ANNEX II
INTERNATIONAL BEST PRACTICE
This section aims to provide an overview of best
practice—first amongst ECAs and MDBs, and then some examples
from the private sector. It should be noted that it has not been
possible to describe the details of these policies. In some cases
the policies and procedures listed may only apply to projects
of a minimum duration or above a certain value. Additionally,
it focuses on the general policy of the institution without attempting
to list specific exceptions which may exist. The table in Appendix
5 provides further details of the ECAs and MDBs investigated.
BEST PRACTICE
AMONGST ECAS
AND MDBS
1. Environmental screening and review procedures
It is common practice amongst all institutions
analysed to screen applications for environmental impacts, assigning
each a category[121]—A,
B or C (a few institutions also use an additional category). This
is often based on a questionnaire.
— JBIC also confirms environmental
considerations identified through its questionnaire via sector
specific checklists[122]
for A and B projects.
— EKN's questionnaire also requests
details of potential positive impacts (rather than only negative
impacts), backing documentation or an explanation of answers,
and provides definitions and guidance notes.[123]
— For many of the institutions, an
environmental impact assessment (EIA) is required for category
A projects, while some less detailed form of environmental audit
is required for category B projects.
2. Environmental standards
Most ECAs follow a "benchmarking approach"
regarding environmental standards. This means that they do not
have one clear environmental standard, but choose examples of
international environmental good practice as reference points
or benchmarks for a particular project. In general, the standard
chosen for a particular project is not publicly disclosed.
— The EDC follows the benchmarking
approach, but for category A projects it also discloses the standard
chosen as the basis for the environmental review.
— The Ex-Im Bank does not use a benchmarking
approach. It has a set of numerical guidelines related to air
emissions, water quality and noise impacts, as well as qualitative
guidelines for other environmental and social factors, such as
pulp and paper, mining, oil and gas, power plants, forest operations,
hydro power and water resource management.
— The World Bank/IFC also have their
own environmental standards, numerical and qualitative, based
on the Pollution Prevention and Abatement Handbook[124].
They also have specific policies on natural habitats, forestry,
dams and international waterways.
3. Monitoring
More than for other areas, there is no standard
approach amongst the organisations towards monitoring of environmental
impacts of projects, or of the impacts and performance of the
organisation as a whole. There is also generally less information
available regarding monitoring procedures.
— JBIC undertakes monitoring for category
A and B projects based on information supplied by the borrower—and
in some cases conducts its own investigations. It is particularly
notable for having sector-specific monitoring forms, which are
publicly available[125].
— Since 1999, Ex-Im has tracked annual
global greenhouse emissions from power projects it supports
— EKN has started evaluating the climate
impact of its overall guarantee portfolio and strategies, in order
to reduce impacts.
— The IFC has developed a framework
to measure and monitor internally the positive impact, or "value
added" of projects—the Private Investments' Contribution
to Sustainable Development[126].
This is based on eight indicators, of which two look specifically
at environmental performance, while others consider issues like
accountability and transparency or management and capacity, as
well as social issues. The framework measures positive impacts
beyond the minimum environmental and social safeguards (which
all projects must comply with).
4. Environmental expertise
Many of the organisations did not have publicly
available information detailing the number of environmental staff,
or environmental training which non-environmental staff undergo.
This is an area where best practice generally lies with the private
sector (see Appendix 4), as well as the World Bank and IFC.
— In addition to having an environment
and engineering division, the Ex-Im Bank has a dedicated staff
member for its "environmental exports program".
— In addition to internal expertise
and training, the IFC requires its financial sector clients to
attend a one-week training seminar in environmental management.
A survey of IFC clients revealed that the IFC's assistance on
environmental matters was amongst the top three most valued services.[127]
5. Transparency and disclosure
Key issues in transparency and disclosure focus
on questions of what information is disclosed, at what point in
the project cycle and for which projects.
— The World Bank, IFC and the EBRD
all have a policy of presumption in favour of disclosure where
disclosure would not materially harm the business and competitive
interests of clients.
— While all organisations commit to
keeping commercially sensitive information confidential, the EDC
is unique in defining at length what constitutes information related
to "commercial competitiveness[128]".
— IFC and EBRD require project sponsors
to make environmental information public for category A and B
projects—unlike many of the other organisations that have
a policy of disclosing project information, but only with the
permission of the project sponsor.
— Several of the organisations have
a policy to disclose project information a number of days (between
30 and 120) before a decision on providing financial support for
the project is reached (ex ante)—particularly for category
A and sometimes B projects. The exact information disclosed varies.
— Several organisations also publish
ex post transaction details on their websites and/or annual reports,
although again the information disclosed varies. The IFC, for
example, posts on its website information on the project sponsor
and major shareholders, location and description of site, description
of company and purpose of project, environmental category and
a description of key issues and mitigation measures, and monitoring
and compliance plans. It also publishes environmental documentation,
including EIAs and environmental audits.
6. Exclusions
— The MDBs have the most extensive
exclusion lists, which include wildlife regulated under CITES;
pesticides, herbicides, pharmaceuticals and other hazardous substances
subject to international phase-outs or bans; drift net fishing
in marine environment using nets in excess of 2.5 km in length;
and in the case of the IFC/World Bank, logging in primary tropical
moist forests. As an example, see the EBRD exclusion list in Appendix
8.
— The ECAs also have some exclusions.
These include:
EFIC: prohibited materials and substances based
on Australian customs.
Ex-Im: banned and restricted pesticides and chemicals,
and commercial logging in primary tropical forests.
— EKN is reviewing its involvement
in the Indonesian pulp industry.
7. Positive incentives for environmental exports
— Some ECAs actively encourage exporters
of environmental technologies to approach them, particularly through
considering or offering extended terms of finance (within OECD
restrictions[129]).
These include EFIC, JBIC and Ex-Im.
— The EDC is conducting a survey of
the Canadian environment industry to better understand its profile
and needs.
— The IFC has an environmental projects
unit to identify and develop environmental projects, especially
in partnership with grant-making institutions.
— The World Bank has established the
prototype carbon fund to develop the market for project-based
greenhouse gas emissions reductions within the framework of the
Kyoto Protocol.
8. Appeal procedures
Few of the ECAs have specific appeal procedures.
— Both the IFC and the EDC in Canada
have a compliance officer, which is independent of management
and has an ombudsman-like role for dispute resolution. The compliance
officer acts as an intermediary, encouraging dialogue between
the EDC and a complainant, including recommending methods for
dispute resolution.
121 Category A means the project has potential significant
environmental impacts which may affect an area beyond the project
site, including projects in sensitive areas or sectors. Category
B means potential impacts are less than for category A-usually
site-specific and reversible. Category C means the project is
likely to have minimal or no impacts. Back
122
JBIC has checklists for thermal power, hydro power, steel mills,
copper smelting works, mining, petroleum/natural gas development,
petrochemical, forestry, paper and pulp, road construction, airports,
ports and harbours, general industry and infrastructure. See www.jbic.go.jp/english/environ/guide/finance/check/index.php Back
123
See www.ekn.se/includes/MIlijobilagaENG.pdf Back
124
See http://wbln0018.worldbank.org/essd/essd.nsf/Docs/PPAH Back
125
See www.jbic.go.jp/english/environ/guide/finance/monitor/index.php Back
126
Based on International Finance Corporation internal document,
Private Investments' Contribution to Sustainable Development:
Recognizing strong environmental, social or corporate governance
contributions to development impact in projects, which was the
basis of indicators developed by SustainAbility, IFC and Ethos
for the report, Developing Value: The business case for sustainability
in emerging markets, London, 2002. Back
127
John Ganzi, Frances Seymour and Sandy Buffett, Leverage for the
Environment: A guide to the private financial services industry,
World Resources Institute, Washington DC, 1998. Back
128
See www.edc.ca/corpinfo/csr/disclosure/treatment-e.htm Back
129
To avoid competition between ECAs based on the financial terms
they offer, and to ensure they are not providing subsidies but
are consistent with market terms, the OECD has restrictions on
the terms of financial support which ECAs can offer. However,
as discussed on page 6, extended payment periods are currently
offered for some sectors, including power plants, nuclear plants
and civil aircraft. Back
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