Making the Grade: a survey of IFI social policies and the policies of the European Investment Bank (EIB) Tom Griffiths Forest Peoples Programme Rights to Complain: IFIs and accountability – on the way to accountability and appeals mechanisms for the European Investment Bank Brussels, November 30th, 2006

Objectives: To assess existing range of IFI policies and related international standards on social development and social safeguard issues To assess existing range of IFI policies and related international standards on social development and social safeguard issues To compare these with EIB policies To compare these with EIB policies To make recommendations for strengthened EIB social standards and improved public accountability To make recommendations for strengthened EIB social standards and improved public accountability

Scope of survey Overview of social safeguard policies of WB, IFC, IADB, AfDB, ADB = not exhaustive Overview of social safeguard policies of WB, IFC, IADB, AfDB, ADB = not exhaustive Best practice standards, including World Commission on Dams and EIR Best practice standards, including World Commission on Dams and EIR Relevant standards in EU regulations, external policies and intergovernmental commitments = not exhaustive Relevant standards in EU regulations, external policies and intergovernmental commitments = not exhaustive

Why operational standards ? Establish incentives to IFI staff and managers address social and environmental issues Establish incentives to IFI staff and managers address social and environmental issues Provide external accountability of the IFI to local communities and citizens Provide external accountability of the IFI to local communities and citizens Constitute an agreed basis for negotiating loans or contracts with borrowers and clients Constitute an agreed basis for negotiating loans or contracts with borrowers and clients Establish a yardstick for project monitoring and evaluation Establish a yardstick for project monitoring and evaluation Improve overall development quality Improve overall development quality

Effective operational standards: Preconditions that must be complied with before the IFI will support a project Preconditions that must be complied with before the IFI will support a project Procedural and substantive operational rules binding on IFI staff and managers Procedural and substantive operational rules binding on IFI staff and managers Implemented by well-resourced transparent management /compliance system (public procedures) Implemented by well-resourced transparent management /compliance system (public procedures) Commitments and safeguards covenanted in loan or grant agreements Commitments and safeguards covenanted in loan or grant agreements Linked to independent IFI appeals and accountability mechanisms Linked to independent IFI appeals and accountability mechanisms

Social policyIBRD/ IDA IFCIADBAfDBADBEIB ∑ Binding oper. Standards ? Except Info disclosure policy 5 Soc Assessment  No OP  No OP 3 Participation x-cutting ? Not clear 5 Info Disclosure ? Resettlement  5 Gender   2 Indigenous Peoples   4 Core Labour Standards  2 Human Rights  0 Independent Appeals mechanism(s)  5 Totals787682

Existing IFI policies: Address specific social issues (previous slide) Address specific social issues (previous slide) Establish objective and obligatory operational requirements on IFI staff, borrowers and clients… (with explanatory definitions) Establish objective and obligatory operational requirements on IFI staff, borrowers and clients… (with explanatory definitions) Set benchmarks for project approval Set benchmarks for project approval Integrated with project management, procedures and oversight Integrated with project management, procedures and oversight Complemented by Implementation Guidelines Complemented by Implementation Guidelines Tied to accountability mechanisms Tied to accountability mechanisms Starting to reference standards to international law Starting to reference standards to international law Still lack policies on key issues like human rights Still lack policies on key issues like human rights

WB IBRD/IDA Policy on IPs “The Bank provides project financing only where free, prior, and informed consultation results in broad community support to the project by the affected Indigenous Peoples” [para. 1. OP 4.10] “The Bank provides project financing only where free, prior, and informed consultation results in broad community support to the project by the affected Indigenous Peoples” [para. 1. OP 4.10] “The Bank does not proceed further with project processing if it is unable to ascertain that such support exists” [OP 4.10, para 11] “The Bank does not proceed further with project processing if it is unable to ascertain that such support exists” [OP 4.10, para 11]

OP 4.10 “Free, prior, and informed consultation with the affected Indigenous Peoples’ communities” refers to a culturally appropriate and collective decision-making process subsequent to meaningful and good faith consultation and informed participation regarding the preparation and implementation of the project…” (fn 4, OP) “Free, prior, and informed consultation with the affected Indigenous Peoples’ communities” refers to a culturally appropriate and collective decision-making process subsequent to meaningful and good faith consultation and informed participation regarding the preparation and implementation of the project…” (fn 4, OP)

IFC PS1: Social and Environmental Assessment and Management Systems “Where the client identifies specific mitigation measures and actions necessary for the project to comply with applicable laws and regulations and to meet the requirements of Performance Standards 1 through 8, the client will prepare an Action Plan.” (PS1: para 16)

IFC Environmental and Social Review Procedures (ESRP, 2006) Includes (inter alia) during the appraisal stage of the IFC project cycle: Review of the Project Assessment Information and Action Plan and identification of gaps… Review of the Project Assessment Information and Action Plan and identification of gaps… Review of client’s ESMS and identification of gaps… Review of client’s ESMS and identification of gaps… Identification of any Supplemental Actions to be incorporated in the client’s Action Plan to address any gaps identified above… Identification of any Supplemental Actions to be incorporated in the client’s Action Plan to address any gaps identified above…

EIB existing social policies The Social Assessment of Projects outside the European Union: the approach of the EIB, 02 October, 2006 The Social Assessment of Projects outside the European Union: the approach of the EIB, 02 October, 2006 Development Impact Assessment Framework for Investment Facility Projects, April 2005 Development Impact Assessment Framework for Investment Facility Projects, April 2005 Public Disclosure Policy: principles, rules, and procedures, 28 March 2006 Public Disclosure Policy: principles, rules, and procedures, 28 March 2006 Statement on Corporate Social Responsibility, 2005 Statement on Corporate Social Responsibility, Various guidelines and codes of conduct + Various guidelines and codes of conduct

EIB Documents consulted The Social Assessment of Projects Outside the EU: the approach of the EIB, October, 2006 The Social Assessment of Projects Outside the EU: the approach of the EIB, October, 2006 Development Impact Assessment Framework for Investment Facility Projects, April 2005 Development Impact Assessment Framework for Investment Facility Projects, April 2005 Public Disclosure Policy, March 2006 Public Disclosure Policy, March 2006 Statement on Corporate Social Responsibility Statement on Corporate Social Responsibility Corporate Responsibility Report 2005 Corporate Responsibility Report 2005 Corporate Operational Plan Corporate Operational Plan The Project Cycle at the European Investment Bank (2001) The Project Cycle at the European Investment Bank (2001) EIB project eligibility and appraisal criteria EIB project eligibility and appraisal criteria Charter for Internal Audit, October 2001 Charter for Internal Audit, October 2001

EIB Social policies Few in number and few operational standards Few in number and few operational standards Rightly base standards on international norms, regulations and best practice Rightly base standards on international norms, regulations and best practice General principle-based statements on EIB commitments General principle-based statements on EIB commitments Vague on required standards for lending in non- EU countries Vague on required standards for lending in non- EU countries Not backed up by associated compliance and independent complaints and appeals mechanisms Not backed up by associated compliance and independent complaints and appeals mechanisms

EIB Social Assessment Policy, 2006 “…Attention focuses on the potential impacts…on population movements and resettlement, and on vulnerable groups…Attention is given to establishing acceptable labour standards, ensuring the health and safety of the workforce and of the surrounding communities…”

Conclusions The EIB is rightly committed to ensuring its policies and practice are consistent with international standards and best practice The EIB is rightly committed to ensuring its policies and practice are consistent with international standards and best practice EU and European governments already committed to most international social standards EU and European governments already committed to most international social standards However, objective operational social standards to which the EIB may be held accountable in its project finance outside the EU remain unclear or entirely absent However, objective operational social standards to which the EIB may be held accountable in its project finance outside the EU remain unclear or entirely absent

Recommendations (1) Adopt binding and specific policies to operationalise its social standards consistent with international standards and best practice, including those of the WCD and EIR. Adopt binding and specific policies to operationalise its social standards consistent with international standards and best practice, including those of the WCD and EIR. As a very minimum, EIB policies should be at least equivalent to the World Bank’s IFC standards. As a very minimum, EIB policies should be at least equivalent to the World Bank’s IFC standards.

Recommendations (2) Establish effective internal oversight, quality control and compliance mechanisms (with problem solving remit?) Establish effective internal oversight, quality control and compliance mechanisms (with problem solving remit?) Establish an external independent complaints and appeals office (outside the EIB) Establish an external independent complaints and appeals office (outside the EIB) And/or strengthen existing external mechanisms, to investigate violations of social and environmental standards and grievances of non-EU communities affected by EIB projects And/or strengthen existing external mechanisms, to investigate violations of social and environmental standards and grievances of non-EU communities affected by EIB projects Undertake these measures to strengthen EIB accountability in full consultation with civil society Undertake these measures to strengthen EIB accountability in full consultation with civil society

Thank You