export agencies to study social impact of projectsJanuary 2002
Twenty-four major economic powers have agreed to commit their export credit agencies to look at social and environmental factors when underwriting business projects.
The move was supported last month by all but six of the 30 member states of the Organisation for Economic Co-operation and Development after 15 months of negotiations. The agencies will begin to examine social and environmental factors from this month, using an OECD statement on the subject as the basis for their actions.
Four new OECD members – Poland, Hungary, Czech Republic and Slovakia – did not take part in the negotiations, and two others, the US and Turkey, refused to back the agreement. The US maintains it would have to lower its standards to comply, and Turkey withheld its support for political reasons.
The agreement says all projects with a repayment term longer than two years must undergo environmental and social screening for their impact ‘in sensitive sectors and locations’.
It also calls for benchmarking of projects ‘against international standards such as those contained in the guidelines of the World Bank Group’, and disclosure of information about the projects to ‘relevant stakeholders’ and other OECD member states.
Consultations with ethnic minorities and ‘interested stakeholders’ will be a key requirement.
The OECD hopes agencies will concentrate as much on supporting socially and environmentally beneficial projects as on screening out damaging ones.
Export credit agencies will be expected to report regularly to the OECD on their progress against the statement, and the agreement will be reviewed before the end of 2003.
‘Nobody is saying this is going to be the end product, and during the year we will see what improvements can be made and how the standards can be raised,’ the OECD said.
OECD ministers asked the organization’s working group on export credits to begin drawing up the statement 18 months ago.
Most of the discussions involved only OECD member states, but the working group also consulted non-governmental organizations.
In the intervening period, the export credit agencies of some countries had already begun to take account of social and environmental matters of their own accord.
The UK’s Export Credits Guarantee Department agreed a statement of principles in 2000 that, among other things, committed it to ensure it ‘does not contribute to human rights abuses or violations in providing cover for any project or investment’ (EP2, issue 4, p3).
In November last year, 70 senior staff from various export credit agencies around the world met in Paris to talk about how best to make their operations more environmentally responsible (EP3, issue 7, p7).
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