Memorandum from WWF-UK
SUMMARY
Export Credit Agencies (ECAs) provide the largest
source of taxpayers' money for foreign corporate investment in
industrial projects in the developing world. Voters and taxpayers,
therefore, have a right to information on how these taxes are
being used.
A major proportion of ECA support goes to large
industrial and infrastructure projects, including power plants,
large dams, mining projects, road development and oil pipelines,
all of which can have significant environmental and social impacts.
WWF believes that the ECGD's decisions and subsequent actions
must be in line with the UK Government's national and international
commitments to sustainable development.
The ECGD has undertaken a consultation on their
case impact analysis process. To input into this consultation
WWF recently undertook research examining ECAs and the environment.
This study identified current environmental best practice amongst
financial institutions—export credit agencies, multilateral
development banks and the private sector—and compared it
with ECGD's environmental policies. It found that the actions
and activities of the ECGD were lagging far behind best practice.
In commenting on the detailed case impact process,
WWF identified a number of serious flaws in the ECGD's operations,
the details of which are summarised below:
PROMOTING SUSTAINABLE
DEVELOPMENT
WWF believes that the promotion of sustainable
development must be a core objective for the ECGD. To this end,
we would offer the following recommendations:
Align with Government commitments on sustainable
development
Current ECGD activities risk undermining Government
commitments on sustainability. The ECGD must adopt clear and specific
objectives with regard to sustainability, directly linked to ECGD
Business Principles, UK Government sustainable development goals
and international commitments (for example, the Kyoto protocol
and the Convention on Biodiversity).
Monitor and report on performance of the ECGD
It is not yet clear how ECGD monitors and measures
the success of the overall organisation with regards to meeting
its Business Principles and UK Government commitments to sustainable
development. Targets must be set to reduce the overall environmental
impact of ECGD supported activities to ensure it adheres to these
commitments. These should include targets to reduce annual carbon
emissions in supported projects and the percentage of projects
impacting on high conservation value forests.
Demonstrate and exert leadership
Through setting an example by strengthening
its environmental policies and capacity, as well as through exerting
leadership in international fora like the Working Party on Export
Credits and Credit Guarantees (ECG) of the OECD, ECGD can work
towards the creation of a level playing field promoting environmental
excellence and sustainable development. The ECGD should push the
OECD initiative on Common Approaches to achieve international
best practice. In the process it can strengthen its own performance
by reducing financial and reputational risk, and capitalising
on opportunities to offer new products and services to clients.
Foster and enhance the competitiveness of UK environmental
exports
There is an opportunity for ECGD to provide
real leadership in supporting UK environmental exporters, and
improving environmental quality in host countries. The ECGD needs
to put in place incentives to encourage sustainable exports. These
could include offering extended terms of finance, training and
grants.
IMPACT SCREENING
AND ANALYSIS
PROCEDURES
WWF believes that the ECGD must seek to amend
its impact screening and analysis procedures. With this objective
in mind, we would propose the following recommendations:
Clarify and strengthen the screening and review
process
There is significant scope in the current process
for impacts to go unreported by the company. There is not a strong
legal requirement for the provision of complete, verifiable and
honest information, nor sanctions when information is dubious.
ECGD must require Environmental Impact Assessments (EIAs) to be
mandatory for all category A projects. For category B projects,
standards set by the World Bank should be adhered to. The EIAs
must also require back-up documentation, and conduct spot checks
by independent reviewers for all three categories (A, B and C).
Develop clear and consistent environmental sectoral
standards
The benchmarking approach means a lack of predictable
and consistent standards. The development of a set of clear ex-ante
standards could bring significant benefit to ECGD and the companies
it supports by allowing projects to be designed from the beginning
with these standards in mind. Following examples from the World
Bank/IFC, Ex-Im and ABN Amro in the private sector, clear screening
policies should be established for sensitive sectors or impact
areas, including forestry, mining, oil and gas, and water (dams).
These should be developed in consultation with stakeholders or
existing initiatives—such as the World Commission on Dams.
Those projects that do not meet these standards should be excluded
from support. Regarding Dams, we would suggest that the ECGD should:
— Adopt clear, ex-ante standards that
reflect in full the WCD's recommendations
— Require Environmental Impact Assessments
and Resettlement Plans for all major projects
— Make disclosure of environmental
impact assessments, resettlement plans and other required project
information a condition of appraisal
— Place "off cover" all water
projects in countries which are building dams in violation of
the principle of "good faith negotiations between riparians".
Improve the monitoring of projects
Procedures for follow-up, monitoring and enforcement
are very weak. Without adequate monitoring, there is a tendency
for environmental impact assessments to be used merely as a rubber
stamp to allow a project to go ahead, rather than to create a
work-plan to maximise positive environmental impacts and mitigate
damage. Monitoring should be necessary for all category A and
B projects, based on guidelines and in consultation with stakeholders.
Support a presumption of transparency
Transparency and disclosure is one of the key
issues being discussed as part of ECGD's consultation process,
and progress has recently been made in this area. Ex-ante information
disclosure should take place 120 days before a decision on the
project is made. Disclosure requirements should be part of the
contract between ECGD and project sponsor. Information disclosure
should be extended to all projects and should include all information
that is not demonstrated to be of a commercially sensitive nature.
Develop an appeal process
Although ECGD decisions can be challenged through
the Parliamentary Ombudsman and judicial review, there is currently
no easily accessible appeal procedure. The ECGD should develop
an approach similar to the private lending arm of the World Bank
and the Canadian Export Credit Agency, with a compliance officer
or ombudsman to which stakeholders can bring their complaints
if they feel a decision has not been in compliance with ECGD's
own business principles or international law.
Expand environmental capacity
It is unclear whether sufficient capacity (ie
staff with sufficient knowledge and time) currently exists within
ECGD to implement the engagement process and other environmental
policies. In order to adequately incorporate environmental dimensions
into ECGD activities greater capacity may be necessary.
May 2003
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