OECD Development Co-operation Working Papers

OECD Development Co-operation Working Papers cover work on understanding aid flows, strengthening aid delivery and improving development policy. Topics include, among others, aid statistics and architecture, aid effectiveness, capacity development, development co-operation systems and management, evaluation of development programmes, as well as the relationship between development and trade, conflict and fragility, environment, gender equality, governance and poverty reduction.


Managing environmental risks in development banks and development finance institutions – what role for donor shareholders?

How and where infrastructure is built – and how environmental and social risks related to infrastructure are managed – will have a direct influence on whether developing countries pursue more sustainable development pathways or not. Development banks and development finance institutions (DFIs) serve as important channels for infrastructure finance, have adopted safeguards systems to minimise and manage the environmental and social risks associated with their projects. This paper provides an overview of these systems and discusses the role of members of the OECD Development Assistance Committee (DAC) in influencing these, in their capacity as shareholders of these institutions. It shows that donor governments influence the policies and activities of development banks, but that the level of engagement varies between bilateral and multilateral development banks and is often determined by internal capacity. The paper argues that donor shareholder governments must continue to play an important role in encouraging development banks to strengthen the implementation of safeguards, which will require continued collaboration within governments, across countries and between development banks and DFIs. Efforts to build the evidence base on the impacts of safeguards in projects will further support this agenda.


Keywords: development co-operation, environment and social safeguards, green investment, development banks, development finance
JEL: Q56: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth; O19: Economic Development, Innovation, Technological Change, and Growth / Economic Development / International Linkages to Development; Role of International Organizations; O44: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Environment and Growth; O13: Economic Development, Innovation, Technological Change, and Growth / Economic Development / Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
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