Radical plans by the World Bank to relax the conditions on which it lends up to $50bn (£29bn) a year to developing countries have been condemned as potentially disastrous for the environment and likely to weaken protection of indigenous peoples and the poor.



A leaked draft of the bank's proposed new "safeguard policies", seen by the Guardian, suggests that existing environmental and social protection will be gutted to allow logging and mining in even the most ecologically sensitive areas, and that indigenous peoples will not have to be consulted before major projects like palm oil plantations or large dams palm go ahead on land which they traditionally occupy.

Under the proposed new "light touch" rules, the result of a two year consultation within the bank, borrowers will be allowed to opt out of signing up to employment safeguards, existing protection for biodiversity will be shredded, countries will be allowed to assess themselves, and harmful projects are much more likely to occur, according to World Bank watchdog groups including the Bank Information Centre (BIC), the Ulu Foundation and the International Trade Union Confederation.

Stephanie Fried, director of the Ulu Foundation, said the leaked draft undermines World Bank president Jim Yong Kim, who has stated several times that existing safeguards would not be diluted as a result of the review.

"Despite Kim's promise .... this plan reveals a shocking attempt to eviscerate protections for the poor while giving a green light for the destruction of forests and the natural environment," she said.



According to the groups, the bank is proposing to gut most of the usual requirements to assess impacts on people and the environment when a project is being developed, leaving it up to governments and staff to use their own discretion, in a clear attempt to avoid responsibility and accountability.



"The leaked proposal reveals a significant weakening of existing standards. They are not only at odds with the bank's stated goals of ending extreme poverty and boosting shared prosperity, but lowers the bar for the international community," said Nezir Sinani, climate change coordinator at the BIC.



The draft uses stronger language on indigenous peoples' rights but Sinani said it was undermined by a proposed loophole for governments to opt out of applying the bank's policy on indigenous peoples, jeopardising the rights of hunter-gatherer communities such as the pygmies of the Congo rainforest.

"Most shockingly, the draft framework provides an opt-out option for governments who do not wish to provide essential land and natural resource rights protections to indigenous peoples within their states. If this were adopted, it would represent a wink and a nod by the World Bank to governments that they should not feel compelled to respect international human rights law," said BIC.



"[If these proposals are passed] workers in World Bank-funded projects will be devoid of even the most basic protections. The bank risks creating a chaotic mishmash of varying labour standards requirements, with the World Bank's far weaker than others," said Peter Bakvis, director of ITUC in Washington.



A spokesman for the World Bank said the new policies would support sustainable development. "The World Bank’s safeguard policies are at the center of our efforts to protect people and the environment and to achieve our goals to end extreme poverty and promote shared prosperity in a sustainable manner in our partner countries.

"We are currently in the process of reviewing and updating our safeguard policies to deliver efficiently on the twin goals and to support more sustainable use of resources, promote social inclusion, discourage discrimination, help address new development challenges and be mindful of the economic burdens development can place on future generations," he said.

The World Bank group, which includes the International Bank for Reconstruction and Development (IBRD) and the International finance corporation (IFC) is the world's largest development institution, with Britain its largest donor.



Strong safeguards and conditions on its loans and guarantees were put in place after a series of environmentally destructive projects in the 1980s and 1990s such as the Narmada dam in India and the resettlement of hundreds of thousands of people to make way for palm plantations in Indonesia.



The leaked copy of the new policies will be discussed by the bank's board next week. It is understood that a vote will be taken on whether to send the draft for public comment.



Earlier this month, leaked comments on the draft by 12 of the bank's most senior employees, revealed disquiet that the proposed new safeguards would lead to an increase in "problem projects".



Ana Revenga, the bank's vice-president for poverty reduction, warned in those comments: "It might appear [from the draft policies] that the bank is interested in lending more, hence lowering standards ... [It] would likely entail an increase in the number of problem projects and cancellations."