Assessing Multilateral Development Bank ESG Safeguard Integration with International Sustainability Ratings

Abstract

In an era where sustainability is paramount, this study critically assesses how multilateral development banks (MDBs) integrate internationally recognized sustainability indicators into their ESG safeguard policies. MDBs have historically incorporated policies to manage environmental and social risks in project financing; yet, protections against negative impacts in developing countries often remain insufficient. On the other hand, several infrastructure sustainability rating systems have been established around the world in recent decades due to economic growth and the importance of controlling environmental impacts associated with the construction sector. The purpose of this study was to analyze whether and how the indicators that these internationally recognized systems use to rate whether a project is sustainable are integrated into these safeguards by using several methodologies, including an analysis of existing documentation, a high-level matrix, and qualitative methods based on co-occurrences using specialized “atlas ti” software. The results show that MDBs’ coverage of financial, governance, and country risks lacks the sustainability focus found in these rating systems. Therefore, this study that concludes MDB safeguards must evolve, balancing comprehensive sustainability parameters and detailed management guidelines and addressing impacts beyond statutory frameworks to encourage stakeholder engagement for more sustainable infrastructure projects.