Devex Invested: EBRD faces heat over human rights complaints
The European Bank for Reconstruction and Development’s environmental and social policy comes under scrutiny, IFC under pressure to compensate child sex abuse victims, and Millennium Challenge Corporation turns 20.
The European Bank for Reconstruction and Development finds itself at the center of a fierce debate about whether its environmental and social policy, or ESP, is fit for purpose. Civil society organizations are pushing for policy changes, but the bank says it is a leader in this area.
The issue has been brought to fore following recent complaints that a project to modernize cotton production in Uzbekistan in which EBRD invested $70 million led to illegal land confiscations, exploitative contracts, mass firings, and union busting — and another complaint that a silver mine project in Bosnia and Herzegovina seriously damaged natural resources, my colleague Rob Merrick reports. EBRD is in the process of a regular consultation ahead of a new ESP, which will be in place about a year from now.
• EBRD tells Devex that its practices are “robust and ambitious” and that it is recognized for its “leadership” in this area of work among other international financial institutions.
• The company at the heart of the complaint about the Uzbekistan project has denied the allegations, saying that it followed due process and had a successful grievance process “validated by independent institutions.”
• A group of six international civil society organizations want the policy to change so that EBRD takes responsibility for projects it co-funds, improves transparency around the impacts of its investments, and consults adequately with local people.
• “We want the bank to take more responsibility for due diligence of a project and for assessing the human rights risks. We believe that is clearly its responsibility,” Nina Lesikhina, a Bankwatch policy officer, tells Devex. “It claims to do due diligence, but its procedures are not transparent, and neither are its findings.”