Environmental Sustainability: An Evaluation of World Bank Group

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July 2008

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Environment matters for development

► Environmental problems are enormous and increasing• Climate change• Air and water pollution• Soil erosion and desertification• Water scarcity• Loss of biodiversity

► Developing countries are severely affected:

• Growth • Poverty

► Both public and private action are needed

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WBG timeline: Increased attention since 1990

1970 1980 1990 2000

WB project focus:"do no harm"

World Development Report (for Rio summit) (1992)

MIGA: Enhanced project-level focus from 1998

WB: Increasingly proactive role from 1992* 4-fold agenda: Safeguards, Stewardship, Mainstreaming, Global sustainability

IFC: Deepening attention to project-level impacts from 1991

WBG: 2001 Environmental Strategy

IFC: Equator Principles WB: 2003 World Development Report

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Key messages► The World Bank Group has made progress

since 1990 as an advocate for the environment

► But treatment of environmental issues in many WBG country programs remains weak due to major external and internal constraints

► The WBG needs to increase its engagement and effectiveness in environmental issues through

– Greater attention in Bank Group and country strategies– More effective cross-sectoral approaches– Better measurement of activities and results– Closer collaboration within the WBG and with partners

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This evaluation looks broadly at WBG engagement FY90-07

► Broad coverage: World Bank, IFC, and MIGA

► Evaluation Objectives– Assessing WBG effectiveness– Identifying principal external and internal

constraints– Suggesting improvements going forward

► Perspectives: “Do no harm” and “ Do good” ► Methodology

– Literature review– Portfolio review (variation across WBG due to

data availability)– 9 country case studies

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The 9 case study countries come from all regions and a mix of

MICs and LICs► Together these countries account for 56% of population, 46% of GDP, and

over 40% of Bank environmental lending in developing and transition countries.

East Asia ChinaLatin America BrazilMiddle East/N. Afr

Egypt

Sub-Saharan Africa

Ghana, Madagascar, Senegal, Uganda

South Asia IndiaEurope/Central Asia

Russia

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Findings

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World Bank

1. Strategies • 2001 WBG Strategy• growing but still inadequate attention in country strategies • even less in country-led PRSPs

2. Lending and grants• exact amount unknown – at most 5-10% Bank total • project performance better over time, but M&E still weak• weaker performance in Africa

3. Nonlending• as important as lending• country environmental assessments: helpful where

undertaken • research influential: WDRs ’92, ’03; Greening Industry

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World Bank (cont)

4. Mainstreaming• some improvement but still far to go (poverty, health-

environment links, vulnerability)5. Partnerships

• needs strengthening within WBG and externally• some good examples (GEF, Pov-Env. Ptnp. )

6. Global public goods • less emphasis during evaluation period, though now

growing• some good examples (Montreal protocol, carbon finance)

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IFC

1. Environmental and social effects of investment projects • 67% success rate in meeting IFC requirements and performance

standards• weak performance in Africa and in certain sectors • limited attention to broader context

2. Environmental work quality • appraisal generally good, supervision of financial intermediaries

weak

3. “Doing good” initiatives• M&E system generated insufficient data or still too early to assess

- Environment & Social Sustainability advisory services - Equator Principles

Sustainability in IFC corporate strategies since 2001. Until recently focus has been on “do no

harm”. Move to more “do good”.

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MIGA MIGA’s focus has been primarily on “do no harm”

Sustainability concept just incorporated in core business1. Environmental and social effects

• Category A projects: better performance and increased attention to social issues

• Category B projects: less attention, worse performance 2. Environmental work quality

• Strengthened environmental and social issues in underwriting

New policy and performance standards (2007): Go beyond safeguards to promote sustainability in guaranteed projects

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Looking ahead

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Many constraints need to be confronted

► Clients (public and private)• Competing demands (e.g. growth, energy needs, governance, conflict)• Insufficient client commitment• Inadequate institutional capacity

and resources

► World Bank Group• Competing priorities• Inadequate staff skills and knowledge networks • Difficulties of coordination across sectors, across WBG,

and externally• Difficulties of taking long-term view and of assessing

country-level impacts beyond individual projects

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The evaluation has four broad recommendations

1. Elevate environmental sustainability as WBG priority -- not just more of the same, but a “transformational” change

2. Move to more integrated, cross-sectoral and area-based approaches and strengthen staffing

3. Greatly improve ability to measure, monitor, and evaluate activities and their results

4. Continue to strengthen partnerships

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What would success look like?

► A widely-shared understanding of the critical role of environmental sustainability to development

► Clear alignment behind key strategic objectives

► Strong and effective WBG capacity ► Effective internal and external

collaboration► An emphasis on continual learning (from

both success and failure)…

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…and a more sustainable world for all

Thank you

Evaluation available at: www.worldbank.org/ieg/environmentalsust

ainabilityEvaluation authors:

John Redwood (IEG-WB)Jouni Eerikainen (IEG-IFC)Ethel Tarazona (IEG-MIGA)