Last Friday marks the end of the 60-day public comment period on the second draft of the Policy and Performance Standards on Social & Environmental Sustainability by the International Finance Corporation (IFC), the private lending arm of the World Bank Group (WBG). The IFC has engaged stakeholders globally in this multi-year policy review process with the goal of creating policies that reflect best practice in the finance industry for addressing social and environmental problems.

Today, two days before the deadline, a group of 14 socially responsible investing (SRI) firms and organizations representing over $117 billion in assets filed a letter with the IFC, following up on a previous letter from April 2005 and an earlier letter from April 2004.

“We are writing to express our ongoing concern that while the public comment period was extended, we do not see many substantive changes to the Performance Standards or Disclosure Policy from the recommendations provided by companies that are IFC clients, civil society organizations, and investors over the last year,” states Lauren Compere, Chief Administrative Officer and Global Advocacy Coordinator for Boston Common Asset Management, who authored the letter. “We also do not perceive willingness from the IFC to make meaningful changes at this stage in the process and believe there is much need for improvements.”

The letter, whose signatories include Christian Brothers Investment Services (CBIS), KLD Research & Analytics, General Board of Pension and Health Benefits of the United Methodist Church, MMA Praxis Funds, Progressive Asset Management (PAM), Trillium Asset Management, lists six key concerns. These include strengthening IFC accountability, implementing corporate screening and minimum human rights standards, the absence of a comprehensive climate strategy, and the dilution of existing performance standards.

“The proposed new system provides IFC with increased flexibility and discretion in making lending decisions but does not call for a parallel strengthening of the IFC’s own accountability or improved system of monitoring and oversight that ensures that IFC clients are adhering to IFC’s policies,” writes Ms. Compere.

IFC Director of the Environment and Social Department Rachel Kyte points to several ways the proposed policy enhances accountability both for companies receiving loans and IFC itself.

“Companies must consult and engage, through the life of the project–something we’ve never said before–with those who may be impacted by their operations, and companies must disclose the measures they’re taking to mitigate and avoid those impacts,” Ms. Kyte told before she received the SRI letter. “For our part we will, for the first time, say 60 days before we go to board for all projects what the project is, why we’re doing it, the expected development contribution by the IFC’s involvement in the project, and where the risks and impacts are.”

“Then on a yearly basis, we will report in aggregate across our portfolio the impact we are having,” she added “None of this exists today–it’s all new, all improved, all stronger, and all more than any other institution does.”

While the increase in case-specific disclosure beforehand will enhance stakeholders ability to critique and influence the design of specific projects, IFC’s aggregate reporting after projects enter its portfolio may hinder the ability of stakeholders to track accountability for individual projects.

Ms. Kyte also noted that IFC’s chief economist has created a new unit of staff to work on improved matrices for measuring development impact to be reported annually. However, Ms. Kyte also acknowledged shortcomings in IFC’s transparency, a key element of accountability.

“One thing we’ve learned throughout the consultation period is that there are large parts of our operational procedures beyond the environment and social department that are opaque to our stakeholders,” she said. “There’s an internal discussion now about how do we improve access to information that lets people see how we do business and the values and principles of how we do business.”

On the issue of implementing corporate screening and minimum human rights standards, Ms. Kyte pointed out that the IFC performs a “very thorough analysis” of all companies it invests in.

“At the same time, there is no off-the-shelf tool that everyone is using to assess human rights records, and there’s nobody in the SRI community who’s come up with one,” she said. ” I can’t put as a requirement into an environment and social policy something that doesn’t exist at the moment–our job is to move the market forward, and I think we’re doing that.”

IFC is financing three research projects on human rights impact assessments, including an adaptation of a human right assessment tool used by the Danish Institute for Human Rights on the financial sector, as well as one by the International Business Leaders Forum (IBLF) on multiple sectors.

In a similar vein, Ms. Kyte acknowledged that IFC does not have a Performance Standard on climate change, though Performance Standard 3 on Pollution Prevention and Abatement addresses greenhouse gas (GHG) emissions.

“We are looking very hard at ways to measure more effectively our renewable energy contribution as well as the energy efficiency we achieve in the portfolio by requiring companies to seek energy efficiency solutions as part of the Performance Standards, and also to look at potential methodologies for monitoring the carbon impact of our portfolio, not just the carbon impact of our operations,” she said. “It’s really complicated to do.”

Ms. Kyte affirmed that she will examine any specific recommendations from the SRI community on climate change policy. However, Ms. Kyte vehemently countered the notion that the proposed policy dilutes existing IFC standards.

“There has never been any intention of diluting, there is not one place that I think we are diluting our standards,” Ms, Kyte said. ” We’ve introduced standards in areas where we’ve been silent before, or in fact where we’ve been equivocal, and now we’re being absolutely unequivocal–there is a whole suite of areas that take us far beyond where we are at the moment, including labor standards, community health and safety standards, a complete approach to biodiversity, social assessments integrated for all projects.”

“This is what the SRI and the environment and social NGO communities have been hammering after the Bank Group for more than a decade to do, and now we’re doing it, and why are we doing it?–because we believe that, even in some of the most tenuous emerging markets, it is in the company’s advantage to position themselves efficiently and effectively on their environment, social, and governance issues,” she added. “We are not doing it so that we can proselytize from Washington that our values are global values–no, this is about building sustainable companies.”