News / 17 February 2016

How effective are the complaints mechanisms of development banks?

Development banks such as the World Bank, the Asian Development Bank, the German DEG and the Dutch FMO have some crucial similarities: they operate with public money, and their ultimate goal is to fight poverty and promote development. But in practice, 'development' seems to be a broad concept, as there are many people that do not profit from the projects these banks invest in. On the contrary, large groups of people are often faced with negative consequences of the investments of development banks. Under pressure from civil society organisations, including Both ENDS, a number of development banks set up a complaint desk for those that are adversely affected.


In the report Glass half full? The State of Accountability in Development Finance eleven organisations assess how effective these complaints procedures actually are.

The World Bank as a forerunner

In the 1990s, at the instigation of Both ENDS and a number of other NGOs, the World Bank created the first official complaints mechanism in the financial sector. The projects of the World Bank, intended to 'do good', often turned out to have an adverse effect. "Major infrastructure projects such as dams, roads, canals, ports and mines, which were actually intended to advance countries' economies, caused so much damage and environmental pollution that the living conditions of large groups of people became much worse instead of better," says Pieter Jansen, policy officer at Both ENDS. "In many cases people were even unceremoniously evicted from their homes or chased of their land, without any compensation."


Recognition and compensation
Under pressure from civil society organisations, the World Bank eventually set up a number of social and environmental criteria that its own investments had to meet. To ensure that the Bank could be held responsible for possible damages, a complaints mechanism was set up as well. After this initiative, an increasing number of development banks followed the World Bank's example, and more and more local communities now find their way to these complaint desks, often with the help of civil society organisations. They seek recognition for the damages they suffer as a result of investments of these banks, and they hope to be compensated fairly.


Which parts are functioning well and which parts could be improved?
"This report analyses the way the complaints mechanisms of eleven development banks function. We see that whilst some things function well, many points need to be improved," says Jansen. "Procedures are too complicated and opaque and they take too long, and 'in practice' we still see barely any results."The findings may initially serve as input for the Dutch development bank FMO and the German DEG, which are currently both evaluating their own complaints mechanisms. Both ENDS and the other organisations will continue to work together with these and other development banks to optimise social and environmental criteria and the effectiveness of corresponding complaints procedures.


More information:

The press release about the report

Te report: ‘Glass half full? The State of Accountability in Development Finance’ 

The website 'Human Rights and Grievance Mechanisms



Read more about this subject