The emerging Brics economies – Brazil, Russia, India, China and South Africa – struck an agreement this month to establish a development bank with an initial capital of $100bn.
The Brics want the bank to mobilise resources for infrastructure and sustainable development projects. From the outset, it should adopt open and transparent processes, and environmental and social rules, that are the best in the business. It should help communities become involved in the development of projects, invest in schemes that communities actually want, and ensure that its investments benefit the most marginalised people.
The world needs plenty of development capital, and infrastructure investment is essential to fulfil people's rights to water, sanitation, education and healthcare – to name a few. But too often communities have been displaced by infrastructure projects, inadequately compensated for the losses they endure, and pushed further into poverty.
The government of Tajikistan has relocated 1,500 of the 7,000 families that will need to be moved to make way for one of the world's tallest hydroelectric dams. But the government has not provided the necessary compensation to displaced families to replace their homes or restore their livelihoods, and many have suffered serious disruptions in access to food, water and education.
Projects may also cause environmental damage, which can have devastating impacts on access to water and food, and people's health. Many communities in Brics countries have experienced development projects such outcomes. Communities have protested against theNarmada valley hydroelectric project in India because of displacement and environmental impacts. In China, Human Rights Watch has documented the effects of lead poisoning on children in villages heavily contaminated by factories in Henan, Yunnan, Shaanxi and Hunan provinces.
At a minimum, the bank's rules should prohibit investment in activities that would cause, contribute to, or exacerbate human rights violations. It should require respect for human rights in all of its activities, and require staff to assess the impact of bank activities on human rights and avoid or mitigate adverse impacts.
The bank should include policies on indigenous people, involuntary resettlement and labour standards that meet the norms provided for in international law, and prohibit discrimination.
The absence of such rules has come back to haunt the World Bank. It invested in programmes in Ethiopia that local government officials excluded people from accessing, discriminating against them on the basis of their perceived political opinion. Healthcare funding for Vietnamwas used in drug detention centres where detainees were forced to work, when sick detainees had the right to be released if they did not receive the medical treatment they needed in the centres.
The World Bank Group's private lending arm, the International Finance Corporation (IFC), has similarly failed to identify and address any adverse human rights impacts of its activities. In its investment in Dinant, a palm oil and food company at the centre of a spate of killings in Honduras, the group's independent accountability mechanism concluded that staff did not adequately assess and respond to risks of violence and forced evictions.
The mechanism pointed to a culture and incentives structure that measures results in financial terms, encouraging staff to "overlook, fail to articulate, or even conceal potential environmental, social, and conflict related risks". The IFC is taking steps to remedy these problems, but it has a long way to go.
The Brics bank should create an independent accountability mechanism that accepts complaints and works to resolve them, assesses the bank's compliance with its policies and international law, determines appropriate remedies for anyone harmed by the bank's activities, and advises the bank on how it can improve compliance.
The Brics have an opportunity to be global leaders on development by building a bank that advances rights. If they do not, the new bank could do more damage than good.
Jessica Evans is the senior advocate and researcher on international financial institutions at Human Rights Watch