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Czechs are turning greener ahead of the EU elections – will it show at the polls?

But this trend seems to be reversing. March saw the first major student protests in the Czech Republic, which are now held regularly and stirring the political discourse. Furthermore, after a dry winter, the topic of water scarcity has made headlines, with many people experiencing the impacts of long-term drought first-hand.

These developments are part and parcel of increasing Czech sensitivity towards environment issues, finds a recent opinion poll from Ipsos MORI and commissioned by the European Climate Foundation. Four out of five potential Czech voters see protection of the environment as one of their main priorities.

Unlike their counterparts in other surveyed European member states (including Slovakia and Poland), the Czechs don’t see climate change as such an important topic; it is a priority for 69  per cent, while the EU average is 77 per cent.

At the same time, more tangible environmental problems such as water scarcity, air pollution or unsustainable agriculture all score higher amongst the Czechs. In fact, some of them even score above the European average, with making agriculture more sustainable the top concern among 83 per cent of potential Czech voters (the EU average is 80 per cent). Protection against extreme weather should be a priority according to 70 per cent of Czech respondents (the EU average is 68 per cent).

Among the top ten most important topics of the European elections for Czech potential voters, three are related to the protection of the natural environment.

The gap between older and newer Member States in terms of public engagement on environmental and climate topics appears to be slowly closing. At the same time, European elections generally do not draw many voters, and those who are likely to vote are also more like to be active in other aspects of pubic life, such as taking a stance against the destruction of our environment and climate. It is possible then that the survey numbers might not be so green after all.

But there are reasons to be hopeful that the active part of the public will keep growing and its calls will be answered by more politicians as well, as the Czech Republic urgently needs to step up its ambition to play its part in Europe’s energy transformation.

EBRD tightens standards in response to Balkan hydropower boom

The Dabrova Dolina 1 hydropower plant is one of the hundreds of projects that the EBRD has financed in the last few years via commercial banks, in this case via Privredna Banka Zagreb (PBZ), part of Intesa Sanpaolo. Though small in volume, these projects can nevertheless cause disproportionate damage. The project is sited on the beautiful blue-green Mrežnica river in Croatia, which is home to a range of species including dice snakes, stone crayfish and otters. More than ninety tufa barriers have gradually formed along its course by calcium carbonate being continuously deposited in the river. Tufa barriers are one of the two habitat types for which the whole river is protected as part of the EU’s Natura 2000 network. The highest of these is the Šušnjar waterfall.

The Šušnjar waterfall dried out in the summer of 2017, in part due to improper operation of the water intake at Dabrova dolina 1 during the dry season.

Increasing transparency in the policy, compared to the draft published in January 2019, was one of the main requests that civil society groups put forward in a joint letter in March 2019. The EBRD’s shareholder countries can take part of the credit for the positive outcome. Credit should be also given to the Management of the bank, which listened to the diverse comments on the initial draft and took steps to improve it.

Šušnjar waterfall before and after Dabrova Dolina 1 started operating

This is just one example why civil society groups around the world asked the EBRD to strengthen its environmental, social and public information standards for intermediated lending.  

And it worked. During its Annual Meeting in Sarajevo on 8-9 May, the EBRD launched its revamped Environmental and Social Policy and new Access to Information Policy. Both include more comprehensive requirements for intermediated financing, that reached over EUR 3 billion — 34 per cent of the bank’s overall investments in 2018.

Better checking of projects

According to its new Environmental and Social Policy, the EBRD will require its financial intermediaries to refer all high-risk sub projects back to the EBRD’s in-house team for additional checks. The list of projects with high environmental and social risks includes all hydropower projects. Importantly, these projects will also have to meet higher environmental and social standards, not only compliance with national legislation, which is often deficient.  

These changes are a clear sign that the EBRD acknowledges the risks inherent in developing small hydropower projects. The bank has also developed a guidance note on small-hydropower projects that clarifies its requirements for direct financing as well as intermediated lending.

More comprehensive disclosure

Even more importantly, the EBRD will require that financial intermediaries publicly disclose information on the environmental and social risks of any sub-project referred to the EBRD and the proposed mitigation measures to address project risks.

This effectively means that the public will finally know whether public money —  the EBRD’s intermediated credit lines — has been used to fund controversial projects such as hydropower plants or any construction works in areas of high biodiversity value.

Had the EBRD had this provision back in the 2008 or 2014 versions of its policy, local communities and civil society organisations might have had a chance to warn the bank and the wider public about publicly-financed damaging projects before the harm was done. The disclosure will still be a subject to “applicable regulatory constraints, market sensitivities or consent of the sponsor of the sub-project” – a provision we hope will not be invoked to limit public access to environmental information but rather to protect legitimate commercial interests of the parties involved.

Good practice: two hundred and eight project-related documents pertaining to two credit lines for a total amount of USD 1.1 billion to two Turkish financial intermediaries are available on the World Bank website (example taken from the Open Books report by Oxfam)

Why this has happened

The breakthrough happened due to sustained pressure from the civic groups. Last year, the Blue Heart of Europe campaign together with Patagonia collected more than 120 000 signatures globally, asking the EBRD, European Investment Bank and International Finance Corporation to limit financing for hydropower plants in the Balkans. Since most of the hydropower plants in the Balkans are small, they are more likely to be funded by intermediated credit lines. The EBRD recognised this trend and co-organised a first-of-its-kind summit on hydropower with the Blue Heart campaign in March. Representatives of commercial banks including Erste, Unicredit and Societe Generale attended the event. This was a prelude to the policy changes that were adopted in late April and presented in Sarajevo.

Increasing transparency in the policy, compared to the draft published in January 2019, was one of the main requests that civil society groups put forward in a joint letter in March 2019. The EBRD’s shareholder countries can take part of the credit for the positive outcome. Credit should be also given to the Management of the bank, which listened to the diverse comments on the initial draft and took steps to improve it.

One of the most important perceived barriers to enhanced transparency of the intermediated lending are banking secrecy laws. A report published by BankTrack in March 2019 showed that this is mainly a myth. Client confidentiality is not an absolute legal requirement in any of the world’s major banking centres. It can be to a large extent overcome by asking client’s consent to publish project-level information.

Next steps

The EIB will consult the public with a draft of its new Standard on Financial Intermediaries this year. Some first steps to listen to public opinion were taken by the bank in February 2019, when representatives of various EIB departments met with NGOs in Luxembourg to discuss intermediated operations.

Indeed, the EIB policy already requires an intermediary or fund manager to publish environmental and social information on specific loans. However, in reality, the EIB does not include this requirement in financing contracts, and it is not done in practice. That’s why Bankwatch has submitted a complaint to the EIB’s Complaints Mechanism (CM), asking the bank to implement its own rules.

Since a significant portion of the EIB’s portfolio is channelled via commercial banks and other intermediaries — EUR 23 billion or 32 per cent of its entire lending in the EU and EUR 23 billion or 36 per cent of its entire lending in third countries —  it is important to strengthen provisions on financial intermediary transparency. We will be closely looking how the lessons learned by the EBRD could be used to strengthen policies in intermediated lending in other banks.

Indigenous communities in Georgia threatened by a major hydropower project financed with European public money

The European Investment Bank (EIB), which approved a USD 150 million loan for the project in January 2018, keeps refusing to acknowledge this.

The project area is home to the indigenous people of Svans, whose rights to the lands are protected by EU commitments, such as the Council Conclusions on Indigenous People recognising the rights of indigenous peoples, and the EIB’s own standards. Instead of acting on them, the bank works hard to find new creative ways to deny the Svans their  status.

Unique heritage on the line

The Nenskra hydropower plant is located in Upper Svaneti, a region in Georgia known for its glorious natural beauty and the unique culture of the Svan people, who continue to cultivate their traditions and pass the Svan language down generations.

https://vimeo.com/236049433

It is estimated that Svans constitute approximately 1 per cent of the Georgian population.

Nenskra is not the only hydropower project threatening to sweep this culture away. Over a thirty other projects are looming around.

Setting the appropriate benchmarks for the Nenskra project could put the Georgian government’s entire hydropower plan on the right track.

EIB backtracks on its own standards

The EIB’s social standards are intended to protect indigenous peoples and their cultures even if they are not recognised as such by their own countries’ legislation, exactly as in the case of the Svans in Georgia.

The bank’s standards rely on the International Labour Organisation’s Indigenous and Tribal Peoples Convention and set a number of characteristics of indigenous peoples to help the bank’s staff and project promoters to identify them when they could be affected by projects supported by the EIB.

Svans have all the characteristics of an indigenous population and therefore should benefit from the EIB’s framework for protection of their rights to self-determination.

On 4 March 2018, in reaction to massive infrastructure development plans, a traditional Svan Council meeting, Lalkhor, demanded to recognise Svans as ancient, indigenous, aboriginal, autochthonic people with appropriate rights for customary and community property in Svaneti.  Yet, the EIB’s decision not to trigger the standard effectively puts vague political interests over the rights of Svans.

In response to our information request the bank claimed its decision was consulted with “respected and highly qualified Georgian anthropologists” but it refused to disclose further details on the content and the identities of these advisors on the grounds of “protection of the public interest as regards international relations”.

This argumentation raises questions about the EIB’s project due-diligence process. The bank openly admits it may not disclose information due to the current geopolitical situation in Georgia and the sensitivity within the political debate of the status of the Svan population, however it fails to specify what this actually means.

Therefore, we had no other choice but to address this issue to the European Ombudsman.  Last month we submitted our complaint, requesting to investigate the non-disclosure of documents and information related to the Nenskra hydropower project, and were subsequently informed the European Ombudsman office is in contact with the EIB to resolve it.

Lost in translation

The EIB’s understanding of “indigenous peoples” is truly puzzling.  The bank overlooked the fact that the environmental and social impact assessment (ESIA) for the Nenskra project has found that Svans do consider themselves a socially and culturally distinct group and are recognised as such by others.  Normally, this would satisfy the main characteristic of indigenous peoples according to the EIB’s standard.

Instead, it argues that Svans have not been identified as a national minority as per the definition under the Framework Convention of the Council of Europe, even though such identification is not even relevant for the legal determination of indigenous peoples.

The EIB’s assessment unreasonably contends that the Svans cannot be treated as indigenous peoples because they were not colonised or annexed by Georgia.

The bank also claims, contrary to the ESIA findings and scientific sources, that the Svan language is merely a dialect of Georgian.

In reality, the Svans face new forms of discrimination from the Georgian state and the political establishment – their traditional land tenure is not formally respected and their language is not recognised as a separate, regional language.

Although UNESCO defines Svan as a “definitely endangered language“, it is not legally protected in Georgia, whereas languages such as German, Armenian, and Polish fully benefit from the immunity under the European Charter for Regional or Minority Languages.

Instead of thoroughly evaluating the Svan case against indigenous peoples characteristics, the EIB chooses to focus on finding arguments that disprove the Svans’ legitimate status.

It is unfortunate that the EU’s bank prefers to surrender to the Georgian government’s arguments about a “sensitive political debate on the Svans’ status” in the interest of ambiguous “international relations” rather than firmly upholding its own standards.

Five reasons why EBRD should pull out of the controversial Nenskra hydropower project

The Georgian government is nowadays promoting the construction of over 30 new hydropower plants throughout the country’s mountainous regions, with the billion dollar Nenskra hydropower plant in the Upper Svaneti region being the most grandiose project. Despite a remarkably poor track record – not least with the Dariali and Khudoni hydropower plants – the overzealous Georgian government remains intent to realise this project, counting on international financiers to cover up to 75 percent of the project’s construction costs.

Nevertheless, as the realisation of the project keeps dragging on, it is becoming increasingly difficult for the EBRD, and all international financial institutions involved, to justify their engagement.

1. A major fiscal liability

A February 2018 World Bank analysis that looked into the fiscal costs of power purchase agreements for Georgian hydropower projects and their potential impact on energy tariffs in the country casts serious doubts over the viability of the Nenskra project. The report concluded that by 2041 Nenskra’s fiscal costs would reach over EUR 1.8 billion, which would mean this gigantic project is set to become a unbearable burden on Georgia’s public coffers. These findings echo a September 2017 report by the International Monetary Fund that warned the Nenskra project is a threat to Georgia’s very fiscal stability.

2. A hot potato for investment banks

Even though a number international financial institutions have agreed to consider supporting the Nenskra hydropower project, in reality the project hasn’t received any money so far. In February 2018, after several delays, he European Investment Bank approved a USD 150 million loan, but the loan contract has not been signed since. The Asian Development Bank and the Asian Infrastructure Investment Bank are yet to decide about their own contributions of USD 214 million and USD 100 million, respectively. In the meantime, in January 2018 the EBRD approved a USD 214 million loan to but announced it is “pausing the process” less than nine months later, after the project’s Italian constructor Salini Impreglio abandoned it.

3. A desperate Georgian government cutting corners

To meet the requirements set out by international financial institutions, the project promoter has introduced a range of technical and technological modifications to the plans for the Nenskra hydropower plant. But despite the dramatic changes to the project design and even location, Georgia’s Agriculture and Environment Ministry decided in February 2019 to waive the legal obligation to prepare a new environmental impact assessment for the revised project. In response, two Georgian NGOs have filed a court case against the ministry the following month.

4. Local communities protesting the project

Members of local communities, concerned the Nenskra hydropower plant would deprive them of their livelihoods, have been objecting the project since several years. The indigenous Svan communities residing in the vicinity of the dam site have staged numerous demonstrations in the region and in the capital Tbilisi to protest the devastating impacts of the project as well as the very process they feel sidelined their legitimate interests. In addition, complaints submitted by local residents to the grievance mechanisms of the ADB, the EIB and the EBRD are still to be resolved.

5. History repeating

The EBRD has already had to withdraw from several problematic hydropower projects over the past decade. Plans for a 1.24 MW hydropower plant on the Iliina river in Bulgaria with the support of the EBRD-administered Kozloduy International Decommissioning Support Fund were eventually scrapped. In May 2013, the EBRD decided to cancel a EUR 123 million loan for the dubious Ombla hydropower project in Croatia which was meant to be built underground, next to a cave considered a natural habitat of global significance. In January 2017, the EBRD had to cancel its EUR 65 million loan for the controversial Boškov Most in North Macedonia, which was planned to be built inside the country’s largest and oldest national park, following an intense civil society campaign. Moreover, the EBRD has agreed to revisit its standards on hydropower investments in response to a major international campaign led by Patagonia last year. Focused on development finance enabling harmful hydropower projects on pristine rivers the western Balkans, the campaign generated the largest energy petition the EBRD has ever received.

As the Georgian government is struggling to implement this shady undertaking, the EBRD would be wise to take these all into consideration and revisit its engagement with a project whose benefits – if it is ever even realised – are questionable at best. It is not too late to acknowledge the Nenskra hydropower project is a toxic investment that must be avoided.

Corporate loans – the rotten apple in EBRD’s Environmental and Social Policy?

The bank’s accountability mechanism has finalised a year long compliance review initiated by Bankwatch and member group CEKOR, which alleged that the EBRD’s  restructuring loan to Serbia’s energy utility Elektroprivreda Srbije’s (EPS) has fallen short of the bank’s commitment to sustainability, rule of law and EU standards.

The Bank’s grievance body’s report has found evidence of harm associated with EPS operations, as well as evidence of inadequate due diligence and monitoring of the EPS Restructuring project. It shows that the EBRD has done an extremely poor job at assessing and mitigating risks and potential harm, “which do not adequately mirror the magnitude of some of the environmental and social challenges faced by EPS, especially as they continue to be reflected in the series of PCM complaints against EBRD operations supporting EPS”. This is especially of concern given the bank’s long experience with EPS.

Vreoci village disappearing – one of many illustrations of EPS’ impact

While the report demonstrates the failure of the EBRD to deliver on the intended improvements in environmental and social sustainability on corporate level, the compliance report concludes that the EBRD has not breached its own policy in the case of the EPS Restructuring loan. This conclusion is illogical and is only backed up by the argument that the EBRD made some, even if inadequate, effort to apply good international practice and EU standards with regards to environmental and social assessments and management, stakeholder engagement and resource efficiency.

As the case is virtually closed, the decision to clarify and strengthen the safeguards in the Policy for corporate loans is solely in the hands of the EBRD’s Board of Directors, who are expected to vote on it in the upcoming days. The compliance review did make specific recommendations in this regard: to clarify its policy provisions on corporate loans, especially for environmental and social risky projects, and to make sure that they are implemented.

How long is too long for non-compliance?

If EPS’ long-term plan to keep digging and burning coal for the next 60 years and impact on the community and environment wasn’t bad enough, the company’s most recent investments in coal infrastructure demonstrate a blatant disregard of national and EU legislation as well as international treaties.

❌ EPS began to construct the de-SOx chimney at Kostolac B1 and B2 in the summer of 2015 before the EIA procedure was concluded and a construction permit granted. Later on, the Construction Inspectorate issued a permit, without any public consultation, in an attempt to legalise the already half-constructed chimney.

Kostolac B power plant and the Drmno mine expanding, despite not having all necessary permits to do so

❌ The Drmno coal mine, which supplies the Kostolac power plant, is being expanded from 9 to 12 million tonnes a year without undertaking an environmental impact assessment procedure – a breach of the EIA Directive which is being investigated by the Energy Community’s dispute settlement mechanism.

❌ An analysis of emissions from 2016 of all power plants in the Western Balkan region places Kostolac B at the top of the polluters list in the region, with 128,000 tonnes of SO2 released into the atmosphere, nearly as much as Germany’s entire coal fleet. Even though in July 2017, work to fit units B1 and B2 with de-SOx equipment was allegedly completed, the pollution control equipment has hardly worked since, which essentially means the retrofit failed to bring any results.

The EPS restructuring loan and the EBRD’s cherry picking approach to Environmental and Social Policy compliance is a turning point.

If the Board decides to implement the compliance review recommendation in the revised Policy, it will show the world that the EBRD is committed to safeguarding impacted communities and the environment in the case of corporate level loans in the same way it has committed to do for loans directed at specific operations of its clients. If not, it will send a message that the bank is happy to leave itself plenty of loopholes with a vague policy that lets polluting giants like EPS get away with blatant legal violations and ignore the fate of people who suffer the consequences of their operations.

The final form of the Environmental and Social policy will be a test of the Board’s maturity and responsibility to close the loopholes that currently allow corporate loans to fall under the compliance radar and show whether they are willing to enforce tangible and measurable improvements for the life of people and the state of our environment, in line with the EBRD’s sustainability mandate.

Will the EBRD Make a Better Offer on Public Information Disclosure and Engagement?

Unfortunately, the EBRD’s proposed draft Access to Information Policy is the weakest link.

Having early access to information can mean the difference between a community learning about a project when the bulldozers arrive, and a community engaging with investors to co-design a project that avoids harm and creates real benefits. In practice, the right to access information goes far beyond simple information disclosure — it ensures that communities are equipped with the necessary information to substantively engage in the development processes that will ultimately shape their lives.

An analysis of the EBRD’s new Access to Information Policy, prepared by theInternational Accountability Project and CEE Bankwatch and co-signed by over 20 civil society organizations, indicates that the policy and practice of information disclosure at the EBRD falls considerably short of international best practice and does not align with international law. The draft policy is not people-centered and instead is excessively client-oriented. In addition, the policy carves out unreasonable amounts of discretionary power for the EBRD and its clients, lending itself to the circumvention of the policy’s own principles and commitments.

Communities have the right to know and understand the full scale of projects that may affect them, including both benefits and risks, so they can meaningfully contribute and ensure project plans align with their development priorities. To this end, the International Accountability Project and our partners are monitoring the online disclosure practices of several development institutions through the Early Warning System initiative. We track what project information is being disclosed, when it is being disclosed online, and ultimately, how accessible the information is for communities.

In Practice: How the EBRD Discloses Project Information

In the spirit of contributing to a more robust and people-centered Access to Information Policy, we have analyzed the EBRD’s disclosure practices for 195 projects proposed between November 1, 2017 and November 30, 2018. Our analysis does not evaluate compliance with Bank policies. Rather, our research seeks to assess current Bank disclosure practices against criteria which if met, would establish the foundation for the meaningful fulfillment of communities’ right to access information. These specific criteria are derived from our experiences working directly with communities affected by development bank projects, and our work to make information accessible through the Early Warning System.

The full analysis of disclosure practices can be accessed here. The dataset used for this analysis is also available for download. The analysis was shared in advance with the EBRD for comment and their response can be viewed here.

Criteria used to evaluate EBRD’s disclosure practices, based on maximizing community access to information

In the case of projects financed by the EBRD, many gaps remain that prevent communities from receiving the information they need. For example, only 6% of the 195 projects analyzed disclosed environmental and social action plans, a document rarely made publicly available that includes vital information like project mitigation measures and stakeholder engagement. Moreover, only 34% of the 195 projects analyzed provided a clear explanation of adverse environmental and social impacts, and only 48% shared measures to mitigate these risks.

Access to information is not only about the timely and early disclosure of documents. Often, the structure and language used can be overly complex, limiting community engagement. In our analysis, we found that only 20% of projects provided non-technical summaries of environmental and social impact assessments, and only 6% provided access to the full text – some with broken links.

The EBRD’s disclosure practice is particularly weak in providing access to information on how and when a community member can engage with a project. Only 14% of projects disclosed plans for stakeholder engagement and only 10% of projects included specific information on consultation dates and locations.

In addition to early access to information, communities require sufficient time to understand and evaluate project information, in order for their rights to be meaningfully fulfilled. As the interactive map above illustrates, the longest period of notice before an investment decision is made is 92 days for projects that are considered high risk, or Category A. However, this accounts for only 6% of projects. For projects that have the potential to pose significant risks to the environment and people, or Category B, information is disclosed an average of 17 days after the date the project is considered for approval, according to the EBRD’s own self-reported dates. Projects considered low risk, or Category C, are disclosed an average of 28 days before the Board date.

In response to the findings of the analysis, the EBRD noted that many projects were considered by the Board on an “authorized deferral basis”, where exceptions to the disclosure timeframe were granted, in line with the terms of the Bank’s current Public Information Policy. The specific reasons for granting deferrals were not disclosed in project documents. Based on the EBRD’s own data for 2017, the number of projects that meet this criteria is not insignificant.

In short, the EBRD reserves the right to carve out exceptions to its own access to information policy. Worryingly, the new draft policy continues in this vein, listing numerous overly broad, discretionary and vague exceptions. As a researcher from the Arab Watch Regional Coalition for Just Development observed during consultations on this policy in Cairo and Casablanca:

Despite the EBRD’s claim that its policy is based on default disclosure, the list of exceptions and language used in the draft policy suggests that in fact, disclosure is the exception.

It’s Time for A Better Offer

The EBRD operates in a region where space is often already restricted for communities to voice their concerns about projects, or even request access to information. This makes the Bank’s information disclosure practices even more critical. The EBRD must do more to meaningfully fulfill communities’ right to safe, timely and accessible information, early in the project cycle.

As Suma Chakrabarti, the current president of the EBRD noted in his vision for the Bank in 2016, “the Bank is instinctively too cautious still on public disclosure. It will need to make a better offer on public information disclosure and engagement to match the standards expected…”

We encourage the EBRD to use the opportunity afforded by this review process to strengthen its disclosure policies and practices, so that they better prioritize communities — the key stakeholders and purported beneficiaries of development.

 

 

Ishita Petkar is the Policy and Community Engagement Coordinator at the International Accountability Project (IAP) and is based in Washington D.C.

The Early Warning System ensures local communities and the civil society that support them, have verified information about projects likely to cause human and environmental rights abuses. Learn more: ews.rightsindevelopment.org

Note: The Early Warning System team strives to ensure the accuracy of the data. This analysis was shared with the EBRD before publication to allow opportunity for comment. While the Early Warning System team has made every attempt to research and present data accurately, it is often difficult to guarantee the complete accuracy of certain projects due to the lack of regularity and transparency in how various development institutions record and publish information. The Early Warning System team is committed to correcting any identified errors at the earliest opportunity.