Flickr / Climate Resilience in Zambia, photo by CIF Action , CC BY-NC-ND 2.0

Since the creation of the field of development assistance in the 1950s, multilateral development banks (MDBs) have aimed to support government- and market-led economic development in lower income countries. Since the 1980s, MDBs have become far more sophisticated in their recognition and management of negative impacts on local communities and the environment from their investments in infrastructure, natural resource extraction, and urban development. They have created “safeguards” policies that seek to limit and mitigate negative environmental and social impacts; programs targeted explicitly at marginalized communities; and procedures to allow local communities and advocates for social and environmental goals to be heard in investment planning and implementation.

CBI has been working for more than 20 years with MDBs and their national and local stakeholders to resolve conflicts and facilitate collaboration on development investments. New challenges continue to emerge as MDBs and related global funds move into new terrain, including investments to help countries mitigate and adapt to climate change.

Recently, we conducted an evaluation of local stakeholder engagement in the work of the Climate Investment Funds. This work has reinforced some of our prior insights and guidance on how MDBs can successfully work with local stakeholders, and it has also generated new lessons for this moment in global development finance.

The Climate Investment Funds (CIF) are a global partnership to help developing countries meet the challenge of mitigating and adapting to climate change. The CIF’s governance includes developed country government donors, developing country governments who receive funding, and five MDBs that serve as CIF’s implementing agencies, working with governments to develop national programs and fundable projects. Since its launch in 2008, CIF has provided more than $8 billion in funding to 72 countries to promote clean energy technologies, increase access to renewable energy, conserve forests, and strengthen climate resilience.

In 2018, the CIF’s Evaluation and Learning Initiative commissioned a major study by CBI to evaluate how effectively the CIF has been engaging and responding to local stakeholders in its governance, national programs, and individual projects. We developed a theory of change to describe the CIF’s aspirations for local stakeholder engagement in each of these arenas. We then used the theory of change as a framework for our review of 18 national investment plans and 20 projects across the CIF’s four funding areas, using document review, interviews with more than 200 stakeholders, and three country visits. Like other multilateral financial institutions, the CIF faces significant challenges to effective local stakeholder engagement in governance, national planning, and project planning and implementation. Here, we offer a snapshot of those challenges, and what we learned in evaluating the CIF’s efforts to meet them.

Local Stakeholder Engagement in MDB Governance



At the global level, participation of local stakeholder representatives in the governance of MDBs has been limited. Most MDBs and other international financial institutions are governed by a board representing the governments that contribute to and receive their funds, with voting power weighted according to financial contributions. Board meetings are generally not open to the public, and formal board consultations with civil society are infrequent and highly structured. At the time the CIF was created, some of the newer multilateral funds, notably the Global Environment Facility, had created opportunities for civil society representatives to engage with their governing boards, but with significant constraints on the time and depth of interaction.

CIF’s experience with Observers

We found that the CIF innovated in its governance by appointing representatives of civil society, Indigenous people, and business constituencies as Observers on its governing committees. CIF has supported self-selection processes for each constituency and enabled Observers to participate actively in committee deliberations. Observers have been effective in advocating for the interests of local stakeholders in deliberations over some CIF investment plans, and in influencing CIF policies and initiatives. For example, Observers played an important role in advocating for and co-designing the CIF’s Dedicated Grant Mechanism for Indigenous Peoples and Local Communities, which gives national committees of Indigenous people and local communities direct control of CIF funds for integrated forest conservation and community development projects.

Observers have, however, had difficulty effectively representing regional constituencies that are very broad and not deeply engaged or knowledgeable about the work of the CIF. As in other MDBs and multilateral funds, not all Observers are well-connected to local stakeholders. Observers have had uneven support from the CIF in developing and maintaining constituency communications, and in preparing for and following up after CIF governing committee meetings.

Local Stakeholder Participation in National Investment Planning



It is rare to find substantial engagement of local stakeholders or their representatives in national investment planning; these processes tend to be focused on senior government officials and MDB staff. The limits on local stakeholder participation at the national level reflect underlying differences in interests, values, and identities. MDBs and the senior officials in government ministries have a primary interest in making investments in national-scale economic development and poverty reduction. Their value systems emphasize economic rationality and governance by nation-states, with stakeholder engagement as a means to improve projects, not as an end in itself. Both MDB and national government officials identify strongly with the nation-states that are the primary focus of their professions, and to whom they are primarily accountable.

Community leaders and members, and NGOs allied with them, are primarily interested in local economic development, social stability, and control of their land and resources. Their value systems emphasize community rights, human rights, and solidarity in the face of outside forces. They often identify much more strongly with the local community (and sub-groups within the community) than with the nation.

CIF’s national programmatic approach

To try to bridge these differences and encourage effective local stakeholder participation at the national level, the CIF used a “programmatic approach” intended to ensure meaningful engagement of local and national stakeholders early in national investment planning. This effort was especially impressive in the context of the CIF’s Pilot Program for Climate Resilience (PPCR), where substantial investments in both government and local stakeholder capacity for joint planning led to well-designed investments in climate resilient agriculture and water management in Tajikistan and Zambia, with gender-sensitive approaches to program design. It also led to meaningful engagement of forest sector stakeholders in the CIF’s Forest Investment Program (FIP) in the Democratic Republic of the Congo, Mexico, and Mozambique.

There was less scope for local stakeholder engagement in the two energy oriented programs (the Clean Technology Fund and the Scaling Up Renewable Energy Program), both because these programs were more focused on a limited scope of technical policy and investment issues, and because there was limited will and capacity among MDB and government partners to support effective engagement. And in PPCR and FIP, where there was more systematic effort, there was significant variation in the breadth, depth, and influence of local stakeholder engagement in the country investment programs that we reviewed. In some countries, the differences in interests, values, and identities; the absence of accepted forums for dialogue; and limited government and local stakeholder capacity to engage meant that the programmatic approach did not produce effective local stakeholder engagement.

Local Stakeholder Engagement in MDB Project Design and Implementation



At the project level, there is a different set of challenges to local stakeholder engagement. MDB and government agency staff responsible for projects are strong on technical analysis, project planning, and following established procedures. They are not generally as well equipped to design and manage complex multi-stakeholder dialogue at the local level. Local communities generally have limited understanding of the role of MDBs and national agencies in funding and designing local projects, and face barriers of language and technical understanding in engaging with them. They also typically seek dialogue based on local norms and leadership/membership structures, not on national government or MDB procedures. MDBs and government implementing partners generally operate under time pressure to move investments forward from design to approval, while communities and NGOs often seek more time to understand possible benefits and contest perceived threats.

CIF’s project-level experience

At the project level, we found some good strategies to create effective dialogue among local stakeholders and project designers and implementers. Notably, some CIF implementing partners (MDBs and governments) were able to build on effective engagement of local stakeholders in national investment planning; strengthen the capacity of both government staff and local community representatives to design projects and activities in collaboration; and use NGOs and community-focused financial intermediaries to facilitate dialogue and support communities in implementing project activities. In the countries where local stakeholder engagement was most successful in the first stage, it often translated into continuing, effective engagement during project design and implementation. However, we also found that engagement became more uneven during the project cycle, depending heavily on whether national government agency capacity was sufficient to support engagement across a wide range of local situations—from dozens of local climate resilience planning exercises in Zambia to hundreds of ejido communities in Mexico’s forest sector.

Opportunities to “Level Up” Stakeholder Engagement in the CIF

Overall, we found that the CIF had numerous good practices in local stakeholder engagement, but that these practices were unevenly implemented across its four funding areas, and across the very wide range of country contexts in which the CIF invested. Our recommendations focused on “leveling up” the CIF’s stakeholder engagement practices by institutionalizing the lessons from its best practices across the full portfolio. We recommended that the CIF:

  • Enhance Observer selection, onboarding, and constituent representation.
  • Increase the meaningful and effective engagement of local stakeholders in investment planning.
  • Improve local stakeholder involvement in program and project implementation and monitoring and reporting.

The key learnings from this project were presented by CBI at a webinar hosted by CIF, the Stakeholder Advisory Network on Climate Finance, and CBI in early May and are outlined in our recently published independent study, Local Stakeholder Engagement in Climate Investment Funds: Evaluation Report.

Continuing the learning process

CBI has been privileged to work with the CIF’s partners and local stakeholders on the evaluation. The results show that the CIF and its partners continue to make progress in the institutionalization of good practices in governance, embedding stakeholder engagement deeper into MDB organizational culture and processes, and capacity building for national implementing agencies. That said, MDBs, the CIF, and other climate finance institutions can and should do more to systematically codify, assess, and support stakeholder engagement across the full range of their investments and implementing partners. There are opportunities for managers and staff in the MDBs and climate funds to share learning more intentionally, as their colleagues in the Independent Accountability Mechanisms Network have been doing for more than a decade.

We look forward to continuing our learning with and from counterparts in the MDBs, civil society, businesses, and local communities around the world. Collaborating to support effective engagement of local stakeholders in development investments is one of the most important contributions we can make to our shared goal of a more equitable, prosperous, and sustainable world.

You can learn more about CBI’s global development and peacebuilding projects here.