Asian Development Bank

ADB activities are governed by its Operational Policies which also include Operational Procedures that spell out procedural requirements and guidance on the implementation of development projects. In July 2009, ADB’s Board of Directors approved a new Safeguard Policy Statement (SPS) governing the environmental and social safeguards of ADB’s operations. It entered into force on 20th January 2010 and includes two main documents: the Safeguard Policy Statement (SPS) and a corresponding section in the ADB Operations Manual. The SPS describes policy principles, a policy delivery process, and roles and responsibilities.

The SPS includes safeguard requirements in four areas ⁵  :

• Environment, which encompasses environmental assessment, environmental planning and management, information disclosure, consultation and participation, a grievance redress mechanism, monitoring and reporting, unanticipated environmental impacts, biodiversity and sustainable natural resource management, pollution prevention and abatement, health and safety, and physical cultural resources;
• Involuntary resettlement, which includes compensation, assistance and benefits for displaced persons, a social impact assessment, resettlement planning, negotiated land acquisition, information disclosure, consultation and participation, a grievance redress mechanism, monitoring and reporting, unanticipated impacts and special considerations for Indigenous Peoples;
• Indigenous Peoples, which includes consultation and participation, a social impact assessment, information disclosure, a grievance redress mechanism, monitoring and reporting, and consideration of unanticipated impacts;
• Special requirements for different finance modalities are outlined in the “Appendices” section of the SPS. They are designed to ensure that ADB staff will apply due diligence to ensure borrowers comply with the requirements both during the project preparation and its implementation.

A consolidated Operations Manual section includes procedures for ADB staff for due diligence, review and supervision of projects. General specifications on safeguard requirements include consultation and participation, such as the necessity for the borrower to undertake meaningful consultation with affected Indigenous Peoples. It is worth mentioning that the SPS refers to the UN Declaration on the Rights of Indigenous Peoples and explicitly mentions the need to ascertain the consent of affected indigenous peoples’ communities in case projects financed by the ADB affect their cultural resources and knowledge, and/or involve the exploitation of natural resources on traditional lands and thereby impacting their livelihoods or cultural, ceremonial, or spiritual uses of the lands,and/or leading to their physical relocation from traditional and customary land. In the SPS, consent refers to a collective expression of broad community support. ⁶ The requirements notably include the necessity to undertake a social impact assessment, to disclose information of key documents to the ADB, including corrective action plans, and to plan for the establishment of grievance redress mechanisms and monitoring and reporting measures.

• Any group of two or more people who are directly, materially, and adversely affected by an ADB assisted project;
• A local representative of affected people;
• In exceptional cases, a non local representative of affected persons, where local representation cannot be found and the Special Project Facilitator or Compliance Review Panel agrees.

If a complaint is made through a representative, it must clearly identify the project-affected people on whose behalf the complaint is made and provide evidence of the authority to represent such people.

• The direct and material harm must be the result of an act or omission of the ADB in the course of the formulation, processing, or implementation of the ADB-assisted project. For a Compliance Review, the harm must relate to non-compliance by ADB of its operational policies and procedures;
• The complaint must be filed within two years of the grant or loan closing date;
• Attempts to resolve the issues through the ADB’s Operations Department must be made prior to filing the complaint;
• Certain matters are excluded from the accountability mechanism, including complaints that are not related to ADB’s actions or omissions, procurement matters, allegations of fraud or corruption, matters concerning projects for which a project completion report has been issued, the adequacy or suitability of ADB’s existing policies and procedures, and non-operational matters such as finance and administration.

Once the complaint has been sent to the Complaints Receiving Officer, it is forwarded either to the Problem solving function through the Special Project Facilitator (1), or to the Compliance review function through the Compliance review panel (2).

Problem-Solving Function

If the SPF determines the complaint is eligible, it conducts an assessment, which could include one or more site visits and meetings with the person submitting the complaint and other relevant parties. Based on the assessment and comments received from the parties, the SPF will decide whether to proceed with problem-solving.

Generally, the objective of the Problem-Solving Function is to bring the parties together and come to an agreement about how to address the problem without determining whether a breach has occurred.

Once a problem-solving process has begun, either party can withdraw at any time, and you can request a compliance review. At the end of the process, the SPF will issue a public report that includes a summary of the complaint, steps taken to resolve the issues and any decisions made by the parties. The SPF will monitor the implementation of any agreement reached. ⁸

Compliance Review Function

If the Office of the CRP that oversees the Compliance Review Function determines that a case is eligible, it will issue an eligibility report for consideration and approval by the Board. If the Board approves the report, the CRP will conduct an investigation that may include one or more site visits, meeting with relevant parties and desk reviews. There is no timeline for an investigation. The review will assess whether the ADB failed to comply with its policies and whether serious harm has happened or could happen. To conclude the investigation, the CRP will issue a report with its findings.

If the CRP finds that the ADB violated its policies, ADB Management will propose ways to bring the project into compliance. The CRP will provide comments on Management’s proposed actions, and then the report will be submitted to the Board for final consideration. The CRP’s report will be made public after the Board approves any remedial actions, and the CRP will monitor any remedial actions. ⁹

The Accountability mechanism in action

By 2021, the Office of the Special Project Facilitator (OSPF) had received 103 complaints, only 30% of which were deemed elegible. ¹⁰

Community empowerment for rural development project (CERDP) in Indonesia

On 9 March 2005, the SPF received the complaint from 3 NGOs – Yayasan Cakrawala Hijau Indonesia (YCHI) in Banjarbaru, Lembaga Kajian Keislaman & Kemasyarakatan (LK3) in Banjarmasin, and Yayasan Duta Awam (YDA) with offices in Solo, Central Java – together with populations from 5 villages concerning the Community Empowerment for Rural Development Project (CERDP) in Indonesia. This project, which is supported by the ADBank, intended to improve the standards of living in rural communities. Indeed, three issues had been identified: rural poverty, poor people’s lack of access to services, and the need to promote the role of women in development. The goal of the CERDP was to empower communities by building the capacity of rural communities and supporting local investment activities. It was implemented with a US$ 170, 2 million dollar budget and started on 15 March 2001.

The issues raised in the complaint relating to this project were the lack of villagers’ participation in planning and design before the construction of rural roads, bridges and water supply began which turned out to be unsatisfactory and which subsequently negatively impacted the agricultural productivity. The complaint was declared eligible on 23 March 2005.

According to the SPF, the implementation of the project violated 5 principles: acceptability, transparency, accountability, sustainability and integration. The project did not respect the approach agreed upon, that is to say: participatory, partnership, public real demand, autonomy and decentralization as well as increasing the role and capacity of women. The project’s management did not respect either local knowledge and practices, human rights (“the right to a feeling of security and the right to freedom from fear”) and good governance principles.

An agreement was reached in September 2005, and an action plan was agreed ¹¹ . According to the SPF, most of the villagers’ requests were accepted, especially those concerning their lacking involvement in planning, implementing and supervising the project, their training for the maintenance of the infrastructures, and the necessary repairs to the damaged buildings. ¹²

Rehabilitation of the Railway in Cambodia project ¹³

The case concerns communities who have been involuntarily resettled to make way for the rehabilitation of Cambodia’s railway system. The resettled families are experiencing severe hardships, including unmanageable indebtedness, loss of income and lack of access to basic services, as they are made to bear the externalized costs of this major infrastructure project. The Asian Development Bank (ADB) is financing the project through a USD 84 million concessional loan.

On August 28, 2012, IDI submitted a request for investigation of the resettlement process to the Compliance Review Panel (CRP), the ADB’s internal accountability mechanism, on behalf of affected families who have asked IDI to represent them through the process.

The complaint describes a litany of problems and non-compliance with the resettlement process that have inflicted hardships on hundreds of poor families. It calls for a number of remedies from the ADB including reimbursement for the actual costs of replacing lost assets, at least enough compensation to build an adequate home and meet basic needs, debt relief, adequate basic services at the relocation sites, and support to get their children back into school. The complaint was registered by CRP on September 4, 2012.

After a 17-month investigation, the CRP issued a scathing report, which found that the ADB failed to comply with its policies and procedures, leaving a substantial number of affected households worse off and impoverished. The Panel found that families affected by the Railway project “suffered loss of property, livelihoods, and incomes, and as a result have borne a disproportionate cost and burden of the development efforts funded by ADB.” According to the Panel, ADB’s “inadequate attention to addressing the resettlement, public communications and disclosure requirements of its own policies…has led to significant yet avoidable adverse social impact on mostly poor and vulnerable people.”

The Panel emphasized: “the need for an urgent, firm, and clear message to ADB Management that resettlement, environmental, and public disclosure issues should be taken seriously and accorded the priority consideration they deserve.” It found that in this case, as in other cases that it had reviewed, these issued were treated by ADB as “mere add-ons.” The Panel concluded that: “ADB operational, sectoral, and regional staff must undergo a mind shift in the treatment of resettlement, environment, and public disclosure and consultation. Their perspective must be based on the recognition already existing in ADB’s safeguard policies that involuntary resettlement is a development opportunity, intrinsic to achieving the developmental goals of projects.”

The Panel made a number of recommendations for remedies, including establishing a $3 – $4 million ’compensation deficit payment scheme’; improving facilities at resettlement sites; extending and expanding the income restoration program; establishing of a debt workout scheme for highly indebted households; improving the functioning of the grievance redress mechanism; capacity-building for the Cambodian authorities responsible for resettlement; and adopting specific safeguards for the development of a freight facility which respects the land rights of families in the “Samrong Estate” area.

On January 30, 2014, ADB’s Board of Directors approved the Panel’s findings and slightly modified recommendations.

IDI, Equitable Cambodia and the affected communities who brought the complaint welcomed the CRP’s report and the Board’s decision and have called upon ADB Management to develop a robust remedial action plan to operationalize the decision.

On August 30, 2015, 23 representatives of families remaining along the railway tracks filed another complaint to the CRP with support from IDI and Equitable Cambodia. The complaint presents new evidence of ADB acts and omissions that threaten material harm to the complainants which were not previously addressed by the CRP in its earlier investigation. If the CRP found evidence of noncompliance with ADB’s operational policies and procedures and evidence that this noncompliance with ADB policies had led to harm or was likely to lead to future harm, it also considered the complaint did not present new evidence that was unavailable at the time of the previous CRP report. It considered the second complaint ineligible and recommended consolidating it with the earlier complaint. ¹⁴