Elena Koritchenko 1
3 ECAs and their way to sustainability: actors and driving forces
In view of the growing recognition of the close interconnectedness between inter-national trade and environmental and social issues worldwide, those ‘giants’ could not stay long out of the radar of sustainable trade and responsible investment pro-ponents. In the mid-1990s, not only did individual experts recognize the potential of and expressed concerns on negative social and environmental consequences of officially supported projects, but also civil society voices on this issue started getting ever more urging. This chapter describes views, roles and motivations of main actors in the process of introduction of sustainability standards for ECAs.
3.1 The role of civil society
From the end of 1990s, ECAs, particularly in the OECD countries, experienced sig-nificant organized pressure from national and international NGOs.21 Some authors go further in the analysis of the civil society role in the introduction of environmen-tal and social standards into international trade and investments practices and tend to see the whole history of the financial sector’s ‘greening’ being a result of consistent work of the NGOs community,22 supported by influential national lobbies at some stages.23 The main discourse in the NGO critique of ECAs’ activities worldwide was the lack of transparency and public dialogue and occasional engagement in activities contradicting the recognized sustainability goals.
In 1996, NGOs taking an active position on the issue, created a network called ECA Watch,24 which is still functioning and highlighting the officially supported
21 Ibid.
22 Schaper, ‘Leveraging Green Power’ supra note 14.
23 Wright, ‘Export Credit Agencies’, supra note 4, at 137.
24 See <http://www.eca-watch.org>.
73 Elena Koritchenko transactions involving potential environmental and social dangers not sufficiently mitigated or disclosed or which are contradicting to the official commitments of the parties. In April 1998, 163 NGOs from 46 countries compiled a joint ‘Call of National and International Non-Governmental Agencies for the Reform of Export Credit and Investment Insurance Agencies.’ It was addressed to the governments of the OECD countries and contained, besides a description of the current concerns, four practical calls to be added to ECAs’ regulations by their governments, includ-ing a call for greater transparency and public participation, a call for environmental screening and assessment, a call for social responsibility and a call for agreement on common environmental and social standards.25
This Call did not stay unnoticed. However, it did not result in the immediate imple-mentation of clear binding commitments for all the OECD export credit agencies.
In 1998, ECAs from the OECD countries made a joint statement on their intention to consider the concerns raised and develop guidelines and procedures which would adequately address them. This process, however, was neither prompt nor easy. The first significant achievement of the trilateral dialogue between the NGO group, the ECA group and the OECD at the very end of the 20th century was the commit-ment of the OECD ECAs to share information on large projects with high potential impacts.26 However, no official procedural document was issued before 2003.
It should be mentioned that ECAs were not the only type of financial institutions in the focus of NGOs’ attention. From the late 1980s, the latter were implementing consistent step-by-step efforts aimed at improving transparency and accountabil-ity of the financial institutions engaged in large projects with high potential envi-ronmental and social impacts, particularly including those situated in developing countries.27 Though the most active phase of this struggle took about 20 years, the efforts of civil society brought significant changes in the financial sector due to the increasing discursive power28 that international NGOs and their associations were gaining.29 Before turning their attention and the ‘name-and-shame’ tactics to the ECAs, they triggered the introduction of a whole set of general and technical sec-tor-specific environmental and social standards and guidelines in the World Bank Group. With time it has even redefined its mission to include ‘sustainable develop-ment’.30 This could be considered as a game changer for the future of the interplay between sustainability and international trade.
25 World Economy, Ecology and Development (WEED), ‘Call of National and International Non-Gover-nmental Agencies for the Reform of Export Credit and Investment Insurance Agencies’ (1998), available at <http://www.weed-online.org/themen/english/17921.html> (visited 27 January 2018).
26 ECA Watch, Common Approaches (ECA Watch, 2018), available at <http://www.eca-watch.org/issues/
common-approaches> (visited 11 March 2018).
27 Schaper, ‘Leveraging Green Power’ supra note 14.
28 As defined by Robert A. Dahl, ‘The Concept of Power’, 2(3) Behavioral Science (1957) 201-215.
29 Schaper, ‘Leveraging Green Power’, supra note 14.
30 Ibid.
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However, as noted by some authors looking at this process from the angle of insti-tutional dynamics, despite similar results (the introduction of environmental and social responsibility considerations into their decision-making processes), the main powers creating pressure on the different types of financial institutions and transi-tion mechanisms differed significantly. In case of the World Bank, this was mainly the discursive power of civil society (expressed mainly by NGOs and other activists as well as lobbyists) conveyed through the national governments of the partner and client countries of the World Bank having instrumental power over this institution.
Further, the Equator Principles financial institutions31, which are mostly private, were mainly influenced through their clients requiring a higher level of responsibil-ity and transparency from the banks.32 In the case of ECAs the change was induced through their respective governments and the high-level governmental forums.
Those step-by-step changes in the dominant views of the main stakeholders on the accountability of the financial sector on social and environmental impact have final-ly resulted in a significant shift in the overall trade and environment discourse, at least in the developed countries. By the end of the 1990s, the dialogue on sustain-ability and international trade (including investments) had gradually transformed from conceptual debates on the relevance of these considerations to project support-ing institutions into a discussion on the methods most appropriate in different cases, with the overall acceptance that financial institutions shall share responsibilities for adverse effects of international trade. This new reality could not be much longer ignored by the national governments which have immediate power over their ECAs.
Moreover, the process was strongly influenced by the US lobby, where the principle of extraterritoriality for environmental assessment was enforced by several law suits raised by NGOs against national agencies providing support for projects overseas, including Ex-Im,33 the national ECA.34 However, debates on the form and content of this policy postponed the actual policy change for another few years.
3.2 The role of high-level inter-governmental forums
The consequent steps of this paradigm shift were marked by several official state-ments made by the world-leading polities. In 1997, the G8 countries encouraged ECAs to introduce ‘sustainable practices by taking environmental factors into ac-count when providing financing support for investment in infrastructure and
equip-31 The Equator Principles is a set of voluntary environmental and social standards for financial institutions providing project financing. For details, see <http://equator-principles.com/>.
32 Ibid.
33 See <https://www.exim.gov/>.
34 Schaper, ‘Leveraging Green Power’, supra note 14.
75 Elena Koritchenko ment’ in their official Communiqué.35 In 1999, the same group of countries pub-lished a joint statement acknowledging the general approach that ECAs’ activities are able to produce environmental and social effects of a scale similar to those of multilateral development banks and agreeing that their policies shall be, therefore, adjusted to take it into account and create instruments for those impacts assessment and mitigation.36
In May 2000, NGOs interested in improving the responsibility, accountability and transparency of export credit agencies’ operations convened again in Indonesia to discuss the current status of the issue and to produce another common statement.
This discussion covered a broader range of topics, than the 1998 statement, includ-ing the impacts of national debt on the populations of developinclud-ing countries. The resulting document is known as the Jakarta Declaration and contains a description of civil society concerns regarding ECAs’ activities worldwide as well as a call for a reform addressed once again to the OECD governments. The Declaration contained a list of six actions able, in their view, to significantly improve the situation, if im-plemented collectively by the ECAs from developed countries. The actions proposed were aimed at increasing transparency, including public consultations, as well as the application of best international environmental and social practice and standards to projects in both developed and developing countries through the development of corresponding guidelines with a particular emphasis on human rights and the intro-duction of binding anti-bribery requirements. Besides that, NGOs urged developed countries to cease support for non-productive investments (with the reference to military goods exports and nuclear power plants construction) and cancel the debts of the poorest countries placing excessive burden on the people of those nations.37 The choice of the OECD as an addressee of the concerns and recommendations represented an important strategic move. Though functioning mainly as a forum for coordinated consensus-based decision-making,38 at that time the OECD was one of the very few institutions bringing certain ECAs together and able to align their activities to a certain extent. Addressing individual ECAs (through national governments or directly) would not allow to create a common policy covering the meaningful amount of international trade. Moreover, exactly this group of countries
35 Berne Declaration, Bioforum, Center for International Environmental Law, Environmental Defense Fund, Eurodad, Friends of the Earth, Pacific Environment & Resources Center, Urgewald, A Race to the Bottom: Creating Risk, Generating Debt, and Guaranteeing Environmental Destruction. A Compilation of Export Credit & Investment Insurance Agency Case Studies (March 1999), available at <slidex.tips/
download/a-race-to-the-bottom-creating-risk-generating-debt-and-guaranteeing-environmenta> (visited 14 February 2018).
36 Wright, ‘Export Credit Agencies’, supra note 4.
37 Jakarta Declaration for Reform of Official Export Credit and Investment Insurance Agencies (May 2000), available at <http://www.eca-watch.org/sites/eca-watch.org/files/Jakarta_Declaration.pdf> (visit-ed 15 December 2017).
38 Morten Ougaard, ‘The OECD’s Global Role: Agenda‐setting and Policy Diffusion’ in Kerstin Martens, Anja P. Jakobi (eds), Mechanisms of OECD Governance: International Incentives for National Policy-ma-king? (Oxford University Press, 2010) 26-50.
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at the turn of the century was both supporting the ideas of sustainable development, including the non-industrial sector,39 and also having some experience on imple-mentation of similar standards. Another ECA forum, the Berne Union, stayed aside from this debate partially due to the lack of instruments and mandate for norm-set-ting and partially because of their much more diverse membership.
At the same time, it became clear that developing countries increasingly favoured the shared responsibilities approach, including in the international trade sphere, allowing them to restrain from additional commitments. The WTO high-level sym-posium on trade and environment, held in March 1999, clearly showed that the developing countries were not ready to move in the direction of the introduction of environmental and social requirements together with the developed countries and, moreover, treated this approach with significant suspicion of creating possible disadvantages for their position on the international trade arena.40 Therefore, it was probably impossible at that period to induce environmental and social standards for each and every ECA in the world, but it was important to launch the process, and the OECD obviously represented the best entry point for a number of reasons described above.