Managing Environmental and Social Risks in Development Policy Financing

Effective environmental and social risk
management in development policy financing (DPF) is central
to achieving the World Bank’s goals of ending extreme
poverty and promoting shared prosperity in a sustainable
manner. If the World Bank is supporting far-reaching member
country reforms that are intended to contribute to the twin
goals, then it should seek to understand the impact of those
reforms on the poor. It should also ensure that the
country’s natural capital and long-term growth prospects
will not be undermined. The objective of this learning
product is therefore to assess the application of the
elements of the World Bank operational policy (OP 8.60)
governing DPF related to the implementation of the
environmental and social risk management requirements of the
policy, and identify lessons learned and good practices. The
focus of the study is on Bank actions, policies, procedures,
and guidance for environmental and social risk management,
based largely on a desk-based portfolio review of a large,
random sample of development policy operations (DPOs),
complemented by assessment of other relevant documents, and
interviews with key stakeholders. This approach requires the
Bank to determine whether specific policies supported by a
DPO are likely to have significant poverty and social or
environmental effects. The Bank emphasized the potential of
OP 8.60 to promote positive environmental and social
development from the time the policy was approved in 2004.