Introduction

            The Compliance Advisor Ombudsman (CAO) is the independent accountability mechanism for the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), private sector arms of the World Bank Group (WBG). Established in 1999 following calls for more accountability towards communities negatively impacted by development projects funded by the IFC/MIGA, the CAO was originally mandated to ‘assist the IFC and MIGA to address complaints of people affected by projects in a manner that is fair, objective and constructive and to enhance the social and environmental outcomes of projects in which these institutions play a role.’ Its functioning was guided primarily by the Operational Guidelines, first adopted in 2000, and updated three times ever since, in 2004, 2007, and 2013.

In July 2021, the CAO Operational Guidelines have been replaced by the IFC/MIGA Independent Accountability Mechanism (CAO) Policy (henceforth, ‘CAO Policy’). This new framework introduces many changes to the CAO structure and procedures, including a shift in the CAO’s reporting line from the President of the World Bank Group to the IFC/MIGA Boards, the inclusion of public accountability as the third aspect of the CAO’s mandate, and the introduction of ‘Core Principles’. The present contribution focuses on this latter change, arguing that the Core Principles bring the work of the CAO closer to the framework of the United Nations Guiding Principles on Business & Human Rights (UNGPs), especially regarding access to remedy (Pillar III). This shift could be instrumental in clarifying the obligations and/or responsibilities of the IFC, MIGA, and the CAO towards victims of business-related human rights violations, and in allowing broader public scrutiny of projects run by multilateral development banks (MDBs) from a business & human rights perspective.

The CAO’s Roles

Before tackling the connection between the new Core Principles with the UNGPs, one should first understand how the CAO fulfils its mission. The CAO has three complementary roles or tracks, which have remained largely unaltered since its creation. First, there is the dispute settlement (or Ombudsman) role, through which the CAO mediates complaints regarding the environmental and/or social impacts of funded projects. It is mainly concerned with the past behaviour of corporate clients. Second, there is the compliance role, through which the CAO reviews IFC/MIGA compliance with their own environmental and social policies. Finally, there is the advisory role, through which the CAO engages with IFC/MIGA and their governing boards to improve their systemic environmental and social sustainability performance, as well as to reduce the risk of harm.

The CAO should thus be understood not only as a remedial, non-judicial grievance mechanism, a role that it develops through its dispute resolution. Through the compliance and advisory roles, the CAO is primarily concerned with addressing systemic failures of the IFC/MIGA and institutional reform. The CAO is thus better depicted as a hybrid mechanism, which merges elements of access to remedy and continuous learning and reform to prevent harm in future projects.

In fact, complaints can trigger not only the dispute settlement procedure but also the compliance procedure (where the input of complainants is limited, as the CAO essentially audits the IFC/MIGA in relation to that specific project). It is precisely in the CAO’s performance of those two roles, when triggered by complainants, that the relation between the Core Principles and the UNGPs is most evident.

The CAO Core Principles and UNGP Principle 31

One of the main innovations of the 2021 CAO Policy are the ‘Core Principles’, which guide the CAO and its work. They entail independence and impartiality; transparency; accessibility; responsiveness; fairness and equitability; predictability; consistency with good practice; and continuous learning. These Core Principles seem to have taken great inspiration from the language of Principle 31 of the UNGPs, which sets out the effectiveness criteria for non-judicial grievance mechanism (see Table 1 below). For instance, ‘independence and impartiality’ are seen as ‘prerequisites to encourage stakeholders’ trust and confidence in CAO’, whereas Principle 31 defines that a grievance mechanism is ‘legitimate’ when it ‘[enables] trust from the stakeholder groups for whose use they are intended […]’.

Table 1: Comparison between CAO Core Principles and UNGP Principle 31 criteria

It is striking that only one of the criteria set out in Principle 31 (being ‘rights-compatible’) has not been fully incorporated by the CAO Core Principles, which opted for the broader ‘consistency with good practice’. This departure seems uncoincidental. The UNGP criterion states that grievance mechanisms must ‘[ensure] that outcomes and remedies accord with internationally recognized human rights’ (emphasis added). Such wording could have been interpreted as a self-recognition of the binding nature of IHRL upon the CAO, the IFC, and MIGA, or of the existence of international obligations to respect, protect and/or fulfil those rights – something that MDBs and international financial institutions have disputed and avoided for decades.

It must be noted, however, that the final text of the CAO Policy did include a better definition of the Core Principle ‘consistency with good practice’ than initially proposed, thanks to the many rounds of public consultations that were held. In the April 2021 Consultation Draft, there was no mentioning of the ‘responsibility of business to respect human rights’. While one might interpret this addition as referring exclusively to IFC/MIGA clients, a better reading of the Core Principle signals that the IFC, MIGA and/or the CAO seem to understand their functioning to be more similar to that of businesses (hence the referencing to UNGP Pillar II language) than that of States (UNGP Pillar I). This does not mean that MDBs or international financial institutions like the World Bank Group – of which the IFC, MIGA and the CAO are part – do not have international human rights obligations, due to their own international legal personality, that arise from other sources.

Access to remedy

Lastly, it is worth highlighting that the CAO Policy mentions the facilitation of access to remedy as one of the Purposes of the CAO. Prior to it, there had been no explicit mentions to access to remedy on any of the operational guidelines. However, the definition of access to remedy put forth in the consultation draft was entirely excluded from the final text of the Policy. It read that access to remedy was understood as ‘the process of addressing grievances and harm stemming from a [project or a sub-project] consistent with the broader remedy framework for grievances under the Sustainability Framework, which includes [p]roject-level grievance mechanisms, operational grievance response systems within IFC and MIGA, and CAO.’

While this exclusion was certainly welcome (as the IFC’s Sustainability Framework might not be the ideal benchmark for access to remedy), the lack of any type of definition could be a source of tension. However, considering the language of the Core Principles and of the mention to BHR principles in the purpose section, it would be reasonable to argue that the new CAO Policy would (and should) observe the UNGPs in matters of access to remedy.

Simply put, the influence of the UNGPs in the new CAO Policy is notorious, from the Pillar III-inspired Core Principles to the mention to access to justice. There is, in fact, an even clearer mentioning of BHR in the document, which strengthens the argument that the 2021 CAO Policy represents a turn towards greater alignment with the UNGPs. On the ‘purpose’ of the CAO, the policy states that in ‘executing its mandate, [the] CAO facilitates access to remedy for Project-affected people in a manner that is consistent with those international principles related to business and human rights included within the Sustainability Framework.’ While the extent to which the UNGPs will in fact inform the CAO’s work under the 2021 Policy is yet to be seen, the many nods in the Policy should not be understated.

Danilo B. Garrido Alves is a DPhil/PhD in Law candidate at the University of Oxford and a Research Officer at the Blavatnik School of Government. He holds an LL.M. (hons.) from the University of Cambridge and an LL.B. from the University of Brasilia.