Podcast Summary: The World Bank's New Safeguards — A Step Forward or Back?

Podcast: The CGD Podcast
Host: Rajesh Merchandani, Center for Global Development (CGD)
Guest: Scott Morris, CGD expert on multilateral development banks
Date: August 8, 2016

Main Theme & Purpose

This episode explores the World Bank’s newly approved set of social and environmental “safeguards”—rules governing the conduct of Bank-funded projects worldwide. Host Rajesh Merchandani talks with Scott Morris, who analyzes these landmark changes: the shift from Bank-imposed standards toward reliance on country-level regulations, the tension between progress and potential risks to vulnerable communities, and the impact of the Bank President’s separate directive on non-discrimination, particularly relating to LGBT rights.

Key Discussion Points and Insights

1. What Has Changed? — The Nature of the Safeguards Overhaul

• Shift in Approach: The World Bank moves from imposing its own rules on each project to evaluating and working with countries’ own regulatory systems.
  • “The shift itself is one from a set of rules that police how the bank itself operates to one that is trying to work with countries on their own rules and regulation in these areas, these vital areas of environmental and social protections.” (Scott Morris, 01:48)
• Broader Goal: The ambition is no longer limited to project-by-project compliance, but aims for systemic regulatory improvement across developing countries.

2. What Does This Mean for Individual Projects?

• More Responsibility (and Work) for Bank Staff:
  • Bank staff must assess if countries have both adequate laws and capacity to enforce them.
  • Projects in “low risk” countries rely on local standards; higher-risk or lower-capacity contexts trigger the Bank’s direct involvement.
    • “They will have to do as they approach a project … make a determination about the rules of the country and the capacity of the country to implement its own rules.” (Scott Morris, 02:41)
• Distinction by Risk Level:
  • Example: Hydroelectric dam projects are considered higher risk than standard road construction, impacting how safeguards are applied. (03:50)

3. Critics’ Concerns: Rollback or Progress?

• Risk of Weaker Protections: Critics argue that countries with weak laws/protections could expose citizens and environments to harm, “rolling back” hard-won safeguards.
  • “This approach … introduces a level of risk when it comes to the protections that I think in principle there's broad agreement on.” (Scott Morris, 05:36)
• Aiming Higher:
  • Morris acknowledges risks but urges viewing the new system as a path to stronger, country-wide regulation, not just better-managed Bank projects.
    • “We really are looking for stronger regulatory regimes across the board in the developing world, not just in a project by project basis for the bank.” (Scott Morris, 06:42)

4. Safeguards, Value, and the World Bank's Strategic Leverage

• Comparative Advantage:
  • The Bank must offer more than loans; it seeks to add value by helping countries strengthen their own systems.
    • “They just can't be a source of cheap financing. They have to deliver other things of value to their country clients.” (Scott Morris, 06:58)
• Competition from Other Lenders:
  • New financial alternatives (AIIB, Chinese banks) mean client countries can bypass cumbersome Bank rules if they’re too strict; necessity to find a balance.
    • “If they view the rules as too onerous, as it takes too long to do a project, they will walk away.” (Scott Morris, 08:09)

5. The Unresolved Challenge: The Presidential Directive on Discrimination

• Nature of the Directive:
  • World Bank President Jim Yong Kim issued a directive banning discrimination (including for LGBT people) in Bank projects. The Board did not formally adopt this as policy.
    • “This has been a controversial issue amongst a set of controversial issues.” (Scott Morris, 10:11)
• Board Resistance:
  • Many borrowing-country governments oppose such measures, citing non-interference in domestic politics.
    • "Right here in the articles of agreement that founded the World Bank, it says that the bank will not interfere in domestic politics.” (Scott Morris, 11:03)
• Practical Impact:
  • The directive compels Bank-managed projects to uphold non-discrimination and take action if, for example, LGBT teachers are dismissed in funded schools—even in countries where homosexuality is illegal.
    • “Non discrimination for … sexual minorities is a standard that the bank will hold itself to, but on a project by project basis.” (Scott Morris, 13:01)
    • “If we think about a country where being gay is outlawed, but the bank encounters the practical effects of that ... under this directive, they have to take action.” (Scott Morris, 13:22)
• Limits:
  • The directive does not impose non-discrimination as a universal standard on all Bank operations, only project-specific.

6. Looking Forward — Ensuring Success

• Adequate Funding is Essential:
  • To improve countries’ capacities, the Bank must assign real budget and staff, not just rhetoric.
    • “When it comes to work in this area, money matters … When you encounter low capacity, make sure you're putting the money and the staff toward doing something about it.” (Scott Morris, 14:36)
• Challenge of Implementation:
  • Recent budget cuts at the Bank endanger sustained commitment; the hope is the spotlight on this reform will translate into actual resources.
    • “I hope that they'll take what is a very good outcome, the attention that's on it right now, and do something with that and sustain it over time with a real commitment of resources.” (Scott Morris, 15:10)

Notable Quotes & Memorable Moments

• On the significance of the policy shift:
  • “They define to a large degree what the bank is about and how it operates.” (Scott Morris, 01:52)
• On country ownership:
  • “It's no longer about a project by project approach … It's a much broader, more ambitious effort in practice.” (Scott Morris, 02:23)
• On the limits of the Presidential Directive:
  • “In one sense, it doesn't represent the degree of ambition of the broader reforms of the safeguards. On the other hand, we shouldn't sell short what you can achieve through project by project.” (Scott Morris, 13:10)
• On the need for resources:
  • “When it comes to work in this area, money matters, and I think one of the most important elements of this package is a commitment to put some of the bank's budget toward it.” (Scott Morris, 14:36)
• On the hope for systemic change:
  • “We really are looking for stronger regulatory regimes across the board in the developing world, not just in a project by project basis for the bank.” (Scott Morris, 06:42)

Timestamps for Important Segments

• 00:05 - 01:34: Introduction to the issue; the scope of the World Bank’s new safeguards
• 01:48 - 03:33: Description of the policy shift and practical implications for Bank projects
• 05:16 - 06:48: Discussion of criticisms; risk-based approach and the higher regulatory goal
• 06:58 - 08:09: Value-add and comparative advantage in a changing global finance landscape
• 09:17 - 09:49: The impact of rising competitors and new sources of development financing
• 09:49 - 14:18: Detailed exploration of the Presidential Directive and its effects (esp. LGBT protections)
• 14:36 - 15:31: The vital role of resourcing in making the new safeguards effective

Conclusion

This episode critically examines the World Bank’s major shift in how it implements social and environmental protections, highlighting both potential for system-wide improvement and substantial risks, especially in countries with weak local standards. The controversial inclusion of anti-discrimination protections via presidential directive signals an incremental, but meaningful, advance on rights issues, with real impact dependent on the Bank’s follow-through with resources and enforcement. Scott Morris concludes with a call for genuine investment in country capacity to make these reforms meaningful in practice.

Further reading: Scott Morris’s blog post, “Doing More Than Safeguarding the Safeguards at the World Bank,” is available on the CGD website.