Conclusions and recommendations
1. The balance of
ECGD's portfolio, with over half in aerospace and defence, has
remained the same despite the introduction of its Business Principles
and case impact screening procedures. (Paragraph 20)
2. We recommend that
ECGD ensure that the sustainable development impact screening
performed by the DTI's Export Control Organisation for sharp-arms
defence exports is at least as rigorous as those which it uses
for civil projects. (Paragraph 22)
3. We recommend that
ECGD bring all aerospace-related applications within its impact
screening processes. (Paragraph 23)
4. ECGD introduced
new disclosure measures in 2002, including the publication of
a list of guarantees issued in its Annual Report. However, these
measures apply only to one third of the overall portfolio (defence
and aerospace being omitted); are dependent on the permission
of the client company; and are limited to the disclosure to exporter,
market buyer, a brief project description and ECGD's maximum exposure.
No indication of the environmental or social impacts of the projects
is included. This severely hampers systematic analysis of ECGD's
performance. (Paragraph 27)
5. We recommend that
ECGD publish on its website details of all high and medium potential
cases under consideration, including relevant information on economic,
social and environmental impacts. Acceptance of such disclosure
on the part of the client should be a condition of ECGD support.
(Paragraph 29)
6. 30. Companies have
the right to expect ECGD to treat information which is commercially
sensitive in a confidential manner but the onus should be on ECGD's
clients to demonstrate the need for confidentiality. Requests
for confidentiality should be tested against rigorous criteria
to ensure that only such information as might genuinely compromise
clients' commercial activities is withheld. A high degree of disclosure
should become a condition of ECGD support. We recommend that ECGD
adopt a clear predisposition to disclosure of information relating
to the projects it supports, especially information regarding
social and environmental impacts. (Paragraph 30)
7. We recommend that,
as a matter of urgency, ECGD liaise with the Department for the
Environment, Food and Rural Affairs to ensure that its practices
adhere to EU regulations on environmental information now and
in the future. (Paragraph 31)
8. We endorse ECGD's
policy of constructive engagement and its attempts to improve
the quality of the projects it supports. (Paragraph 34)
9. We welcome the
commitment to develop indicators to measure ECGD's impact on project
quality but their production and publication has to be in addition
to, rather than instead of, greater disclosure on the nature of
applications and supported projects. (Paragraph 36)
10. We welcome the
establishment of the £50 million a year underwriting facility
for renewable projects as a step in the right direction, particularly
because of the signals it sends to industry and commence and the
encouragement it gives to companies operating in that sector to
compete for overseas contracts. However, this should not be a
substitute for treating environmental criteria as a mainstream
objective. (Paragraph 39)
11. The Government
should ensure that all public bodies concerned with the support,
development and promotion of UK trade and industry adopt a consistent
approach to sustainable development and ensure that initiatives
are co-ordinated to achieve maximum benefit. (Paragraph 40)
12. We recommend that
ECGD should develop its capacity to support environmental exports
further and should explore the possibilities of offering extended
terms of finance and other incentives such as fast-track processing.
(Paragraph 41)
13. The Canadian export
credit agency, EDC, discloses the precise standard chosen as the
basis for environmental review in all high impact cases. We recommend
that ECGD adopt a similar approach. (Paragraph 45)
14. There is no circumstance
under which it would be acceptable for ECGD, using taxpayers money,
to support projects which exploit children or employ bonded or
forced labour. We were therefore pleased to receive a further
note from ECGD assuring us that "it is the Department's policy
not to provide support for any project that involves the use of
bonded or forced labour. The policy statement in the guidance
notes for the impact questionnaire will be amended to provide
greater clarity on this point". We look forward to receiving
copies of the amended text. We recommend that a similarly categorical
statement is made in respect of child labour and the guidance
notes suitably amended. (Paragraph 49)
15. We recommend that
in future, applications for support for projects in IDA-only countries
are accepted only when they meet at least two of the debt sustainability
criteria. (Paragraph 52)
16. We welcome the
efforts that ECGD has already made to extend the scope of the
OECD's Common Approaches initiative towards sustainable development
and to have a requirement for all projects, regardless of size,
to be subject to project screening. These issues, together with
greater clarity on standards and greater transparency, should
be priorities in negotiations on the revised Common Approaches.
(Paragraph 57)
17. We recommend that
ECGD treat obtaining unanimity as a priority during the negotiations
on revisions to the Common Approaches; and we further recommend
that the Government take a leadership role in reaching international
consensus to ensure that common environmental criteria are a key
component of all decisions relating to the granting of export
credits guarantees. (Paragraph 58)
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