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

other Members.

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

practical experience.

“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.

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