Export Credits Guarantee Department and Sustainable Development
Memorandum to Environmental Audit Committee Inquiry

On 13 May 2008, the UK Parliament's Environmental Audit Committee launched an inquiry into the Export Credits Guarantee Department (ECGD) and Sustainable Development to reassess the extent to which ECGD takes account of environmental and social concerns in the course of its decisions. (The Committee considers the extent to which the policies and programmes of government departments and non-departmental public bodies contribute to environmental protection and sustainable development, audits their performance against targets set by the government and reports to Parliament.)

In 2003, the Committee had found that the ECGD was not giving sustainable development due priority and raised concerns about the adequacy and consistency of ECGD's impact screening progress, and its failure to disclose full information on prospective projects.

The Corner House's submission to this Committee addressed:

• Decision-making procedures and sustainable development
• Inadequacy of ECGD's Business Principles and need for a proactive approach 
• Due diligence and monitoring
• Information disclosure
• The OECD and export credit agency reform

It noted that ECGD's Business Principles fail to provide incentives, penalties and binding rules to ensure that the Department's business practice accords with sustainable development objectives.

ECGD has classified several projects with potentially high environmental, social, debt or developmental impacts, including the alleged use of child labour, as being of medium or low impact, thus requiring little or no further scrutiny. The submission queried the adequacy of ECGD's due diligence on the choice of an experimental anti-corrosion coating for the Baku Tbilisi Ceyhan oil pipeline project, for which BP obtained ECGD support.

It noted that ECGD is failing to discharge its duty under the Environmental Information Regulations (Regulation 4/1) of proactive dissemination. Key documents that would enable the public to monitor (and improve) the effectiveness of ECGD's due diligence and other procedures are either denied to the public (for example, derogations from standards) or made available only after prolonged Freedom of Information requests. ECGD should as a matter of course post on its website all completed environmental screening assessments, impact questionnaires and other assessments of projects.

As a public institution supported by public funds, ECGD should make publication of basic project information -- name, short description, potential environmental, social and human rights impacts, and impact category -- a precondition of appraisal for all projects.

The Corner House was requested to give oral evidence before the Committee on 8 July 2008, together with World Wildlife Fund UK (WWF) (Questions 1-19 evidence, Questions 20-38 evidence).

The Corner House submitted supplementary evidence on 21 July to correct severak erroneous assertions made by ECGD in its oral evidence to the Committee, together with a 2005 Legal Opinion examining the legal powers of ECGD to blacklist companies involved in bribery and corruption.

The Environmental Audit Committee published its report on 20 October 2008, together with an accompanying press release headed "Room for improvement at the ECGD". The Committee stated that "the Export Credits Guarantee Department must take a bold and rigorous approach to sustainable development and transparency", thereby improving standards across the globe. It acknowledged that ECGD's primary duty is to support the competitiveness of British industry, but was categorial that it cannot be exempt from wider government objectives on sustainable development and the environment.

The Committee called for tighter scrutiny of the sustainable development credentials of projects in heavily polluting sectors such as defence and aerospace that have dominated ECGD's portfolio in recent years. It also called for more rigorous environmental standards across the ECGD's portfolio and for more projects from sustainable and environmental industries.

It said that ECGD's current approach to information disclosure undermines confidence in ECGD's procedures and prevents full scrutiny of its operations.

The Government's response to the Committee's report was published on 4 March 2009.