March 23, 2004
Social Investors Urge World Bank to Adopt Extractive Industries Review Proposals
by William Baue
If adopted by the World Bank, EIR recommendations could serve as a social and environmental best
practice benchmark for oil, gas, and mining companies.
The World Bank Group (WBG), whose mission
is to alleviate poverty in the developing world, exerts influence not only through its own
investments and actions, but also as an exemplar. A coalition of US- and Canada-based socially
responsible investment (SRI) advocates is urging WBG President James Wolfensohn to set just such an
example by implementing recommendations of the Extractive Industries Review (EIR).
Mr. Wolfensohn commissioned the EIR in
2000 to determine whether investment in and involvement with oil, gas, and mining sector companies
could in fact promote poverty alleviation and environmental sustainability. The EIR Final Report, issued
late last year, concludes that extractive industries can contribute to social and environmental
sustainability only in very circumscribed ways. Specifically, the report states that extractive
industry companies and the countries where they operate must have pro-poor governance, effective
social and environmental policies, and respect for human rights.
Although the EIR does not
consider itself a "standard setting exercise," neither does it bar groups such as the SRI coalition
from using its recommendations as a yardstick.
"We believe the recommendations of the EIR
could be a valuable new benchmark for corporate social responsibility (CSR) as we engage in
dialogue with our global oil and gas, and mining company holdings," said Lauren Compere, global
advocacy coordinator for Boston
Common Asset Management.
The coalition, which collectively represents over $28.86
billion in assets under management, sent a letter to Mr. Wolfensohn earlier this month asking him to
adopt the EIR recommendations in their entirety, as both a direct and an exemplary action.
"The World Bank's full adoption of the EIR recommendations will bring a new level of credence
and attention to best practices in the extractive industries," said Mark Regier, stewardship
investing services managers for coalition member MMA Praxis Mutual Funds.
Regier also chairs the International Working Group of the Social Investment Forum (SIF), which has increased its interaction
in recent years with members of the World Bank and one of its subsidiaries, the International
Finance Corporation (IFC).
these groups play an important role in both modeling and shaping (if indirectly) corporate practice
in a variety of venues," Mr. Regier told SocialFunds.com.
The EIR was carried out
independently of the WBG through a secretariat headed by Dr. Emil Salim, chair of the 2002 World Summit on Sustainable
Development in Johannesburg, South Africa.
"Countries should be helped to remove
subsidies from carbon-based fuels [and] WBG lending should concentrate on promoting the transition
to renewable energy and endorsing natural gas as a bridging fuel--building new pipelines and
renovating leaking ones," wrote Dr. Salim in a letter to Mr. Wolfensohn. "On this basis, the
WBG should phase out investments in oil production by 2008 and devote its scarce resources to
investments in renewable energy resource development, emissions-reducing projects, clean energy
technology, energy efficiency and conservation, and other efforts that delink energy use from
greenhouse gas emissions."
Specifically, EIR recommendations call on the WBG to devote 20
percent of its energy portfolio to clean, renewable energy.
The SRI coalition also looked
at the other side of the coin, projecting the implications of the WBG not implementing the
"If the Bank rejects the EIR, it would seriously diminish the potential
of the recommendations and undermine the ability of SRIs and others to point to it as a new CSR
standard for how oil, gas, and mining companies should operate in the developing world," said Ms.