The EIB does not commit itself to operational environmental and social procedures; instead it relies on the individual EU Member States environmental legal framework. Outside the EU it also relies on the borrowers’ ability to conduct environmental and social impact assessment in compliance with the general EIB Statement on Environmental and Social Principles and Standards.
The procedures for the implementations of environmental and social standards in international lending have been set up in order to ensure that investments do not harm the environment or local communities.
The EIB is guided by the EU’s environmental policies as the bank states in its “Statement on Environmental and Social Principles and Standards”. How it applies and adheres to those policies when financing outside EU is, however, often unclear. For example projects are approved by the Bank sometimes long after they are subject to formal approval in the countries so it is impossible to review how public consultations were conducted or to make better environmental assessment to change the project design.
The EIB follows a flexible, guidance-based approach without clear performance levels or auditable compliance criteria. Combined with the shortage of capacity for the monitoring of projects and pro-poor impact assessment, the EIB is not set up to meet the development needs it is obliged to serve under its extra-EU mandates.
In February 2010 EIB updated its 2006 Environmental and Social Practices Handbook, which is a guidance document first of all for the bank’s staff. This document identifies why and how the EIB conducts its own environmental and social assessments of projects. While the disclosure of this mainly internal document is a very welcome step, it clearly shows some eye-catching shortcomings.There is still a notable discrepancy between the standards the EIB is prepared to adhere to inside and outside the EU. For example, whereas projects in the former are required to “comply” with EU laws and standards, those in the latter are only “bench-marked” against them. Furthermore, the EIB argues that the application of EU standards to non-EU projects is subject to local conditions such as affordability, local environmental conditions, international good practice and with reference to factors such as the costs of application.
Despite some improvements in its environmental and social policy as well as its Transparency Policy, regrettably the EIB still lacks explicit operational procedures based on international or EU law, which would constitute a consistent and effective framework for managing environmental and social issues in project outside the EU.
Related reports:
European Investment Bank: promoting sustainable development “where appropriate”
