Established to promote the transition to market-oriented economies in countries committed to multiparty democracy, the EBRD’s lending often destroys nature and harms communities by failing to conduct proper human rights due diligence and informed public participation.
Alternative news on the EBRD
Harsh economic realities and the discernible trend of democratic retrenchment in EBRD recipient countries suggest there are serious deficiencies in the bank’s overall ‘market-oriented’ approach.
Created after the fall of the Berlin Wall to promote the transition to a free-market economy, the European Bank for Reconstruction and Development (EBRD) is a leading institutional investor in Central and Eastern Europe, Central Asia and the Mediterranean regions. The bank is unique among multilateral development banks with its political mandate that commits its countries of operation to multiparty democracy, the rule of law and respect for human rights. The bank also has a strong mandate to promote sustainable development within ecological limits in the full range of its activities.
Despite its unique statute, the EBRD invests more than half of its portfolio in countries rated as authoritarian and hybrid regimes by the Economist Intelligence Unit. The bank’s newest Strategic and Capital Framework till 2025 foresees that only half of its portfolio will be green. Although the bank actively promotes a green economy and decarbonisation as key qualities of transition, it still invests in fossil fuels and carbon lock-in.
Our critique of the EBRD
Although the EBRD aims to align its investments with the Paris Agreement and to invest more than half of its portfolio in Green Economy Transition projects, the bank still invests in fossil fuels. Natural gas is no longer seen as a transition fuel, according to the International Energy Agency, so the EBRD urgently needs to review its energy and to develop a new climate strategy. EBRD’s investments should enable the just transition in our countries and a shift away from fossil fuels dependence and stranded carbon assets to carbon neutral development.
The EBRD has a well-developed and yet ineffective system for assessing political risks and safeguarding human rights. Unfortunately, there are many loopholes in this system that allow for projects to inflict harm on local communities and individuals, as our monitoring on the ground shows. The EBRD needs to plug the loopholes to ensure a watertight operational approach that delivers effective protection and promotion of human rights.
Deteriorating democracy in EBRD countries
The EBRD was given a core mandate to promote a transition to market economy in former centrally planned economies, which was expected to go hand-in-hand with the democratisation of these countries.
Three decades down the road, the state of democracy, the rule of law and respect for human rights are deteriorating significantly in many EBRD recipient countries, whilst the Bank has done little to revisit its engagement.
From power plants in Uzbekistan, to extensive new storage and transmission infrastructure in Cyprus, to Romania’s stranded pipeline, to upgrading and constructing new heating systems, we show that the EBRD’s plans for fossil gas are set to lead to fossil fuel lock-in and stifle climate action.
EBRD PROJECTS WE MONITOR
The Khada Valley in Georgia brings together exceptional biodiversity, precious cultural and archeological heritage, and mountainous villages which have preserved rich traditions and historical lifestyles. But all of this might vanish if a 23-kilometer road from Georgia to Russia – the Kvesheti-Kobi project – is built.
Global demand for minerals and other critical raw materials is intensified by the just transition to renewable energy and the digital transformation agenda. Therefore sustainable supply chains of minerals are fundamental to addressing the climate crisis and the Covid-19 crisis that humanity is facing today. The European Union needs to innovate and find solutions to achieve its circular economy and resource use reduction objectives and to meet the demand of EU’s industry and consumers, while still protecting communities and nature threatened by mining.
Blog entry | 5 July, 2021
In a series of video tutorials, we demonstrate tools civil society organisations and activists from Uzbekistan can use to have a say about projects supported by development banks that may affect their communities and the environment.
European development bank’s new fossil fuels pledge falls short of aligning with the Paris AgreementPress release | 2 July, 2021
The governors of the European Bank for Reconstruction and Development (EBRD), representing 69 shareholder governments as well as the EU and the European Investment Bank, decided yesterday the Bank will decrease its support for the fossil fuels industry.
Blog entry | 29 June, 2021
People around the world are already feeling the brunt of the climate crisis on an almost daily basis. Most governments accept we are in the midst of a global climate crisis, including those controlling the European Bank for Reconstruction and Development (EBRD). And yet, Bankwatch’s recent analysis shows that during 2019-2020, the EBRD has awarded the fossil fuels industry more than USD 2 million every day on average. Two million dollars. Every single day.