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Commentary

Accountability for a Just Transition

Gregory Berry, Policy Associate at Accountability Counsel, highlights the importance of local community input into climate and biodiversity projects.

When sudden disaster strikes, emergency responders rely on triage systems to optimise survival outcomes under time and resource limitations. Some have attempted to apply the concept of emergency triage to the gradual threat of climate change, arguing that environmental and social due diligence must be deprioritised to ensure a rapid response to the global crisis. Rights and inclusiveness be damned, they argue, we need action. Never mind that catering to the outsized political and economic power of special interests, not the public interest, is actually to blame for decades of delayed action. But as much as private sector wealth and influence have been a cause of the sickness, multilateral development banks are resolute that they are also the cure. 

Past passivity and outright denial of climate change has resulted in an exponentially larger problem to address in less time, with the worst impacts borne by the poorest members of society and discretely by women. Add to it the grave risks of biodiversity loss, and our planetary stress compounds. As multilateral institutions push to devote more financing for global public goods, and seek to attract more private sector money, they ironically risk deprioritising the very environmental and social safeguards intended to help in the effort.  

This time of important transition demands careful attention to the environmental and social risks of rapid development for adaptation and mitigation, or else we risk creating or exacerbating other crises consequential not only to our economic systems, but also to our quality of life and survival. We must respond responsibly to climate change, and that is by holding our institutions accountable for honouring a just, inclusive, and resilient transition. Fortunately, impact measurement and reporting standards are increasingly requiring investors to hear from and be accountable to the very communities who they impact. Any investor committed to climate and biodiversity finance should adhere to these standards. 

Fast action 

Public sector banks around the world are pivoting to climate finance and the unifying message is a need for speed. Chief among them is the World Bank Group, which has proposed an Evolution Roadmap to scale finance for global public goods at the level that is needed to address the immense challenges before us. But while the bank has offered creative finance solutions to leverage capital, it has yet to propose steps to ensure that its environmental and social commitments keep apace. In doing so it fails to acknowledge its historic contributions to the climate crisis and responsibility for the impacts of its investments. 

Public-private partnerships for renewable energy and critical mineral mining operations have enabled land grabs, forced displacement, rights violations, and rent-seeking at the expense of local economies. In some instances, local communities and Indigenous Peoples deprived of a legitimate consultation effort or the right to Free, Prior, and Informed Consent (FPIC) have been met by attempts to oppress protest through violence or coercion. 

For years, financial institutions have pushed back on better governance claiming that it will slow down financing. They now seem to lean on the argument even more with urgency of the climate crisis. It is a straw man. First, the argument belies the imperative to build accountable and inclusive institutions at all levels alongside the climate prerogatives of the UN Sustainable Development Goals. It also ignores that people impacted by development projects bear the most risk if they go wrong. The 2015 Addis Ababa Action Agenda instructs on the way forward – “Projects involving blended finance, including public-private partnerships, should share risks and reward fairly, include clear accountability mechanisms and meet social and environmental standards.”

Second, accountability only slows the progress of projects to the extent that those being held accountable resist. The virtue of being accountable is as important as the mechanisms for providing accountability. If governance requirements give private actors pause, then they are not trustable partners to deliver positive development impacts.

Third, it is not better governance, but the perception of weak governance that discourages private sector participation in international development. In this regard, accountability is an asset to private sector actors apprehensive about supporting projects in fragile contexts and with the uncertainties of climate change, especially as they do not share the same claims of immunity from lawsuit as multilateral development banks. If development finance institutions seek to entice a risk-averse private sector to the risk-laden environments, then the most prudent thing to do is offer strong risk-based due diligence and shared responsibility for remedying adverse development impacts.

Data informed by local communities’ experience 

Environmental and social safeguards are the minimum. The next step is being accountable for them and accurately reporting on adherence. 

In its recent report on the State of Finance for Nature, the United Nations Environment Programme (UNEP) recommends advancing nature-based solutions in public and private sector investments by supporting the participation of local and Indigenous communities in investment decisions. In turn, sustainability and impact reporting regimes are increasingly including metrics about impacts on and efforts to hear directly from local communities. 

The Global Reporting Initiative (GRI) has been a leader in updating its standards; its draft Biodiversity Topics Standards require organisations to report on “areas of high biodiversity value that are important to Indigenous Peoples and local communities.” Similarly, the Taskforce on Nature-related Financial Disclosures (TNFD), of which the UNEP plays a guiding role, and the Science-based Targets for Nature (SBTN), set by over 2,600 companies, are developing comprehensive guidance on community engagement intended to underpin data-collection, relying on the lived experiences of local communities and Indigenous Peoples to assess, monitor, and address adverse impacts to nature. 

It is crucial that biodiversity assessments and disclosures require more from institutions than simple assurances that they will respect the rights of Indigenous Peoples and local communities;  they must go a step further by requiring evidence-based accountability for those policy commitments. The best way to consider whether the interests of Indigenous Peoples and local communities are duly considered when reporting on biodiversity impacts is to hear directly from those groups impacted by operational activities. Effective grievance mechanisms are a key tool to assist in that effort, as they function to help institutions ascertain and address actual and potential adverse impacts to communities.   

Not only do effective grievance mechanisms empower Indigenous Peoples and local communities to report concerns and seek redress for any negative impacts resulting from conservation efforts, but disclosures related to effective grievance mechanisms allow all stakeholders to more fully understand the actual efforts taken to manage biodiversity in a way that is rights-compatible. Companies and investors should disclose how they responded to and remedied complaints as evidence that their projects are truly sustainable. Disclosures of this nature may also promote the shift in corporate culture needed for  businesses and organisations to adopt more accountable, transparent, and inclusive operations. 

Accountability for a just transition 

The gravity of the climate and biodiversity crises demands more than soft assurances of ecological impact management. The issue implicates more than profit margins – every living thing on the planet depends on institutions to achieve the goals of the Global Biodiversity Framework. The GRI, TNFD, and SBTN frameworks are positioned to set the baseline expectations of accountability and respect for the vital role that Indigenous Peoples and local communities play in the stewardship of  natural resources. Effective grievance redress systems are essential for ensuring that Indigenous Peoples’ opinions are heard and that their rights are upheld in the context of conservation initiatives. 

It is essential that corporate actors move beyond just reporting on impacts to actively working to address and remediate those impacts. This requires a genuine commitment to working in partnership with Indigenous Peoples and local communities to ensure that conservation and remediation efforts are guided by their knowledge and values. Just as treating patients with dignity and attaining their informed consent cannot be done away with in the context of emergency triage, climate financiers cannot ignore the rights and voices of project-affected people. Let’s get serious about addressing climate change and biodiversity loss, and let’s be responsible about how we do it. 

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