The European Investment Bank is not a leader in the green transition

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European Investment Bank President Nadia Calviño’s recent comments on Euronews that the value of the EIB is to reduce the risk of green investments for private investors is to become a leader in green finance and a major player in tackling global issues. It builds on the EIB’s broad objectives of supporting scale projects. These include, but are not limited to, climate change.

This may sound like a noble ambition, but communities affected by EIB projects know there is much more to this story. The EIB has already made clear many times that it is not ready to lead a green transition.

The EIB has a poor track record in selecting viable investments to begin with.

In fact, the most frequent issue raised by communities affected by EIB-supported projects to its complaints mechanism (46% of all complaints) was that the bank did not conduct proper due diligence on the project in the first place. It is.

A power line project that no one wants to get involved with

As an advocate for Accountability Counsel, I have seen this situation firsthand in Nepal. In Nepal, communities are demanding justice for the damage caused by her EIB-backed renewable energy projects.

No one consulted or even notified the local residents, some of whom live along the proposed transmission line route, about the project.

In fact, for some people, the first time they learned that a high-voltage power line would cross their land was when they saw people marking the predetermined route with red paint.

When local people raised concerns about the loss of land, livelihoods and forests, but also, of course, about the complete violation of indigenous rights to free, prior and informed consent (FPIC); Nepal Securities Force resorted to violence.

In 2021, the EIB’s independent accountability process confirmed what the community already knew: that the project did not comply with the EIB’s own rules.

However, three years after its discovery, the EIB still has not brought the project back into compliance or remedied the damage caused.

Why fund people who repeat climate change crimes?

The second most common complaint about EIB projects (accounting for 43% of all complaints) is that they have a negative impact on the environment.

This is not only a problem for communities living near these projects, but also undermines the EIB’s climate change ambitions.

My organization’s analysis shows that multilateral banks like the EIB often lend to repeat offenders of environmental and human rights abuses.

For example, Nepal Electricity Authority (NEA) is implementing at least 20 hydropower and energy projects across the country.

Affected people have filed complaints against nine different NEA projects, alleging the NEA’s inadequate compensation and consultation, inadequate environmental and social impact assessments, and the failure of indigenous communities’ collective rights. It shows a pattern of neglect.

How can the EIB be truly prepared to select green projects and reduce risks for the private sector when the EIB erratically follows its own rules and takes no responsibility for the damage its projects cause? Can it be fixed?

There is an opportunity to change direction for the better.

The EIB has recently appointed Calviño as president and Vasco Amaral Cunha as the new head of its complaints department, giving it a chance to change direction.

As president, Mr. Calviño must, at a minimum, commit to consulting affected people as part of the design of EIB projects and ensuring or providing remedies for the negative environmental and social impacts of their investments.

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For his part, Cunha should focus on ensuring that the EIB’s grievance mechanism fulfills its purpose of delivering “fair and sustainable outcomes for all”.

Over the next year, the powers and procedures of the grievance mechanism will need to be updated to ensure that the EIB is properly held accountable for its climate ambitions. More soon, Cunha will be able to get the Nepal power line incident back on track.

Communities have repeatedly called on the EIB’s grievance mechanism and EIB management to facilitate honest dialogue between affected communities and the Nepal Electricity Board. Cunha could begin his new term by finally starting that dialogue.

If Calviño and his team want to transform the EIB into a leader in the field of green finance, they should start by making sure its own projects stay out of trouble.

Otherwise, the EIB will continue its greenwashing of the private sector and the green transition will remain an illusion.

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Sutharee Wannasiri is a Community Associate at Accountability Counsel.

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