Remedying project-level compliance gaps

CAO’s monitoring function allows it to assess both systems and project-level responses to compliance investigation findings. In this context, there are important distinctions between CAO’s monitoring role and IFC and MIGA’s supervision role. IFC and MIGA are responsible for supervising client performance, whereas CAO’s role is to report publicly on whether its compliance findings have been addressed.

Most independent accountability mechanisms like CAO have compliance monitoring responsibilities following an investigation, which reflects an established good practice in this field. This compliance monitoring mandate is similar to standard auditing practices whereby an auditor may report on whether previous findings have been addressed.

CAO encourages IFC and MIGA to develop action plans that include both systems-level and project-level responses to its non-compliance findings, and to consult with project-affected communities, including the CAO complainants, in doing so. Over the last year, IFC has developed a practice of preparing a tabulated response to CAO compliance findings. These tables assist the reader in understanding IFC’s response to CAO compliance findings and regularly note improvements in IFC’s procedures and practices that are relevant to CAO’s findings. However, IFC has not, to date, consistently addressed CAO’s compliance findings at the project-level citing constraints related to project status or IFC’s leverage. CAO also notes that IFC does not, as a matter of practice, consult with complainants when preparing a response to a CAO compliance report.

CAO visits villages east of the the Port of Lomé as part of its investigation related to the Lomé Container Terminal project, Togo, April 2016. CAO continues to monitor IFC’s actions in response to the investigation findings (CAO).

This year, CAO released compliance monitoring reports in relation to IFC investments in the Lomé Container Terminal in Togo; Wilmar palm oil plantations in Indonesia; and the Eco Oro mine development in Colombia. These reports reflect the challenges outlined above with actions documented at the level of IFC procedures on systemic issues, but limited project-level responses. As an example, following up on CAO’s Lome Container Terminal investigation, CAO’s monitoring report welcomed IFC’s issuance of new guidance on coastal erosion, while at the same time raising concerns regarding limited progress made in addressing CAO’s project-level findings. Working with IFC and MIGA to develop a more effective approach to management responses and monitoring is a priority issue for CAO in the year ahead.