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Conclusions: World Bank Group

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Environmental problems in developing countries remain serious and are increasing in many places, reflecting both the Bank Group's limited ability to affect larger—including market—forces that have an impact on the environment and the need for greater attention to these concerns on the part of the countries themselves and the donor community as a whole.

Even though the Bank has provided considerable lending for urban sanitation and environmental management in China and elsewhere, poor water and air quality continue to generate serious public health problems in megacities and other urban areas. Global greenhouse gases continue to rise, especially in China and India (as well as in some developed countries), and the Bank has only recently stepped up its efforts to help the most vulnerable nations in South Asia, Sub-Saharan Africa, and elsewhere adapt to the likely impacts of climate change. Finally, despite Bank-supported interventions in support of sustainable development in the Brazilian Amazon over the past several decades, deforestation continues at high rates and could further accelerate, depending on the evolution of international and domestic demand for beef, soybeans, timber, and ethanol, together with government infrastructure and private agribusiness investments. While the Bank Group cannot be expected to address all environmental priorities and ultimately is limited by what its clients want it to do, it can nonetheless be more proactive in its efforts to help them address local and global environmental challenges, both through its own support and by working more effectively with partner institutions that share the same objectives.

The world has changed considerably since 2001. The role of the private sector in international financial flows—and of IFC and MIGA operations within the World Bank Group—has sharply expanded, while global environmental challenges, especially climate change, and transnational environmental footprints, have become increasingly important and visible. In this context, and in view of its efforts to promote inclusive and sustainable globalization, the World Bank Group's strategy for the environment needs to be updated.

It is crucial that the World Bank Group have a clear definition of its role in support of its clients' efforts to achieve greater environmental sustainability in the years ahead. Consultations carried out during this evaluation have revealed that a broad range of external stakeholders, including the private sector and civil society, are looking to the World Bank Group for this definition. Representatives of the private sector have indicated, moreover, a desire to continue to engage actively, not only with IFC and MIGA in relation to environmental sustainability concerns, but more directly with the World Bank as well.

Strengthening coordination and collaboration in relation to the environment within the World Bank Group, at both the corporate and country levels, should be a central part of the updated strategy.

This is particularly important for countries where the Bank Group has its largest portfolios and whose environmental management challenges have the most significant global implications. It also reflects a broader need for more effective public-private partnerships in countries where the Bank Group operates, as well as for greater transfers and development of appropriate technologies, and support for environmentally friendly market transformation more generally. Stronger intra-World Bank Group collaboration is needed across the board, including in work with its clients to improve environmental performance of small and medium size enterprises, as well as with larger firms and financial intermediaries, through better supply chain management and capacity building, among other measures.

The evaluation confirms that partnerships can—and often do—play a vital role in enhancing the effectiveness of Bank Group support for environmental sustainability. But it has also shown that these partnerships have not always been as effective as they might have been, and thus could— and should— be enhanced.

This is especially important given the growing scale and seriousness of many environmental problems at both the national and global levels. The Bank Group's existing environment-related partnerships with other UN agencies (especially UNEP and UNDP), with programs such as the GEF, with major international environmental NGOs, and with the private sector should thus be strengthened. The Bank Group should also collaborate with the multilateral development banks to promote the use of IFC Performance Standards and engage with more financial institutions to adopt Equator Principles, while helping them to improve their compliance reporting. Partnerships in the public and private sectors should also be a central theme in updating the World Bank Group environment strategy, a process that should include active consultations with such partners. All of this, however, including future joint activity in relation to climate change, must continue to occur in the context of the Bank Group's overriding poverty reduction and sustainable development mission. Environmental issues, while increasingly important, are only part of the dialogue. World Bank Group clients face many other challenges, and the Bank Group must grapple with many other demands as well.

While helping clients address climate change (including responding better to both mitigation and adaptation needs) is critical, it is equally important to ensure that other persisting environmental challenges—such as biodiversity conservation, water resource management, and local pollution abatement—continue to receive adequate priority and attention.

In updating the strategy, the economic benefits of environmental investments and the need to avoid the costs of inaction should also be brought out, together with the links to poverty reduction and growth in both the short and longer term.

The Bank Group, particularly the World Bank, needs to strengthen its information base regarding the environmental aspects, results, and impacts of its interventions. This evaluation has found shortcomings in this regard at both the individual project and portfolio levels. Better tracking of the environmental effects of Bank Group advisory and other nonlending services would also be desirable. Monitoring, evaluation, and reporting need to be enhanced at all levels, as does environment-related research and knowledge generation and dissemination more generally, both within the World Bank Group and in conjunction with external collaborators. The Bank Group can and should learn more from the relevant experience of other organizations, including its major development and country partners. In short, the World Bank Group's role as a knowledge bank on matters related to the environment and sustainable development needs to be reinforced.

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