As the United States pulls back from global leadership, the recent European Investment Bank (EIB) group forum in Luxembourg came at a crucial time.
As the world’s largest multilateral development bank, the EIB now has a chance to become a responsible development actor — but if and only if the institution properly addresses long-standing deficiencies of its Complaints Mechanism and commitment to accountability.
On the surface, the EIB presents itself as an ambitious and forward-thinking institution. While it primarily invests in Europe, it has expanded its scope and branded itself as a “climate bank”, using global financing to promote gender equality, human rights, and other EU values.
Compared to the US’ shrinking role on these topics, this year’s EIB group forum notably included a “Global Days” portion devoted to global challenges for the first time.
However, the EIB’s track record raises a big question about whether its actions can reflect its ambitions.
Already, there are doubts as to whether the EIB’s green projects are really green, and whether some EIB activities, including expansion into the defence industry and military financing for Israel, are suitable for a development institution.
Most importantly, the EIB has a poor history of ensuring its international projects are held accountable to local communities.
Decades of development experience have shown that even with the best intentions, projects harm communities if they do not solicit community input during the design process, nor are developed in accordance with stringent environmental, social, and human rights requirements.
To address these types of concerns from communities, several multilateral development banks and development finance institutions have independent accountability mechanisms (IAMs). When they work well, these bodies address complaints through mediation or an independent investigation, and can provide lessons for the institution's work going forward so that the same mistakes are not repeated.
The EIB’s IAM, the Complaints Mechanism (CM) has been operational since 2008.
While the office had received nearly 400 environmental and social complaints through the end of 2022, there's very little public evidence that communities have received compensation, or another appropriate form of redress.
Of the outcomes we do know about, we know there have been challenges in delivering remedies. For example, although a 2021 CM investigation confirmed problems with the resettlement of communities affected by the 220 kV Marsyangdi Corridor transmission line in Nepal and a violation of Indigenous Peoples’ rights, communities are still waiting for the EIB and the Nepal Energy Authority to correct these harms.
In Budapest, Hungary, new studies analysing the climate, air and noise pollution, traffic, and social impacts of the EIB-supported expansion of the Liszt Ferenc International Airport have yet to be implemented, despite a 2021 CM investigation report recommending these actions.
Clearly, the EIB’s accountability system is not working.
Unresolved harm undermines sustainable development by leaving communities poorer, damaging the environment, and exacerbating conflict. Although EIB president Nadia Calviño has stated that the institution takes accountability very seriously, we have seen that the EIB has major accountability issues. The EIB simply cannot be the global development leader it aspires to be unless things change.
Fortunately, the EIB currently has an opportunity to course-correct. Last year, the EIB initiated a review of its accountability mechanism. For this review to result in meaningful changes, we need to see a few important elements.
First, the process for the review needs to be inclusive and transparent. The EIB hired a team of three accountability experts to conduct a comprehensive review of the CM and the accountability system. The EIB report is expected to receive the experts’ report soon; when it does, it should be made public.
Crucially, consultations for the review should include in-person engagements in countries where the EIB operate and should engage past users of the CM, as these stakeholders best know the impacts of the EIB’s financing and what needs to change with the CM.
Second, the complaint process needs to become more accessible, equitable, and effective. Currently, there are several areas where the CM does not meet international best practices, including in the transparency of its work. Its monitoring of agreed actions to address harm is lacking, which contributes to the lack of remedy. It also needs a more robust advisory function so that lessons from its cases change negative EIB practices.
Third, and perhaps most importantly, the EIB must show a strong institutional commitment to accountability. Because of its large mandate, which includes access to information and other topics in addition to environmental and human rights, the CM receives more complaints than any other IAM. It needs more resources to address this large caseload properly. Moreover, when the CM verifies instances of non-compliance and harm, the EIB must meaningfully respond by working with its clients to ensure that harm is fully remedied.
The outcomes of the CM review will help set the direction for the future of the EIB. Amid the current climate, it has a major opportunity to step up and become a responsible global development leader that can spearhead meaningful positive change. Will it live up to that potential, or will it continue its path of unaccountable actions? Now is the time for EIB to answer this question.
Stephanie Amoako is policy director at Accountability Counsel, which advocates for people harmed by internationally financed projects, amplifying voices and driving policies to protect human rights and the environment.
Stephanie Amoako is policy director at Accountability Counsel, which advocates for people harmed by internationally financed projects, amplifying voices and driving policies to protect human rights and the environment.