By Toby McIntosh
The European Bank for Reconstruction and Development (EBRD) should make significant changes in its transparency policies and practices, according to civil society organizations.
This message dominates comments CSOs recently submitted during the EBRD’s consultation process about draft proposal to modify both its Environmental and Social Policy (ESP) and its Access to Information Policy (AIP).
“Despite some improvements,” according to a joint statement signed by 60 civil society organizations (CSOs), “these draft safeguards are insufficient to ensure human rights are respected and protected, especially in countries with significant democratic deficits. They pointed particularly to information gaps about the environmental and social impacts of EBRD-supported projects.
The EBRD’s Access to Information Policy, the system for handling specific requests for information, is too restrictive, according to comments seen by Eye on Global Transparency.
The bank invited comments on draft proposals and held a series of meetings to gather reactions. However, the EBRD will not post the comments or the recommendations that the staff will send to the EBRD Board. A summary of comments will be issued when the Board approved revised policies, expected by October, an EBRD official told EYE.
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Assessment Faults EBRD Performance
The EBRD disclosures about projects are are “inadequate,” according to a May 2023 study by the International Accountability Project.
After monitoring disclosures on 158 projects for a year and a half, the IAP concluded that the EBRD’s performance “falls considerably short of fulfilling communities’ right to information, thereby erecting substantial barriers to access to information and meaningful participation for project affected communities.”
The conclusion elaborates, “Specifically, EBRD’s disclosure of environmental and social impacts and risks remains weak: relevant environmental safeguard policies, environmental mitigation plans, full environmental impact assessments, and stakeholder engagement plans are routinely not disclosed by the EBRD.”
CSOs Seek Access to EBRD Risk Assessment Tools
The top request in a joint submission by 60 CSOs calls for the EBRD to disclose how it assesses project risks.
“The EBRD should disclose its risk assessment methodology and environmental, social and human rights due diligence procedures,” the CSOs stated. In 2015, the EBRD published its methodology, but no updates have been disclosed. According to a person who attended a workshop with EBRD officials this year, EBRD officials committed to disclose the risk assessment methodology by the end of this year.
The methodology is significant, one civil society activist explained, because it affects project categorization and the categories chosen affect disclosure practices.
More Information on Projects Sought
The CSOs also recommended the disclosure of information about more projects, not just the “high risk” ones.
The EBRD “needs to improve its approach to the disclosure of environmental and social information for medium- and low-risk (category B) projects, which comprise most of the EBRD’s project portfolio,” according to the comment letter.
The CSOs noted that the draft safeguards “propose enhanced disclosure for category B projects likely to have significant impacts on biodiversity and land acquisition.” But they urged the EBRD to go further, saying, “Mandatory disclosure for all projects involving public sector clients in this category is essential.” Also potentially ambiguous is the definition of “significant.”
Lack of information limits citizen participation on public projects such as those intended to improve local transportation systems, the CSOs said, noting examples from Tbilisi and Sarajevo. Similar examples of poor consultation have involved category B projects in the mining and agriculture sectors, for example Adriatic Metals and MHP, Ukraine, according to reports by the CEE Bankwatch Network.
“The EBRD’s efforts to engage with communities as part of its due diligence remains weak,” said Nina Lesikhina, policy officer at Bankwatch, speaking at the EBRD’s annual meeting in May, according to a Bankwatch press release.
Fidanka Bacheva-McGrath, also of Bankwatch, said: “Sustainable infrastructure investments aimed at decarbonising cities and transport systems can only succeed if they ensure public participation, inclusion and accessibility, especially for vulnerable groups. All too often we see green projects facing problems during implementation or failing to achieve their transformative objectives.”
Gaps Documented
Research has revealed the extent of gaps in information disclosure.
Of the EBRD’s municipal and environmental infrastructure (MEI) projects published between 2020 and 2022 (largely Category B) only 45 per cent of them were accompanied by non-technical summaries and just 35 percent had a stakeholder engagement plan, according to 2023 research by the CEE Bankwatch Network.
“Tellingly, none of the projects featured an environmental and social action plan (ESAP) disclosure,” Bankwatch found. Moreover, only in 40 per cent of these cases, when the public sector clients enjoyed significant technical cooperation, was information about the size of the grants disclosed. In 93 per cent of MEI projects classified as Category B, funding was allocated to public sector clients in countries with high levels of corruption and serious human rights violations, such as Egypt, Turkey, Morocco and Uzbekistan, the study said.
Category B projects make up almost 40 percent of the bank’s portfolio.
Contract Information Hidden in Bosnia
The lack of information about a contract in Bosnia, underwritten by a loan from the EBRD, was revealed in a June 13 article in Izdvojeno.ba.
Almost a year after the work was completed, the government Ministry of Transport “is hiding the content of the contract on the reconstruction of the tram line in Sarajevo, so the price, deadlines, etc. are still unknown,” according to the article.
The article said that part of the railway was not built in accordance with the feasibility study, “which means that it is possible that the use permit and the safety of driving trams are questionable.”
It continues:
The EBRD is involved in the selection of the contractor and protects Minister Šteta, who refuses to disclose the contract. The EBRD provided a non-existent link on its website to clarify this dubious deal. Transparency International BiH [Bosnia and Herzegovina] recently filed a complaint with the Cantonal Court in Sarajevo due to the concealment of the contract.
The article also states that the EBRD would not provide information about contract because it is not the contracting party.
A request for the information through the Bosnian national freedom of information law was unsuccessful because one of the Chinese contractors objected, saying disclosure of contract would reveal confidential information, according to the article.
(Editor’s note: Extensive problems with access laws in the Balkans were recently documented in a report by BalkanInsight.)
Disclosure of More Monitoring Reports Needed
The joint submission by CSOs said the disclosure of more environmental and social monitoring reports is necessary “to ensure ongoing due diligence and facilitate meaningful stakeholder engagement.”
The draft safeguards propose that only high-risk (category A) projects, which comprise about 3 percent of the EBRD’s project portfolio, should be subject to the disclosure of such reports. “However, these reports should be disclosed annually (not only upon the project’s completion) to ensure regular opportunities for any course correction needed and to facilitate rights holders’ feedback,” the CSOs wrote.
Other recommendations concern the EBRD’s role in evaluating projects and engagement with affected communities. The 60 groups said the proposed changes to the grievance redress mechanism risk weakening them.
Tougher Rules on Financial Intermediaries Urged
Separate comments by the CEE Bankwatch Network, Publish What You Fund, the Danish Institute for Human Rights and others echoed and amplified the CSO joint statement, particularly concerning transparency for projects for which the EBRD relies on private financial entities, known as financial intermediaries (FIs).
Projects handled by financial Intermediaries, typically smaller ones, nevertheless comprise almost 60 percent of the Bank’s portfolio.
Publish What You Fund (PWYF) said the EBRD should “go further” than proposed and “commit to disclose all E&S [environmental and social] documentation for all investments,” including those of financial intermediaries.
PWYF has created a DFI Transparency Index that compares the transparency of the world’s leading Development Finance Institutions (DFIs). The EBRD ranks comparatively high on the index, although no institution rate above 55 percent on the PWYF scale.
For high and medium risk financial intermediary investments, PWYF said, the EBRD “should commit to disclose the FIs’ environmental and social management systems (ESMS).” The EBRD “should develop policies for FI sub-investment disclosure in line with the guidance in Publish What You Fund’s DFI Transparency Tool and disclose sub-investments for both private equity fund and qualifying bank investments,” PWYF said. Also, “EBRD should commit to providing assurance and information on the community disclosure undertaken for its investments as part of its E&S due diligence processes.”
The handling of disclosures by financial intermediaries was the subject of a 2024 report by the Danish Institute for Human Rights. Most DFI portfolios include FI financing, ranging from 30% to 50% of their total investment volumes or portfolios, according to the report that cited three “areas of concern.”
While an increasing number of DFIs are adopting FI-specific safeguards to manage environmental and social risks, the authors observed, “a detailed look” reveals “exceptions and exemptions both explicit and implicit, caveated provisions and areas of ambiguity.”
The institute also contributed comments to the EBRD consultation. On FIs, the institute noted that the proposed requirements for Category A projects “should be accompanied by additional information on how it will be enforced and monitored, including by specifying e.g. whether the requirement will be included in the EBRD´s contract with the FI, whether EBRD will ensure that the FIs´ legal documentation with the sub-project includes this requirement, and whether EBRD plays a role directly monitoring Category A sub-projects’ compliance with the ESR by conducting site visits.”
“Such clarity is important to better understand the precise roles and responsibilities of EBRD and FIs in the enforcement of this clause,” the institute said.
“While we welcome some of the additions to this standard,” the institute said, “we are concerned that EBRD´s commitments in this area are not robust enough to ensure that human rights risks linked to financial intermediaries are properly identified and addressed.” In April, the institute published an analysis of DFI’s management of human rights risks in intermediated finance.
The institute pointed to “a potentially significant protection gap for stakeholders affected by category B and C projects.”
The institute also commented in detail on risk assessment, stakeholder engagement and impacts associated with digital technologies.
The Coalition for Human Rights and Development submitted extensive feedback on how to address the retaliation risks, including through better disclosure.
Rules for Request Process Criticized as Too Restrictive
The EBRD Access to Information Policy, through which requests can be made, should be strengthened, according to commenters.
The Centre for Law and Democracy (CLD) in its observations praised “some very positive proposals, such as getting rid of the negative public interest override, which granted the EBRD broad discretion to refuse to disclose information.” But CLD continued, “[O]nly minor changes are being proposed for the regime of exceptions, which involves a number of overbroad exceptions and class-exclusions, and grants a number of parties a veto over the disclosure of certain types of information.”
“Ultimately, the regime of exceptions is at the heart of any access to information system”, said Toby Mendel, Executive Director of CLD. “If it is overly broad – which is certainly the case with the draft Policy being proposed by the EBRD – the system will fail in its overriding goal of promoting transparency.”
“Another very serious shortcoming,” CLD said, is the absence of a mechanism to lodge an appeal with an independent appeals panel when a request is refused.
PWYF also made this point, saying, “EBRD’s Information Appeals Panel should be made independent from EBRD and should include individuals that are independent from the organisation.”
PWYF and CLD also criticized the EBRD policy of requiring permission from third parties to disclose information they have identified as sensitive or confidential. “Such an exception should be limited to protecting legitimate interests from harm and an objective harm test should be applied,” according to PWYF.
According to the EBRD’s 2023 annual report on the access policy, requesters submitted 923 requests, a quarter of which concerned “business development.”
Editor’s Note: For a broad look at DFI transparency, see a 2021 blog post by Fran Witt and Fidanka Bacheva-McGrath of Bankwatch.
Interested in making requests? Requests for the EBRD can be made online here. See the EYE Guide: How to Request Information From International Financial Institutions
