|
Oral evidence Taken before the Environmental Audit Committee on Wednesday 14 May 2003 Members present: Mr John Horam, in the Chair __________ Memorandum submitted by Friends of the Earth Examination of Witnesses Witnesses: MR TONY JUNIPER, Executive Director, MR PHIL MICHAELS, Friends of the Earth Legal Adviser, MR NICHOLAS HILDYARD, Friends of the Earth Strategic Adviser and MS HANNAH GRIFFITHS, Friends of the Earth Corporation's Campaigner, Friends of the Earth, examined. Q Chairman: Welcome to the Committee. May I apologise if we are interrupted at any stage by a division. I am afraid that is a consequence of the new modernised arrangements (which I, nonetheless, support) but unfortunately we have more divisions than usual in Committee sessions. That does mean we have to cease for a quarter of an hour and come back. Thank you also for your memorandum. Is there anything you would like to add to that briefly before introducing your colleagues? Mr Juniper: I do not think so, Chairman, thank you. Chairman: Let us just kick off then. I know Mr Chaytor wants to lead. Q Mr Chaytor: Good afternoon. Can I ask about the impact of the review of the ECGD in 1999? Your memorandum provides a very powerful critique of some of the flaws of the ECGD over the years but you say nothing about any changes that may have occurred in the last four years. Do you think there has been an impact of that review and could you tell us, if so, what the impact has been? Mr Juniper: I think the fact that the review was happening at the same time as there were high-profile cases regarding ECGD decisions being debated in Parliament and in public (mainly the Ilisu Dam and, to a lesser extent, the Yusufeli Dam) meant that there was a very real drive into the process because of these concerns that did lead to some substantial changes which we welcomed, but I think it is really a question of how far those changes go and what the impact has been on the lending decisions or the project support decisions of ECGD. My colleague, Nicholas Hildyard, I think would be able to provide us with some more information. Mr Hildyard: Some headline points. One is that the ECGD portfolio, despite the changes and despite the new mission statement remains dominated by unsustainable sectors and projects. It is quite interesting to compare 1999/2000 and 2001/20002. In 1999/2000 21 per cent of the support went to airbus and in 2001/2002 it was 20 per cent. In 1999/2000 1 per cent went to other aerospace, in 2001/2002 it was 4 per cent. Defence was 31 per cent and is now 29 per cent. Civil was 47 per cent and is still 47 per cent. Of the civil, again, very little change in actual types of projects that are funded. So on the energy and power sector there has actually been an increase in spending on projects, for example, that use fossil fuels. Q Mr Chaytor: So since 1999 an increase in support for fossil fuels? Mr Hildyard: Yes. Q Mr Chaytor: Is the analysis you quoted from on the public record? Is this a public document or is that an internal Friends of the Earth document? Mr Hildyard: The committee arm of Corner House prepare a submission but it has given us a slightly later date, so it will be in that submission. Q Mr Chaytor: So what you are saying, in fact, slightly contradicts Mr Juniper's point. Mr Hildyard: Not really. Q Mr Chaytor: He is saying there has been some improvement since 1999, but you are saying the figures are static or in reverse. Mr Juniper: I think the distinction is between the improvement in procedures compared with the improvement in the project portfolio. There have been some improvements in the procedures at least in the sense that there is now a screening questionnaire, but in terms of whether this has influenced the project decisions that are causing impacts on the ground is a different matter. Q Mr Chaytor: So in terms of the procedures you are saying the improvement has been entirely in terms of its impact questionnaire? Mr Juniper: Principally, yes. Q Mr Chaytor: But the impact questionnaire has not resulted in an improvement in performance? Mr Juniper: Exactly. That is the point. Q Mr Chaytor: So the next question is, what would you propose as the best way forward to improve the impact questionnaire, or are there other screens? Mr Juniper: Yes, indeed. I think the question comes back to whether the impact questionnaire is the right way of doing it. We have to ask some fundamental questions about how the ECGD is discharging its wider duties and the extent to which it has a duty to advance sustainable development compared with the extent to which it is required to advance the commercial interests of British companies. I think we need to go back to the legislation that guides ECGD to be looking for solutions that could, in turn, be turned into procedures and codes of conduct which would give the organisation different impacts. Q Mr Chaytor: Primary legislation and a mission statement? Mr Juniper: Yes. I think that is where we would like to see attention paid in the future - going back to basics and looking at the role ECGD is playing more widely rather than seeking to mitigate its portfolio through a questionnaire which evidently is not changing the way it lends. Q Mr Chaytor: On the question of performance and the figures that Mr Hildyard quoted earlier, have you taken these up with the ECGD? Did you have a response to your criticisms in terms of no change in performance? Mr Hildyard: The Corner House has not taken those up yet because it is fairly recent analysis, but we will be doing so. Q Mr Chaytor: That is a piece of work to be done? Mr Hildyard: There have been regular discussions about the inadequacies of both procedures and the practices of the ECGD, and an engagement on that, but not on the specific figures. Q Mr Chaytor: My final question: in terms of culture and communication, again, have you noticed any change since 1999 in respect of the willingness to engage in dialogue or the transparency or the availability of information provided by ECGD? Mr Juniper: I think our Legal Adviser, Phil, would be able to provide that answer. Mr Michaels: I can comment on the issue of transparency, which is that following the consultation - which seemed to aim in significant part at an improvement in transparency, and certainly from the NGO sector that was a very significant driver - we made very clear recommendations about what the ECGD would need to do in terms of its impact analysis and screening procedures in terms of transparency. Following the conclusion of the consultation and publication of their policy there does not appear to have been any significant change whatsoever. The improvements in transparency are, I would say, cosmetic. What they propose is that in a limited number of cases that they describe as high-impact cases a very limited amount of information will be made available on the website, again, as before, subject only to the consent of the applicant. This is quite different from what was suggested by the NGOs, which was in particular that there be a process whereby unless the applicants consent to the information being made available the process simply does not continue. That is not a pie-in-the-sky demand, that is normal World Bank procedure and it is what we suggest should be followed by the ECGD. So it does not come anywhere close to that, it relies, as before, on the consent of the applicant. More to the point, I think this is why Tony pointed this question in my direction, we said it does not actually comply with the legislation as it stands today or, more importantly, with the draft regulations in this area which were due to come into force later this year, which require that this sort of information is made public on request to any citizen without their needing to state an interest. They are simply not doing that at all. Q Mr Thomas: I just wanted to follow up on the progress or not that has been seen here. I think Parliamentary questions will bear out the point that has already been made that there has been no change in the investment into dirty coal (?) technologies and so forth. The other criticism that is also made of the department is that of corruption - not directly, but of supporting companies that are themselves, perhaps, allegedly involved in corrupt practices in the countries where support is given out. We have received evidence that this, in itself, can be a distortion of sustainability aims. I just wondered if you would like to comment on that and what sort of obstacle corruption is placing in the way of sustainable development as a tool of government policy through the Credit Guarantee Department. Mr Juniper: It is fair to say that corruption is one of the most corrosive forces on the process of development in the poorer countries in terms of influencing decisions that are not in the interests of poor people and, of course, of diverting funds away from people who most need it towards people who are in a position to undertake corruption. There are examples of projects supported by ECGD where there have been allegations of corruption by the corporations involved who are receiving support. Certainly we believe - not just Friends of the Earth but a wider body of NGOs - that export credit agencies in general need to do much more to discourage corruption in the companies that they are supporting. To that extent, an approach which might be comparable to that of the World Bank, or refusing support for companies who are found guilty of corruption, might be something that sends the right signal. Q Mr Thomas: What stops the department doing that now? Is there any legal obstacle to that? Mr Juniper: Not as far as I know. Nick? Mr Hildyard: This is an important point. The department has said it cannot blacklist companies because of the terms of the founding act that set up the department, which requires it to consider all applications for export credit support. It has used this, also, to resist the introduction of either a positive list for types of project it supports or, indeed, an exclusion list for certain types of project not being supported. The Corner House position, and I think also that of Friends of the Earth (I cannot speak for Friends of the Earth) would be that this is an issue that maybe Parliament needs to reconsider - whether in fact the act needs to come back to Parliament to be amended so that it can contain specific sustainable development objectives and empower the department to be able to make discriminatory choices in favour of sustainable development. There is a clause in the act which does permit some discretion. If you bear with me one moment I will find it. Q Mr Thomas: Perhaps you could either send it in ---- Mr Hildyard: I can send it in. It is section 3 of the act and it empowers the ECGD to "make any arrangements considered to be in the interests of the proper management of the ECGD's portfolio." Whether that clause is sufficient to enable ministerial directions to be made to the department on the interpretation of its new mandate is a question for the lawyers and for Parliament. Q Chairman: Could you read that again? Mr Hildyard: "To make arrangements considered to be in the interests of the proper management of the ECGD's portfolio." Certainly the Corner House would argue that these power could be used to screen out projects that are incompatible with sustainable development at the earliest possible opportunity, not least because many of them are not in good financial interest but, also, because there are reputational risk implications for the department itself and, indeed, for Britain. Whether that clause could be used to enable ministerial directions is a question that, maybe, the Committee might like to consider. Q Mr Thomas: To your knowledge it is not being used at the moment? Mr Hildyard: Absolutely not, and the ECGD is on record in a number of places as saying that the act does not allow it to make these discretionary, discriminatory decisions. Mr Thomas: They are coming next week, I think, Chairman. Q Mr Ainsworth: If that is the case, what evidence is there that guarantees have been issued to companies that are known to have been engaged in corrupt practice? Mr Hildyard: The Corner House is actually about to publish, and will be including in its evidence as an appendix, the summary of a report which looks at 9 cases where allegations of corruption have been made with regard to ECGD credits, including the sale of jets to South Africa (you may have heard the programme on Radio 4 last night on that) and some other cases, including the Darvel power plant in India and various other ones. Many of these were prior to the ECGD bringing in its new procedures. However, the assessment that the Corner House has made has revealed some substantive, in our view, institutional failures and practices which suggest that the ECGD is continuing to underestimate the risks of corruption and indeed permitting corrupt practices to go unpunished. If I were to list them: we found a persistent failure to take account of corruption allegations when deciding whether to back projects; a reluctance to investigate such allegations and woefully inadequate investigatory procedures; an unwillingness to pass on allegations to the appropriate external investigatory authorities; a disregard for international concerns about corruption in countries in which the ECGD supports projects; inadequate vetting of UK companies with poor track records of corporate governance and a lack of openness and accountability regarding projects that it backs. All of which, in our view, are institutional failures that make it more difficult to prevent corruption. We will be putting this in our evidence which you will be getting by 19 May. Q Mr Ainsworth: Will you be producing chapter and verse on these cases or merely listing lists of problems? Mr Hildyard: There are substantial case studies and we will give you summaries of the case studies and would be prepared to give you more. I would add that there are a number of cases where the corruption allegations have been made on cases that have been approved since the new procedures have come into play. The companies deny any corrupt practice. In the case of one of them, Blue Stream, there is an official investigation in Turkey into corruption by Botash, which is the company that is involved. It did not actually receive the credit, the credit came via a reinsurance of the Italian export credit agencies involved in the project, and a case in Papua New Guinea where the ombudsman's department in Papua New Guinea is, I understand, going to be initiating investigations. Q Mr Savidge: I realise this partly may be covered in the answer you have already given to Peter but what effects are you aware of from the introduction of the ECGD's business principles and their impact screening and analysis procedures? Have you detected any change in the ECGD's pattern of support as a result? Indeed, are you aware of any case where the need to obtain ECGD support has resulted in positive changes in the nature of projects? Mr Juniper: Not as far as we know. The projects that have dropped by the wayside in recent years, which evidently would have posed large scale environmental and social threats to the affected communities, were withdrawn by the companies following public campaigns. I think the biggest impact we have seen on ECGD supported projects has been through advocacy and campaign work by NGOs rather than decisions being taken by the ECGD itself. It is worth adding that I think ECGD, and the Secretary of State, certainly, has said to me that the withdrawal of Balfour Beatty from the Ilisu Dam project in Turkey and the withdrawal of Amec from the Yusufeli Dam on the Çoruh River in Turkey set no precedent for ECGD support. So to that extent the biggest impact we have seen has been through public pressure rather than through the exercising of the new mission based upon new principles by ECGD itself. As Nick said, looking at the portfolio now compared with the time before the adoption of the principles, it is pretty similar, and in the case of fossil fuels is more skewed than before. As far as I know, and colleagues may have other information, I do not know of any project that has been dropped because of screening for sustainability. Ms Griffiths: I do not think any projects have been dropped. Also, just to add to that, the lack of transparency and the inability to get access to information makes it very difficult to assess whether or not projects will have been improved. So, for example, for cases like the Yusufeli Dam in Turkey, we were unable to get a copy of the environmental impact assessment which meant that it was very difficult to assess whether going through procedures like the impact questionnaire would have made a difference or not. Mr Michaels: Can I add to that slightly? I agree entirely with what Hannah said, but it demonstrates the issue of transparency which I think, from a number of your questions, is at the very heart of this and is not an add-on, because without that transparency it is impossible for you, for us and for members of the public to get clear answers on questions such as corruption, on questions such as environmental impacts. Without proper transparency, in fact, there is no accountability, which is, really, what reform of the ECGD should be aiming at. Another point, if I may, just on transparency is the issue of commercial confidentiality. This continues to be the screen behind which the ECGD is operating. They state in their policy that their aim is to be as open as possible whilst respecting legitimate commercial confidentiality. In fact, however, looking at the experiences we have had with them, both on Ilisu and Yusufeli, and actually looking behind the words of their policy, it appears to be exactly the opposite. Their policy is aiming to protect the commercial interests of their clients whilst seeking to comply at the very lowest level with the legislative requirements of freedom of information. This issue of commercial confidentiality is a very important one, because in fact contrary to the way the ECGD portray it, it is they who are defining the information as commercially confidential. It is a circular argument. It is the ECGD that has stamped the case impact analysis questionnaire with "Commercial in Confidence" at the top of all the papers and, therefore, seek to prevent the information from being disclosed. It is perfectly possible for most of the information in those questionnaires to be deemed non-confidential, as the World Bank does and as other ECAs do. In fact, most courts would say that the type of information that is being sought to be prevented from disclosure by the ECGD is clearly not the sort of information that would harm the commercial, competitive position of these companies. I do feel, going back to Hannah's point on transparency, that this issue of commercial confidentiality is right at the heart of it. Q Mr Savidge: The impact questionnaires seem to focus very heavily on the environmental impact. Do you feel that the ECGD takes adequate account of other sustainable development concerns, such as human rights, corruption, poverty alleviation? What do you feel could be done to improve things in those areas? Mr Juniper: I think the emphasis on the environmental side is good but, as you say, it is not sustainable development and perhaps this environmental preoccupation has been driven into the discussion by the international process that was run through the OECD. NGOs, certainly the ones we are in contact with, regularly see this issue as being far bigger and embracing not only environmental questions but, also, seeking to promote development in the interests of the poorest people and, also, the protection of human rights and compliance with other internationally agreed measures to promote sustainability - for example, international labour organisation conventions. All of these things do need to be brought to the table for ECGD to be genuinely promoting sustainability, but right now I think the policy, as we see it, is full of holes; it is not saying, for example, "We will not support child labour or projects involving child labour"; it is not saying "We will exclude projects involving child labour", it says "We do not expect to be supporting projects involving child labour". Similarly, with questions of forced resettlement. This question of human rights and the rights of individuals and communities affected by projects to be able to speak out against those proposals, to be able to represent dissent in public, this should be at the heart of what the ECGD stands for. After the experience of Ilisu, evidently, there is a great deal to be done to make sure that people can be consulted, that they can have a right of expression and that they will have proper compensation if they are negatively affected. This is still very much in the margins of what ECGD stands for in terms of hard, clear policies and duties that will be reflected in practice. Q Chairman: The ECGD, of course, does report to the Department of Trade and Industry. Do you have any views about the role of the Department for International Development? Mr Juniper: Yes, and we do have new policy in the sphere of international development which has been published in recent years which talks about poverty alleviation and Britain's influence being used internationally to advance the cause of poverty eradication. However, the extent to which the ECGD's activities and its decisions are consistent with that aim is still highly questionable, and the tests that it has to undertake to be consistent with the policies promoted by DFID - they are still very far apart. Q Mr Savidge: In your memorandum you are critical of the ECGD's case-by-case approach. What do you think are the particular disadvantages of that approach and how would a more strategic approach, perhaps, produce a better pattern of support? Mr Juniper: The situation we have now is very much a case of "Well, we are the same organisation with the some objectives but we will try to screen out the worst impacts of what we have done in the past", which is not the same as saying "We are fundamentally advocates for sustainability with a mandate to promote good development, to promote resource conservation, protection of biodiversity and policies that are compliant with international measures on climate change". That, I think, is the difference. Again, this brings us back to the conclusion that we really need to be looking at the primary legislation and looking for remedies there in terms of creating a new approach for ECGD which really is aligned to the Government's wider sustainability goals. Q Mr Savidge: It is quite a long way to go, I suppose, for a department that used to help to provide weapons to Iraq, I seem to remember, out of China. Mr Juniper: Indeed. Q Ian Lucas: Would you prefer it if the ECGD reported to DFID rather than the DTI? Mr Juniper: That is an interesting proposal. We have not considered that one. My instant reaction to that would be that there might well be merits there, in terms of harnessing the potential for British companies to promote sustainability on the global stage through putting the support they receive through the development ministry. However, it has to be said that we did have grave concerns about what was called the Aid Trade provision years ago which led to disasters like the Pergau Dam, and we welcomed the reforms that came after the 1997 election in terms of doing away with that particular instrument of overseas aid which was there, in many respects, to advance the interests of major companies and demonstrably was not helping development in many cases. If there was some kind of mechanism that could be avoiding the mistakes of the past whilst genuinely promoting sustainability through a different ministerial arrangement, then that may be something to be considered. Q Mr Thomas: I just wanted to follow that point because we have, in this Parliament, had the many successes of Clare Short, I would say, which got rid of Aid for Trade. Nevertheless, as you remind us in your evidence to this Committee, something like 97 per cent of the debt owed by the heavily indebted countries to the UK is actually owed to the ECGD. In what way can we be said to have got rid of Aid for Trade in reality? It seems to me that the export credit agency that we have in this country is actually a Aid for Trade driver. Would you agree with that? Mr Juniper: Yes, in some respects, except that it is worse because the debts raked up through export credit agency arrangements are more onerous for developing countries than low-interest loans they might get from the international development associations or bilateral donors, for example. However, it remains of great concern to us, not just in terms of the ECGD but export credit agencies generally, the extent to which they are still fuelling the global debt problem through backing projects that should not be backed, not only because of their commercial vulnerability but also because of the negative development and the environmental impacts they cause too. Q Gregory Barker: You have been very scathing in your comments about the lack of transparency of the ECGD. They do use benchmarking to determine environmental standards but you said that can vary from project to project. Why do you think they are so resistant to having a consistent, publicly disclosed international set of standards? What is their resistance there? Mr Juniper: I do not know what they would say. My guess would be that they have concerns over the extent to which this would relatively disadvantage British exporters compared with their French, German or American counterparts, for example, insofar as we would be going further than other countries and would therefore be limiting opportunities for British exporters to enter risky markets. I think that is what they would say. Then again, we would say that if you are serious about sustainable development you have to put your money where your mouth is, show some leadership and stand up for what you believe in. That may limit involvement in some bad projects but, at the same time, it could open doors to genuine sustainability in the future which could, down the road, provide many more economic benefits for the UK economy, for example through backing renewable energy. Q Gregory Barker: Ultimately the UK Government could achieve much more if they led a multilateral approach on this. There have been attempts in the past, which have broken down, between the US and Europe. What do you think the British Government should do and why do you think that has not succeeded in the past? Mr Juniper: The OECD process, I think, was dragged down by many countries. As I recall, the Spanish and the Germans were not helpful and, in the end, the agreement that came through was very weak and did not take us to where we need to be. That does not mean to say that there should not be new multilateral processes in the future that could try to move us from where we are now to a better place. Britain, we believe, should be an advocate for that but, at the same time, should still be pressing ahead with domestic reforms irrespective of what is going on through international processes in the OECD or elsewhere. Mr Hildyard: If I could add to that, I think Britain could have taken much more of a leadership role than it did within the OECD. To its credit the ECGD did push the built-in agenda of the negotiations within the OECD export credit group by pushing to have human rights taken into account as well as the environment. However, it signed on to this extremely weak agreement which does not even require the release of any project information. In doing so I think it quite possibly undermined the position of more progressive elements within the OECD. I would stress that some countries have taken unilateral action; Japan has gone much further than the OECD and America was already further than the OECD required. In both countries, from what I understand, and I can certainly supply further evidence on this, the business community has actually found that this put them in a good place competitively; it has enabled them to plan forward, and it has given them clear-cut guidelines that they know they are going to be working to. It has given them a certainty that is not there with this discretionary, benchmarking approach. At the moment you go to the ECGD, you do not know which bit of a particular standard is going to be applied, or not applied, and much of it would depend on how much public outcry the particular project raises, and so on. So the certainty has actually been of benefit to business, and I think Britain could take a much stronger lead than it is taking. Q Gregory Barker: Last year I was in Washington and met the former head of the US Ex-Im Bank and he was particularly scathing about the European position. Do you think he is justified in that criticism? Mr Juniper: Well, it depends on how you look at it. In terms of wider engagement with successive US administrations on environmental policy they are not justified, but in terms of looking at the narrower question of export credit agencies, yes, they are in having gone further, as Nick has said, than the European ones in having had a screening process and, as I understand, they publish a great deal more than is the case here. This, I think, was one of the things that the Americans were very concerned about at the end of the OECD process - that it was too weak and they wanted it to go further. I guess, in some respects, there was an element of them thinking about their competitive position globally and looking for others to meet their standards, and they were disappointed that the OECD process did not do that. Q Gregory Barker: Is that disclosure driven, do you know, by access to information that is easier in the States, or is it driven by environmental concerns? Mr Juniper: As I understand it, the situation in terms of access to information in the United States is a good deal freer than here. There is a culture of more access to information. For example, the position of the United States in the World Bank is to publish its voting position and, also, to ensure environmental impact assessments are carried out and World Bank projects are available to the public in the USA. Q Gregory Barker: So if we are looking to improve the situation here, we would do well to look at the US model? Mr Juniper: It would be one place to look. Mr Hildyard: And Japan. Q Ian Lucas: Mr Michaels referred to the issue of commercial confidentiality earlier, which is I think used very often by government departments as well as private business. Have you any information about how that is dealt with in, for example, the United States or Japan? Is it an issue there? Mr Michaels: I can comment a bit. Commercial confidentiality is almost universally an exception from freedom of information legislation, but it is the way in which it is interpreted that is important. I do not know anything about Japanese law in the area but in the US certainly it is interpreted much more narrowly than the ECGD are interpreting it here. It is interesting to note that it is precisely this broad interpretation of commercial confidentiality that has led the EU Commission, in drafting the updated regulations, to tighten that loophole. They have specifically required now that commercial confidentiality and the other exceptions are very restrictively interpreted, taking into account the broad public interest in disclosure of the information. That is something that the ECGD does not seem to have taken on board. Q Mr Ainsworth: Mr Barker has very kindly explored the area I was looking forward to exploring this afternoon! Let me approach a different subject. Would you agree that it is very important to distinguish between an analysis of bad systems, if you like, and bad practice on the ground, and that whilst it is fair enough to make criticisms of systems which are liable to fail, those criticisms are much, much more powerful where there is clear evidence that they have failed and are failing. I think it was Mr Hildyard who referred to rather weak wording on the question of child labour. It might have been Mr Michaels, I am not sure. There is a world of difference between having wording which is liable to lead to bad outcomes and the fact that those outcomes are happening. So my question, I guess, is: is there evidence that the UK taxpayer has been subsidising companies that are engaging in child labour? Mr Hildyard: This is an interesting one. I would refer you to the summary of the ECGD impact analysis procedures which the ECGD puts out and which we are being asked to comment on. Annex 1 of the guidance note, at page 4 of that, has child labour. What it says is that in common with most countries around the world the UK has ratified a UN Convention on the rights of the child and the international labour organisation conventions on the abolition of child labour, and that there must therefore be exceptional circumstances for the ECGD to provide covered projects which involve child labour. The question is why do they need to make that exception? If they had a complete publication of all their projects it would be possible for NGOs, Parliamentarians and others to scrutinise that list and see that there is no use of child labour. One, we do not know for sure, but the question I would put to the Committee is why do they need to put that clause in? I would say that it is not beyond unreasonable speculation to suggest that the reason that clause is in there is because some of the projects they are currently backing do indeed use child labour, and they need to exempt themselves from those conventions. Q Mr Ainsworth: I suppose the point is that so long as there is a failure to disclose, the suspicion that that is happening will always be there? Mr Hildyard: I think there is that point but, also, if Britain is signed up to these conventions why should a British government department be seeking derogations from these conventions? This seems to be odd at the very least and, I would have said, unacceptable. I would have thought it was far easier for everybody if the British Government department said "We will abide by British law". Q Mr Ainsworth: Is that a view that Mr Juniper endorses? Mr Juniper: Yes. Q Mr Challen: Does the United Nations' document The Rights of the Child actually allow for any derogations? Does it mention there are possibly exceptional circumstances in the case of child labour? Mr Hildyard: I have not looked at that in detail, but I can certainly give further evidence on that. It is interesting also, on bonded and forced labour, that they make a similar, potential derogation. I think the point is that it does not exactly give a great impression, for a start. Secondly, I think there are real question marks about why they should even feel the need to make that potential derogation in their guidance notes. Q Mr Challen: I think we have discovered why you think that the ECGD is reluctant to reveal information - it stems from this concept of commercial confidentiality, it would appear. Would you say that that indicates that the department is in the pocket of business? Mr Juniper: I am rather out-of-date in terms of how the advisory board (I think it is called) of ECGD works, but it was the case at one point that it was essentially dominated by industrial interests. I do believe that there is now at least one or two individuals in there with a wider sustainability perspective. The extent to which ECGD is being influenced by its clients is not obvious, again, because of the transparency question; if, perhaps, we could have minutes of meetings published and if we could have an understanding of who meets who and how lobbying is going on we might have a better idea of how this dynamic is working. One anecdote that I will share with you is a document that I saw during the time of the review of the mission of ECGD, which includes some notes of a meeting which was attended by several British corporations. I think I recall Powergen and Rolls-Royce being two of them. They said that if there was to be an embrace of ethics and sustainability by ECGD then this would be a major blow to business. So I would not be surprised if there is a feed of perspective into ECGD to the effect that it needs to remain focused very much on its commercial objectives and not to embrace in the fullest sense sustainability thinking. Q Mr Challen: Have you detected any hint of ministerial dissatisfaction with this situation? Mr Juniper: No. I would repeat the conversation I had with the Secretary of State for Trade and Industry at the Doha World Trade talks on the day that Balfour Beatty withdrew from the Ilisu Dam. Her remark to me was that this was a commercial decision by the company and had no impact at all in terms of the policy agenda for ECGD. I think the withdrawal of the company from the Dam was welcomed by the department as a means of ending a very unhappy story for them. Q Mr Challen: I am just wondering if there are any examples known to you of any companies that have adopted a corporate social responsibility policy which are more open than the ECGD's own policy on openness, and whether in fact you have any examples of those being in conflict? Mr Juniper: Hannah, do you have any examples? Q Mr Challen: I am sure Balfour Beatty, for example, will have some well-paraded CSR policies - or they do now. Ms Griffiths: Balfour Beatty do have environmental and human rights standards. An interesting thing to note is that when we were meeting with them to discuss the Ilisu Dam they made it very clear that if the Government and government departments such as ECGD were to lead the way in terms of requiring companies to meet standards like the Royal Commission on Dam Standards then they would follow and they would be happy to do so. However, until ECGD or other government departments require that of them they saw no reason to do it, and they made that exceptionally clear. The Committee suspended from 4.37 pm to 4.45 pm for a division in the House Q Mr Challen: We were talking about CSR. I do not know whether you had finished on that. Ms Griffiths: I did have one other thing to say, which is that most of the big companies these days that probably would be applying to the Export Credits Guarantee Department do have some kind of sustainability policy. There is sometimes a gap between that policy and the extent to which those principles are actually translated into action. Another specific example is that Amec has quite a strong social responsibility policy, which would include things like access to information. However, when we were trying to get a copy of the environmental impact assessment for the Yusufeli Dam, which they were involved in, we were referred by the ECGD to Amec and then by Amec to the Turkish authorities, each claiming that it was not their responsibility to give us the environmental impact assessment. I think Phil Michaels wants to add something, but just to finish, I think the ECGD should be promoting systems whereby companies like Amec or other companies who claim to have such policies are forced to abide by them rather than contributing to a situation where it is possible for companies to have such a policy and yet not to act on it. Mr Michaels: All I was going to add is that in the case of the Yusufeli Dam and Amec, it was quite an extraordinary situation. After we had made several requests for the environmental impact assessment report from the ECGD and we were refused on a number of legal bases (usually commercial confidentiality), we then advised them that we would be considering seeking a judicial review. At that point the response we got back from the ECGD was that they were proposing to divest themselves of this report by returning it to Amec, at which point, of course, they would no longer hold the information in question and would not then be bound to release it to us. So, once again, it is this issue of commercial confidentiality that underpins the difficulty of getting hold of this information. Mr Hildyard: I think, at the time, Mr Michaels described that tactic as the legal equivalent of shredding. If I could just add a few comments on this question of corporate social responsibility? The questionnaire is unbelievably weak on this. All it does is ask whether they have got a policy. It does not say what it is going to do with it and has no requirements in terms of requiring companies to have policies or whatever. Certainly, it is the position of the Corner House and, I think, also Friends of the Earth, that there should be a requirement that the companies have signed up to the OECD multinational enterprises guideline. The other point I would make is that the World Bank, and indeed the Ex-Im Bank - and I believe also JDIC, which is the Japanese investment bank - has a very simple way forward on this and on the disclosure of information more generally, which is to make it a condition of applications that this sort of information will be disclosed, particularly environmental impact assessments. So under the World Bank procedures if a company refuses to disclose an environmental impact assessment then appraisal of the project ceases automatically. Ex-Im has the same sort of procedures and has safeguards for the companies in terms that the companies are allowed to delete commercially confidential information. However, in most environmental impact assessments there really is not commercially confidential information - what happens to the Crested Newt is not commercially confidential. Those are the points I would make. The final one is that I think the ECGD, when it comes to give evidence to you, will make great play of the fact that in practice its benchmarking approach means that it conforms to World Bank-standard safeguard policies. There is a world of difference between conforming on paper to the World Bank's safeguard standards and conforming to the World Bank's procedures. The two things are very, very different; the standards are just a checklist of things you have to do, the procedures are the bits that require consultation, that require transparency and that require the participation of affected people. These are the really key bits in terms of eliciting the right sort of information that would enable (a) the project to be improved but, also, to enable those who are affected to have some say in the project and some sense of ownership of the project. It is critical for sustainable development. Q Mr Challen: Just lastly could I ask if think the ECGD should have some kind of appeals process when you are refused information to get that information? How would it work and how robust ought it to be? Mr Michaels: It does already have a form of appeals process in that it now has built in, as it is required to do, an internal administrative review, and under the new Environmental Information Regulations, which are expected to come into force later this year, there will also be a legal appeal to the Information Commissioner who is currently operating the Freedom of Information Act, so there is already some form of process and there will be a further one developed later this year. Q Sue Doughty: We need to take a look at the role of the Advisory Council which is there to make recommendations to the Secretary of State. It is really advising on whether or not ECGD is supporting the Government's policies for good environmental standards. How successful do you think it is at the moment? Mr Juniper: I have no information personally, I do not know if Nick has more on this. I have had little conversation with the members of the Advisory Board, but I think, again going back to what is actually still being approved and the difference between the portfolio now compared to the portfolio before, the principal benchmark would be the effect of internal scrutiny on the decisions which ECGD is making. I have no real knowledge of the way that Advisory Board works. I do not know if Nick has anything to add. Mr Hildyard: No. Q Sue Doughty: I was hoping to go into the membership of the Council and whether it had the right sort of qualifications you would want to see to be able to provide that advice. Mr Juniper: I cannot comment on that, I am afraid. Chairman: That you very much. It has been a very interesting session and we are very grateful for the evidence you have given. Thank you.
Memorandum submitted by WWF-UK Examination of Witnesses Witnesses: MS SALLY NICHOLSON, Head of Global Policy, MR JULES PECK, Global Policy Adviser, and MS JODY THORPE, Consultant, WWF-UK. Q Chairman: Welcome to our proceedings and thank you, too, for your memorandum which we read with great interest. Is there anything you would like to add to that before we start to take evidence from you? Ms Nicholson: Thank you, Chairman. My colleague, Jules Peck, would like to add one thing. Mr Peck: The main comment on that is, as you probably see from the date on the document, this is something that we put together with help of sustainability back in August last year and it has been quite a long time since then. There have been changes and so we cannot comment quite so much on the change although we are aware of what the changes have been. But there is a meeting due in two weeks' time where ECGD are going to feedback to us how they took on board our points in changing their processes. Q Chairman: It would be very interesting to have some thoughts on their response. If it is in two weeks' time it would be within our timescale. Ms Nicholson: Is that still within your timescale? Q Chairman: Absolutely, and we would be delighted to have that. Ms Nicholson: We would support what our colleagues, Friends of the Earth and Cornerhouse have said already today, in particular we have done some work on better practice across sectors, which has been with the help of Jody, on sustainability, and looking at things that particularly concern WWF in terms of water resources, forestry, climate change and renewable energy. I hope that is a help in terms of our particular expertise. Chairman: Thank you very much indeed. Q Mr Thomas: If I can just follow up on that last point which is to ask you what your particular interest as WWF is in the activities of the Export Credit Guarantee Department and what sort of vision, if any, you have for their role in promoting sustainable development industries on behalf of the United Kingdom abroad? Ms Nicholson: Obviously WWF is concerned about the environment and biodiversity worldwide. We are concerned about the impacts of unsustainable development on that biodiversity, which is not just about animals and plants but about people and the natural resources upon which they depend, so we have been very involved with ECGD since their very first review back in 1999 and made some comments then in various dialogues with them. We see that it is a very important part of the UK's contribution to sustainable development in terms of the amount of taxpayers' money that is used to support developments. It is absolutely critical in terms of policy coherence - after all, sustainability has got to be about policy coherence - and in achieving all of those sustainable development aims in an integral whole we believe the ECGD has an important role to play. Perhaps Jules could comment on the vision. Mr Peck: Part of our vision would be presented by the best practice examples that Jody helped us put together. They are in the report, you have seen it very clearly, and a lot of other ECAs are ahead of ECGD, for example, on climate change and measuring CO2 emissions. Another thing that would be part of our vision reflects in some of the private sector activities and some of the private banks, which have gone much further than ECGD, and it is fairly inexcusable that taxpayers' money is being spent on projects which private banks would not touch because they feel their values would not allow them to touch them. ABN Amro, the Dutch bank, and several other Dutch banks have put in place forestry policies which would mean they would not invest in projects that currently ECGB would invest in. I think our vision would want to look at some private sector activities and what the World Bank and IFC are doing. Thirdly, there is a vision document that the NGOs have put together called Civitavécchia (?) Declaration, which is named after a very charming village north of Rome, where we collected last November as a group of international NGOs to put down on paper what we felt our vision of what a sustainable financial sector would look like. We launched that at Davos. I am quite happy to send that. Q Chairman: That was the Davos Summit? Ms Peck: There is a side event which is the NGO Forum which meets 100 metres up a hill. They do not let us into the forum. So the Civitavécchia Declaration is a six-point series of commitments which lay out our vision for a sustainable financial sector. That would be very useful for ECGD to look at. Q Mr Thomas: I have not seen that. Mr Peck: I think we might have sent it through. Ms Nicholson: We can send it again. Q Mr Thomas: It might well be within our papers. The fact I have not seen it does not mean anything in those terms. The other question I wanted to ask you, because you were sitting in on the earlier evidence and you just mentioned you had been involved in consultations with the department since 1999, is whether you feel there have been any improvement or impact on biodiversity, your particular interest, perhaps since 1999? Can you point to improvement? Have there been steps back, steps forward? What is your overall impression of the progress that the department has been making? Ms Nicholson: Probably to echo again what Friends of the Earth said, we have certainly noticed a complete difference and attitude in terms of procedure in terms of being willing to dialogue. I would not say I had noticed any actual impact in terms of projects being supported, infrastructure being supported, and there is perhaps more willingness than reality and actual doing something. We noticed obviously there was the commitment made in Johannesburg by Tony Blair about the extra £50 million set aside for renewable energy, but there was always the availability to support renewable energy if projects were put forward so it was not like it was a whole new thing, and that has only just come about anyway, so I imagine there has not been an opportunity yet to monitor the impact. Q Mr Thomas: Do you monitor what the ECGD is supporting in its projects? Ms Nicholson: No, the information is not available. Q Mr Thomas: You come back to that same point that you are not in a position to do that? Ms Nicholson: We are aware currently of the BTC pipeline going through the Caucuses that has been put forward to ECGB and other ECAs for possible support. We are aware of that. We also are aware, for example, that the United Kingdom government put out consultation on the World Dam Guidelines at the end of last year/towards the beginning of this year. The UK government does not build large dams in the UK any more and DFID gives sectoral support rather than direct project support so it concerns the role of ECGD in building dams. We were surprised, for example, that the ECGD did not have a person to send to our consultation workshop with other members of the government because there is a very critical area for them to make some decisions on across the government about whether they are going to align themselves with these world guidelines. Q Mr Thomas: Would it be fair to say that you only become involved in the projects they may be supporting either in the critical sense or any other sense only when the NGOs in that country or your representatives in that country or of another NGO become aware of them? Mr Peck: Although we did research that last year with a fair amount of in-depth research of ECGD and we measured it against ECAs, to echo what Sally said and to echo what Friends of the Earth said, it is a step forward to some degree in some of the increase of transparency but also a step back, as I think Nick maybe alluded to, in that the support for oil and gas and power sector has increased by five per cent since 1999. So clearly it is not being effective in reducing the emphasis on oil and gas and on a carbon economy. Q Sue Doughty: You would have heard in the session with Friends of the Earth that they have got quite an interesting Advisory Council and about the role they play. Have you taken any interest in what they do? Ms Nicholson: We are interested but we have not got any information. I was aware that the Advisory Council format and composition was changed slightly when they started going through the review with business principles and they have now got some sustainable people on board but, again, the agenda and minutes and so on are not made available so it is very difficult to comment. I am not a member of that. Mr Peck: The only thing I could comment on there is the fact that I used to be a lobbyist so used to around in this building quite a bit and I did go to some of the ECGD meetings. It was heavily business orientated but John Elkington (?), with whom Jody works, and Ralph Lemarge (?) (who is one of the leading lights in SRI in the sustainable world) are on it. It is very welcome that they are on that board and it may well be that they could help. It is worth investigating. Q Sue Doughty: We need to follow that through with them. Ms Nicholson: Certainly follow through with them to find out more. Q Sue Doughty: Thank you. In your memorandum on ECGD you recommended that it should adopt "clear and specific objectives with regard to sustainability". It has in fact an objective "to ensure its activities accord with other government objectives, including those on sustainable development, human rights, good governance and trade". Having made your recommendation, do you think there is a weakness in their objectives here? Mr Peck: There could be much more specific targeting. There are other ECAs in our analysis of best practice which exhibit some very good targeting. Two if not three of them are measuring CO2 emissions in the projects to which they lend, which given the commitment to Kyoto, they are looking at increasing or reducing their weightings of carbon in their portfolio, both on financial risk in terms of the price of carbon and also on a sustainability basis. Q Sue Doughty: Will there be any other objectives you would like to see in there? Mr Peck: There are many which the WWF could provide information on. Ms Nicholson: One thing that I believe I am right in thinking the preamble says is to "to take into account" of UK government objectives rather than to "abide by" or "promote". "Take into account" does seem rather weak if we have that sort of thing. We talked about CO2 and carbon, the other thing I would like to see is any major commitments that the UK government has already signed up to or intends to promote or take forward in the future. I have already mentioned the Dam Guidelines, and dams and water infrastructure are going to be a really major issue for ECAs in the next ten to 15 years because of the Millennium Goals and the emphasis on water supply and sanitation. Q Sue Doughty: If these were built in would you expect to see a change in the sort of projects the ECGB is getting involved in? Mr Peck: We would. It would very much rely on sectoral standards and exclusions. As I said, there are private sector banks and the World Bank, which take on board recommendations of NGOs and implement them and we would expect the ECGD to do that as well. We have provided guidance on water and dams, forestry, climate change and these put in changes and exclusions and measure the impact, positive or negative, because often very positive things are done here. We would like to see on the renewables a shifting of emphasis of the lending to smaller SMEs rather than the large projects. There is all sorts of guidance we have and can provide for ECGD on this so they can start measuring their footprint and reporting on it publicly. Ms Thorpe: There is much more they could be doing on the positive side in trying to encourage the renewable energy industry in the UK. It is fine if they have made some money available for that but there are other ECAs who are more proactive in finding out what that sector needs in order to be able to find out how they can make their policies and procedures more available to that sector. Additionally, for example, if you look at the World Bank and IFC when they are considering projects they are looking not just at exclusions and negative impacts but also the potential positive impacts. This could be a role the ECGB could play in encouraging more positive impacts. Q Sue Doughty: This could be a plus for UK plc in those particular sectors if we were able to see some changes in their criteria and objectives? Mr Peck: Absolutely. A lot of big British corporates like BP and Shell are leading the way. They are light years ahead of ECGB in thinking of sustainability and transparency issues, which was asked about before. Q Mr Challen: I notice in the WWF's submission to the Committee that you call for a duty of disclosure to appear between ECGD and its clients. To quote on the last page you say that this duty of disclosure should be extended to all projects and include all information that is not demonstrated to be of a commercially sensitive nature. Who would be demonstrating that? Would it be some independent oversight or would it be the ECGD itself or an agreement between them and its clients? Mr Peck: Certainly the International Finance Corporation and the Canadian ECA have an independent Ombudsman in place who would be able to take that role. They also have a presumption for transparency so there is a fundamental presumption for transparency, as Nick mentioned earlier, with the World Bank and if a company is not willing to be transparent then the process will halt. Ms Thorpe: The other things the Canadians do is they state what they mean by "commercially sensitive" so at least there is some clarity and it is not just a concept that can be hidden behind as easily. Q Mr Challen: You want those rules to apply in this case or do you want strengthen them? If so, how? Mr Peck: That is current best practice. Let's get them to go ahead with that if they can. We have put down a lot of this on paper; Nick is going to in the next few days; and Friends of the Earth have. That is all collated and examined. There is a pretty clear landscape that ECGD can navigate. The UK are going much further than many countries in many ways. It is a great shame that the ECGD is dragging down our reputation internationally. Q Mr Challen: They do seem to be resisting or doing these things under protest. Mr Peck: Is it down to capacity, we might come on to that, there is not a great capacity within the ECGD. Q Chairman: By capacity you mean resources? Mr Peck: Resources, people and time, apart from anything. I think it is one of the recommendations in the report. Q Mr Challen: That is certainly one issue. It is a new thing to them so it is bound to require more capacity I assume. I tend to be a little bit cynical and maybe they do certain things like their web site to try and draw the sting of criticism to try and say, "Look, we are open, here it is", and therefore reduce the opposition to their general level of secrecy. Mr Peck: I think the onus of proof should be on them to prove whether they are increasing or reducing their impact, their footprint. Q Mr Challen: In relation to those two issues, openness and certainly the capacity there to support it, do you think their transition to a trading fund is going to have an impact? Do you think it will make things worse? Mr Peck: I do not know a great deal about that and I was hoping that you were not going to ask me. My understanding is that it becomes a much more commercial entity like some of the ECAs are. It is great that our ECA is under very close government control and overview, so if this is the way that things are going to go then we need to ensure that the oversight and transparency and accountability is kept to the maximum, or indeed increased. Ms Nicholson: I am afraid I do not know about the trading fund so I cannot comment on that. On capacity it does seem to me that at the moment if they are doing things on a case-by-case basis and being open to all our benchmarks rather than having clear standards up front so that companies know that they have got to be clear on this before they even put in an application, then it is going to take an awful lot more time and require resources, and that in itself is going to be more expensive and time-consuming because they have few people in it to handle this. Getting dialogue with each company saying, "We probably ought to extend IEA or something else here, can you come back to us with this bit of the paper work," is all going to take more time, rather than having it up front, "These are the criteria before you even think about coming to ECGD for support." Q Gregory Barker: In terms of fostering sustainable exports the ECGD flagged up recently a £50 million cover specifically for UK renewable energy. Is that all it is cracked up to be and is it a sign of what they are already doing and can you put it in some context for us of their overall energy policy anyway. Ms Nicholson: As far as I understand it when meeting with them with another NGO I queried the potential for the ECGD to be quite forward looking in promoting renewable energy efficient projects. They said they would come to us and ask us. They are usually small scale, they are not the kind of thing that requires our support. Usually it is fossil fuel things. We are not going to stop supporting fossil fuel certainly but we might think about it. They said that the cover is available for renewable energy and that they do not have people coming and asking them. As far as I can see, possibly the announcement made in Johannesburg was a) to do with the criticism they had already come under from Friends of the Earth or Greenpeace in the press release about the amount of CO2 emissions that ECGD were responsible for and b) maybe they were actually saying ECGD is going green. I think it had a lot to do with the REAP initiative which is one of the partnerships the United Kingdom government initiated. It stands for Renewable Energy and Efficiency Programme. It was initiated by the Cabinet Office and is now run by the Foreign Office. It is very much about promoting renewable energy and energy efficiency programmes overseas and part of it is using ECGD to help promote those partnerships properly connected to that as well. Q Gregory Barker: We do not know what the take-up of that cover has been. Ms Nicholson: It is too early. Mr Peck: More information would be useful. Q Gregory Barker: How does that compare to the support for fossil fuel? Mr Peck: I do not have the actual figures in front of me. I know it pales into insignificance in comparison to support for oil and gas and power. That has gone up by five per cent since 1999. I have got figures here for other ECAs. It is much, much bigger. You are talking about thousands of millions. I think we need a lot more detail on that before we can be clear as to the details of it. Is it even new money? That is certainly not clear. Q Gregory Barker: Right. Are there examples of other ECAs putting forward sustainable projects which you think they should look at which might be rather more interesting than just recycling? Ms Thorpe: I do not know the details of the projects but, for example, the Japanese and Australians, I believe it is, do what I was referring to before which is make certain terms or conditions available specifically to environmental exporters, so it is not just about making money available because it is very easy, as you said, to say, "We made the money available but no one took it up", but they proactively tried to help environmental exports. The IFC for example has a team that goes out and looks for environmental projects so something that would be more proactive would be useful. Mr Peck: JVIC does that. Oil and gas projects are given effectively a subsidy at preferential rates. We would like to see that shifted to no preferential rates for carbon economy projects and preferential rates for renewables to start small and medium sized enterprises which represent a great potential industry for the UK, and we would like to see that kickstarted with preferential rates in ECGB and in wider government. Q Gregory Barker: In terms of raising standards on a multi-lateral basis, in the previous session you may have heard me asking Friends of the Earth about the criticism from Jim Harman a previous head of Exxon Bank in now, I suppose, "old" Europe's previous negotiations. What is your take on that? I understand now the position is that there is a lot of pressure building up in America because American business interests feel they are dangling out ahead of Europe and they are being disadvantaged. In actual fact, if Europe does not take up the slack you may see a retreat back in the other direction with a lowering of environmental standards as a result of failure to agree and support multi-lateral agreement. How would you comment on that? Ms Thorpe: I think that is a very fair comment that there is a danger of slipping back. I think it is striking, I have made this comment to Jules in the break, that, amongst the private sector, Europe is far ahead of North America so it is surprising to me in the export credit agencies that it is exactly the reverse. I am not quite sure why Europe is holding back so much. I do think there is this danger because OECD did not come to an agreement, partly because Turkey was holding back but also because the Americans felt that the standards were not high enough and wanted to see Europe come up. Q Gregory Barker: If you wanted to finger anybody in Europe who would you finger? Mr Peck: The German ECA, Hermes, has always been a bit of a bête noire for the NGO community, Coface, the French one, and the Italians, there is not a great deal of interesting stuff going on in ECAs in Europe. Sweden is way ahead. Q Gregory Barker: But it carries little clout? Mr Peck: Yes. Q Gregory Barker: You said the Common Approaches on Environment and Officially Supported Export Credits is not a satisfactory way forward. What are your specific criticisms? Mr Peck: On the Common Approaches there is a whole series of reasons why they are criticised by NGOs. There are no environmental standards, as has been discussed at great length here. Again it is a benchmarking process rather than standards. Projects that do not meet international standards are permitted within the Common Approaches. There is a whole series of them I could provide to you. Q Gregory Barker: Perhaps if you could let us have them. Mr Peck: We have got a lot of specific detail internationally and from Europe of the things NGOs list as faults within the Common Approaches. In some respects the UK is ahead of that. Q Mr Savidge: Exemptions are given for defence equipment and for the aerospace sector from the screening process. Do you feel that those exemptions are justified. Mr Peck: No, I think that is a fair point. WWF is a field-based, scientific, conservation organisation. Ms Nicholson: We also promote sustainable development, and promoting the arms trade cannot be sustainable development. Mr Peck: Certainly on the aerospace angle obviously there are environmental problems with CO2 emissions from airline industries. 50 per cent of United Kingdom ECGD support goes to defence. It would be great if we could be expend all that energy in UK plc on wind farms. Ms Thorpe: The ECGD line on that is that we do not need environmental impact assessment or screening on sectors because the impact is pretty much the same, but that is the problem and, as has been said several times, there does not seem to be any change to the portfolio despite procedural changes and the adding of business principles in the last year. Q Mr Savidge: In 2000 the Select Committee on Trade and Industry said "the questionnaire is possibly the weakest form of environmental assessment that could have been chosen." Do you agree and if you do agree what do you think would be a better methodology? Mr Peck: As we have said a number of times, standards, exclusions, things that will not be normally acceptably supported, targets, measurement of CO2 emissions, measurements of whether or not projects are in line with principles of human rights biodiversity and so forth, clear measures and targets and objectives has to be the way forward rather than a case-by-case, fairly vague, discretionary benchmarks. Ms Nicholson: They are not even required to provide the evidence, it is just yes, and there might be spot checks. Q Mr Savidge: In your response to the public consultation you say that the current screening and analysis procedures have failed on numerous counts to ensure sustainability in inherently unsustainable projects and for this reason certain project types must be avoided. Are you certain that in fact the ECGB has the power to do that? You mentioned the Investment and Export Guarantees Act 1991. Does that give them the power to do that? Mr Peck: As Nick and Phil discussed, I am not an expert on the legality of this but I think this deserves investigation. Certainly Canada changed the underlying act because they felt it was not facilitating sustainability within their ECA, so there is a precedent for changing the act, but it may not even be necessary. I think this needs to be investigated to see just how much of a valid excuse this is. Q Mr Savidge: Do you feel that it might be argued that UK companies could be put at a competitive disadvantage unless all other ECAs adopt the same stance? Do you know of examples of ECAs that have, in fact, got better practice? Mr Peck: Better practice? Q Mr Savidge: On this. Mr Peck: On? Q Mr Savidge: On this specific issue of ruling out some projects as being unsustainable? Mr Peck: Yes, and we have highlighted a number of them in our report of ECAs which are exhibiting best practice on the competitiveness angle. Obviously it is up to government to balance these things but there has been an enormous emphasis put on sustainability by the UK Government and there are massive potential markets for things like renewables. As I said before, why can we not make all that money that we are making out of selling weapons to Indonesia under our ethical foreign policy out of wind turbines? We are in a position to leap ahead of many other countries on things like wind turbine technology. Ms Nicholson: And there is the question of risk and reputation. In terms of competitiveness it may be fine to say we dare not exclude sectors because it would be damaging to UK industry, but far more damaging over the longer term is that in terms of risk and reputation. Q Mr Savidge: Were you consulted in any way on the actual changes to the impact questionnaire? Did this have any effect in your view? Mr Peck: Yes, they have taken on board some of the environmental issues that we recommended were included but, as I said, in two weeks' time we are actually sitting down with David Alwood and his team and they are going to feed back to us specifics of which recommendations were taken up and why some were not. We will have a discussion at that point and hopefully get back to you. Chairman: Thank you very much indeed for that very interesting session. Could I remind the Committee that we are meeting at ten o'clock next Wednesday to interview ECGD. Thank you very much. |