How the New Development Bank Can Lead by Safeguarding Our Future
Bhima Yudhistira Adhinegara and Muhammad Zulfikar Rakhmat argue that the NDB has a chance to prove that development finance can be both ambitious and responsible
When the New Development Bank (NDB) was launched in 2015 by the BRICS countries — Brazil, Russia, India, China, and South Africa — it promised something bold: a new kind of development finance institution that would challenge the dominance of the World Bank and the International Monetary Fund. For many developing nations, this was a breath of fresh air — a chance to fund growth on their own terms, without the political strings that often accompany loans from Western-led institutions.
A decade later, the NDB stands at a crossroads. It has approved billions of dollars in loans for infrastructure and sustainable development projects across its member countries. Yet the real question now is not how much it lends, but how it lends — and to what kind of future.
If the NDB wants to live up to its founding vision of inclusive, sustainable development, it must adopt stronger and clearer safeguards. These are the rules and principles that ensure development financing does not harm people or the planet. Safeguards are not red tape; they are the seat belts of development finance — protecting communities, ecosystems, and the bank itself from the risks of reckless lending.
Learning from the Old Guard
The World Bank’s private sector arm, the International Finance Corporation (IFC), has long had environmental and social safeguard policies — though not without controversy. The IFC’s safeguards, for instance, require assessing how projects affect local communities, biodiversity, and emissions. Yet even with these rules, there have been repeated failures: coal plants funded in poor countries, communities displaced without consent, and forests destroyed in the name of “development.”
The NDB, in its bid to do better, has a real opportunity to learn from these missteps. Its safeguards must go beyond the minimum standards set by institutions like the IFC. In particular, the NDB should make a firm and explicit commitment not to finance any fossil fuel projects — including coal-fired power plants, gas plants, “captive” power plants built by industries for their own use, or co-firing projects that mix biomass with coal.
These projects may look modern or “transitional,” but in truth, they lock countries into decades of pollution and dependency. In contrast, investments in renewable energy — solar, wind, geothermal, and sustainable hydropower — build resilience and economic independence. If the NDB wants to be seen as the bank of the future, it must fund the future, not the past.
Financing the Green Transition
Many developing countries face a cruel paradox: they are among the least responsible for climate change, yet suffer its worst consequences — from floods to droughts to deadly heat waves. At the same time, these nations still need to grow their economies and lift millions out of poverty.
This is where the NDB can make a difference. By focusing its lending on the green economy — investments that create jobs while reducing carbon emissions — the NDB can help bridge the gap between development and sustainability. Financing large-scale renewable energy projects, supporting electric public transport, and funding energy efficiency in industries can drive this transformation.
But to do that effectively, safeguards must ensure that “green” truly means green. Without strong standards, even well-intentioned projects can cause harm — for example, solar farms that displace farmers without fair compensation or dams that flood indigenous lands. A comprehensive safeguard framework should ensure every project meets strict social and environmental criteria before funding is approved.
Transparency and Public Participation
A good safeguard system is not just about rules on paper; it’s about how those rules are applied. The NDB must make its project evaluation process transparent — open to public scrutiny, especially from the communities most affected. Too often, decisions about development are made behind closed doors, with limited input from local people who bear the consequences.
Civil society organizations — including local NGOs, academic institutions, and grassroots movements — should have a seat at the table when the NDB reviews and monitors projects. Their insights can reveal risks that distant officials may overlook. Meaningful consultation is not a box-ticking exercise; it is a democratic necessity.
Transparency also builds trust. When communities see that a bank listens, they are more likely to cooperate and less likely to resist. In the long run, this reduces social conflict, improves project outcomes, and enhances the NDB’s reputation as a responsible lender.
A Chance to Set a New Standard
The NDB’s founding countries often speak of creating a “fairer world order.” That vision will ring hollow if their bank ends up repeating the mistakes of the very institutions they sought to challenge. To be credible, the NDB must show that it is not just new in name, but genuinely different in practice.
A clear fossil-free policy, rigorous project assessment, open engagement with civil society, and strong accountability mechanisms would set a new benchmark for development banks everywhere. These safeguards would not slow down progress; they would safeguard it — ensuring that development today does not destroy the foundations of tomorrow.
The global transition to a low-carbon economy is already underway. The only question is who will lead it. The New Development Bank has a chance to prove that development finance can be both ambitious and responsible — that growth can come not at the planet’s expense, but in harmony with it.
In doing so, the NDB can truly live up to its name — new, not because it is young, but because it dares to do better.
Bhima Yudhistira Adhinegara is the Executive Director of the Center of Economic and Law Studies (CELIOS). Muhammad Zulfikar Rakhmat is the Director of the China–Indonesia and MENA–Indonesia Desks at CELIOS.
Photo by Nagy Ciprian
