More than being funders of development projects, international financial institutions (IFIs) should also be viewed as international law-makers, or more specifically as participants in the international law-making process relating to sustainable development. Achievement of the Sustainable Development Goals (SDGs), as endorsed by the UN General Assembly, relies not only on the IFIs’ continued performance of their economic functions, but also on their collective efforts to set and apply standards for integrating economic, environmental and social considerations in development projects. In presenting IFIs as law-makers in the field of sustainable development, this article focuses on the ‘safeguard systems’ that IFIs have individually created in order to ensure the sustainability of the development projects they finance. Through the safeguard system and its components’ respective functions, IFIs clarify, elaborate and operationalise the concept of sustainable development, and thereby participate in the international law-making process relating to this concept. Additionally, the IFIs’ participation involves enabling other non-state actors to also participate in development decision-making at the international level. The law-making functions of IFIs and the emergence of a droit commun among them bear valuable insights and implications on the current discussion surrounding the new institutions, whose entry into the multilateral development banking system has elicited anxiety about a race to the bottom in sustainability standards. This article shows why this speculated outcome is not a foregone conclusion. It suggests that preventing a race to the bottom in sustainability standards entails strengthening one component of the safeguard system, the independent accountability mechanism, which interprets the system's other component, ie the IFIs’ environmental and social policies. The ongoing efforts to harmonise the IFIs’ safeguard policies should likewise be encouraged. As specialised international organisations and members of the international community, the IFIs (and their member states) should react to adverse competitive pressures with the overarching consideration of responding to the demands and expectations of the international community. This approach means continuing to implement the global commitment to the sustainable development principles of integration and public participation, as well as maintaining the protection of the rights and interests of people affected by development projects.
'Sustainable Development' as Legal Term in European Community Law: Making It Operable Within the Habitats Directive and the Water Framework Directive