Transcript Alke Schmidt, EBRD - Banknig presentation

Labour Issues and EBRD
Alke Schmidt
Environment Department, EBRD
EBRD
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AAA-rated international financial institution founded in 1991
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Mandate: facilitate the transition to market economies in
CEE/ CIS
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Capital base of €20 billion
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Largest single investor in the region
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Project finance
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Over 70% private sector/privatisation projects
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Sound banking principles
A strong mandate in
EBRD’s Founding Agreement
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Requires a commitment from EBRD members to
respect human rights as a condition of membership
and borrowing
EBRD to promote sustainable development “in the full
range of its activities”
EBRD to foster productive investment…thereby
assisting in making a competitive environment and
raising productivity, the standard of living and
conditions of labour.
Operationalising the mandate:
Policy/Portfolio level
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Countries’ human rights record assessed
annually in country strategies. Lending may
be restricted or suspended if lack of progress
Assessment criteria explicitly include
– Right to form trade unions and to strike
– Rights of ethnic minorities
(cf ‘Political Mandate Papers’, 1991/93)
Operationalising the mandate:
Project level
EBRD Environmental Policy (2003) covers
1) Ecological issues
2) Worker protection issues
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Occupational health and safety
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Child labour, forced labour, non-discrimination
3) Community issues
How does EBRD assess labour issues?
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Process managed by Environment Department (ED)
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Integrated into ED’s due diligence
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Risk-based, iterative procedure:
– Screen all projects (risk assessment)
– Due diligence may include questionnaires or site visits by
ED / consultants
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Focus resources on high risk projects
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Process developed in consultation with other IFIs, ILO,
experts
Labour standards risk assessment
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Credit risk (fines, loss of markets, productivity)
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Reputational risk
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Risk indicators:
– Country
– Industry / sector
– Client policies / compliance record / reputation
– Employment impact of EBRD financing
Benchmarks
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All projects must meet
– National laws
– ILO conventions on child labour, forced labour,
discrimination
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Additional benchmarks are
– EU (re discrimination)
– For remediation: private sector good practice
What if there is a problem?
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Key is to move towards compliance
– i.e. reject financing only in extreme cases
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Action plan to achieve compliance with national law / ILO
standards within a reasonable time frame
– Often changes in client’s HR policies required
– Enforcement agencies may impose corrective action plan
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Client reporting on action plan implementation
Legal documentation
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All projects: Covenant on compliance with national
labour laws and ILO standards in template legal
documents
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Covenant on Action Plan implementation if required
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Reporting on covenant labour compliance/action
plan implementation as part of annual reporting on
environmental and social matters
Monitoring
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Client reporting
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Monitoring visits by EBRD staff and/or labour
experts
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Third party audits
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Role of NGOs/media
Resources and support
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1 ED staff, plus labour expert consultants on
retainer
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All ED environmental staff trained on labour
issues and risk assessment
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Basic training for bankers on labour issues
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Country fact sheets, sample questionnaires,
‘case book’ on project work
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N.B.: This takes time!
Main issues to date
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Regulatory compliance
– Work hours /overtime in supermarket chain
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Retrenchment in privatisation/restructuring
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Exploitation of migrant workers in construction
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Endemic problems in country/region
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Supply chain issues
– Child/forced labour in cotton supply chain in Central
Asia
Outlook
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Revision of Environmental Policy in 2006 offers
opportunity to broaden scope and weight of
social assessment
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Need to clarify supply chain requirements
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Process of continuous learning and improvement
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Share experiences with others
Labour Issues and EBRD
Alke Schmidt
Environment Department, EBRD