When presented with an opportunity to review human rights risks at a major hydropower plant in Chile, the Development Finance Corporation and affiliated international development banks reacted defensively and responded with boilerplate.
In a July post, I set out some context for records I received in response to a Freedom of Information Act request made to the Development Finance Corporation. It’s probably best to review that post before reading this follow up. Briefly, in August 2020, five UN Special Rapporteurs on Human Rights sent a detailed letter to DFC CEO Adam Boehler, warning of serious human rights risks at Alto Maipo Hydroelectric Project in Chile. The DFC is a major funder of the project.
A second set of responsive records, which DFC tells me is the final release, arrived yesterday. I’ve put them online here.
These are emails circulating within DFC and with other members of the Alto Maipo Lender Group in August and September, 2020, in response to the rapporteurs’ letter. The Santiago office of Norwegian bank DNB apparently received the letter first, on 18 August 2020, and emailed others in the Lender Group to alert them that it was on its way.
I don’t know what else the Office of Investment Policy (OIP) had heard about the Alto Maipo project before receiving Uauy’s email, or what exactly prompted OIP’s Jean Kim to remark “It Just keeps on coming.” Maybe Alto Maipo was already a source of concern or bureaucratic headaches, or maybe (given the email was sent at 8PM) it was just an especially busy day at the office.
The correspondence that follows Jean Kim’s email is pretty thoroughly redacted, making it difficult to assess the DFC response, but a few things are tolerably clear.
As suggested by Uauy’s email, DFC, DNB, International Finance Corporation, the Inter-American Development Bank, and other members of the Lender Group (like Germany’s KfW Development Bank and Brazil’s Banco Itau) will coordinate their response to the UN letter. The Lender Group’s Independent Environmental Consultant, ERM, will lead this effort.
ERM organizes a call to bring everyone up to speed, and after the call, a Social Risk Officer at DFC emails colleagues with a summary of the letter’s contents: “apparently the letter is claiming that the Project did not complete FPIC [Free, Prior and Informed Consent, as established in the UN Declaration of the Rights of Indigenous Peoples], amongst 5 other comments.” The 26 August chain of correspondence also includes a summary of a UN press release on the topic, with this quotation called out in bold:
“The Chilean Government would not be fulfilling its international human rights obligations if it prioritises economic development projects over the human rights to water and health,” said Léo Heller, UN special rapporteur on the human rights to drinking water and sanitation. He referred specifically to the Alto Maipo Hydroelectric Project, southeast of the capital, Santiago, and the avocado business in Petorca province in the Valparaiso, region north of Santiago.
Heller focuses his remarks on the Chilean government’s obligations to protect human rights. He goes on to suggest that steps taken by the government have been inadequate:
“Not only may this project reduce the main source of drinking water for residents of Santiago de Chile, it could also make air pollution in the capital worse,” Heller said, by damaging the “green corridor” of the Maipo River basin that has helped offset pollution.
During implementation of the project, which is due to come online in December, “although the Government has investigated damages to the environment no effective measure was taken to guarantee the human right to water for people affected by this megaproject”, Heller said.
There is clearly a role — or an opportunity — for the Lender Group to help the Chilean government address these challenges. As funders, the DFC and the Lender Group have a shared, concomitant responsibility to respect human rights in the economic development projects they back; to this end, DFC has its own environmental and human rights policies and compliance procedures in place.
But by September 4, the DFC appears to have assumed a defensive posture. “The letter,” writes Kate Dunbar of the Office of Investment Policy, “has reiterated key issues claimed by the opposition group throughout the Project.” She no doubt has in mind the group — “the opposition” — led by the Center for International Environmental Law, the Chilean NGO Ecosistemas, and Coordinadora No Alto Maipo. These organizations have been monitoring the project and raising concerns over human rights due diligence since its inception.
By September 21st, as the deadline for responding to the letter approaches, this defensive stance has hardened among some members of the Lender Group: the UN letter “contains a series of allegations than contain with [sic] no support whatsoever,” writes one member of the International Development Bank, dismissively. A strategy takes shape:
DNB is on board with the suggestion that the Lender Group keep the response non-confrontational, “high level and pointing to public information and bank’s general procedures.” ERM produces a draft and revisions follow, but all of that is redacted.
It’s hard to say how much these redactions could matter. Overall, the impression is that the Lender Group had decided, by late September, to stonewall. If that impression is mistaken, I welcome corrections.