Environmental and Social Framework

ILO Statement on the World Bank Environmental and Social Policy

The revised ESF, which sets forth the safeguard policies that the Bank and its borrowers will apply to future investment project financing, now includes a labour standard for protecting workers on Bank-financed investment projects.

Statement | 08 August 2016
The World Bank Group’s revised Environmental and Social Framework (ESF), which sets forth the safeguard policies that the Bank and its borrowers will apply to future investment project financing, represents a major step forward in its inclusion of a labour standard for protecting workers on Bank-financed investment projects. The new ESF, approved by the Bank’s Board of Executive Directors on 4 August, is the result of an intensive three-and-a-half year, worldwide multi-stakeholder consultation process in which the ILO actively participated. As the global authority on international labour standards, the ILO welcomes the new ESF, which brings the Bank’s policies closer to those of other multilateral development banks and to the performance standards of the World Bank Group’s own International Finance Corporation.

The ILO now looks forward to participating in the process of drafting guidelines for implementation of the ESF’s Environmental and Social Standard 2 (ESS2) on Labour and Working Conditions. These guidelines will inform the conduct of Borrowers and the expectations of workers on all Bank projects. In light of concerns the ILO has with the ESF itself, discussed below, the ILO stresses the importance of providing concrete and meaningful guidance to all project participants.

The complex process of consultation which led to the adoption of the ESF required finding common ground among disparate viewpoints held by Bank donors, borrowers and stakeholders. Within this context of compromise, ILO experts advised the Bank with respect to labour rights in a number of key areas, including occupational safety and health, to ensure consistency with Borrowers’ international obligations. Many issues arose that were ultimately resolved; however, from the outset the ILO expressed concern with Bank Management’s decision to exclude direct references to ILO core labour conventions from the ESF. These widely ratified conventions, enshrined in the 1998 ILO Declaration on Fundamental Principles and Rights at Work,1 have become key benchmarks for other multilateral banks’ risk management frameworks and international governance mechanisms, including the UN and numerous trade agreements. Their near-universal acceptance, which demonstrates the value of ILO membership, has allowed them to become the globally accepted baseline for fair treatment in the workplace and a minimum starting point for addressing labour and development. The ILO believes that their inclusion would set appropriate expectations of borrowers’ behaviour and make it easier for the Bank to implement its new Safeguards on the ground as well as facilitate future Bank-ILO collaboration on implementation. Numerous other organizations supported the call to reference internationally recognized fundamental principles and rights in the Framework, including ILO constituents, civil society organizations and other United Nations agencies.

In working with their Bank counterparts, ILO experts sought to ensure the greatest alignment possible of ESS2 to ILO standards. The consultation process resulted in very good progress from the first to the second draft with regard to the objectives and scope of the ESS2, worker protections, working conditions and occupational safety and health. Coverage of additional categories of workers involved in the project, including contractors’ and subcontractors’ workers and primary suppliers’ workers was also a positive step.

The ILO is therefore disappointed to see that the recently adopted document that emerged from the internal consultations among the World Bank’s Executive Directors not only does not address some remaining gaps that would ensure consistent protection and coverage of all categories of project workers, but also includes changes to key provisions that substantially weaken some important worker protections in ESS2.

In particular, the objective of “supporting the principles of freedom of association and collective bargaining” now to be required only “in a manner consistent with national law” undercuts the universal principles adhered to by the ILO’s 187 member states and jeopardizes the purpose of having such an objective. In the ILO Declaration on Fundamental Principles and Rights at Work, all categories of rights and principles are of equal importance, and they are applicable to all ILO members. As ILO and World Bank membership is almost identical, this could create difficulties for member States in applying these fundamental principles and rights consistently. None of the other objectives of ESS2 are qualified in this manner. Unfortunately, this new provision also affects negatively other key provisions in ESS2. For example, it is now difficult to interpret provisions that address workers’ rights to join organizations, bargain collectively, and protect their rights.

It is also of concern that for primary supply workers on Bank projects, ESS2 shifts the responsibility for identifying risks of forced and child labour and for mitigating serious safety issues from the Bank and borrower to the supplier could result in weak compliance and oversight.

The ILO and the World Bank Group collaborate on a large portfolio of joint projects that clearly demonstrate how respect for labour standards can improve development outcomes and contribute to the Bank’s twin goals of ending extreme poverty and promoting shared prosperity, goals that the ILO embraces. The ILO-IFC Better Work Programme, anchored in international labour standards, continues to improve working conditions and productivity for hundreds of thousands of workers in garment factories across global supply chains and has become a model of interagency collaboration. In addition, the successful and ongoing ILO-Bank collaboration in Uzbekistan to monitor the cotton harvest for child and forced labour has also provided a useful template of how the ILO and World Bank can work together to assist countries to build their capacity to implement labour standards in the context of World Bank projects.

The ILO highly values its partnership and growing cooperation with the World Bank. In this spirit of commitment to continued collaboration, the ILO looks to the World Bank to maximize the development potential of the Safeguards and ensure that future guidance, procedures and capacity building of Borrowers fortifies the intent of the ESF to drive sustainable development and contribute to countries’ achievement of the UN Sustainable Development Goals, including Goal 8 on promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. This would include, inter alia:
  • Acknowledging that the requirements in the ESSs have been guided by a number of internationally recognized benchmarks reflected in international conventions and instruments, including those of the International Labour Organization and the UN, as was done in the IFC’s Performance Standard 2 on labour and working conditions, with particular attention to application of the fundamental principles and rights at work to all workers;
  • Ensuring that the ESF does not inadvertently lower protections where otherwise using the Borrower’s own national policy, legal and institutional Framework would actually allow the project to achieve outcomes that are equal or better than the ESSs; and
  • Working with the ILO in development of the guidance and other supplementary materials affecting the ILO’s areas of competency and development-related ILO cooperation.
The ILO looks forward to continued collaboration on these issues of critical importance. In that regard, ILO Director-General Guy Ryder and World Bank President Jim Kim share a commitment to further strengthening the already excellent partnership between the ILO and the Bank, including on implementation of the Safeguards to pursue their common objectives.

1 The four categories of principles and rights are: (1) freedom of association and effective recognition of the right to collective bargaining; (2) the elimination of all forms of forced or compulsory labour; (3) the effective abolition of child labour; and (4) the elimination of discrimination in respect of employment and occupation. All 187 ILO Members, even if they have not ratified the Conventions in question, have an obligation arising from the very fact of membership in the Organization to respect, to promote and to realize, in good faith and in accordance with the Constitution, the principles concerning the fundamental rights which are the subject of those Conventions.