By Toby McIntosh
The transparency of development finance institutions (DFIs) is “poor,” according to a comprehensive evaluation issued Jan. 25 by Publish What You Fund.
“Across the board DFIs are insufficiently transparent – critically, DFIs are not providing evidence of impact, data regarding mobilisation, or proof of accountability to communities,” states the top conclusion of the study by the international nongovernmental organization based in the United Kingdom.
“For many DFIs, even basic information about their investments is not publicly available,” according to the 40 page summary of research that rated 40 DFIs based on 52 specific categories of transparency.
The International Finance Corporation (IFC) ranked as the most transparent non-sovereign (private sector) DFI in the assessment, scoring 54.4 out of 100. But specifics in the report indicate some of the weaknesses. “Although IFC revealed what E&S (environmental and social) documents were produced for projects, it only disclosed them a handful of times.”
The Asian Development Bank was rated as the most transparent DFI in the analysis of sovereign operations, scoring 75.9 out of 100.
Beginning several years ago, PWYF began honing its “DFI Transparency Index” and meeting with officials from the DFIs and other interested parties. A series of five preliminary reports were issued without revealing the scores of individual DFIs, but drawing some broad, and critical conclusions. (See EYE articles here, here, and here.)
In its new report, PWYF said it has seen evidence of “piecemeal” progress and “constructive engagement” by the DFIs. Building on this “baseline report,” future ratings reports are planned
Gary Forster, PWYF’s CEO said in a press release, “The launch of this report marks a moment of reckoning for DFIs and their shareholders.”
Forster said that “the dearth of information about impact, mobilisation and accountability to communities raises some serious questions about the difference these organisations are making and how effectively their capital is being applied.”
The report is particularly critical of “commercial confidentiality arguments” to prevent disclosure of information about DFI projects with private sector entities. Such justifications “are being used too liberally,” Forster said.
“There is still not enough information available to stakeholders and researchers about where DFI capital is invested and its impact. Information about how DFIs manage and mitigate environmental, social, and governance (ESG) risks continues to be unavailable,” according to the report.
In addition, the report concludes, “DFIs still publish far too little data about how these policies are implemented in individual projects.”
The report includes some general recommendations and specific recommendations for each DFI examined.
In an overall conclusion, the PWYF report states, “The results of this index show that the need for further efforts to increase transparency is urgent and that we have not yet reached a position where we can say any DFI is sufficiently transparent.”
