This independent validation assessed the Bank Group’s CIP reporting, implementation, and its progress toward broader priorities under the CIP and the Forward Look. This chapter provides concluding remarks and summaries on (i) CIP reporting, (ii) CIP implementation of the four priority areas, (iii) CIP outcomes, and (iv) lessons for future corporate initiatives. The report’s main findings are as follows:

• The Bank Group has made notable progress on achieving the CIP priorities of increasing the Bank Group’s financial sustainability, promoting global themes (including climate change), and, for IBRD, engaging with different client country segments and increasing its financing for below-GDI countries. However, the Bank Group made the least progress in creating markets, IBRD made the least progress among all its CIP priorities in mobilizing private capital and domestic revenues, and IFC made the least progress in achieving its ambitious targets for increasing financing for low-income and fragile countries, despite notable efforts.
• The Bank Group made the most progress on implementing CIP clusters that already had clear corporate strategies or action plans, supportive internal organizational arrangements, and well-defined indicators and targets. However, the Bank Group made the least progress implementing clusters where it lacked clear strategies and measurable indicators or had limited oversight, weak collaboration, perverse incentives, and overly ambitious targets. These findings reveal lessons for future corporate initiatives, such as the importance of having clear strategies or action plans, explicit buy-in from senior management, and accurate reporting with meaningful indicators and realistic targets.

Capital Increase Package Reporting

The quality of CIP reporting varied depending on the existence of corporate strategies and indicators. Using the rating criteria described in notes in table 6.1, this validation finds that CIP reporting was adequate (that is, it was comprehensive, systematic, and informative) for nine CIP clusters. All these were covered by corporate strategies and aligned with corporate metrics, such as gender, FCV, climate change, financial sustainability, and serving all clients for IBRD. CIP reporting had major shortfalls in three clusters and some shortfalls in five clusters. The major reporting shortfalls were for clusters that were not covered by corporate strategies or well-established metrics. For example, IBRD’s DRM and operating model effectiveness were areas where corporate metrics were few, insufficient, or no longer collected. Table 6.1 shows that instances with inadequate reporting were usually accompanied by limited implementation progress. Box 6.1 shows the different types of reporting shortfalls that this validation observed, including unmeasurable indicators, indicator inconsistencies, and uninformative reporting narratives.

CIP reporting could have been more informative and learning oriented. Ideally, monitoring and evaluation systems should lead to learning, course corrections, and accountability. However, CIP monitoring did not promote learning or adaptive management. There were also instances of CIP reporting that did not declare if CIP commitments were fulfilled or explain why certain initiatives were discontinued. Moreover, CIP progress reports, even when they are accurate and comprehensive, were issue- and activity-specific but contained little evidence on the CIP’s larger outcomes. Reporting also did not account for how the implementation of one priority area affected or conflicted with the activities and outcomes of another. For example, increasing financing and PCM in FCS contradicts targets for increasing lending volumes and budget discipline.

Source: Independent Evaluation Group.

Note: Rating criteria are as follows (see appendix A for the full criteria).Reporting:Adequate reporting: Reporting in annual CIP updates, complemented with other Board reports as relevant, was comprehensive in that it covered all or nearly all the cluster’s policy measures, backed with evidence and consistent throughout the reporting periods; had baselines when relevant; provided sufficient information to assess progress; and was candid about challenges.Some reporting shortfalls: Reporting was not as comprehensive, systematic, and informative as desirable.Major reporting shortfalls: The CIP reporting was vague or inconsistent; claimed that targets were achieved without supporting evidence; used indicators that were not aligned with the objectives of the commitment, were not measured, or were measured with major inconsistencies; or otherwise had uninformative narratives.Implementation progress:Achieved: IBRD or IFC has fully implemented the cluster’s commitments and policy measures, as well as supporting mechanisms and incentives. Targets have been exceeded, met, or are broadly on track of being met.Partially achieved: IBRD or IFC has implemented most of the cluster’s commitments and policy measures, and most of the cluster’s targets have been met.Not achieved: IBRD or IFC has not implemented the cluster’s policy measures to any reasonable degree. Targets have not been met. Supporting mechanisms or incentives are not in place. Targets have not been met or are unlikely to be met.CIP = capital increase package; FCV = fragility, conflict, and violence; IBRD = International Bank for Reconstruction and Development; IFC = International Finance Corporation.

Capital Increase Package Implementation

Implementation progress has been stronger for the CIP clusters aligned with corporate strategies and supported by indicators and targets. This validation shows that the Bank Group delivered many different major corporate commitments, even if it did not achieve all of its targets and objectives. Table 6.1 shows the validation’s ratings for the implementation of CIP’s commitments and policy measures.1 Eight out of the 19 CIP clusters listed in table 6.1 had satisfactory implementation progress, achieving all or most of their targets. All eight of these had a corporate strategy or plan backed up by indicators.2 The gender, climate change, and financial sustainability commitments, for example, were backed by detailed plans and metrics and organizational units in charge of implementation. Conversely, implementation progress and target achievement were limited for CIP clusters that lacked a clear corporate vision. None of the three CIP clusters with limited implementation progress, and most of those with partial progress, were fully covered by a strategy. These clusters did not benefit from a strategy’s support and accountability mechanisms, which include dedicated staff, clear incentives, implementation guidance, and clearly defined indicators and targets.

The CIP’s implementation progress was limited by policy measures that were written as broad statements of intent. This was the case for the commitments for adopting a systematic approach to creating markets across the Bank Group using the Cascade approach as the operating system to MFD in the PCM and creating markets cluster, broadening and deepening the tax base of client countries in the DRM cluster, agile reforms and administrative simplifications and empowered and engaged staff in the operating model effectiveness cluster, and various commitments in the knowledge and convening cluster.3 These commitments’ lack of precision and undefined indicators made them difficult to report on and, by extension, difficult to achieve (table 6.1). Policy measures without specific commitments or indicators amount to statements of intent or descriptions of what the Bank Group was already doing. The CIP’s design and choice of commitments and policy measures were outside this validation’s scope, yet it is hard to see the value of including commitments and policy measures that do not drive organizational actions.

Capital Increase Package Outcomes

The CIP’s formal commitments led the Bank Group to make policy changes. The CIP not only infused capital into IBRD and IFC but also boosted the implementation of Bank Group priorities that already had corporate strategies and supportive internal arrangements in place. As mentioned, these priorities, except the operating model priority area, aligned with the Forward Look strategy. The CIP did this by raising management’s attention to its priorities and creating incentives and accountability for their achievement. The CIP also likely supplied a mandate to staff to engage clients on these priorities in policy dialogues.

The CIP’s five intended outcomes achieved differing levels of success. These are listed from most successful to either least successful or those with insufficient evidence for a more definitive assessment:

1. Improving the Bank Group’s financial sustainability: This is the area with the most unqualified progress. The CIP’s capital infusion and financial sustainability measures clearly strengthened IBRD’s and IFC’s capital bases, thereby enhancing both institutions’ financial sustainability. Although outside the scope of this validation, the CIP allowed the Bank Group to swiftly and substantially respond to the crises that affected client countries after 2019.
2. Leading on global themes: The Bank Group has undoubtedly expanded its role in promoting global themes during the CIP period. This includes delivering global public goods through its concerted response to pandemics, FCS, climate change, and other crises. As mentioned, this response was compelled by a confluence of global crises, but the CIP also facilitated this response.
3. Differentiating support across client segments: The Bank Group continues to serve all country segments, and the country-based model continues to meet countries’ needs. The CIP led IBRD to focus more on below-GDI countries, and IBRD did meet its lending targets for these countries. IFC, for its part, has made limited progress toward its CIP financing targets for low-income and fragile countries, which, arguably, were overly ambitious for reasons that are not clear to this validation.
4. Mobilizing capital and creating markets: The CIP saw limited progress in scaling up public and private resource mobilization. Although IFC has met or exceeded many of its mobilization targets, IBRD has not. This partly reflects the ambitious nature of the private resource mobilization targets for IBRD. At the same time, the Bank Group has lacked mechanisms to buttress its commitments and policy measures on DRM, PCM, and creating markets.
5. Improving the operating model’s effectiveness: IBRD and IFC have made many changes to their operating models, although not necessarily those anticipated in the CIP. The outcomes of these changes have not been assessed. The CIP’s clearest, or at least most measurable, legacy in this area is its management of workforce growth, specifically its reduction in GH-level staff. However, the reduction in high-level technical staff likely decreased staff capacity and morale, with unclear effects on the Bank Group’s performance.

Lessons for Future Corporate Initiatives

Five lessons emerged from this validation’s findings on developing, implementing, and reporting future corporate initiatives, and on the CIP’s continued reporting:

Lesson 1: Success was greatest when corporate initiatives focused the Bank Group on areas with buy-in. Senior leadership’s buy-in and support are a necessary condition for the successful implementation of corporate initiatives. Many times, senior leadership demonstrates its buy-in by promoting corporate strategies or action plans, organizational champions, and changes to the Bank Group’s operating model. Shareholders could help increase the likelihood of success by ensuring that future policy measures are backed by a clear strategic vision, a conducive organizational model, and meaningful indicators and targets.

Lesson 2: Good indicators, with baselines and targets, create clarity, foster accountability, and contribute to a strategy’s sustained implementation. The implementation of some CIP commitments and policy measures lacked continuity. As stated in chapter 5, several CIP policy measures once considered important were discontinued when the senior champions that had backed them departed. However, this did not occur for commitments that were guard railed by measurable indicators and targets. Core corporate indicators and targets can be blunt tools (see lesson 4), but they make required actions and reporting clear, become embedded in results agreements, compel business units to follow through on these issues, and ensure the implementation’s continuity in the face of changes to senior management and corporate priorities. In contrast, policy measures that did not link to clear indicators and targets had little accountability and sometimes lost momentum. Good corporate indicators are clear and measurable, cover both the volume and quality of the Bank Group’s work, align with intended outcomes and corporate monitoring frameworks, create incentives for staff to pursue the desired results, and have a reasonable level of ambition and scale to meet the underlying development challenges.

Lesson 3: Indicators should be aligned to commitments, and indicator monitoring should be grounded in routine operational processes. IBRD monitored its DRM policy measures with a broad tax-to-GDP measure that did not capture the measures’ intended outcome, which would have required a more granular indicator on tax policy. IFC originally committed to financing targets for above- and below-GDI countries and small states, but IFC 3.0 creating markets strategy focused more on financing in IDA and IFC countries rather than middle-income countries and UMICs, and IFC’s operational processes did not distinguish countries based on GDI. IFC therefore revised its commitments starting in 2020 into a simplified reporting framework focused on IDA and IFC countries. Looking beyond the CIP, reporting requirements multiply with the addition of new corporate initiatives and frameworks. Ensuring alignment between commitments and indicators and aligning indicators with those of existing corporate initiatives, systems, and frameworks will simplify the Bank Group’s reporting processes and ensure that corporate incentives are aligned.

Lesson 4: Corporate indicators are a blunt tool for capturing policy measure outcomes. Corporate indicators capture the Bank Group’s actions, processes, and outputs but do not capture what outcomes these actions led to or how policy measures interacted across clusters. This is because corporate indicators focus on activities and outputs that are under the Bank Group’s control. Although useful from an accountability perspective, this carries the risk that corporate indicators may perfectly measure the trees while ignoring the forest. Some corporate indicators (such as the climate co-benefit and gender tagging indicators) have become burdensome for operational teams by diverting their attention from improving outcomes to complying with internal requirements. To improve corporate indicators, the Bank Group could tap into their data-rich project monitoring and evaluation systems to develop metrics and assessments that better capture ongoing and ex post results. The Bank Group could also combine indicator-based reporting with periodic deep dives that focus on outcomes.

Lesson 5: Report with candor. CIP reporting narratives were sometimes vague, uninformative, or inconsistent. However, CIP reporting on global themes often had more detail and candor and, uncoincidentally, had more implementation success. Honest and accurate reporting on implementation challenges enables the organization to learn and adjust. As such, future reporting would benefit from greater candor on progress, challenges, and trade-offs. Management and Executive Directors may want to reflect on what signals they give to business units that report candidly on their successes and failures.