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Civil society groups urge the EBRD to rethink mining investments

In their recommendations, civil society groups urge the Bank to do more to safeguard the environment and welfare of local communities and to take action to reduce the demand for critical raw materials. 

The EBRD is currently in the process of revising its Mining Sector Strategy for 2024 to 2028. The draft document proposes an increase in investments in mining critical raw materials required for the green and digital transition, as well as the promotion of exploration. 

On 15 September, civil society organisations submitted recommendations regarding the EBRD’s mining strategy, advocating for the following measures: 

  • Prioritise the circular economy over just mining; 
  • Focus on reducing material footprints and promote recycling; 
  • Ensure that no mining investments are made in countries that do not enforce environmental laws; 
  • Define no-go zones and prohibited technologies; 
  • Guarantee Free Prior Informed Consent for Indigenous Peoples and consent from all affected communities; 
  • Deliver tangible benefits to local communities in the countries where the EBRD operates. 

Although the draft strategy highlights the importance of improving relations between mining companies and local communities, public consultations on the draft were conducted during the summer holiday period. A very small number of handpicked groups were invited at extremely short notice to local consultation events, seriously limiting public input. 

The mining sector has a shameful track record of pollution, human rights abuses, community resistance and retaliation against activists around the world. It remains the most perilous sector for environmental defenders, with almost 30 per cent of annual attacks occurring within the industry. EBRD-funded projects in Armenia (Amulsar) and Bosnia and Herzegovina (Adriatic Metals) have already prompted complaints by affected communities to the EBRD’s Independent Project Accountability Mechanism (IPAM) due to environmental pollution and lack of public consultation. 

Nina Lesikhina, Policy Officer at Bankwatch, says: ‘Business as usual is no longer an option. Relying solely on environmental and social safeguards is insufficient, given their gaps and inadequate implementation. The EBRD needs to consider each country’s capacity to implement mining projects sustainably and how to reduce demand for critical raw materials in the first place. The imperative for a green transition should not be used as an excuse to reduce efforts, but as a motivation to do more to ensure that the transition is truly green and equitable.’ 

Sukhgerel Dugersuren, Chair at Oyu Tolgoi Watch, Mongolia, says: ‘If the EBRD and other development banks increase financing for mining, corporations will scramble to secure critical and/or transition minerals. This will have further negative impacts on climate change, contaminating the environment, depleting water resources and deepening desertification processes. The Mongolian economy is dependent on a single sector – mineral extraction – which is closely tied to the Chinese market. Any future mining strategy must be guided by principles that balance economic, geopolitical and other risks.’ 

Gaelle Dusepulchre, Deputy Head of the Business, Human Rights and Environment Desk at the International Federation for Human Rights, says: ‘Mining projects are among the most harmful to human rights and the environment. Any mining strategy must promote a truly just transition. These projects not only require increased due diligence, but also rely on the meaningful participation and consent of communities likely to be affected. Protecting human rights and environmental defenders is just as essential.’ 

 

For media inquiries and further information, please contact: 

  • Nina Lesikhina, ninalesikhina@bankwatch.org 
  • Sukhgerel Dugersuren, otwatch@gmail.com 
  • Lucia Posteraro, lposteraro@fidh.org 

Legal challenges hit Greece – North Macedonia gas pipeline plans

State-owned company NOMAGAS (1) plans to build the 67-km North Macedonian section of the gas interconnector. Although promoted as a means of diversifying the country’s gas supply, in reality it would significantly increase gas imports and further lock the country into fossil fuel consumption and associated price fluctuations at a time when it should be decarbonising. 

The European Investment Bank signed a EUR 41 million loan agreement for the project in December 2021, just before its self-imposed deadline to halt direct financing for fossil fuel projects. At the same time, an EU grant agreement for EUR 12.7 million was signed under the Western Balkans Investment Framework. The European Bank for Reconstruction and Development is considering financing for the remainder of the project (2).

The first two complaints – to the Energy Community Secretariat and the European Anti-Fraud Office (OLAF) – concern the guarantee for the EIB loan signed by the North Macedonian government for the project in December 2021. The guarantee decision did not pass through mandatory state aid checks by the country’s Commission for the Protection of Competition, potentially rendering it invalid. 

In an unprecedented outbreak of efficiency, the North Macedonian Parliament approved the state guarantee on 20 December 2021 and the President confirmed it the same day. It was published in the country’s official journal on 21 December, before the loan signing with the EIB on 22 December.

Pippa Gallop, Southeast Europe Policy Officer, CEE Bankwatch Network – ‘It beggars belief that the EU’s house bank did not do basic due diligence on the loan guarantee approval procedure. This calls into question the guarantee’s validity and harms the EU’s financial interests by unnecessarily raising the likelihood of having to use EU funds to cover the EIB’s losses in case of a loan default.’ 

The third complaint – also to the Energy Community Secretariat – concerns a breach of environmental impact assessment rules for the project, as North Macedonia’s environment ministry failed to organize a public consultation period. It did not publish any announcement that a consultation was taking place, nor details of how to submit comments.

Ana Colovic-Lesoska, Executive Director, Eko-svest – ‘The EBRD and EIB claim not to finance projects which are not in line with national law. Yet when the North Macedonia government violated basic legal requirements during the environmental assessment process for the gas pipeline, they turned a blind eye. We are confident that the Energy Community Secretariat will confirm our allegations of a legal breach and require the public consultation process to be repeated properly’.

 

Contacts

Pippa Gallop

Southeast Europe Energy Policy Officer, CEE Bankwatch Network

pippa.gallop@bankwatch.org

+385 99 755 9787

 

Ana Colovic Lesoska,

Executive Director

Center for environmental research and information Eko-svest

ana@ekosvest.com.mk

+38972726104

 

Notes for editors

  1. Formerly National Energy Resources
  2. Information about the loans and grants for the project can be found at:

EIB: https://www.eib.org/en/projects/all/20180836

WBIF: https://www.wbif.eu/investmentgrants//WB-IG04-MKD-ENE-01 

EBRD: https://www.ebrd.com/work-with-us/projects/esia/regional-gasification-project.html (loan amount and approval date not yet published). 

Renewables boost much-needed, but weakening of environmental safeguards inexcusable

Reaction to today’s European Parliament vote on the Renewable Energy Directive

The amended directive includes controversial measures exempting renewable energy projects in so-called ‘renewables acceleration areas’ from being subject to project-level environmental impact assessments – and the accompanying public consultations – under certain conditions. This includes highly damaging projects such as forest biomass or hydropower plants. 

The new rules also see all renewable energy projects presumed to be of ‘overriding public interest and serving public health and safety’, making it easier to build damaging projects in protected Natura 2000 sites and rivers in good condition.

The changes benefit only renewables projects causing significant environmental harm, as low-impact ones anyway do not require full environmental assessments and can be built in Natura 2000 sites. 

Currently, only if a project is likely to significantly harm a Natura 2000 site it is generally not allowed to go ahead. There are exceptions, which should be used sparingly. But the new changes make the exceptions into the rule by presuming that renewables are of ‘overriding public interest’.

Pippa Gallop, Southeast Europe Energy Policy Officer at CEE Bankwatch Network – ‘Sustainable forms of renewable energy undoubtedly need to further speed up in the EU, but scapegoating environmental safeguards is unnecessary, unjustifiable and counterproductive – the biodiversity and climate emergencies must be tackled together.’

‘The amended Directive does tackle some of the real barriers to renewables such as poor spatial planning, lack of digitalisation and understaffing of permitting authorities, but undermining environmental and public participation safeguards is likely to increase public opposition to projects, not decrease it. There are still plenty of low-hanging fruits that need to be picked instead, such as introducing a legal requirement to install solar on new buildings.’  

Andrey Ralev, Biodiversity Campaigner at CEE Bankwatch Network – ‘The new rules undermine decades of hard-won EU environmental safeguards and would be a step backwards in the mission to halt and reverse nature loss by 2030. The revised directive allows more projects to go forward in areas where they should be prohibited, such as Natura 2000 sites with priority species, rivers with good water status, and areas crucial for bird populations.’

Campaigners also highlight the negative precedent set by the legislation for other sectors. The European Commission’s proposal for a Critical Raw Materials Act, for example, also contains similar provisions on ‘overriding public interest’ for ‘strategic projects’ in the mining sector. [1]

[1]  Article 7 of the European Commission’s proposal for a Critical Raw Materials Regulation, 16 March 2023.

Contacts:

Pippa Gallop
Southeast Europe Energy Policy Officer
CEE Bankwatch Network
pippa.gallop@bankwatch.org
+385 99 755 9787
Skype: pippa.gallop

Complaint filed against EBRD: labour rights violations, land grabs and exploitation at cotton producer Indorama Agro in Uzbekistan

Berlin, September 5, 2023 – Indorama Agro is in receipt of loans from EBRD and the International Finance Corporation (IFC) totaling USD 130 million to modernize cotton production. The complaint comes after multiple reports from Uzbek Forum and local communities of violations across Indorama Agro’s operations in Syrdarya and Kashkadarya regions of Uzbekistan were communicated to Bank staff and company management over two-and-a-half years but resulted in no tangible improvements. 

Uzbek Forum has interviewed dozens of workers and farmers who have reported the loss of livelihoods caused by illegal land confiscations, lack of access to land, mass redundancies and abuse of labour contracts, as well as attempts to dismantle the trade union. Furthermore, farmers contracted to deliver cotton to Indorama Agro complain of delayed payments for the cotton they have delivered and exploitative contracts that include no minimum price for their cotton.

Workers and stakeholders who speak out, risk retaliation and intimidation. Following interviews with Uzbek Forum monitors, farmers and workers have been interrogated by security service officials and warned against speaking to “international organizations”. 

 “The Indorama Agro project has caused immense harm to local communities since its inception. Farmers’ land was unilaterally transferred to the company without prior, informed consent or compensation. Instead, farmers were given unfulfilled promises of full-time employment and are now struggling to feed their families,” said Umida Niyazova, Director of Uzbek Forum for Human Rights. “Despite all the rights abuses we have reported, EBRD this year awarded the company a further loan of $25 million. Where is the due diligence?”

“The EBRD approved the project despite numerous reports of human rights violations. The Bank failed to effectively assess the project’s environmental and social impacts and ensure meaningful stakeholder engagement required by the Bank’s standards,” said Nina Lesikhina, Policy Officer at Bankwatch. “The EBRD ignored contextual risks associated with Uzbekistan’s cotton sector, resulting in harm to local communities. We expect IPAM to hold the Bank to account and ensure that adequate remedy is provided.”

Background

Indorama Agro is a part of the Singapore-registered Indorama Group, a global chemical and fiber conglomerate that was established to produce wheat and cotton in 2018 by decree of the government of Uzbekistan. 

Indorama was also the subject of a complaint filed by Uzbek Forum on behalf of cotton pickers to IFC in 2016 relating to child labour in its operations at Indorama Kokand Textile in Fergana region. Nonetheless, Indorama continues to receive loans from other banks, including the Asian Development Bank (ADB) which recently awarded the company USD 15 million for Covid-recovery and climate change mitigation.

 

For press enquiries:

Umida Niyazova, Uzbek Forum for Human Rights (English, Uzbek, Russian)

umida.niyazova@gmail.com

Nina Lesikhina, Bankwatch Network (English, Russian)

ninalesikhina@bankwatch.org

 

For more background to this case, see:

Uzbek Forum, May 17, 2021, Will Indorama Agro Stand in the Way of Uzbekistan’s First Independent Trade Union?: https://www.uzbekforum.org/will-indorama-agro-stand-in-the-way-of-uzbekistans-first-independent-trade-union/

Sourcing Journal, February 14, 2023, Controversy Rocks Better Cotton’s Uzbek Program: https://sourcingjournal.com/topics/labor/better-cotton-uzbekistan-indorama-agro-labor-rights-farmers-union-collective-bargaining-417230/

Bankwatch Network, January 26, 2021, Pulling the ‘cotton’ over Uzbek eyes at latest EBRD investment: https://bankwatch.org/blog/pulling-the-cotton-over-uzbek-eyes-at-latest-ebrd-investment

Joint Statement Regarding the Establishment of an Independent Trade Union in Uzbekistan, March 26, 2021:  https://www.uzbekforum.org/joint-statement-regarding-the-establishment-of-an-independent-trade-union-in-uzbekistan/

Ozodlik, December 15, 2022, Farmers: The cluster has enslaved us (Uzbek): https://www.ozodlik.org/a/32176667.html

RFE/RL, March 27, 2021, Celebrations Over Uzbekistan’s First Independent Union Cut Short By Threats, Harassment: https://www.rferl.org/a/uzbekistan-trade-union-agricultural-workers/31172316.html

Ozodlik, May 21, 2021, Indorama Agro workers dissatisfied with reduction of wages organized demonstration (Uzbek): https://www.ozodlik.org/a/oyliklar-qisqarganidan-norozi-indorama-agro-ishchilari-betonka-da-velonamoyish-uyushtirdi-(video)/31265705.html

Civil society calls on public development banks to overhaul their approach to development

Cartagena, Colombia — September 4, 2023 – The global coalition’s message, issued at this year’s Finance in Common Summit, is loud and clear: When it comes to development financing, the principles of rights, justice, sustainability, transparency, accountability and dignity for all cannot remain mere slogans. They must be the cornerstone of all projects undertaken by public development banks.  

The Finance in Common Summit has become a pivotal platform for international public development banks, including the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB). Far too often, these banks fail to assess, prevent and remedy the harmful impacts of their investment decisions on communities and the environment. This has been proven in many cases, including the Indorama Agro cotton farm in Uzbekistan, the Budapest Airport expansion, the Kvesheti–Kobi Road in Georgia, and many other projects Bankwatch has been monitoring over the years.   

That this year’s summit is being held in Cartagena, Colombia – a country where 186 human rights defenders were killed in 2022, including those working to defend land rights, indigenous peoples and the environment – is a stark reminder to development banks of the need to prioritise the protection of human rights across all their projects. 

A new report, written by over 100 Global South activists and civil society experts, exposes how – in the name of development – public development banks are fuelling human rights violations, environmental destruction, inequality, and debt. Through a series of eye-opening case studies, data, and analysis of key trends, “Demystifying Development Finance” shows how public development banks are supporting projects and policies that harm people and the planet, and funding governments and companies that do more of the same. 

Manana Kochladze, strategic area leader for democratisation and human Rights at CEE Bankwatch Network, says: ‘Unfortunately, despite many safeguards and precautions, development banks still follow the logic of commercial profit. All too often they finance projects that bring untold misery to local people. Loss of income, involuntary resettlement, degraded and polluted environments, human rights violations, and shrinking civic space are just some of the detrimental effects. These investments prevent sustainable development, democracy and pluralism, all of the values development banks are supposed to strive for.’  

Nina Lesikhina, EBRD policy officer at CEE Bankwatch Network, says: ‘Public development banks continue to invest millions upon millions in development projects located in countries with weak democracies, where restrictive regulation of civil society organisations, reprisals against journalists and human rights defenders, and suppression of peaceful public protests are commonplace. Yet, despite decades of technical assistance and oversight, these banks have consistently failed to uphold human rights and the principles of democratic transition. That local people continue to push back is proof – if ever it was needed – of the negative impacts of these ‘public’ investments. It’s high time development banks stood up for human rights!’ 

Anna Roggenbuck, EIB policy officer at CEE Bankwatch Network, says: ‘Public development banks can still improve the project preparation process, including by integrating human rights due diligence into their appraisals and requiring promoters to do the same. When red flags are raised about a project, banks should meaningfully engage with the people likely to be affected at an early stage. This will not only improve the quality of the development of these projects, but will also build people’s trust in public institutions, a prerequisite for democracy and the growth of civil society.’ 

View Press Kit here. For media inquiries and further information, please contact: 

Three governments are seeking EU money to deepen fossil gas dependence under the guise of energy emergency

The full report is available here: https://bankwatch.org/publication/cutting-off-the-pipeline-from-repowereu-to-the-fossil-gas-industry 

EU Member States have until 31 August to request financial support for plans to steer their energy sectors away from Russian fossil fuels as part of the EU’s REPowerEU strategy. 

Bankwatch has been closely tracking the development of these plans in nine countries in central and eastern Europe. Our new report shows that three governments – in Poland, Bulgaria and Croatia – are still trying to exploit this emergency response by pumping EU taxpayers’ money into LNG import terminals and fossil gas pipelines.  

If realised, these projects would sabotage the EU’s efforts to cut greenhouse gas emissions and aggravate the greater global emergency that is the climate crisis. 

At least three other governments – in Romania, the Czech Republic and Hungary – have already abandoned previous plans to include fossil gas projects in their REPowerEU chapters following civil society pressure and negotiations with the European Commission. 

In addition, the REPowerEU chapter submitted by Estonia does not include any fossil gas projects, Slovakia’s includes limited support for fossil gas boilers, while Latvia is also expected to submit a REPowerEU proposal free of gas investments. 

Background 

In May 2022, the European Commission unveiled the REPowerEU plan, intended to reduce the EU’s dependence on imports of Russian fossil gas while ensuring security of supply. 

Under the plan, Member States are required to add an additional REPowerEU chapter to their national recovery and resilience plans – the EU’s post-pandemic financial stimulus package – outlining their investment schemes to facilitate the shift away from Russian gas imports. 

The perception at the time was that, to safeguard Europe’s energy security, new fossil gas imports are needed. Consequently, the REPowerEU strategy allowed governments to request EU public money to build new gas infrastructure as an emergency measure. 

In fact, the Commission effectively endorsed the fossil gas industry’s lobbying effort when a list of 11 gas projects drawn up by the European Network of Transmission System Operators for Gas (ENTSOG) was officially included in the REPowerEU plan, alongside 30 other so-called Projects of Common Interest. 

Now, after a bonanza year for the oil and gas industry, fossil gas companies are poised to swell their coffers even more thanks to projects enabled by REPowerEU funds. 

According to Bankwatch’s new report, fossil gas companies in central and eastern Europe posted massive profits in 2022 on the back of the energy crisis. Last year, gas grid operators in Bulgaria and Romania saw their revenues double, while Poland’s PKN Orlen made EUR 4.5 billion. These very same companies would be the main beneficiaries of the fossil gas projects proposed for EU financing under the REPowerEU chapters of their respective governments. 

Yet, given that the EU managed to cut its gas use by an impressive 17.7 per cent between August 2022 and March 2023, governments’ fossil gas ambitions – much like ENTSOG’s so-called needs assessment — now appear completely out of touch with reality. 

Gligor Radečić, gas campaign lead at CEE Bankwatch Network and co-author of the report, says: 

‘The very idea that EU taxpayers could once again be subsidising the fossil fuel industry is perverse, especially after a year in which fossil gas companies made record profits. Governments can no longer defend using EU public money to build new gas infrastructure. In any case, these projects would take years to complete and do nothing to alleviate an imminent energy shortage. The new gas pipelines and LNG import terminals that governments in Poland, Croatia and Bulgaria are seeking to develop with REPowerEU funds would perpetuate Europe’s dependence on fossil fuels. Instead, these governments should be ensuring that every cent of EU money targeted at ending the dependence on Russian fossil gas is used to drive the energy transition, not sabotage it. If these governments are to uphold Europe’s energy security, keep energy affordable and prevent global warming, they need to invest EU money in boosting energy efficiency and expanding renewable energy sources.’

For further information, please contact: 

Ido Liven
Communications officer, CEE Bankwatch Network
ido.liven@bankwatch.org
+420 737 294 589 (also via Whatsapp)