'Submission to the International Finance Corporation/Multilateral Investment Guarantee Agency (IFC/MIGA) Consultation on the proposed Approach to Remedial Action', April 2023

[...] Shift recognizes that this is an extremely important topic for IFC/MIGA to be tackling in terms of its potential to deliver meaningful outcomes for people in connection with IFC/MIGA’s own investments and also in the signals that such an approach can send to other financial institutions, particularly national and regional development finance institutions.

IFC/MIGA’s proposed “Approach to Remedial Action” (the Approach) references extensively the concepts of the remedy ecosystem and enabling remedy. On the positive side, we note with appreciation that the Approach considers “prospective and anticipatory measures” throughout the project cycle that could lessen the need for and/or increase preparedness for remedy. However, the Approach is grounded in an assumption that IFC/MIGA’s involvement in remedy will typically take, absent “exceptional circumstances”, the primary form of “facilitating or supporting” its clients’ provision of remedy.

Shift therefore seeks in this submission to provide some background on the development of these concepts, grounded in the international standards on human rights due diligence (HRDD), and to highlight examples of the application of these concepts by financial institutions that we would encourage the IFC/MIGA to consider further. Our comments are grounded in the UNGPs and the OECD Guidelines for Multinational Enterprises (hereafter collectively the International Standards). [...]

A persistent myth that financial institutions can never contribute to impacts in their portfolio, whether through their actions or omissions, has been rebutted by the Office of the UN High Commissioner for Human Rights and the OECD (which have a mandate to interpret the UN Guiding Principles and the OECD Guidelines respectively) looking at both commercial banking as well as development finance contexts. So, while it is fair to say that a financial institution’s relationship to impacts with which it is involved through its portfolio companies will often constitute a situation of linkage, this is by no means always the case. [...]

Shift respectfully urges IFC/MIGA to align its proposed Approach to enabling remedy more fully with that in the International Standards – including recognizing the relevance of the involvement framework in any analysis of responsibility and respective roles in remedy. We support the view expressed in the Joint CSO Statement that “IFC and MIGA have an opportunity to demonstrate leadership among development finance institutions and the wider financial sector by bringing this proposal in line with prevailing international human rights norms.” We also echo the concerns about the length of the four-year pilot period proposed in the context of creating new de facto expectations and potentially limiting IFC/MIGA’s ability to change course thereafter. We hope that the IFC/MIGA will draw on the feedback it receives to reorient these core elements of the Approach towards greater alignment with existing International Standards and developing practice among other financial institutions.