More than 100 citizen groups and 19 affected communities in the Philippines recently filed a historic complaint against the International Finance Corporation (IFC), the World Bank’s private-sector arm, accusing the IFC of fueling global climate change through its investments in a Philippine bank that is a major financier of the coal industry.
This is the first climate change-related complaint received by the IFC’s independent watchdog, the Compliance Advisor Ombudsman.
The complaint accuses the IFC of supporting 19 new or expanded coal-fired power plants in the Philippines through its investments in Rizal Commercial Banking Corporation (RCBC).
After receiving $253 million in IFC funding and the World Bank’s stamp of approval, RCBC went on to provide and arrange billions of dollars in financing for the power plants and the companies developing them, in violation of the IFC’s social and environmental Performance Standards and climate commitments.
The complainants are calling on the IFC to use its leverage to stop the coal projects that have not yet commenced operation, and to ensure that its financial intermediaries in the Philippines and around the world stop financing coal projects and instead fund renewable energy solutions.
“Our complaint is an indictment of the IFC’s complicity in putting our country and communities at certain risk at a time when addressing climate change impacts is the order of the day,” said Aaron Pedrosa of the Philippine Movement for Climate Justice, one of the complainants, whose home was destroyed by Super- Typhoon Yolanda (International Name: Haiyan) in 2013.
“By providing funds to intermediaries that are bankrolling a new generation of coal plants, the IFC is lending its imprimatur to the deaths and destruction caused by coal plant operations. The IFC is in effect issuing a license to kill. It should be held to account,” Pedrosa said. Pedrosa presented the complaint to the Compliance Advisor Ombudsman and the leaders of World Bank Group in Washington, DC.
The IFC is indirectly funding coal in the Philippines despite a 2013 World Bank pledge to get out of the industry for good, except in extraordinary circumstances. World Bank President Jim Yong Kim has said further funding of coal in Asia will “spell disaster for us and the planet.”
The IFC’s investments in RCBC bank fit a global pattern. Over the past five years, the World Bank Group member has invested $50 billion in commercial banks and private equity funds, without disclosing where this money ultimately ends up. The IFC’s financial intermediaries are required to apply the institution’s strict environmental and social performance standards. In practice, however, they are financing harmful and high-risk companies and projects, with little apparent IFC oversight.
In October 2016, Inclusive Development International exposed the IFC’s hidden support for dozens of new coal projects in the Philippines and elsewhere as part of its Outsourcing Development investigative series.
“If the world’s preeminent development finance institution can’t stop bankrolling dirty coal plants and instead support developing countries in making the shift to renewable energy technology, the consequences will be dire – for the Philippines and the rest of the world,” said David Pred, managing director of Inclusive Development International, which supported the groups to file the complaint together with Bank Information Center.