ECGD and Sustainable Development
Memorandum to Environmental Audit Committee Inquiry

Today, 80% of financing for projects and investment in poorer countries comes from publicly-financed Export Credit Agencies (ECAs) because few companies will operate in those countries without ECA support. Yet ECAs have historically been subject to few, if any, environmental, human rights or developmental safeguard standards and policies.

In 2003, the Environmental Audit Committee of the UK Parliament examined the ways in which the UK’s export credit agency, the Export Credits Guarantee Department (ECGD), incorporates sustainable development principles into its activities. (The Committee comprises Members of Parliament of the lower House of Commons and monitors the contribution made by government departments and agencies to environmental protection and sustainable development.)

Its inquiry addressed:

1. The extent to which ECGD’s policies and operations reflect the Government’s commitment to environmental protection and sustainable development;
2. The extent to which ECGD’s revised mission statement and the development of its Statement of Business Principles have led to changes in the ways in which ECGD incorporates sustainable development considerations into its operations and activities;
3. The ways in which the transition to a trading fund may affect transparency, particularly in relation to environmental information; and
4. The scope and need for further reform for further integration of sustainable development principles.

This submission from The Corner House documents in detail how the ECGD’s policies and practices fall far short of compliance with the Government’s sustainable development commitments. It makes several recommendations to address the ECGD’s institutional and procedural failures, and to bring the Department in line with the Government’s sustainable development policies and objectives.

The Committee published a report of its inquiry on 17 July 2003. Annnouncing the report, the chair of the Committee said:

"… despite a commitment to take sustainable development into account in considering applications for support, there has been little noticeable change in the balance of ECGD's portfolio, which remains dominated by projects in unsustainable sectors".

He added:

" we are at a loss to understand why applications relating to aerospace projects should be exempt from impact screening procedures."

Among its recommendations and conclusions, the Committee stated that:

There is no circumstance under which it would be acceptable for ECGD, using taxpayers money, to support projects which exploit children or employ bonded or forced labour. We were therefore pleased to receive a further note from ECGD assuring us that "it is the Department's policy not to provide support for any project that involves the use of bonded or forced labour. The policy statement in the guidance notes for the impact questionnaire will be amended to provide greater clarity on this point". We look forward to receiving copies of the amended text. We recommend that a similarly categorical statement is made in respect of child labour and the guidance notes suitably amended.

On 3 November 2003, the Government published its Response to the Committee’s report.