Human Rights and DFIs

Civil society organizations and grassroots movements around the world have struggled ensure that DFIs respect human rights, whether by seeking to change the type of development projects that are financed, fighting to halt or change harmful projects proposed for financing, demanding accountability and reparation for harm, or advocating for laws and policies that might prevent future harm from occurring.

Changing DFIs’ internal policies to incorporate human rights norms and principles is not enough on its own to guarantee that DFI-financed projects respect human rights and to ensure that human rights violations don’t occur. It is, however, a critical strategy to ensure that people have an opportunity to participate in development processes and that their rights are taken into account.

Check out here our “Human Rights Due Diligence” toolkit.

Below are a few reasons why DFIs should adopt human rights standards.

1.    Legal Obligations

As institutions made up of governments, no DFI can argue that it is permitted to violate human rights.  When making decisions through DFIs’, member states must comply with their obligations under international law, regardless of whether they are borrowers or donors.

As borrowers: When a state receives a loan from a DFI, it must implement the project in a manner consistent with its human rights obligations.  If the DFI provides a loan to a company, the state must ensure that it protects the project-affected community from human rights abuses which may be committed by the company.

As donors: States’ human rights obligations do not stop at their borders. They have obligations not to finance the violation of human rights in other countries and not to obstruct other countries’ ability to meet their human rights obligations towards their people.

As decision-makers: DFI governing bodies – often made up of national finance ministers – are responsible for approving the projects financed and the policies governing those projects.  States acting through DFIs must ensure they do not violate the rights of those outside their own territories when taking decisions about Bank policies or activities.

2.    Development Effectiveness

The missions of the DFIs are generally to help aleviate poverty and support sustainable development. People living in poverty are often the most marginalized and vulnerable people in our societies.  A human rights framework, with its emphasis on the principles of equality and non-discrimination, provides a focus on protecting the rights of the very people most in need.  A human rights framework also prioritizes the participation of those affected by development projects or policies, which ensures that the project or policy better meets their needs.

On the other hand, failure to ensure respect for human rights in development leads to greater poverty and inequality. Projects which fail to anticipate and address human rights issues are more likely to be plagued by social conflict and fall short of their objectives.

3.    Harmonization and Policy Coherence

Incorporating human rights standards in DFI policies improves consistency and coordination between different institutions and government agencies. DFI policies vary greatly from one institution to another. Harmonizing DFI policies with human rights standards helps to avoid conflicting requirements, prevents activities that could undermine countries’ international obligations, and supports countries’ domestic development agendas.

Within the same government, it is not rare for one ministry to be unaware of or even undermine the actions of other ministries.  In most cases, it is the finance ministry that represents the government in its interactions with DFIs, rather than those ministries that are charged with the protection of human rights.  Ensuring that DFI policies respect and uphold human rights can prevent the perceived false trade-off between development and human rights agendas.