Transcript Document

Social Due Diligence in EIB Lending :
an Introduction to EIB’s Social Standards
Eleni Kyrou, Social Development Specialist
PJ/ECSO
November 5th, 2014
European Investment Bank
1
I. The Foundation of EIB’s E&S Framework
EIB’s general approach to the environment and social well-being is
derived from the Lisbon Treaty (2009)
The Charter of Fundamental Rights of the EU as the main reference
for EIB’s social standards; and supplemented by good practice
requirements (MFIs’ standards, ILO Core Labour Conventions, UN
Guiding Principles on Business & Human Rights, etc)
EIB Statement of Environmental and Social Principles and Standards
(2009) as its highest-level policy articulating EIB’s commitments to
environmental and social sustainability
EIB E&S Practices Handbook (updated 2013) operationalizes the
Statement, introduces HR language, and provides guidance to
promoters on compliance and alignment to E&S performance
EIB E&S Standards apply to all regions (exceptions indicated); all
types of financing; both public and private sector projects; throughout
the project cycle
2
European
Foundation of EIB’s Environmental & Social
Framework
EIB Statement of Environmental and
Social Principles and Standards (2009)
Good practice
requirements
Charter of Fundamental
Rights of the EU
Lisbon Treaty
Art. 11. - integration of environment in all other
policies
•
•
Highest-level policy of the Bank articulating EIB’s commitments to
environmental and social sustainability
Applicable to all regions, all types of financing, to the whole project,
throughout the project cycle
European Investment Bank
3
EIB Environmental and Social Framework
Lisbon Treaty
EU Charter of Fundamental Rights
Environmental and
Social Practices and
Procedures
Operationalised by
Environmental and Social
Standards
1. Assessment and Management of
Environmental and Social Impacts and
Risks
2. Pollution Prevention and Abatement
3. Standards on Biodiversity and Ecosystems
4. Climate-related Standards
5. Cultural Heritage
6. Involuntary Resettlement
7. Rights and Interests of Vulnerable Groups
8. Labour Standards
9. Occupational and Public Health, Safety
and Security
10. Stakeholder Engagement
Informing
Statement on
Environmental and Social
Principles and Standards
Thematic and Sector
Guidance
Sourcebooks
Transparency Policy
European Investment Bank
4
The Integrated Approach
EIB E&S SPS
committing to
sustainability and
the protection and
respect of human
rights
10 EIB E&S
Standards :
key requirements
for Bank
supported
operations
Internal due
diligence
procedures for
the Bank
EIB E&S
Framework
Integration:
Environment,
climate change,
social issues,
biodiversity and
ecosystems
Standards apply
to both public
and private
sector and to all
regions
What do EIB’s E&S policies and
Standards Encompass?
COMPLIANCE
QUALITY ENHANCEMENT
RISK & IMPACT MANAGEMENT
EIB Environmental and Social Standards
•
Requirements to be met throughout the life of an EIB-supported operation
•
Help promoters manage E&S impacts and risks
•
Help promoters improve their E&S performance through implementation of
sound environmental and social practices, transparency and accountability.
Standard 1: Assessment and Management of Environmental and Social Impacts and Risks
Standard 5: Cultural Heritage
Standard 6: Involuntary Resettlement
Standard 7: Rights and Interests of Vulnerable Population Groups
Standard 8: Labour Standards
Standard 9: Occupational and Public Health, Safety and Security
Standard 10: Stakeholder Engagement
European Investment Bank
7
The Role of the EIB vs the Role of the Promoter
European Investment Bank
8
The Social Standards: Key Messages & Specific
Outcomes Defined
The social standards that need
to be achieved are defined, but
not the way in which they are
achieved
Avoid impacts – Application of the
Mitigation Hierarchy
Avoids prescription and allows
promoters to develop solutions that
are appropriate to the circumstances
and location
Increases both opportunities and
risks for promoters and their
financiers
Opportunity
•
•
•
•
Innovation
License to operate
Cost effectiveness solutions
Efficiency
Risk
•
•
Promoter and EIB need to
understand what they have to do
Capacity constraints of the
promoter can mean that impacts
are not managed
European Investment Bank
9
EIB Social Due Diligence Guiding Principles
Appraisal in the context of the project’s definition, covering relevant
stages of the project cycle, proportional to impacts and risks;
Support positive environmental and social outcomes;
Comply with national laws (but if not adequate – EIB/EU/IFI policies
should be the substitute) but sometimes not enough to say project
is acceptable because it has national approval;
Apply international best practices;
Create ownership among stakeholders;
Assess implementation capacities and systems;
Support the rights of the project affected people;
Monitoring and review;
Not to be dogmatic but use experience, sector and country
knowledge, judgement and common sense.
European Investment Bank
10
III. Human Rights Integration: Key Principles
HR impact assessment seen as an integral part of a robust social
impact assessment – not required as a stand-alone instrument
HR mitigation hierarchy as key principle -- premised on the principle
of remedy rather than off-setting
Focus on materiality of risk to affected persons, now acknowledged
as rights-holders
Guided by considerations of likelihood, severity, and frequency of
HR impacts anticipated, hence ordering the prioritization of
mitigation measures accordingly (with exceptions in supply chain)
Likelihood is often linked to: (i) the country context related to
specific rights, and (ii) specific business relationships posing
particular HR risks
Severity is to be appraised on basis of gravity of anticipated
impacts (scale), scope and remediability of the said impact
Considerations of influence over potential impact and leverage over
those able to affect change should inform attribution of
responsibility and obligation for action
European Investment Bank
11
III. Human Rights Integration: Key Challenges
Supply chain risks remain due to the decision to limit the
requirement to the application of standards and due diligence on
the first-tier supplies
Application of standards in environments with poor governance
(and particularly with public promoters)
Challenges related to monitoring and follow-up of
implementation of commitments by promoters
European Investment Bank
12
Understand Promoter Capacity and Commitment
E&S
Assessment
Reporting
E&S Plan
Promoter
Capacity &
Commitment
Capacity &
Training
Monitoring
Engagement
European Investment Bank
13
What’s in the Standards?
Objectives
Definitions
General guidance
Screening questionnaire
Specific requirements where sensible
Further references
European Investment Bank
31
What’s not in the Standards?
Detailed step-by-step directions
Coverage of all likely project scenarios
Detailed methodologies for further studies
=>Social Development Specialist
Further resources
European Investment Bank
31
Standard 1: Assessment and Management of Environmental and Social
Impacts and Risks
Objective
To anticipate, avoid, minimize, and compensate for impacts and risks;
To mitigate or minimise negative impacts to affected communities and the
environment;
To promote effective use of environmental and social management systems
To promote adequate engagement and communication with project-affected
communities
In sum:
Standard 1 establishes the importance of (i) integrated assessment to identify
the environmental and social impacts, risks, and opportunities of projects; (ii)
effective community engagement through disclosure of project-related
information and consultation with local communities on matters that directly
affect them; and (iii) management of environmental and social performance
throughout the life of the project .
European Investment Bank
Page 16
Standard 1: Assessment and Management of Environmental and Social
Impacts and Risks
Key elements
Assessment
Management
M&E
Stakeholder engagement
Relevant frameworks of reference
SEA
Assessment area, taking into account: assets or facilities or associated works
directly owned or managed by the Promoter and integral parts of the main
project intervention; supporting/enabling activities; associated facilities or
businesses; areas and communities likely to be affected by cumulative impacts
When do we undertake a comprehensive environmental and/or social
assessment?
Environmental and Social Management Plans (ESMPs)
Organizational and Management Systems
Intermediated Operations; Corporate loans
European Investment Bank
Page 17
Standard 8: Labour Standards
Objectives
To promote fair treatment, non-discrimination, equal opportunity and safe
conditions for workers and employees;
To ensure compliance with national employment and labour laws;
To protect workers and avoid the use of forced or child labour;
To promote the right to freedom of association.
Key elements
The Bank is expected to undertake a labour assessment, follow up in
monitoring
Requires comparable terms and conditions for all workers;
Defines first-tier supplier and contractor, requiring application of due
diligence at that level, too;
Introduces requirements for workers’ accommodation;
Ensures worker access to a grievance mechanism;
Introduces the notion of labour audit.
European Investment Bank
Page 18
Standard 8: Labour Standards
Red lines
No child labour is admissible
No forced or bonded labour is acceptable
Highly desirable
Freedom of association and the right to collective bargaining
Screening
Check Promoters’ awareness of ILO Core Labour Standards and compatibility with
national law
Assess risk in terms of labour problems [downtime, union problems, workermanagement relationships, working conditions, etc ]
Is there an internal grievance mechanism for workers?
Review the Promoter’s employment policies (HR), their adequacy, and
management’s capacity to implement
Are the actions required to meet necessary standards articulated in the ESMP?
How to handle subcontractors and supply chain?
Do not rely automatically on fellow IFIs in the transaction
European Investment Bank
Page 19
Standard 9: Occupational and Public Health, Safety and Security
Objectives
To anticipate and avoid or manage health, safety and security impacts on workers
and the public;
To safeguard people and property in accordance with relevant human rights
principles.
Key highlights
•The Standard applies to 1st-tier suppliers and primary contractors. Promoters are
recommended to seek to apply the Standard through the supply chain with the use
of a human rights due diligence assessment.
•Where health impacts on the public and/or the workers of significant magnitude, an
ESHIA is expected. Specifically for the labour domain, a hazard assessment is
foreseen.
•Labourers’ accommodation and health, hygiene & safety considerations
•Security management enters the scene in our due diligence
•Different risks related to HSS that the promoter needs to address, managed
through a variety of plans, such as: influx management plan; emergency
preparedness plan; traffic management plan; security management plan etc.
•IFI differences on OSHS
European Investment Bank
Page 20
Standard 9: Occupational and Public Health, Safety and Security
Screening
Assess health, safety and hygiene risks for workers and communities alike
transportation and access, waste disposal, security personnel, in-migration of
workers – exposure to disease, etc.
Plans or measures to deal with these risks
Is there a formal structure to deal with the HSH issues? Reporting measures of
incidents?
Are there any significant security threats? Is the Promoter considering the hiring of
public or private security forces?
Check living and hygiene conditions at labourers’quarters
Monitoring can be done by site visits for major projects by lenders advisors
European Investment Bank
Page 21
EIB Project Cycle and Social Due Diligence Elements
Upstream
PreAppraisal
Approval CA
Implementation
Identification
PIN
Loan negotiation
Operation
 Issues meeting
Appraisal AFS
COP
Opinion for
Business
plan
Social
Completio
n
Appraisal (OA)
Completio
n
Appraisal report
report
ESIA (s) EA
Contract
Progress reports
E&S
E&S - REM
indicators
screening
ESDS
covenants
Env. eligibility
E&S Rating
(loan conditions)
REM
Project cycle
Paper trail
E&S issues
European Investment Bank
22
Stages of the EIB Project Cycle and Relevant Points of
Disclosure and Engagement
• Pre-Appraisal
Promoter:
Community
engagement and
consultation
• Appraisal
• Approval
• Disbursement
• Supervision
EIB:
EIB:
Promoter:
Publication of NTS/EIS
Publication
of ESDS
On-going Community Engagement /
European Investment Bank
Documentation Updates
23
ECSO: What We Strive For
ECSO: Environment, Climate and Social Office (PJ)
•
•
•
Three (3) social specialists in place available for full attribution and/or
helpdesk function
Social screening process once PIN is issued
Social Working Group (inter-directorate)
We work towards:
Adding value
A collaborative and transparent process;
Engage stakeholders in a variety of ways;
Adapt to ever changing global E&S needs;
Obtain feedback from directly-affected communities and promoters.
European Investment Bank
24
THANK YOU
Eleni Kyrou
PJ/ECSO
European Investment Bank
25