Title: Social Due Diligence in EIB Lending : an Introduction to EIB
1Social Due Diligence in EIB Lending an
Introduction to EIBs Social Standards
- Eleni Kyrou, Social Development Specialist
- PJ/ECSO
- November 5th, 2014
2I. The Foundation of EIBs ES Framework
- EIBs 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 EIBs 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 EIBs
commitments to environmental and social
sustainability - EIB ES Practices Handbook (updated 2013)
operationalizes the Statement, introduces HR
language, and provides guidance to promoters on
compliance and alignment to ES performance - EIB ES Standards apply to all regions
(exceptions indicated) all types of financing
both public and private sector projects
throughout the project cycle
3Foundation of EIBs Environmental Social
Framework
- Highest-level policy of the Bank articulating
EIBs commitments to environmental and social
sustainability - Applicable to all regions, all types of
financing, to the whole project, throughout the
project cycle
4EIB Environmental and Social Framework
5The Integrated Approach
EIB ES SPS committing to sustainability and the
protection and respect of human rights
Integration Environment, climate change, social
issues, biodiversity and ecosystems
10 EIB ES Standards key requirements for Bank
supported operations
EIB ES Framework
Standards apply to both public and private sector
and to all regions
Internal due diligence procedures for the Bank
6What do EIBs ES policies and Standards
Encompass?
COMPLIANCE
QUALITY ENHANCEMENT
RISK IMPACT MANAGEMENT
7EIB Environmental and Social Standards
- Requirements to be met throughout the life of an
EIB-supported operation - Help promoters manage ES impacts and risks
- Help promoters improve their ES performance
through implementation of sound environmental and
social practices, transparency and
accountability.
8The Role of the EIB vs the Role of the Promoter
9The 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
10EIB Social Due Diligence Guiding Principles
- Appraisal in the context of the projects
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.
11III. 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
12III. 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
13Understand Promoter Capacity and Commitment
14Whats in the Standards?
- Objectives
- Definitions
- General guidance
- Screening questionnaire
- Specific requirements where sensible
- Further references
European Investment Bank
31
15Whats not in the Standards?
- Detailed step-by-step directions
- Coverage of all likely project scenarios
- Detailed methodologies for further studies
- gtSocial Development Specialist
- Further resources
European Investment Bank
31
16Standard 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 .
17Standard 1 Assessment and Management of
Environmental and Social Impacts and Risks
- Key elements
- Assessment
- Management
- ME
- 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
18Standard 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.
19Standard 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, worker-management relationships,
working conditions, etc Is there an internal
grievance mechanism for workers? Review the
Promoters employment policies (HR), their
adequacy, and managements 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
20Standard 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
21Standard 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
labourersquarters - Monitoring can be done by site visits for major
projects by lenders advisors
22EIB Project Cycle and Social Due Diligence
Elements
ES issues
Project cycle
Paper trail
23Stages of the EIB Project Cycle and Relevant
Points of Disclosure and Engagement
Promoter Community
engagement and consultation
EIB Publication of ESDS
EIB Publication of NTS/EIS
Promoter On-going Community Engagement /
Documentation Updates
24ECSO 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 ES needs
- Obtain feedback from directly-affected
communities and promoters.
25THANK YOU