Nations agree on environmental standards for exports
A voluntary agreement enabling improved environmental standards for capital goods exports has been signed by 24 out of the 26 Organisation for Economic Cooperation and Development (OECD) export credit agencies (ECAs).
Only the US and Turkey failed to ratify the draft recommendation. All other
Working Party members agreed to implement the provisions effective from January
The UK’s Export Credits Guarantee Department (ECGD) has been significantly
involved in the development of the lengthily-titled Common approaches on the
environment and officially supported export credits’ agreement. It plays a
significant role in capital projects, underwriting bank loans to enable overseas
buyers to purchase capital and project-related goods and services from the UK,
and ensuring the return on investments made by UK companies in overseas
The agreement will oblige ECAs to screen all projects with repayment terms of
two years or more, with a view to identifying and reviewing any that might
adversely impact the environment. Social issues such as resettlement, indigenous
or vulnerable groups and cultural heritage will be considered alongside more
traditional green benchmarks.
Projects will also have to be classified in one of three categories, depending
on their potential effect on the environment, in order to indicate how much
information will be required for the subsequent environmental review. A full
environmental impact appraisal will be undertaken for sensitive sectors and
locations before any decisions are made. This will enable members to evaluate
whether to provide or decline support for a project, and – if support is
provided – the extent of any mitigation requirements.
ECAs will also have an obligation to compare or benchmark projects against
international standards such as the World Bank’s guidelines. Any project that
does not meet these standards will have to be fully justified.
This obligation does not mean international standards will automatically be
Required. It is seen as parallel to the World Bank’s own procedures. These set
acceptable levels of pollution loadings but recognise that in specific sites
they may not be appropriate – for example, dust levels in emissions from plants
in a desert may not need to be as low as for a plant in an urban residential
ECAs would also have to explain any departures from international standards in
their reporting and transparency procedures. They would also be obliged to
encourage the dissemination of information on environmental impacts, subject to
local legal provisions on public disclosure, to relevant stakeholders and with
The new system will also put in place robust reporting and monitoring
provisions. These are intended to assist in a review of the recommendation that
will take place by the end of 2003, to enhance the existing provisions with
“Much time and effort
has been put into these negotiations and this agreement sets common approaches
to the assessment of environmental impacts of projects supported by export
credit agencies,” said Minister for Trade and Investment Baroness Symons.
“Although I am disappointed that the USA and Turkey – for different reasons –
are unable to support the Agreement on Common Approaches, I believe this
voluntary agreement reached by the remaining 24 OECD countries represents a
sound starting point and a platform for further development in the light of
experience,” she said.
OECD Secretary-General Donald J Johnston added: “Export credit policy can
contribute positively to sustainable development and should be consistent with
that objective, while creating a level playing field for healthy international
The current proposal of common approaches, after 15 months of negotiation, has
also taken into account consultations with civil society organisations. The
implementation of this proposal by most members from January 2002 will mean that
all major exporting countries of the OECD will now be applying environmental
review mechanisms. This results in the first common ‘greening’ of export credits
and should be seen as a major accomplishment.
“This proposal is an important first step. I believe the countries of the OECD
will, through ongoing negotiations and review, improve the level playing field
for export credits and the environment,” said Johnston.