Advocating for responsible policies of development banks
Development banks should comply with strict environmental and human rights rules to ensure that their projects benefit and do not harm the poorest groups. Both ENDS monitors the banks to make sure they do.
Multilateral and national development banks play an important role in many development projects. Both ENDS follows the policies of these banks and the projects they finance very closely as they use a lot of public money that is explicitly intended to promote development. In addition, they often invest in the least developed and fragile countries that private investors shy away from. That means that development banks can potentially have a positive impact in these countries. However, failing policies and lax compliance with their own rules frequently mean that their projects have a negative impact on the very people that these projects are designed to help.
Both ENDS and the development banks
Both ENDS focuses mainly on the banks that have the greatest impact in least developed countries and in which the Netherlands has a financial interest and influence. These are:
- FMO: 51% of the shares of Dutch development bank FMO are owned by the Dutch state. It is one of the largest bilateral development banks in the world.
- The World Bank: the first multilateral development bank, with extensive local impact and a trendsetter in sustainability policy. The Netherlands can exert its influence at the Bank through its constituency.
- The Asian Infrastructure and Investment Bank (AIIB): a new multilateral development bank set up in 2016 to counterbalance the World Bank. The largest shareholders are China, Russia and India. Like other European countries, the Netherlands also has shares in the AIIB. This new bank presents opportunities to promote sustainability, but China's dominance presents a lot of risks.
- The Asian Development Bank (ADB): grants loans to governments in developing countries. The Netherlands is one of the 67 members.
- The European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD): the Netherlands is a shareholder in both of these European development banks.
- Other regional development banks, such as the African Development Bank (AfDB) and the Inter-American Development Bank (IDB; Latin America): because the Netherlands has little influence within these banks, we focus mainly on strengthening regional networks and local partners who work to improve the social and environmental policies of these banks.
Development banks' social and environmental standards
Development banks should set an example in setting up and applying strict social, environmental and human rights standards. They also closely monitor each others' activities and developments in relation to sustainability and human rights. Many of them adhere to the IFC Performance Standards, developed by the International Finance Corporation, the private sector branch of the World Bank Group.
However, the banks increasingly attract private capital to enable them to make large-scale investments. That results in more and more public-private partnerships. The banks also have to compete with increasing capital flows from other sources, like China. That exerts greater pressure to relax the current standards to make investments quicker and easier. Moreover, the banks' standards are by no means always adhered to in practice. That is why we, together with partners throughout the world, try to persuade public financial institutions to tighten up their rules and actually put them into practice.
Besides strict standards, transparency and independent complaints mechanisms are important to identify abuses and enforce structural improvements.
International networks relating to development banks
We do not call for reforms in development financing alone, but as much as possible together with a wide range of other organisations. Both ENDS is therefore active in many networks of civil society organisations, including the Euro-IFI Network of European NGOs which monitors the policy of the World Bank Group, and the NGO Forum on the ADB, which does the same for the Asian development banks ADB and AIIB. In relation to the European banks, Both ENDS works closely with Counterbalance.
Both ENDS was also actively involved in setting up and strengthening the CSO Coalition on the AfDB, a network of organisations that examines the effects of the investment policy of the African Development Bank and makes suggestions for improvement.
In addition, Both ENDs works together with local organisations that resist projects funded by development banks. By bringing our local partners into contact with the banks and supporting them in submitting complaints, we can either show the banks that their rules need to be tightened up, or that their policies, which look so good on paper, do not always turn out that well in practice.
Towards more social and sustainable policies by development banks
At FMO, our efforts have been successful. As a result of the problems surrounding the Barro Blanco dam project in Panama, the Dutch development bank has set up a complaints mechanism. And, after our intensive efforts to bring about structural changes after the murder of Berta Cáceres in the context of the Agua Zarca project in Honduras, FMO has tightened up its environmental, human rights and gender policy. We continue to monitor whether this policy is indeed complied with.
In the case of other banks, such as the ADB, we have been able to stop standards from being reviewed, and thus most likely degraded, for many years. Persistent pressure from various groups from civil society is also slowly generating greater transparency and participation at the banks. A good example is the large-scale consultation process on the World Bank's Environmental and Social Safeguards. New banks like the AIIB are also setting up complaints procedures and the EIB is reforming its own mechanism.
Locally, our work is creating greater knowledge and awareness among civil society organisations on the impact of development banks on their living environment and, together with our partners, we are ensuring that the voices of local communities and organisations are increasingly being heard by policy-makers at the banks.
Read more about this subject
Indigenous Hondurans are resisting the construction of the Agua Zarca hydrodam. Their fight has cost several lives, including that of Berta Cáceres. After considerable public pressure, Dutch development bank FMO withdrew from the project.
Large-scale infrastructural projects have detrimental effects on local people and the environment, while their benefits are felt elsewhere. Both ENDS is working to ensure that local people have a greater say in decision-making and is investigating the way these projects are funded.
Together with civil society organisations from all over the world, the Fair Green and Global (FGG) Alliance aims for socially just, inclusive and environmentally sustainable societies in the Netherlands and the Global South.
The Barro Blanco dam project in Panama, which has Dutch financial support, is causing indigenous lands to disappear under water. Both ENDS is working to protect the rights of indigenous communities living near the dam.
News / 10 June 2022
In a new Position Statement on Financial Intermediary (FI) Lending, Dutch development bank FMO argues for limited responsibility over the outcomes investments that are channeled through commercial banks, investment funds, and other financial intermediaries, representing by far the bigger sector of its portfolio. In doing so, FMO is undermining its development mission, including the protection of human rights and addressing the climate crisis. FMO intends to delegate these key responsibilities to its FI clients only, falling short of best practices of peer financial institutions. In a joint submission prepared by Both ENDS, Oxfam Novib, Recourse and SOMO, we argue that FMO can do much more to ensure the protection of human rights, the environment, and to measure the development impact of its indirect investments.
Letter / 10 June 2022
Both ENDS, SOMO, Oxfam Novib and Recourse sent in a submission to FMO's public consultation on its Position Statement on Financial Intermediaries. In this position statement, FMO only takes limited responsibility for the consequences of its investments through so-called financial intermediaries. We call upon FMO to publish a position statement that focuses on protecting human rights and the environment and take full responsibility for this.
Letter / 15 May 2022
Both ENDS Comments and recommendations on the Bank Group’s Environmental and Social Policy of the AfDB Integrated Safeguards System
This letter by Both ENDS to the African Development Bank is a comment written in reaction to a draft version published by the Bank of its Environmental and Social Policy as part of a formal public consultation held by the Bank. This comment was sent to the bank along a joint submission letter with other CSOs, and specifically responds to the overarching Policy.
The bank's flexible requirements for clients and national standards for risky projects dilute safeguards. Project approval should be predicated on specific and binding targets for compliance and reflect input from communities involved.
Letter / 15 May 2022
Joint Submission of comments and recommendations to the Public Consultation on AfDB Integrated Safeguards System
Together with 29 other CSO's, we've submitted our comments and recommendations in the Public Consultation on the AfDB Integrated Safeguards System. These include that the Bank should prioritize community-led development and human rights-based approaches; protect natural resources and tackles environmental and climate crises; raise the bar on access to information, transparency and accountability; facilitate participatory processes in policies, programmes and projects; and end inequality, poverty, and the cutback and privatization of vital services.
News / 15 April 2022
The Inter-American Development Bank (IDB) has taken a unique decision to withdraw from the construction of two controversial dams in Ixquisis, Guatemala. Both ENDS has supported our partner AIDA for many years in its fight against the dams. Tamara Mohr and Pieter Jansen explain why this decision is so exceptional.
News / 23 December 2021
2022 is the year for FMO to make good on its promises and provide financial support only to sustainable development
2021 was a turbulent year for Dutch development bank FMO, to say the least. The bank has been under fire for many years for investments linked to human rights violations and suspected corruption. But in the past year, the Dutch press and media have reported on one new development after the other in ongoing cases involving FMO. Below we give a short summary of these cases and call on FMO to make the promised improvements in 2022.
Letter / 23 August 2021
6 civil society organizations, including Both ENDS have submitted a gender comment on the newly proposed EIB Environmental and Social Framework. The EIB Environmental and Social Standards has to be updated to ensure that due attention to gender specific impacts, risks and related mitigation strategies is integrated in the policy and each standard, as well the assessment needs to specifically address the needs and problems of all genders. A lot of improvements can be made in the integration of gender aspects in policy and standards, in order to prevent violation of the rights of women and girls during project implementation, and tools (widely used by other organisations) and or commitments for their development should be included (inclusive consultations, Gender assessments and analyses, gender impact assessment, Legal Assessment Tool (LAT) for gender-equitable land tenure, gender responsive tools for prevention of violence.
Letter / 23 August 2021
Reflecting the duality of gender and climate in the EIB’s Environmental and Social Sustainability Framework’s Standard 5 on Climate Change
This briefing of Eurodad, co-authored by Pieter Jansen, Both ENDS aims to outline recommendations on how the European Investment Bank should address the interconnected issue of gender inequity and the climate crisis in the newly proposed environmental and social policy.Severe climate change has consequences for human rights, including the right to life. As such, under the European convention on human rights the EIB has a duty to stop carbon-emissions related investments. The EIB and project promoters must monitor a project's greenhouse gas emissions and the climate risks of the project on the natural environment, and the women possibly affected by the project. The newly proposed policy should ensure that project promoters, who apply for EIB funding, submit a gender and social inclusion plan, and full participation and engagement of women, local communities and stakeholders in the Climate Risk Vulnerability Assessment methodology.
Letter / 5 August 2021
A joint CSO submission to the European Investment Bank, Standard 11 on intermediate finance in the Public consultation on the EIB Group's
16 civil society organisations including Both ENDS have written a letter of concern to the European Investment Bank about a newly proposed standard for the Bank its intermediate finance investing. Both ENDS contribution to the contents of the joint letter consists out of proposals for improvement of screening, scoping, due diligence, appraisal, monitoring and supervision of high-risk clients and sub-projects. through financial intermediaries and clear and mandatory social, environmental and human rights requirements for FI investing matters.
Letter / 5 August 2021
25 civil society organisations, including Both ENDS have submitted a comment on the overarching policy of the newly proposed Environmental and Social Framework of the EIB Group. The EIB has to undertake environmental, climate, social and human rights assessment and appraisal of proposed projects to inform the decision of financing and must not rely on a clients' self-assessment and reporting (solely). The Policy needs to state clearly what the due diligence, monitoring and reporting responisibilities for the EIB are, in particular regarding human rights and contractual clauses with clients should enshrine the standards in all EIB operations, enabling for suspension of contracts if the standards are not implemented.
News / 4 June 2021
FMO's new position statement on fossil fuel investments commits to ending new direct finance in the downstream and midstream coal and oil sectors, whilst still allowing for investments in gas-fired electricity generation under exceptional circumstances only. Both ENDS welcomes this development as a step in the right direction.
Press release / 10 February 2021
The Dutch development bank FMO is not sufficiently transparent about the projects it finances and is therefore acting contrary to its mandate. This is evident from a new report published by the International Accountability Project (IAP) and the Foundation for the Development of Sustainable Policies (FUNDEPS), endorsed by 28 organizations including Both ENDS, SOMO, and Oxfam Novib. The research assesses FMO's disclosure and access to information practices for investments proposed between January 1, 2019, and May 31, 2020. Only in 25% of the cases was it disclosed what potential negative consequences an investment by FMO would have for people and the environment.
News / 10 November 2020
The Dutch development bank FMO has published a statement about fossil fuels to take steps in climate action. Both ENDS and partners are pleased that FMO is finally taking a stand regarding fossil fuels, but in our opinion it could be more ambitious. In order to really contribute to sustainability and equality, it is essential that development banks stop investing in harmful fossil projects.
Letter / 9 November 2020
Both ENDS and partners gave their input on FMO's public consultation on Climate Action Commitments and Fossil Fuel Statement. Both ENDS and partners are pleased that FMO is finally taking a stand regarding fossil fuels, but in our opinion it could be more ambitious.
News / 18 November 2019
Good news for the climate: last week, the European Investment Bank (EIB) decided to stop investing in fossil fuels by 2021. This is part of its new energy strategy.
News / 8 November 2019
On Thursday November 7th, a group of European NGO's including Both ENDS, sent a letter to Vice-President of the EU Frans Timmermans, in which they ask him to support the phase out of European Investment Bank’s fossil fuel financing by the end of 2020.