Export credit agencies (ECAs) are public agencies that provide government backed loans and insurance to corporations. G7 governments all own export credit agencies, which support G7 companies to do business abroad.
 
Export credit agencies (ECAs) are public agencies that provide government backed loans and insurance to corporations. G7 governments all own export credit agencies, which support G7 companies to do business abroad.
 
Collectively, ECAs are the largest sources of public finance for foreign corporate investment in industrial projects in the developing world. ECAs support large-scale power and nuclear plants and hydro-electric dams, mining projects, oil pipelines, road developments, plantation schemes and even arms deals for developing countries. Most of these projects are highly risky due to their environmental, social, economic and human rights impacts, Many would not come to life without the financial backing of ECAs.
 
While the World Bank Group and most bilateral aid agencies have minimum social, labour and environmental guidelines, ECAs typically operate in secrecy and with limited, if any, requirements to disclose any information, including the name of companies they support. They also have limited, if any, requirements to take into consideration environmental, social or human rights impacts of their investments.
 
ECAs compete to support projects that should not be supported on environmental, social or human rights grounds. This competition fuels a “race to the bottom” that drives down standards of lenders and borrowers. One of the best examples of this is the Three Gorges Dam in China. This project will displace 1.8 million people, flood millions of hectares of farmland and has been fraught with billions of dollars in cost overruns and corruption. Canada was the first country, through its ECA, to support the Three Gorges Dam. The World Bank and the US ECA refused to even consider the project on environmental grounds.
 
The US ECAs have environmental and disclosure standards that are better than any of the other G7 countries. Because of this, the G7 have made calls for environmental standards for export credit agencies as past meetings of the G7. In 1997 in Denver, the Communiqué read that, “Governments should help promote sustainable practices by taking environmental factors into account when providing financing support for investment in infrastructure and equipment”.
 
As a result of this push, the Organization for Economic Cooperation and Development (OECD), a forum that coordinates common agendas for the industrialized countries, has been discussing the development of common standards for ECAs to take into account environmental impacts. After five years of discussion, no consensus has been reached. G7 and other countries, with the exceptions of the United States and Japan, refuse to commit to binding environmental assessment standards that would include disclosure of the assessment and consultation with locally affected people.
 
The G7 have also refused to commit to requiring their ECAs to support more exports of renewable energy. Instead, ECAs will continue to be the largest sources of public finance for greenhouse-gas emitting industrial projects.
 
Governments should not be putting profits for their multi-national companies ahead of exporting environmental, social and human rights values. The upcoming World Summit on Sustainable Development focus on corporate sustainability is laughable when institutions owned outright by G7 governments are not held to the highest standards.
 
Recommendations: G7 must agree to:

• Commit export credit agencies to an immediate target of 20% of their energy sector lending and support to go to renewable energy and energy efficiency development and to work with other OECD governments to achieve this target.
• Adopt the highest common approaches to sustainable development.
• Require ECAs to assess the human rights impacts of their investments and to refuse involvement if impacts cannot be mitigated.
• Ensure public access to environmental information, transparency and public consultation in the evaluation of the environmental aspects of investments.

The following projects were supported by Canada’s export credit agency, among others: 

• The Urrà hydroelectric dam in Colombia has destroyed the traditional food supply of the Embera Katio people and increased the violence directed at community leaders. A dozen leaders opposing the dam have been killed by the paramilitary and guerilla forces. Malaria and dengue are on the rise since the dam has been constructed.
• PT TEL, set to become Indonesia's largest pulp and paper mill, has subjected the local community to landlessness, unemployment, pollution, loss of livelihood and health problems. The company has been embroiled in conflicts with local villagers due to illegal logging, forced land seizures and intimidation by security forces.
• The Ralco Dam, the second of six to be built along Chile's Biobío River, will flood 3,400 hectares of land, displace 600 people, 400 of them Pehuenche Indians. During the project approval process the heads of the environment and indigenous departments have been dismissed. Three court cases are pending in Chile.
• The Chamera II dam in Northern India is continuing the devastation caused by the Chamera I dam, despite that social and environmental issues of the first dam remain unaddressed. The first dam turned 18 kilometers of forested valleys into a lake, in an area already greatly suffering from deforestation. Landslides are increasing. The Chamera dams are located in the highest seismic area in India. 
• The Bulyanhulu mine has caused the eviction of thousands of artisanal miners from their mining concession. Tanzanian environmentalists are concerned that gold mining in the area will lead to water contamination from hazardous mine tailings containing heavy metals and cyanide. According to reports received by Amnesty International, artisanal miners were killed during evictions from disputed land.

Produced By:
The NGO Working Group on the EDC, a working group of the Halifax Initiative