This is the second of three posts, exploring the connections between cultural morality, sustainable development, and iconoclasm. A simple analysis of World Bank Group Strategy is performed.
– analytical format: strengths, weaknesses, opportunities, threats (SWOT)
– analytical focus: sustainable development
While ‘sustainability strategy’ documents have been found for various corporate persons, including: McDonalds, Nike, Monsanto, Bayer, Nestle, and Microsoft (all last accessed in 2014), no such document has been found in relation to the WBG. The closest thing in meaning to such a text, was found as a blurb in an environmental strategy published by the WBG.1
“THE WORLD BANK GROUP IS CONTINUING TO REDUCE ITS OWN IMPACT THROUGH A STRING OF INTERNAL SUSTAINABILITY INITIATIVES.
Formal programs have been set up within the World Bank and the IFC to manage environmental impacts from internal operations. Efforts to measure, report, and offset greenhouse gas emissions from internal operations have been strengthened. In 2006, the WBG became carbon neutral for its headquarters-based internal business operations, including all facilities operations, staff air travel, and owned vehicle use. WBG facilities are now more efficient in water use, waste management, and procurement, and the results of these efforts are published annually on the website. In 2010, the IFC’s headquarters building was awarded the Leadership in Energy and Environmental Design Platinum Certification for Existing Buildings by the U.S. Green Building Council. Two other WBG buildings have received a gold standard, and the new “C”.”
This paragraph seems insufficient for the purpose of a SWOT analysis, as no weaknesses, opportunities, or threats are clearly stated. Let us instead take a wider perspective from a document, titled “World Bank Group Strategy”.2
A selection of introductory quotes.
“The [WBG] strategy focuses on the ambitious goals of ending extreme poverty and promoting shared prosperity in a sustainable manner.”
“The [WBG] is committed to helping clients3 see note reach these goals through economic growth, inclusion and sustainability.”
“The WBG will reposition itself, based on a value proposition to best serve the development community in pursuit of the two goals. [(i) work more in partnership with others, including the private sector, and (ii) significantly increase collaboration across its agencies].”
“Implementation of the Strategy will require organizational change and a new framework for medium-term financial sustainability to ensure that its resources are commensurate with the roles and responsibilities it carries out on behalf of the international community. Translated into action, the Strategy will reposition the [WBG] to help transform the lives of the nearly 4 billion people […].”
– presumably, “nearly 4 billion people” refers to ‘owned clients’ (i.e. ‘owned countries’).
“a strong, AAA-rated financial institution, the WBG mobilizes and manages large amounts of resources for development on a global basis, and offers a wide range of innovative financial products and services to clients.”
“With its global multilateral membership and ownership structure, the WBG can synthesize perspectives on development issues from around the world.”
“the WBG has broad operational experience; expertise on policy dialogue, implementation, and capacity building; knowledge of the private sector; ability to blend public and private finance; and capacity to bundle knowledge, finance, and convening services.”
“The WBG will strengthen the focus of its country programs by developing a more evidence-based and selective country engagement model in the context of country ownership and national priorities, and in coordination with other development partners.
A Systematic Country Diagnostic (SCD) will use data and analytic methods to support country clients and WBG teams in identifying the most critical constraints to, and opportunities for, reducing poverty and building shared prosperity sustainably, while explicitly considering the voices of the poor and the views of the private sector. The Country Partnership Framework (CPF) will describe focus areas for WBG support, aligned with the country’s own development agenda and selected primarily to address the key constraints and opportunities identified in the SCD. Performance and Learning Reviews will identify and capture lessons; determine midcourse corrections, end-of-cycle learning, and accountability; and help build the WBG’s knowledge base, including effective approaches for integrating inclusion and sustainability dimensions (including gender and environmental sustainability) into the SCD and CPF. A new Regional Coordinating Mechanism [RCM] will formalize country-and regional-level coordination among the [World] Bank, [International Finance Corporation (IFC)], and [Multilateral Investment Guarantee Agency (MIGA)]. The RCM will help the WBG with its regional engagements.”
Weakness: good quality statistical information
“In the competitive market for political risk insurance, MIGA is considered the strongest multilateral provider in terms of its business results, global reach, and market reputation. It is recognized for (a) its expert underwriting, (b) its strong balance sheet, enabling large long-term guarantees, (c) its willingness to guarantee complex projects in high-risk markets, and (d) its unparalleled record in resolving investment disputes. MIGA, too, has a broad array of clients representing a range of industries, sectors, and geographic areas. Much of MIGA’s comparative advantage is derived from its affiliation with the WBG, which enables it to draw on the research and knowledge base to inform underwriting, the extensive network of global offices to support business development and project monitoring, and the relationship with host countries to allow it to take on riskier projects. Like other multilaterals and the other WBG agencies, MIGA’s perceived weakness is having heavy information requirements, especially in the areas of environmental, social, and integrity due diligence.”
“Building shared prosperity will require countries to address inclusion and sustainability more vigorously. With the focus on jobs, policy action is urgently needed in countries where women are excluded from opportunities in paid employment and entrepreneurship. Developing countries must manage spatial transformation well to increase prosperity sustainably. Across the developing world, growing populations and economies are putting significant strain on the natural resource base—land, water, forests—and countries are struggling with the impact of climate change, environmental degradation, and ecosystem changes. Most countries that have successfully transitioned to high-income status followed a path of urbanization and concentrated industrial development that enhanced productivity, expanded service delivery and generated broad based gains in social welfare. In tackling these complex challenges, developing countries can benefit from the pace and breadth of technological change, which will continue to reshape development in myriad, often unforeseen ways—but this in turn will require robust policies to promote innovation, entrepreneurship, and the free flow of information.”
Opportunities: ownership and development of clients
“While the opportunity is historic, bold steps will be needed by all stakeholders and the risks are multifold. The WBG faces significant risks to delivering on its commitment to the two goals, particularly if it falters in implementing the actions identified in the Strategy. Management will need to meet its commitment to keep the WBG relentlessly focused on the goals, to offer clients world-class development solutions, and to operate truly as One World Bank Group, as well as to move ahead with changes to make the organization more efficient and stronger. Continued strong engagement with the Board of Executive Directors and the Governors will be decisive to address key areas such as the budget and financial sustainability, and to support the shift to a “Solutions WBG.” Achieving the goals will depend on each member government and the international community as a whole demonstrating the political will to focus on the poor and disadvantaged, and to act in partnership with the private sector and civil society. Effective global action will require that all countries and multilateral institutions demonstrate a renewed capacity to collaborate. Together, we can do what it takes to end poverty and build shared prosperity in our time.”
“Implementing the CPF will be challenging, and there will be a need to adapt it to specific country circumstances. First, country ownership will remain critical. In situations where the alignment between country demands and the goals remains unclear, the WBG will work with country clients to deepen the analysis, understand the political economy, and pursue dialogue in an effort to help clarify the most appropriate and promising pathways toward the goals and build social consensus. Second, partnerships will be essential. WBG country teams will work with key partners at the country level, including the IMF and MDBs, encouraging them to engage in the SCD process and seeking their input into the formulation of CPFs where appropriate. Third, data availability will be a limiting factor, particularly in countries with weak country statistical systems: only one-quarter of WBG member countries have adequate capacity and data to assess progress in poverty reduction and shared prosperity, and to account for sustainable development. Working with development partners, the WBG will launch a new initiative under which member countries will be requested to gather relevant data and improve access to and dissemination of these data through a global database.”
Threats: climate change and social development
“Climate change threatens both future poverty reduction and the sustainability of past gains, achieved through decades of efforts. The international community’s collective response to the fundamental threat posed by climate change will shape not only the global fight against poverty, but also the world’s overall development trajectory for generations to come. Average world temperatures are on track to rise at least two degrees Celsius and rainfall patterns are changing. Increasingly, these changes are resulting in more severe and frequent extreme weather events—storms, droughts, heat waves, and floods. The impact of these events is exacerbated by environmental degradation and other socio-economic factors. The adverse effects of climate change fall disproportionately on the poorest countries and, within countries, on the poorest people, who are already seriously affected by environmental degradation and lack adequate capacity to adapt.”
The WBG plans to capitalize upon its vast finances and sphere of influence via its institutional structures, in order to sustain and increase its finances and sphere of influence via “shared prosperity” and “inclusion” of economically developing regions on the globe. Critically, one would ask whether this is not a polite manner of stating “client ownership”, and whether the latter is not simply slavery; the result of systemic indebting of the world’s poorest people.
Is FAIRTRADE Fair?
A similar treatment of Fairtrade organization has revealed identical corporate, financial, institutional, and governing mechanisms, albeit on a smaller scale and flying different colors. Briefly, farmers living in ‘developing economies’ are bamboozled into debt, up to 60% of annual income, under the auspices of sustainable development. Critically, peasant farmers under Fairtrade are forced into a holding pattern via ‘client ownership’ by indebtedness, identical to that implemented by the WBG.
Fairtrade mission statement / manifesto4
I) “[Fair] Traders pay producers an agreed minimum price that covers the costs of sustainable production and living; this gives way to the market price whenever the latter is above this minimum.”
II) “[Fair] Traders should, in addition to the minimum price, also provide a social premium, of around 5 to 10 per cent, for development and technical assistance.”
– the term ‘social premium’ is identical in meaning to the more familiar term social insurance.5 Essentially the Fairtrade premium is a financial risk mitigation mechanism, helping to stabilize production.
III) “Fair Trade products must respect a series of social and environmental criteria.”
– is this not true for all products?
IV) “[Fair] Traders, as far as possible, must purchase directly from producers or producer organisations using long-term contracts to lessen the number of intermediaries and to promote long-term planning and stability.”
– this surely is a good ambition!
V) “[Fair] Traders should help provide producers with credit of up to 60 per cent of the value purchased when requested.”
The fine print
“[Fair trade contracts are also] available for large agricultural businesses […].”
“[…] Fair Trade organisations charge certiﬁcation [contractual] fees to cooperatives [villagers] and wholesalers [usually villagers] for services such as inspecting the farms and monitoring the supply chain. The minimum charge for certiﬁcation [contractual obligation] for the smallest group (fewer than 50 producers) applying for certiﬁcation of their ﬁrst product is approximately £1,570 in the ﬁrst year followed by an annual recertiﬁcation fee of around £940. The charges for certiﬁcation of additional products are approximately £165 in the ﬁrst year followed by an annual recertiﬁcation fee of £145.”
“[W]holesalers that supply to retailers wishing to use the Fair Trade label also have to pay a licence fee, which is usually based on the wholesale price of the product. For example, in the UK, the Fairtrade Foundation charges 1.7 per cent on the ﬁrst £5 million [£850,000] of annual sales of Fair Trade certiﬁed products and marginally lower for incremental sales thereafter. These fees contribute towards meeting the expenses of the Fair Trade organisations.”
“The mainstreaming of Fair Trade proved highly successful, with Fair Trade’s proﬁle and sales expanding markedly.”
– may we assume this refers to the trade of corporate shares?
“[The following global brands have made 100 percent commitments to Fairtrade:
Cadbury Dairy Milk, Starbucks, Kit Kat [but not the rest of Nestlé], Green & Black’s and Ben & Jerry’s]”
– please stop here for a minute, to think about what this might mean ‘wholly’, i.e. in regard to the ‘development of villagers’ and ‘indebtedness of villagers’.
“An important component of the Fair Trade movement is its campaign-based promotion. [Promotion] is critical for Fair Trade as its growth in sales depends on public awareness and understanding of Fair Trade products and the rationale for buying them, marketing and conventional distribution and retail channels. The mainstreaming of Fair Trade proved highly successful, with Fair Trade’s proﬁle and sales expanding markedly.”
– ‘campaign-based promotion’ is nice wording for ‘corporate and political propaganda’.
– no mention at all of the well being of peasant farmers or villagers.
Bibliography and Notes
1) The World Bank Group, “The World Bank Group’s Environment Strategy 2012-2022”, (2011), http://go.worldbank.org/K0BH79OE50
2) Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries, “World Bank Group Strategy”, (2013), http://web.worldbank.org/WBSITE/EXTERNAL/DEVCOMMEXT/0,,pagePK:64000837~piPK:64001152~theSitePK:277473~contentMDK:23470472,00.html
3) Note: in this document the words “client” and “country” are used interchangeably. Also, there are three mentions of “country ownership” and at least one mention of “client ownership”.
4) S. Mohan, “Fair Trade Without the Froth”, (2010), http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0CDEQFjAB&url=http%3A%2F%2Fwww.iea.org.uk%2Fsites%2Fdefault%2Ffiles%2Fpublications%2Ffiles%2Fupldbook524pdf.pdf&ei=7vN1U-nkAene7AaVxYHIAQ&usg=AFQjCNFeHESy_r4CDg0yJUESbfnIDhXIqg&bvm=bv.66699033,d.ZGU