When raising concerns about development projects, complainants typically seek various outcomes, such as repairing damaged roads or houses, compensation for impacts on crops, or a greater say in company decisions that impact their livelihoods.
This section looks at the different outcomes of CAO processes.
After accepting a complaint, CAO conducts an assessment, which does not involve a judgment on the merits or the substance of the complaint. Rather, the assessment process is designed for CAO to gain a better understanding of the complaint issues and enable the complainants and companies concerned to make an informed decision about how they wish to address the complaint with CAO’s help. Specifically, CAO offers two options to address the issues – a Dispute Resolution or Compliance process. Over time, these options have been used in equal numbers.
Engaging comprehensively with complainant and company representatives during the assessment phase is also an important aspect of CAO’s core principle of predictability, and helps create trust and ownership in CAO’s process.
Participating in a CAO Dispute Resolution process is voluntary for all involved and can therefore only be pursued when both the complainants and the company choose to engage in this way. CAO is often asked whether, when cases go to Compliance, it is complainants or company representatives who decide against Dispute Resolution. Since 2012, when CAO started tracking this data, we have seen that, in the cases that did not proceed to Dispute Resolution, it is more often the company that has made the choice to decline a Dispute Resolution process and proceed to Compliance. It is also not uncommon that neither party prefers Dispute Resolution.
Since 2018, more companies have chosen to pursue a Dispute Resolution process. This coincides with efforts on behalf of IFC to engage and support its clients through CAO complaint-handling processes.
From its first engagement with complainants and company representatives, CAO aims to build trust and confidence in its approach. An important element of this is how much the parties to a complaint perceive CAO to act fairly and balanced.
CAO has asked community and company representatives questions related to fairness and equal treatment since 2015. As early as at the conclusion of the assessment process, stakeholders have responded that CAO has been impartial and balanced interests fairly.
CAO’s Dispute Resolution function works with communities and companies to resolve complaints using a flexible, voluntary problem-solving approach.
CAO is an independent office where people affected by IFC and MIGA projects can voice their concerns and see them addressed. CAO allows complainants to decide whether they would like CAO to facilitate the resolution of their complaint between affected people and the operating company – a process that is voluntary for companies also - or to review IFC or MIGA’s compliance with its environmental and social policies.
Depending on the nature of the concerns, the context, and the needs and wishes of the parties, CAO’s Dispute Resolution team employs different approaches and tools to help communities and companies resolve concerns.
Capacity building is important to support company and community representatives, as well as the CSOs supporting them, to engage in dialogue. Capacity may involve training in negotiation and active listening skills. It is carried out in almost all of our dispute resolution cases and is a key element of the process.
CAO Spotlight: Reflections from Practice is a series of products that help to explain key principles that guide CAO’s DR work.
Companies and communities engaging in dispute resolution processes report many different outcomes. Frequently, these processes result in improved relationships and structures for ongoing engagement between the communities and companies.
CAO is an independent office where people affected by IFC and MIGA projects can voice their concerns and see them addressed. CAO allows complainants to decide whether they would like CAWhere relationships have been built on trust and mutual understanding, and dialogue skills have been strengthened, companies and communities benefit by laying the foundation to confidently handle new disputes as they arise in the future, and after CAO’s involvement concludes.O to facilitate the resolution of their complaint between affected people and the operating company – a process that is voluntary for companies also - or to review IFC or MIGA’s compliance with its environmental and social policies.
Feedback from community and company representatives who have participated in CAO dispute resolution processes clearly show increased levels of trust not just in each other, but also in IFC/MIGA, after conclusion of the process.
CAO Spotlight: In this case study on CAO’s work in Mongolia, the parties discuss the central role of trust building as part of the dialogue process.
Parties coming together in agreement to implement jointly-generated solutions to environmental and social concerns, is a key outcome of a dispute resolution process. CAO has fully settled nearly half of the cases that come to Dispute Resolution, and over 60 percent of cases have achieved either full or partial settlement. In cases where companies and communities do not reach settlement, the complaint is transferred to Compliance, with the complainant’s consent.
Settlement rates are only one indicator of the outcomes of a dispute resolution process. Concrete actions can be captured in agreements, implemented, and monitored over time. Less tangible outcomes that are not always easy to measure, however, include opportunities for information sharing, platforms for future engagement, and forging relationships that continue to be characterized by mutual trust.
Through its Compliance function, CAO carries out reviews of IFC’s and MIGA’s compliance with their environmental and social policies, assesses related harm, and recommends remedial actions to address non-compliance and harm where appropriate.
Between 2008 and 2021, the Compliance function handled 111 complaints in 40 countries.
Of the 111 cases that have been handled by CAO Compliance since 2008, 73 were referred from assessment, 30 were transferred from Dispute Resolution, and 8 were initiated by CAO.
Multiple complaints on the same IFC/MIGA project are frequently merged into one compliance process at the appraisal stage. This translates into a total of 90 merged compliance cases – with 58 referred from Assessment, 24 transferred from Dispute Resolution, and 8 triggered by CAO.
The number of cases handled in Compliance increased significantly when CAO changed its Operational Guidelines in 2013. Since then, the parties can choose whether they wish to pursue a dispute resolution or compliance process during CAO’s assessment of the complaint.
About half of cases that are handled in Compliance proceed to investigation, following a compliance appraisal that assesses whether:
1. There is evidence of potentially significant adverse environmental and/or social outcome(s), now or in the future.
2. There are indications that a policy or other appraisal criteria may not have been adhered to or properly applied by IFC/MIGA.
3. There is evidence that indicates that IFC’s/MIGA’s provisions, whether or not complied with, have failed to provide an adequate level of protection.
In CAO’s Policy, these criteria have been revised to create a more explicit link between possible non-compliance and the alleged harm.
Transparency is one of CAO’s core principles, and CAO’s Policy enables more opportunities for both the complainants and companies to review compliance investigation reports. The CAO Policy also allows CAO to defer a compliance process and provide IFC/MIGA and its clients an opportunity to address potential compliance issues early and proactively prior to an investigation being initiated.
Successful compliance cases may result in project-level corrections responding directly to the concerns identified by complainants. They may also generate systemic changes and learning at IFC/MIGA in relation to how investments are carried out to prevent similar issues from occurring in other projects.
CAO is an independent office where people affected by IFC and MIGA projects can voice their concerns and see them addressed. CAO allows complainants to decide whether they would like CAO to facilitate the resolution of their complaint between affected people and the operating company – a process that is voluntary for companies also - or to review IFC or MIGA’s compliance with its environmental and social policies.
Successful compliance cases may result in project-level corrections responding directly to the concerns identified by complainants. They may also generate systemic changes and learning at IFC/MIGA in relation to how investments are carried out to prevent similar issues from occurring in other projects.
CAO’s Management Tracking Record (MATR) annually rates the adequacy of IFC’s and MIGA’s responsiveness to CAO compliance investigations. On average, responsiveness at the systems level is better rated than at the project level. Investigations have resulted in significant systemic changes at IFC/MIGA, including updated policies and guidance notes. In response to this experience, CAO’s Policy has a strengthened focus on options for early resolution of complaints throughout the complaint process.
Examples of systemic outcomes from compliance cases include CAO’s 2012 FI Audit, which brought about significant changes in how IFC engages with E&S risk in its financial intermediary lending. IFC reduced its exposure to high-risk FI clients, built internal capacity to manage high-risk labor issues, and increased E&S resources allocated to high-risk FI clients. Disclosure requirements and internal procedures were also refined, improving the transparency and traceability of IFC’s FI lending.
Similarly, CAO’s investigation of IFC in relation to Dinant in Honduras brought about institutional change. IFC responded by improving its guidance on the use of security forces and placing greater focus on contextual risk in its due diligence processes to better inform institutional decision making around risks that can be out of the client’s control.
An important outcome of CAO’s investigation of IFC regarding its FI client, CIFI, is what it means to exit from an investment responsibly in the presence of ongoing social and environmental risks and impacts to local communities. This has been raised in several CAO cases where IFC or the client may have exited the project during CAO’s process, IFC has committed to develop an approach to “responsible exit” in its investments. CAO’s Advisory function will issue a related advisory note on this topic in 2021