Compliance Advisor/Ombudsman (CAO) Meg WORLD BANK GROUP ANNUAL MEETINGS 2008 Compliance Advisor/Ombudsman (CAO) Thursday October 9, 2008 9.30-11.00AM, MC C1-200

Our approach Distribution of project risks and benefits underlie many concerns/ complaints to the CAO Potential for IFC/MIGA to pay more attention to local development impacts to enhance project outcomes The role of a financial institution presents opportunities and limitations The approach we have taken in this report is focused on the role that IFC and MIGA play as development oriented actors in the private sector. As financiers, rather than as operators, there are both opportunities and constraints to what IFC and MIGA can do. Ultimately, IFC and MIGA have impacts through their clients – Sponsors. Host communities play a critical role in taking advantage of opportunities but also in facing some of the negative impacts of development projects. What we have seen, during our experience with complex projects, is that there is real value in encouraging greater attention to project level development impacts. We also understand that there are some obstacles. But we think that there are sensible ways to overcome these obstacles and get at the value.

1. What does local development impact mean to you? When we talk about ‘development impact’ what does that mean? Many different perspectives It depends who you ask The answer differs according the to the stakeholder

What does development impact mean… …For workers, families, suppliers, business owners, customers: Employment Supply chain/procurement Community development funds Local capital (e.g. infrastructure, health, training) But lets come back to the opening question: what does development impact mean? In broad terms, labour opportunities and employment; providing goods and services through the supply chain and procurement; being able to take advantage of community development funds to improve social capital; and to build infrastructure, health and skills.

2. What are the opportunities? Can people give us some real examples where they have seen development impacts? What did these look like? What is the value of paying attention to development impacts though monitoring or developing indicators for them? What’s the opportunity, value and rationale for focusing on development impact? We have some ideas and examples in our back pocket.table 1.1,-1.3

Opportunities Build strong corporate-community relationships Create benefits = reduce conflict Shared value

3. What are the obstacles?

Obstacles Confidentiality of business-related information Flexibility and managing expectations IFC/MIGA v. client reporting

4. What are the opportunities for implementing local DI reporting at IFC/MIGA?

Our recommendations Help companies engage with communities e.g. guidance on indicators & processes Improve reporting around significant impact projects Integrate E&S impact assessment with economic analysis Address DI in strategy & staff/management incentives

5. Next steps How can we encourage implementation of these recommendations?

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