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17th May 2022

23 NGOs slam EIB human-rights record, amid review

  • The EU bank is undertaking an extensive rework of its sustainable and social-lending practices (Photo: EIB)
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A group of 23 NGOs wrote to the European Investment Bank (EIB) directors on Wednesday (26 January), urging them to improve its human rights standards.

The EU bank is currently undertaking an extensive rework of its sustainable and social lending practices, intended to prevent further loss of biodiversity, harm to the environment and pollution and protect human rights for years to come.

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The board of directors is set to rubber-stamp the updated Environmental and Social Sustainability Framework (ESSF) on Wednesday (2 February).

But according to the signatories of the letter, which include the World Wildlife Fund (WFF) and Counterbalance, these new regulations fail to address existing weaknesses that perpetuate environmental and human rights violations.

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 as a campaign in 2007 specifically aimed at challenging the EIB to push for reform.

Its researchers have drawn links between EIB financing and intimidation and violence in Ukraine and the forced eviction of a village for a Mombassa port access road in Kenya.

One of the problems the letter highlights is that many of the banks projects are financed through commercial intermediaries.

Third parties

And while the EIB transparency rules have been clearly established under the bank's own external lending mandate, its partners are not subjected to the same level of scrutiny.

Potential effects on the local populace or the environment are often not made transparent.

And while the EIB has recently taken ambitious steps to become a climate leader, it falls short of the same ambition when looking at human rights and transparency matters.

The signatories, therefore, urge the board of directors to amend the ESSF rules "to oblige intermediaries, in every case, to refer high-risk sub-projects to the EIB for review."

The EIB is not obliged to publish the projects it selects for funding, the role of financial intermediaries (like commercial banks and investment funds), the selection criteria, or the environmental impact of such 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, "considerably longer period than envisaged in its own internal rules."

In a similar complaint related to loans for a power system expansion in Nepal, the banks' own complaint mechanism found "serious assessment shortcomings, no stakeholder engagement plan and poor outreach to local indigenous people."

In the ESSF rules, the bank suggests that it intends to develop "a human rights position statement."

However according to the signatories, "it is not clear what status this document will have" and advise the bank to develop a "fully-fledged human rights strategy to complement its gender strategy and climate strategy."

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