Originally created to finance the rebuilding of Europe after World War II, the World Bank later took on a larger mandate to try to alleviate poverty around the world. Unfortunately, many of the Bank's policies and practices in intervening years clashed with conservation priorities. But the more recent onslaught of global warming threats, along with greater overall public environmental awareness, has forced the World Bank to factor sustainability concerns into how it encourages development moving forward.
The World Bank has been widely criticized for funding a series of environmentally damaging projects in the 1980s, including the building of dams on the Narmada River in India, road building into the Brazilian Amazon and transmigration (resettlement) efforts in Indonesia.
"These projects have led to a variety of adverse impacts in borrower countries, including deforestation and displacement of indigenous peoples," reports the Institute for Policy Studies, a nonprofit think tank. In response to the criticism, the World Bank adopted a set of policies and procedures in the late 1980s to better assess the potential, adverse environmental impacts of its projects. The Bank further developed a series of polices to guide investment in such areas as forestry and energy. "For example, the bank's forestry policy prohibits the institution from financing logging in primary tropical forests".
Other highlights of the Bank's first round of greening included the creation of a special unit to oversee environmentally and socially sustainable development, and the recruitment of staff with technical environmental credentials to supplement its professional core of economists. IPS reports that with these changes in place, the bank has been able to start developing a portfolio of environment-sector projects ranging from support for national environmental agencies to investments in national parks.
But an independent internal review of the World Bank's sustainability impacts between 1990 and 2007 found that even these new sustainability-oriented policies fell flat. Researchers found that the bank's private-sector funding arm, the International Finance Corporation, was still promoting the expansion of livestock herds, soybean fields and palm oil plantations - all which accelerated deforestation in the tropics, hastening the pace of climate change.
"They need to begin to see the inextricable link between sustaining environment and reducing poverty - said Vinod Thomas, director of the World Bank group that performed the review. - It is clear now from the Amazon to India that if environmental sustainability is not raised as a priority, then all bets are off."
The World Bank tried to address many of these concerns with the release of a beefed up Environment Strategy in 2001, but analysts remain critical of the organization's performance and general commitment to sustainability.