BRUSSELS — The European Investment Bank is preparing to consider changes to how it assesses the human rights impact of its projects, as a report from two NGOs released Monday argues the multilateral lender must be “deeply reformed” if it is to live up to its development potential.
The report, by Counter Balance and Bankwatch, follows an open letter from 15 civil society organizations last month calling for EIB to beef up its rights framework for those affected by its work. Around 10% of EIB financing — €7.9 billion ($9.38 billion) in 2019 — goes to projects outside the European Union, including exposure in 43 of 59 least-developed countries and fragile states.
For now, an EIB spokesperson told Devex, a project’s impact on human rights is considered by the bank as part of an overall environmental and social assessment.
If it decides the possible risks to human rights warrant further scrutiny, the Luxembourg-based lender can ask those benefiting from its loan or equity stake — typically other banks or companies — to carry out their own dedicated human rights assessment. But that has not happened since 2015, according to the report.
Citing lending in countries such as Laos and China, as well as projects that the NGOs say have required resettling or displacing people in Senegal and India, the report’s authors ask whether “EIB services did not spot sufficient risks related to human rights in these projects to trigger a dedicated assessment. Or is it simply that there was no human rights screening performed at all?”
The NGOs want EIB to adopt a new human rights strategy, including dedicated human rights due diligence screening by the bank itself before every project goes ahead.
“There is also room for the European Commission and European External Action Service to play a more active role in the appraisal process at the EIB,” the report states. “Before approving a project, the Commission should ensure that the EIB has properly assessed human rights risks early in the project cycle, and it should oppose the project when red flags emerge.”
The bank’s spokesperson emailed that “EIB has never stopped assessing the human rights aspects of its projects,” adding that the current method of considering the “likelihood, frequency, and severity of human rights impacts” as part of the environmental and social assessment allows for an “interrelated analysis.”
At the same time, the spokesperson wrote that “the question of using stand-alone human rights assessments will ... be considered in our forthcoming review of our Environmental and Social Framework,” expected in the first half of next year. The review, which will include a consultation with civil society groups, is a chance to “clarify and strengthen” language on the bank’s human rights obligations, the spokesperson wrote.
The bank is also planning to publish a guidance note for those it finances by the end of this year, designed to help them “undertake meaningful stakeholder engagement, with regards to environmental, climate and/or social risks and impacts and the proposed measures and actions to address them,” the spokesperson added.
In their report, the NGOs argue that other shortcomings on transparency and anti-money laundering, as well as too few staff in low-income countries, mean that EIB would have to be “deeply reformed” before becoming the EU’s preferred development bank — one option now under consideration by EU countries.
The report and open letter are timed to coincide with this week’s Finance in Common summit of the world’s 450 public development banks, which NGOs have criticized for neglecting the rights of Indigenous people and human rights defenders.