Blog entry

Open letter to ministers regarding the EU Budget

Dear Minister,

The co-signatories of this letter represent a broad group of businesses, civil society, local authorities, think tanks and other organisations who are working together to support the EU’s commitment to achieve the UN Sustainable Development Goals and the Paris Climate Agreement objectives. We are writing to urge you to ensure that the next MFF is aligned with Europe’s climate and energy objectives, and is consistent with and contributes to the Paris Climate Agreement and Sustainable Development Goals across all programmes.

The recently published IPCC 1.5°C report shows that we have the scientific understanding, the technological capacity and the money to avoid the worst impacts of climate change. The only barrier is one of political will, which you and your colleagues can change.

Therefore, we ask you to:

Increase the climate action target to at least 40% of the whole EU Budget, with specific ex-ante binding targets per programme.
Climate proof the entire EU budget, and exclude spending on projects that are not in line with the Paris Climate Agreement, such as unabated fossil fuels infrastructure and environmentally harmful subsidies. Extend the exclusion criteria on fossil fuels in the Cohesion Fund programme proposal to all fossil fuel investment and apply these across all programmes.
Include Energy Efficiency First as a mandatory assessment tool in all planning and preparation of programmes and projects, similar to the provisions in the Regulation on the Governance of the Energy Union.
Improve the performance and result orientation of climate action. Take into account the recommendations by the European Court of Auditors on the climate tracking methodology, differentiate between mitigation and adaptation measures, and avoid overestimation.
Align financial flows and fiscal incentives to a low carbon pathway as committed to under the Paris Climate Agreement. Align the National Energy and Climate Plans with financing strategies under the EU Budget, and incentivise climate action through higher budget allocation and better financial conditions.
Provide support for a low carbon transition in high-carbon regions.

We look forward to engaging with you on this very important matter.

Yours sincerely,

ACT Alliance

AE3R – Ploiesti-Prahova Energy Efficiency and Renewable Energy Agency

Akcja Konin

Alofa Tuvalu

Amis de la Terre France

AVERE – The European Association for Electromobility

Buildings for the Future

Carbon Market Watch

CEE Bankwatch

CEPA Priatelia Zeme

CEPTA – Center for Sustainable Alternatives

CFEE – Coalition France pour l’Efficacité Energétique

Chance for Buildings

CITENERGO

Citizens Climate Lobby

CLER – Réseau pour la transition énergétique

Climate Action Network Europe (CAN-E)

Climate Alliance

Climate Reality Project

CNCD 11.11.11

CLG – The Prince of Wales’s Corporate Leaders Group

Counterbalance

Covenant of Mayors National Platform Slovakia

Czech Green Building Council

Deneff – Deutsche Unternehmensinitiative EnergieEffizienz

Deutsche Umwelthilfe

Divadlo Astorka Korzo ’90

DNR – Deutscher Naturschutzring

Eco-union

EHPA – European Heat Pump Assocation

Ekoenergy

Energy Cities

EPS – Sdružení EPS ČR/Czech EPS association

EU-ASE – European Alliance to Save Energy

EUREC – The Association of European Renewable Energy Research Centres

Euro Perspectives Foundation

ETUC – European Trade Union Confederation

EuroACE

E3G

Fedarene

FERN

Focus – Focus, društvo za sonaraven razvoj / Focus Association for Sustainable Development

Food and Water Europe

FÖS – Forum Ökologisch-Soziale Marktwirtschaft e.V.

Friends of the Earth Europe

Fundacja Greenmind

Fundacja Miasto Prowincjonalne

Fundacja Nasza Ziemia

Fundacja Zielone Światło

Hnutí DUHA – Friends of the Earth Czech Republic

Fundación Renovables

Fundacja Fundusz Partnerstwa – Partnership Fund

Fundacja Instytut Rozwoju Innowacyjnej Energetyki

Fundacja Otwarty Plan

Fundacja Rozwój Tak – Odkrywki Nie!

Green Budget Europe

Green Building Council Espana

Green Building Council Italia

Green Liberty Latvia

IEW – Fédération Inter-Environnement Wallonie

Islamic Relief Worldwide

Legambiente

InspirAction

Irish Green Building Council

Katedra Ecologie

Magyar Természetvédök Szövetzége – Friends of the Earth Hungary

Milieudefensie

Mouvement Ecologique

Municipality of Ciechanów

Municipality Ostrów Wielkopolski

National Society of Conservationists – Friends of the Earth Hungar

Ögni – Osterreichische Gesellschaft für Nachhaltige Immobilienwirtschaft

Ogólnopolskie Stowarzyszenie Budownictwa Naturalnego

Oil Change International Oil Change International

Państwomiasto Fundacja Projekt: Polska

Polski Klub Ekologiczny Okręg Mazowiecki (Polish Ecological Club Mazovian Branch)

Polskie Stowarzyszenie Budownictwa Ekologicznego | Polish Green Building Council (PLGBC)

Polska Zielona Sieć

Push Sweden

RAC France

REFEDD – REseau Français des Etudiants pour le Développement Durable

ROENEF – The Association for Promoting Energy Efficiency in Buildings

Seas at Risk

Slovak Academy of Sciences – Institute of Forecasting

Slovak Association of Photovoltaic Industry and RES (SAPI)

Society for Sustainable Living

Stowarzyszenie do spraw Rozliczania Energii

Stowarzyszenie Ab Ovo

Stowarzyszenie BoMiasto

Stowarzyszenie Eko Unia

Stowarzyszenie Zielony Imielin

Towarzystwo dla Natury i Człowieka

Towarzystwo na rzecz Ziemi

Towarzystwa Przyjaciół Rzek Iny i Gowienicy

Transport & Environment

Więcej niż Energia

ZERO – Associação Sistema Terrestre Sustentável

Zero Waste Europe

The complaints mechanism at the EIB – usable but useless?

If the policy proposed by the bank’s management is adopted by its board on Tuesday (October 9), the complaints mechanism will lose its teeth, becoming all but useless in practice for ensuring accountability and redress.

Established a decade ago, the complaints mechanism is one of the youngest grievance bodies among its peers, although the bank is one of the oldest multilateral financial institutions. The EU’s house bank has for several years been averse to public scrutiny or evaluation, and the draft policy makes structurally and procedurally weaker the mechanism.

The new policy introduces an unprecedented level of control over the mechanism’s reports by the bank’s service and management committee. It allows for the bank’s inspector general to ask for a revision of the complaint mechanism’s final conclusions, even in cases where a member of the bank’s management or staff voices disagreement. The complainant will not even see the report until all issues are settled within the bank.

Such a policy is only likely to deter potential complainants from accessing the bank’s grievance body if they have no confidence that it is able to genuinely address their problems and concerns.

The EIB’s own legitimacy as an EU public institution is on the line. The bank’s board has a statutory responsibility to oversee its management and instruct that amendments are made to bank policies, procedures and operations when needed. The Board also gives complaint mechanism its mandate.

Under the proposed policy, the EIB’s board is not supposed to know about the work of mechanism, nor it is allowed, unlike other EIB bodies, to initiate investigations by the mechanism. The mechanism also would not have its budget approved by the board nor its reports published under the board’s authority, which would strengthen the legitimacy of its work. This is in contrast to policy provisions guiding the bank’s operations evaluations division, a sister accountability mechanism placed next to the mechanism in the bank’s inspectorate general.

The review of the mechanism appears to move it away from its mandate of addressing instances of wrongdoings and maladministration. Rather than reasserting the bank’s commitment to the public interest, the new policy is seeking to shrink the bank’s accountability even further and reduce the mechanism to mere lip service.

In theory this review should be an opportunity to learn from other accountability bodies. But a joint submission by Bankwatch and other civil society groups finds that of 55 best practices to strengthen the bank’s accountability and ensure that remedy is provided to complainants, the current mechanism meets only nine of these recommendations in full.

The bank’s current mechanism meets only nine of these recommendations in full. With the policy review process set to water down these provisions even further, the independence and legitimacy of this important mechanism must not be compromised.

European public banks continue financing coal bonanza

First published in Euractiv.

After the signing of the Paris Agreement on tackling climate change, international public financing for coal-based electricity has become indefensible. And yet, major European public banks, including the European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD), have found a way to continue supporting the biggest polluters.

Every year, billions of euros are being transferred to fossil fuels-based energy corporations, thus effectively helping them sustain outdated energy systems against the economic and environmental interests of their customers.

A recent Bankwatch analysis showed that since 2013 the EIB has provided €3.9 billion to a number of coal-based energy companies, despite them having no plans to decarbonise. Similarly, the EBRD has extended unconditional loans to utilities which continue to develop new coal power capacities.

In Serbia, for example, EBRD investments in the national power utility Elektroprivreda, a company which dominates lignite mining and generates almost all of the country’s electricity, were supposed to bring environmental improvements.

In reality, however, the company’s energy-related greenhouse gas emissions have increased in recent years despite EBRD and EIB loans. And it keeps opening new mines to fuel its polluting coal power plants.

Both banks also regularly support Polish state energy companies such as Energa, PGE and Enea. Billions of euros intended to help the companies expand electricity grids, have in practice freed up cash for new coal power plants and other dirty investments.

In 2016, Energa and Enea decided on a joint investment in new, 1,000 MW coal capacities. A tender for the construction of the Ostrołęka coal-fired power plant has already been completed.

In 2017, after Energa received EIB and EBRD loans for issuing of hybrid bonds for grid development, the company cancelled old contracts with renewable energy producers. Earlier in 2016, Energa and PGE invested €115 million each in the newly established Polish Mining Group, now the EU’s biggest hard-coal miner.

PGE, Poland’s largest coal-heavy utility, is also one of the biggest polluters in Europe. Its Belchatow power plant alone emits as much mercury into the air as Spain’s entire industrial sector.

But make no mistake – the company has no plan to comply with the Paris Agreement. Its capital expenditures in renewable energy decreased by 44% in 2017 compared to the year before, and it is currently developing new coal capacities and modernizing its existing, old coal fleet.

Some of the EBRD and EIB loans for grid expansion were supposed to facilitate renewables connectivity but this is only part of the picture. A small part indeed. Our analysis has found that out of a total of €1.5 billion the EIB has extended to Polish electricity utilities between 2013-2017, less than 1% was spent on renewable capacity or grid enhancement for renewable energy.

This is all the more surprising since the companies have been recently struggling with the increase of carbon price which is still expected to rise. Their customers will eventually bear the cost.

These cases illustrate that Europe’s public banks must apply stricter due diligence in the interest of the environment and society. No loans should be granted to companies which intend to develop new coal-based heat and power capacities and which do not develop decarbonisation plans aligned with the Paris Agreement.

More efforts from the EBRD required to mainstream gender in Kyrgyzstan

Originally published on the Foreign Policy Centre

The European Bank of Reconstruction and Development (EBRD) has invested more than EUR 650 million in support of the Kyrgyz Republic since the Central Asian country gained its independence following collapse of the Soviet Union in 1991.

One of the core objectives of the EBRD in the Kyrgyz Republic is to address inclusion gaps in relation to gender equality.

EBRD projects in southern Kyrgyzstan

In line with its goals, the EBRD has provided a loan of EUR 5.7 million and a grant of EUR 3.1 million to implement the modernisation of bus and trolleybus fleets, the introduction of an e-ticket system, staff training and improvement of technical equipment in the country’s second largest city of Osh. In addition to the public transport project, the EBRD has also provided more than EUR 10 million to rehabilitate wastewater and drinking water supply infrastructure in Osh.

In 2016, the government of Switzerland and EBRD collectively provided funding for a new wastewater plant in the city of Osh. The EBRD extended a EUR 3 million sovereign loan and Switzerland a EUR 5.05 million grant for the project, undertaken by the Osh Water Company, a municipal water and wastewater operator. The works included an upgrade of existing facilities as well as the installation of brand new equipment.

Screenshot from “5News” report on the drinking water quality in Osh city, 2017

Researchers, including this author, travelled to Osh to conduct a survey on the impact of these projects on gender equality in the city’s public transportation and water sectors in the month of October 2017. The EBRD’s investments in Osh city were largely welcomed and supported by residents who participated in the field survey. The research survey focused on acquiring data based on age, gender and occupation in the public transportation and water sectors. Whilst the gender-mainstreaming study objective was focused on gender inclusion, the survey has revealed the problems with accessibility for disabled residents and recurrent issues regarding school children’s safety in private transportation.

The survey underlines common use of public transportation and municipal water supply. Therefore, it is primarily focused on the EBRD funded projects to improve public services in Osh city. However, the poll results for the private transportation sector outline a whole set of separate challenges in contrast to the city’s public transportation.

In context with the methodology of the research, additional questions have been prepared for the Osh city Mayor’s Office and municipal services. However, the city officials declined to be interviewed citing procedural requirements for the meeting with researchers on initial visit to the Mayor’s administration. In the days and weeks after the first visit, the city administration officials failed to respond in a timely manner or demonstrate their willingness to provide information for this survey during research mission in October 2017.

Nonetheless, researchers established that the EBRD’s objective to ‘improve human resource policies and practices both from equal opportunities and commercially focused perspectives’ had yet to be fully implemented for both project aims to include a gender inclusion component.

Indeed, in a response letter to this study, the EBRD acknowledged the challenges of gender mainstreaming in the Osh city municipality. ‘The Gender Advisory Services Programme for the Osh Auto Public Transport Company started in 2015 and is scheduled to finish in mid-2018. The total cost of the assignment is EUR 179,928. The Programme was developed by the bank after pre-investment due diligence revealed that only 20 of the Company’s 236 workforce were women and only one of their 164 drivers was female. The due diligence revealed that the high staff turnover is one of the big challenges – for example, in 2015 they have reported a loss of 50% of their drivers.’ according to the EBRD.

The research findings in Osh are consistent with the conclusions of the paper ‘Gender Equality Initiatives in Transportation Policy’ authored by Yael Hasson and Marianna Polevoy who found that ‘The travel patterns of women differ from those of men. These differences are linked to gender inequality within the home and the labor market, urban structures, and the processes of socialisation and education. Women and men make different use of a shared system of transportation’.

Gender Inclusion Challenges

According to the bank’s announcement the ‘EBRD-supported gender advisory services programme will see the city’s authorities and the Osh Auto Transport Company work together to offer improved job and career growth opportunities to women in the company’.

EBRD funded public transport project in Osh city, 2017

However, the Osh city development plan 2016-2020 does not stipulate career opportunities for women in the public transportation and water sectors or include objectives for the municipal services in the same period. It does include a chapter which underlines priority for the gender policy and support of women. In the expected outcome, the development roadmap implies more job opportunities will be created for women and youth in Osh, which seemingly has declarative intent rather than a realistic plan based on an agreement.

Furthermore, the Mayor’s Office pledge, in the development roadmap for greater transparency and open access to public and civil society organisations falls short of actual delivery of policy. The affirmed goal of close cooperation with public and civil society regarding evaluation and monitoring of the city development programs raises questions regarding lack of communication in the Mayor’s Office.

The city development plan has a detailed description of expenditure for the public transportation sector which includes modernisation of the bus and trolleybus fleet, introduction of an e-ticket system, staff training and improvement of the technical equipment, but a gender component of the EBRD funded project is not included in the city’s expenditure plans. In a similar fashion, the city’s plans for the Water Company doesn’t include expenditure for an inclusive gender policy.

Previously, the media coverage of the Mayor’s Office roadmap 2016-2020 highlighted deficiencies in the city development plan. The RFE/RL Kyrgyz language service (Azattyk) report stressed the city administration’s immediate focus on infrastructure projects and the lack of human development programs in the plan itself. It is unclear how the city authorities conduct or implement their original development target goals with respect to gender-mainstreaming.

It is even less clear whether a commitment on gender equality is part of the city administration’s long-term planning for the public transportation and water sectors, despite the official narratives.

The research team was unable to verify or observe the EBRD’s ‘work-in-progress’ in the Osh municipal services regarding gender inclusion, due to the city administration’s failure to collaborate with observers on the ground.

Recommendations

Throughout the month-long research, the team has discovered acute concerns and problems regarding functionality of the public and private transportation and water services. Just as in the country’s capital Bishkek, the city of Osh may require expansion of the public transportation routes within city limits in addition to existing geographical coverage.

Among critical concerns which were raised by the survey participants: the discrimination and harassment of pupils in the private transportation sector; unsafe rides on private minibuses underscored by both gender groups; lack of capacity of the existing transportation system due to traffic congestion and the insufficient number of public transportation units; a report of sexual harassment in one specific case; untrained staff in both, public and private transportation; disparity of communication between the authorities and city residents; and an unsatisfactory level of service for the disabled residents in public and private transportation.

Respectively, the Water Municipal Company will require enhancement of the communication policy with city residents which seems inadequate at its present level, more efforts to maintain an uninterrupted supply of water throughout the year, improvement of the quality of drinking water during rainy seasons, cooperation with local civil society organisations and activist groups on the promotion of water conservation practices in the city.

The gender-mainstreaming study objective of the research mission couldn’t be fully achieved as a result of the Osh city administration’s failure to communicate with the team after the Presidential election. It appears the EBRD funds are prioritised on the first-need service basis rather than the long-term strategy goals identified by the EBRD in both the public transportation and water sectors.

It is recommended that the EBRD conducts further consultation with clients on bringing focus back to the gender component in the decision-making process in the local administration and municipal companies; facilitates open access for civil society organisations to the information on gender equality in the municipal companies of Osh city; take steps to undertake annual research and analysis in the public transportation and water sectors based on gender component; improve the city administration’s communication strategy with the public and civil society organisations; include the perspectives of women and youth in the decision-making process; integrate more women in planning and implementation of development plans for the municipal services; and introduce annual target goal parameters for gender equality in the public transportation and water sectors.

This essay is a summary of a report produced for Bankwatch:

Six years later, a criminal investigation into illegal environment permits finally begins in Romania

The company behind deforestation

Since its establishment in 2012 through the merger of decade-old power plants and coal mines, OEC has often found itself in situations where its actions were inconsistent with environment legislation.

Romania joined the global effort to limit global warming below two degrees Celsius by committing to a transition to a low emission economy. Even though OEC is a majority state-owned company, it still decided to expand its lignite mines and increase coal production.

The mines neighbour villages, agricultural lands and forests. When the company’s expansion plans stalled as owners refused to sell land, or complex permits were required to develop further, state institutions removed the obstacles that had blocked these processes.

In the village of Runcurel, where the government decreed the Jilț Nord mine expansion a project of ‘public utility,’ direct negotiations with land owners was eliminated, and the state became the owner of the land overnight. More than one hundred households will be expropriated for the expansion of Jilț Nord mine, and similar decisions were issued for the nearby Jilț Sud and Roșia mines.

Stepping further into the forests

The Government Decisions against property rights were just the beginning. The expansion required the removal of hundreds of hectares of forest, some neighbouring Natura 2000 sites, a network of protected areas created for the long-term protection of wild plant and wildlife species and the habitats in which they are located.

According to the Forestry Law, deforestation of areas measuring less than a hectare require just a decision of the Territorial Inspectorate of Forest and Hunting (TIFH, now the Forest Guard), but for areas of more than ten hectares, a Government Decision is needed.

OEC interpreted the provisions of the law in their favour, slicing the land needed for the expansion of the lignite mines into plots of less than one hectare to avoid environmental and social impact studies and the issuance of a Government Decision.

Taking it to the court

In 2014 Bankwatch Romania initiated a series of lawsuits for the annulment of these documents. In 2015, the deforestation decisions for the expansion of Pinoasa and Roșia mines were annulled, and in 2016 the decisions for the Roșiuța mine were annulled in the first court.

Not all cases proceeded as smoothly, however. Some of the actions have been declined to different courts, while others have been rejected. Different rulings were made on almost identical complaints concerning similar situations.

January 2012 – September 2013:TIFH Râmnicu Vâlcea issues over 100 deforestation decisions for Roșia, Roșiuța, Pinoasa, Rovinari, Jilț Nord, Tismana 2, Jilt Sud mines
February – November 2014:Bankwatch Romania files lawsuits for the annulment of deforestation decisions for Roșiuța, Roșia, Pinoasa, Rovinari mines
November 2014:contested Jilt Sud
December 2015: Deforestation decisions for Roșia mine are definitively annulled
June 2016:Deforestation decisions for Pinoasa mine are definitively annulled
September, 2016:Bankwatch Romania asks the Ministry for Environment to send the Control Unit to verify the TIFH’s activity
November, 2016:The Ministry of Environment replies, requesting additional information from TIFH Râmnicu Vâlcea
March 2017:Deforestation decisions for Jilt Sud mine definitively annulled
June, 2017:Deforestation decisions for Roșiuța mine are definitively annulled
August, 2017:A new message from the Ministry of Environment: the TIFH inspection is included in the 2017 Programme for thematic controls
December, 2017:The decisions for Jilț Nord are annulled in the first court; the Court does not accept a Bankwatch Romania lawsuit against the Tismana 2 decisions
March, 2018:Deforestation decisions for Rovinari mine are definitively annulled; Bankwatch Romania asks the Ministry for Environment for an update
August, 2018:The Control Unit sends its inspection report to the criminal investigation bodies after finding irregularities at TIFH

The caravan goes on

The slow evolution of the lawsuits allowed some areas to be deforested before the trials were finished, as the decisions were not suspended.

This was the case for the Roșia mine. OEC issued a statement to explain that ‘those areas were deforested in compliance with the TIFH decisions’ and that the final sentence of the court ‘has no effect on the continuation of OEC’s activity’.

To avoid repeating such situations in the future, Bankwatch requested that the Ministry for Environment send the Control Unit to verify the Forest Guard’s activity. After almost two years of delays, the Control Unit performed a thorough analysis at Râmnicu Vâlcea’s Forest Guard in spring this year. The control revealed irregularities in the definitive removal of land from the Romanian Forestry Fund in order to extend OEC’s mining exploitations. For this reason, the inspection report was sent to the competent criminal investigation bodies.

Finally, there is hope that someone will be held accountable for the illegal permits that led to the destruction of hundreds of hectares of forest. Six years after the local authorities that are meant to protect the environment did the opposite, a criminal investigation began.

This law was changed in the meantime, however, enabling large-scale deforestation for projects of ‘public interest’ by removing the mandatory Government Decisions. The fight goes on.

5 benefits of engaging in a facilitated dialogue process: the case of Myronivsky Hliboproduct

In June 2018, villagers from the Vinnytsia region of Ukraine filed complaints to the independent accountability offices of the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) about harmful impacts from an industrial chicken farm run by Myronivsky Hliboproduct (MHP).

MHP has received hundreds of millions in financing from the IFC and EBRD, enabling the construction of its Vinnytsia Poultry Farm and, now, a massive expansion that will double the farm’s production capacity. Local villagers have experienced negative impacts from the farm including dust pollution, foul odors and damage to roads and buildings from heavy vehicle traffic. They also fear long-term environmental and health impacts, but lack information to understand the full scope of these risks. As the expansion of the farm is underway, there is an urgent need to address these concerns before they intensify further.

Community members have asked the accountability offices to facilitate a Dispute Resolution process to allow them to negotiate solutions directly with MHP. Dispute resolution is a voluntary process and will only move forward if the community members and the company both agree to participate. If the company refuses, or if the parties cannot reach an agreement, the accountability offices may instead initiate a Compliance Review to investigate the complaints and publish any findings of non-compliance with the banks’ social and environmental policies in a public report.

When both parties come to the table ready to participate in a meaningful way, a dispute resolution can serve as a valuable opportunity for companies, as well as the communities impacted by its operations. Here are five reasons why MHP stands to benefit from a dispute resolution with local community members:

1. A chance to achieve a complete and lasting resolution

The recent complaint filing provides a unique opportunity to resolve years of building conflict. Since construction of the farm began in 2010, community members have continuously raised concerns about its impacts. MHP has made progress on some issues, yet its efforts to-date have not resulted in any true resolution of community concerns, and many people remain deeply unsatisfied with what they see as a pattern of false promises. For example, community members have requested detailed information on the environmental and health impacts of the whole farm.

While recent environmental assessments are more detailed than earlier ones, MHP still has not publicly released a comprehensive assessment for the whole farm and there has been limited outside verification of the Company’s reporting. Without an independent impact assessment, conducted by mutually agreed outside experts, community members lack trust in the information provided by the company and their concerns persist.

A facilitated dialogue provides a radically different way for MHP to engage with community members. Hosted by an independent facilitator, often a trained mediator, the process offers an opportunity to build trust, identify common ground and generate comprehensive solutions. Since community members will be directly involved in the dialogue process, any solutions that the parties negotiate will have a stronger chance of achieving a lasting resolution than solutions developed by outside parties without community input. The IFC’s accountability office reports that 75% of its dispute resolution cases handled in 2017 reached a full or partial agreement: a testament to the value of this process in building trust between parties and developing mutually beneficial solutions.

2. Often faster, more flexible and less costly than other forums

A dispute resolution process is collaborative by nature, and therefore more flexible and responsive to the needs of the parties compared to other forums, such as traditional court proceedings or even a compliance review. The parties jointly agree on the rules of the process and, together, define everything from how often to meet to which parameters are needed to allow for open and productive conversations about sensitive topics. Through committed efforts to reach an agreement, the parties themselves can influence the amount of time and energy needed to resolve the dispute and avoid any longer, more painful and public processes, such as a compliance review or litigation. Additionally, dispute resolution processes have fewer procedural formalities than other processes, such as litigation, and are likewise less prone to tense, costly and ultimately distracting legal battles about procedural issues that fail to address the core of the dispute. These processes are typically completed within a year or two from when they are filed – far less time than a court proceeding may take to address similar issues, and without the hefty legal fees.

3. Lasting improvements to local community relations

As long as MHP continues operation of the Vinnytsia Poultry Farm, it will continue to impact the people living near its facilities. Community relations is a necessary and unavoidable part of doing business among rural communities in Ukraine and it is therefore critical for the company to develop and maintain a strong social license to operate within local communities. Social license refers to ongoing acceptance or approval by local communities of a company’s business practices. Without this acceptance, companies face damaging public criticism and costly conflict with local communities, both of which can threaten the long-term sustainability of their operations. Meaningful engagement in a facilitated dialogue is an ideal way for MHP to build legitimacy and trust with local villagers and develop meaningful solutions to concerns about its Vinnytsia Poultry Farm, which is critical to enhancing its social license to operate.

4. Build and maintain an international reputation for strong corporate values

MHP asserts that environmental protection and improving the welfare of the Ukrainian population are two of its top corporate social responsibility priorities, yet recent media reports raise questions about the company’s exporting practices and the environmental and social impacts of its operations. This building pressure demonstrates that the international community, particularly European countries to which MHP exports poultry, care deeply about social responsibility and the impacts of MHP operations. Participation in a dialogue process provides an opportunity for MHP to prove its commitment to the corporate social responsibility values that it advertises. Genuine and meaningful engagement in a dialogue process would show the international community that MHP cares about the impacts of its operations enough to fix them, in line with accepted international practice for responsible business conduct.

5. Apply lessons learned across company operations

The Vinnytsia Poultry Farm is the largest of MHP’s poultry farms, but it is not the only one. The company has operations in over half of Ukraine’s 24 administrative regions, cultivating over 370,000 hectares of land, and communities living near other MHP operations have raised similar concerns. If MHP engages in a facilitated dialogue, it stands to learn lessons that may improve its community relations across all operations. If successful, the process may provide a blueprint for improving MHP’s engagement and communication with other communities, helping the company to achieve a social license to operate and reduce the reputational risks of its farms across Ukraine and beyond.

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