Environmental Sustainability: An Evaluation of World Bank Group Support July 2008

2 Environment matters for development ►Environmental problems are enormous and increasing Climate change Air and water pollution Soil erosion and desertification Water scarcity Loss of biodiversity ►Developing countries are severely affected: Growth Poverty ►Both public and private action are needed

3 WBG timeline: Increased attention since WB project focus: "do no harm" World Development Report (for Rio summit) (1992) MIGA: Enhanced project- level focus from 1998 WB: Increasingly proactive role from 1992 * 4-fold agenda: Safeguards, Stewardship, Mainstreaming, Global sustainability IFC: Deepening attention to project- level impacts from 1991 WBG: 2001 Environmental Strategy IFC: Equator Principles WB: 2003 World Development Report

4 Key messages ►The World Bank Group has made progress since 1990 as an advocate for the environment ►But treatment of environmental issues in many WBG country programs remains weak due to major external and internal constraints ►The WBG needs to increase its engagement and effectiveness in environmental issues through –Greater attention in Bank Group and country strategies –More effective cross-sectoral approaches –Better measurement of activities and results –Closer collaboration within the WBG and with partners

5 This evaluation looks broadly at WBG engagement FY90-07 ►Broad coverage: World Bank, IFC, and MIGA ►Evaluation Objectives –Assessing WBG effectiveness –Identifying principal external and internal constraints –Suggesting improvements going forward ►Perspectives: “Do no harm” and “ Do good” ►Methodology –Literature review –Portfolio review (variation across WBG due to data availability) –9 country case studies

6 The 9 case study countries come from all regions and a mix of MICs and LICs ►Together these countries account for 56% of population, 46% of GDP, and over 40% of Bank environmental lending in developing and transition countries. East AsiaChina Latin AmericaBrazil Middle East/N. AfrEgypt Sub-Saharan AfricaGhana, Madagascar, Senegal, Uganda South AsiaIndia Europe/Central AsiaRussia

7 Findings

8 World Bank 1.Strategies 2001 WBG Strategy growing but still inadequate attention in country strategies even less in country-led PRSPs 2.Lending and grants exact amount unknown – at most 5-10% Bank total project performance better over time, but M&E still weak weaker performance in Africa 3.Nonlending as important as lending country environmental assessments: helpful where undertaken research influential: WDRs ’92, ’03; Greening Industry

9 World Bank (cont) 4.Mainstreaming some improvement but still far to go (poverty, health-environment links, vulnerability) 5.Partnerships needs strengthening within WBG and externally some good examples (GEF, Pov-Env. Ptnp. ) 6.Global public goods less emphasis during evaluation period, though now growing some good examples (Montreal protocol, carbon finance)

10 IFC 1.Environmental and social effects of investment projects 67% success rate in meeting IFC requirements and performance standards weak performance in Africa and in certain sectors limited attention to broader context 2.Environmental work quality appraisal generally good, supervision of financial intermediaries weak 3.“Doing good” initiatives M&E system generated insufficient data or still too early to assess - Environment & Social Sustainability advisory services - Equator Principles Sustainability in IFC corporate strategies since Until recently focus has been on “do no harm”. Move to more “do good”.

11 MIGA MIGA’s focus has been primarily on “do no harm” Sustainability concept just incorporated in core business 1.Environmental and social effects Category A projects: better performance and increased attention to social issues Category B projects: less attention, worse performance 2.Environmental work quality Strengthened environmental and social issues in underwriting New policy and performance standards (2007): Go beyond safeguards to promote sustainability in guaranteed projects

12 Looking ahead

13 Many constraints need to be confronted ►Clients (public and private) Competing demands (e.g. growth, energy needs, governance, conflict) Insufficient client commitment Inadequate institutional capacity and resources ►World Bank Group Competing priorities Inadequate staff skills and knowledge networks Difficulties of coordination across sectors, across WBG, and externally Difficulties of taking long-term view and of assessing country-level impacts beyond individual projects

14 The evaluation has four broad recommendations 1.Elevate environmental sustainability as WBG priority -- not just more of the same, but a “transformational” change 2.Move to more integrated, cross-sectoral and area- based approaches and strengthen staffing 3.Greatly improve ability to measure, monitor, and evaluate activities and their results 4.Continue to strengthen partnerships

15 What would success look like? ►A widely-shared understanding of the critical role of environmental sustainability to development ►Clear alignment behind key strategic objectives ►Strong and effective WBG capacity ►Effective internal and external collaboration ►An emphasis on continual learning (from both success and failure)…

16 …and a more sustainable world for all

Thank you Evaluation available at: Evaluation authors: John Redwood (IEG-WB) Jouni Eerikainen (IEG-IFC) Ethel Tarazona (IEG-MIGA)