took on
a larger mandate to try to alleviate poverty around the world. Unfortunately, many of the Bank’s
policies and practices in intervening years clashed with conservation priorities. But the more recent
onslaught of global warming threats, along with greater overall public environmental awareness,
has forced the World Bank to factor sustainability concerns into how it encourages development
moving forward.

According to the Institute for Policy Studies (IPS), a non-profit think tank, the World Bank has been
widely criticized for funding a series of environmentally damaging projects in the 1980s, including
the building of dams on the Narmada River in India, road building into the Brazilian Amazon and
transmigration (re-settlement) efforts in Indonesia. “These projects have led to a variety of adverse
impacts in borrower countries, including deforestation and displacement of indigenous peoples,”
reports the group.

In response to the criticism, the World Bank adopted a set of policies and procedures in the late
1980s to better assess the potential adverse environmental impacts of its projects. The Bank
further developed a series of polices to guide investment in such areas as forestry and energy. “For
example, the bank’s forestry policy prohibits the institution from financing logging in primary tropical
forests,” adds IPS.

Other highlights of the Bank’s first round of greening included the creation of a special unit to
oversee environmentally and socially sustainable development, and the recruitment of staff with
technical environmental credentials to supplement its professional core of economists. IPS reports
that with these changes in place, the bank has been able to start developing a portfolio of
environment-sector projects “ranging from support for national environmental agencies to
investments in national parks.”

But an independent internal review of the World Bank’s sustainability impacts between 1990 and
2007 found that even these new sustainability-oriented policies fell flat. Researchers found that the
bank’s private-sector funding arm, the International Finance Corporation, was still promoting the
expansion of livestock herds, soybean fields and palm oil plantations—all which accelerated
deforestation in the tropics, hastening the pace of climate change for the rest of us.

“They need to begin to see the inextricable link between sustaining environment and reducing
poverty,” said Vinod Thomas, director of the World Bank group that performed the review. “It is clear
now from the Amazon to India that if environmental sustainability is not raised as a priority, then all
bets are off.”

The World Bank tried to address many of these concerns with the release of a beefed up
Environment Strategy in 2001, but analysts remain critical of the organization’s performance and
general commitment to sustainability. In June 2011 the World Bank will release a new Environment
Strategy which it will use as a sustainability roadmap for its projects over the coming decade. The
focus of the Bank’s sustainability work will be mitigating climate change through the promotion of
clean energy technologies.

CONTACTS: World Bank, www.worldbank.org; Institute for Policy Studies, www.ips-dc.org.

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Credit: International Rivers, courtesy Flickr

The World Bank has been widely criticized for funding
numerous environmentally damaging projects around
the globe. Pictured: Construction of the Sardar Sarovar
Dam, a controversial World Bank-funded project on the
River Narmada, India that flooded thousands of acres of
land and displaced hundreds of thousands of people.