A group of 23 NGOs wrote to the directors of the European Investment Bank (EIB) on Wednesday 26 January, urging them to improve its human rights standards.
The EU bank is currently undertaking a major overhaul of its sustainable and social lending practices, aimed at preventing further biodiversity loss, environmental harm and pollution and protecting human rights for coming years.
The Board of Directors is expected to approve the updated Environmental and Social Sustainability Framework (ESSF) on Wednesday, February 2.
But according to the letter’s signatories, including the World Wide Fund for Nature (WFF) and Counterbalance, these new regulations fail to address existing weaknesses that perpetuate human rights and environmental abuses.
According to Counterbalance director Xavier Sol, the bank lacks the staff capacity and expertise to conduct due diligence on the projects it finances.
Counterbalance was launched in 2007 as a campaign aimed specifically at the EIB to push for reform.
Its researchers have established links between EIB financing and intimidation and violence in Ukraine and the forced eviction of a village for an access road to the port of Mombasa in Kenya.
One of the problems the letter highlights is that many of the banks’ projects are financed through commercial intermediaries.
And while the EIB’s transparency rules have been clearly established as part of the bank’s external lending mandate, its partners are not subject to the same level of scrutiny.
Potential effects on local people or the environment are often not made transparent.
And while the EIB has recently taken ambitious steps to become a climate leader, it is falling short of the same ambition on human rights and transparency.
The signatories therefore urge the Board of Directors to amend the ESSF rules “to oblige intermediaries, in all cases, to submit high-risk sub-projects to the EIB for review”.
The EIB is not required to publish the projects it selects for financing, the role of financial intermediaries (such as commercial banks and investment funds), the selection criteria or the environmental impact of these projects. .
In a 2019 ruling, the European Ombudsman said the EIB had mishandled environmental complaints against a cobalt mining operation in Madagascar.
It took the bank six years to respond, “a considerably longer period than envisaged in its own internal rules”.
In a similar complaint about loans for an electricity system expansion in Nepal, the banks’ own complaint mechanism found “serious deficiencies in the appraisal, lack of a stakeholder engagement plan and a low awareness of local indigenous people”.
In the ESSF rules, the bank hints that it intends to develop “a position statement on human rights”.
However, according to the signatories, “it is unclear what status this document will have” and advise the bank to develop a “comprehensive human rights strategy to complement its gender strategy and climate strategy”.