The Extractive Industries Review
From SEA.unu.edu/wiki
Background
In response to concerns that the World Bank’s ongoing investment in the extractive industry sector (oil, gas and mining) was incompatible with its broader commitments to poverty reduction and sustainable development, the World Bank commissioned an independent Extractives Industries Review (EIR).
The basic premise underwriting the EIR was that the extractive industries sector has the potential to be the engine of economic growth in many developing countries.
Paradoxically, however, developing countries that are reliant on exploiting significant mineral resource endowments often exhibit greater degrees of corruption, poverty, conflict and poor governance (along with more project specific negative environmental and social impacts) than those that do not have such mineral resources.
The 2004 EIR report, Striking a Better Balance–The World Bank Group and Extractive Industries, concluded that the WBG should stay engaged with the sector, but only where its investments can be seen to explicitly support poverty reduction and sustainable development goals, and when three critical enabling conditions are in place: pro-poor public and corporate governance, more effective social and environmental safeguard policies, and greater respect for human rights.
Approach
In order to consider the critical strategic choice of whether the WB should stay engaged in the extractives sector, the EIR carried out an extensive review of existing project experiences, invited written submissions, conducted interviews, and held five regional workshops to hear evidence.
The review process attempted to accommodate multi-stakeholder interests, but was criticised for the inordinate influence it gave to civil society in the consultation process.
This was countered by the EIR’s contention that civil society does not normally have direct, continuous and official links to operational WBG decision making on a par with the participation of governments and the private sector. Thus a need was identified to design a civil society bias into the process.
“The WBG needs to know that genuine development requires partnership not only with governments and companies, but with civil society as well ...It is civil society –local communities, indigenous people, women and the poor– who suffer the negative impacts of extractive industrial development –such as pollution, environmental degradation, resettlement and social dislocation.”
The EIR process was transparent. All submissions, draft report iterations, representations, developments, etc., were posted on the EIR Web site (www.eireview.org). In addition, the recommendation highlighted the principle of transparency as a key dimension of good governance, with cross-reference to the Aarhus Convention’s three pillars of access to information, public participation in decision making and access to justice (UNECE 2000).
The EIR also explicitly addressed the interrelationships between social, economic and environmental aspects.
Outcomes
The report recommended that “a strengthening of the environmental and social components of WBG interventions” was required.
It added that the WBG “should take an holistic, multi-dimensional approach to assessments, identifying cumulative impacts of projects and socio-economic linkages to environmental issues” and that the WBG should recognise the need to “mainstream economic, social and environmental considerations into sustainable development–with the alleviation of poverty as the economic goal, the enhancement of human rights as the social goal and the conservation of the ecological life support system as the environmental goal”.
Further, the EIR recommended the use of strategic assessments:
“The structural framework within which the oil, gas and mining sectors exist is of fundamental importance to achieving pro-poor development outcomes that are sustainable. Poverty and the environment should be accorded strategic importance in designing and implementing structural reform programmes that include the extractives industries.”
Implementation of the World Bank’s management’s response to the EIR is the subject of regular progress reports to the WB Board and overseen by an Advisory Committee of external stakeholders.
Source: EIR (2004).
