Environmental Sustainability: An Evaluation of World Bank Group Support

1. Environmental Sustainability: An Evaluation of World Bank Group Support July 2008

2. 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

3. 1970 1980 1990 2000 WB project focus: "do no harm" IFC: Deepening attention to project- level impacts from 1991 WBG: 2001 Environmental Strategy World Development Report (for Rio summit) (1992) WB: Increasingly proactive role from 1992 * 4-fold agenda: Safeguards, Stewardship, Mainstreaming, Global sustainability MIGA: Enhanced project- level focus from 1998 WBG timeline: Increased attention since 1990 IFC: Equator Principles WB: 2003 World Development Report

4. 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

5. 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

6. 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.

7. Findings

8. World Bank • Strategies • 2001 WBG Strategy • growing but still inadequate attention in country strategies • even less in country-led PRSPs • 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 • Nonlending • as important as lending • country environmental assessments: helpful where undertaken • research influential: WDRs ’92, ’03; Greening Industry

9. World Bank (cont) • Mainstreaming • some improvement but still far to go (poverty, health-environment links, vulnerability) • Partnerships • needs strengthening within WBG and externally • some good examples (GEF, Pov-Env. Ptnp. ) • Global public goods • less emphasis during evaluation period, though now growing • some good examples (Montreal protocol, carbon finance)

10. IFC Sustainability in IFC corporate strategies since 2001. Until recently focus has been on “do no harm”. Move to more “do good”. • 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 • 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

11. MIGA MIGA’s focus has been primarily on “do no harm” Sustainability concept just incorporated in core business • Environmental and social effects • Category A projects: better performance and increased attention to social issues • Category B projects: less attention, worse performance • 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

12. Looking ahead

13. 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

14. The evaluation has four broad recommendations • Elevate environmental sustainability as WBG priority -- not just more of the same, but a “transformational” change • Move to more integrated, cross-sectoral and area-based approaches and strengthen staffing • Greatly improve ability to measure, monitor, and evaluate activities and their results • Continue to strengthen partnerships

15. 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)…

16. …and a more sustainable world for all

17. Thank youEvaluation available at: www.worldbank.org/ieg/environmentalsustainability Evaluation authors: John Redwood (IEG-WB) Jouni Eerikainen (IEG-IFC) Ethel Tarazona (IEG-MIGA)