FMO, don’t shirk your responsibilities to the ultimate beneficiaries of your projects — local communities.

By Ishita Petkar

FMO — the Dutch development bank — is relying on an access to information system with serious flaws.

In 2020, International Accountability Project (IAP) and FUNDEPS analyzed the disclosure practices of FMO, the Dutch development bank. We found serious shortcomings in FMO’s current access to information system. Out of a dataset of 241 projects disclosed from January 1, 2019 through May 31, 2020 on FMO’s website, our key findings revealed that:

  • Despite investing heavily in non-English speaking contexts, 0% of projects disclosed included translations of basic or technical project information;
  • 0% of projects disclosed technical documents, including environmental and social impact assessments (ESIAs), non-technical summaries, or stakeholder engagement plans; and
  • Only 24% of projects were disclosed with a summary of their potential impacts, and only 9% presented details on how harms could be prevented.

Read the full analysis here.

The experiences of IAP and partners in the Early Warning System have demonstrated, time and again, that the right to information is not a checkbox — it is the foundation for truly sustainable development. Without safe access to early and accessible information, affected communities are unable to meaningfully participate and contribute their vital knowledge and expertise to bettering project outcomes and avoiding adverse impacts.

We shared our findings with FMO in late 2020, endorsed by 28 organizations from across the regions where FMO invests. These included concrete recommendations for creating an Access to Information Policy at the institution in order to meet the baseline for communities’ right to information and bring FMO’s current flawed practices in line with international law and best practice, including that of peer institutions with stronger access to information systems and practices.

Read FMO’s response to our letter here.

While we welcome FMO’s engagement with us and its assurance that our recommendations will be considered in an internal review, the institution’s lack of concrete commitment to substantively revising its policy through a public process is disappointing, as is its deferral of responsibility to its clients. Additionally, any meaningful review of FMO’s access to information system must include the voices of communities who have been affected by FMO’s investments. Here are the reasons why FMO’s response is inadequate.

While FMO’s statement attempts to shift this responsibility to its clients, as a financial institution with a development mandate, majority-owned by the Dutch government, and operating with public money, FMO has an obligation to ensure that its investments protect and fulfill the rights of communities. Such obligations cannot be transferred to private entities at the will of a public institution, generating a clear conflict of interest. As a bank operating with public resources, FMO’s disclosure policies and practices should be aligned with fulfilling the right to information, which acknowledges communities’ right to know about potential projects that will affect them — instead of falsely assuming that it is the bank’s prerogative to decide what information will be disclosed. Additionally, as a development bank, FMO should seek to fulfill communities’ human right to development which requires the meaningful participation — and leadership — of communities in the development process.

“We strongly believe that the responsibility of disclosure of information must lie with the FMO. Uzbek Forum has identified the involvement of Hamkorbank, an existing FMO client, in the forced mobilization of their employees to pick cotton — or pay for pickers to go to the fields in their place — as recently as during the 2020 harvest. It is therefore essential that stakeholders are well informed in advance of the potential risks these loans could pose. It is simply not credible that clients, especially those with a poor record on human rights, can be relied upon to provide comprehensive information in a timely manner.”
Umida Niyazova — Uzbek Forum for Human Rights

FMO’s statement lists out the institution’s approach to disclosure of information, including its objectives for disclosure. Given the findings of our analysis, it is not surprising that not a single objective recognizes the goal of disclosure as ensuring communities are able to access information and meaningfully participate in the development process. FMO’s response exposes its lack of a people-centered approach. The work of IAP and our partners have repeatedly shown the immense barriers to access faced by communities — our experiences have also demonstrated that communities’ legitimacy and local expertise can better the design of potential projects, anticipating and mitigating adverse impacts, to build projects that result in positive development outcomes. In pursuing true development, FMO should be seeking to enable community access to information and participation as a fundamental goal. Implementing our collective recommendations, including creating an information request mechanism, will assist FMO in taking the first steps to achieve this goal of dismantling existing barriers to access. FMO’s efforts should be driven by recognition of the very real power imbalances faced by communities, and pursue both proactive and reactive channels of disclosure that are accessible to the communities impacted by the bank’s operations.

“Most projects in Malawi involve processes of resettlement, land acquisition and depletion of natural resources, just to mention a few. The groups that are negatively impacted by these processes are usually communities living in the rural areas, poor and vulnerable groups. One of the reasons these groups are heavily impacted is the lack of access to information, to help them make informed decisions regarding their lives and well-being. Hence there is a need for project financiers to ensure that affected communities are provided with adequate information that is easily understood in their local languages so that communities can fully participate and contribute to the development process.”
Lydia Mkandawire — Center for Human Rights and Rehabilitation (CHRR)

As an influential investor, FMO’s disclosure practices matter. This visual analysis of FMO’s portfolio illustrates the global reach and scope of FMO’s investments. The institution should be modeling best practice on access to information — including disclosing environmental and social documents, publishing regular updates, and making translations available. FMO should not be relying upon its clients to fulfill communities’ right to information, but should instead be meeting the standards set internationally, setting the bar high, and become a global leader in transparency and access to information.

Explore FMO’s portfolio of investments, including risk category and sector, in our interactive visualization here.

In its statement, FMO says it follows IFC’s Performance Standards in its approach to disclosure of information. However, IFC’s Performance Standards form one component of its core Sustainability Framework — they work in tandem with IFC’s Access to Information Policy, which governs the institution’s responsibilities for disclosure. Applying one without the other is incoherent. If FMO is truly committed to following IFC’s lead on disclosure, it should, at minimum, apply IFC’s Access to Information Policy which includes requirements for the Bank’s role in upholding transparency, including detailed ex-ante disclosure. Ideally, FMO should create its own Access to Information Policy based on the internationally endorsed principles on access to information.

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For FMO to meaningfully address the serious shortcomings identified in our analysis and recommendations, the bank must begin to acknowledge its responsibilities and build an access to information system that recognizes communities as FMO’s key stakeholders and intended beneficiaries of development.

Read the civil society letter and analysis here.
Read FMO’s response to our recommendations
here.
Read the Press Release
here.

Ishita Petkar is the Policy Director at the International Accountability Project (IAP) and is based in Washington D.C.

International Accountability Project works to defend the rights, land and livelihoods of people threatened by destructive development projects.

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