EIB Board values dialogue with civil society
- Oct 17, 2011
"Constructive criticism is essential," Vice-President Philippe de Fontaine-Vive underlined at the opening of the EIB's first Board seminar with civil society on 17 October. The EIB is already in regular formal and informal exchange with civil society organisations, but it was the first time they met with its Board members. The Board decides on financing projects, on the Bank's lending priorities and policies. The meeting was largely welcomed by Non Governmental Organizations (NGOs) as well as EIB staff and Board members.
How can the EIB lead the way on the decarbonisation of the energy sector? How can it make sure smaller projects get financed? How can the Bank accelerate lending to SMEs by financial intermediaries and ensure transparency? And how to make sure that projects contributing to development are to the greatest benefit to the people on the ground? These were among the questions raised in a lively debate with some 77 participants from civil society that looked at the Bank’s policies, principles and projects.
A key role to play in climate action
As the world's largest climate lender, the Bank plays an important role in supporting investments that contribute to fighting climate change, especially in supporting emerging technologies. NGO representatives welcomed the EIB's efforts in the area of renewables, but very much questioned its support for fossil fuels, such as coal and gas, as well as the automotive sector. The Bank was also urged to step up its lending to energy efficiency projects, in particular in Eastern European countries. Civil society representatives encouraged the EIB to take a more proactive approach, to become "the learning hub on how to fund innovative projects". The Bank should strive to be a "guiding institution" in the area of climate and energy. It should support politicians to choose objectives and projects more in line with the global decarbonisation goal. Sharing of expertise between the Bank and civil society at local level was recommended to make projects more effective. Civil society organisations recognised that the Bank has to face trade offs caused by competing EU priorities. Nevertheless, they stressed that the climate crisis is more important although less urgent than the financial crisis. The EIB was thus invited to look at the longer term when it revises its energy policy and include a 2050 perspective.
Improved lending for SMEs
For SMEs, the backbone of the European economy, the EIB stepped-up its lending following the credit crunch in 2008. Financing of innovation and microfinance were significantly strenghtended together with the EIF. Because lending is intermediated through banks, the discussion centred on how to make sure the money reaches the right sectors and the right beneficiaries faster. The EIB seeks to accelerate disbursement to final beneficiaries and to improve its reporting. Civil society members suggested that provisions for more rapid disbursement to final beneficiaries could help. They also brought up ideas for improving its effectiveness, such as provision of technical assistance to bridge capability gaps in developing countries, dedicated loans and more creative products like micro-insurance, risk capital or mezzanine funding. NGOs underscored the need to strike a balance between confidentiality and transparency and raised the question whether the EIB should work more with public financial intermediaries to make intermediated lending increasingly responsible and transparent. NGOs acknowledged the role of financial intermediaries but asked the Bank to be more careful in its selection of intermediaries. They also cautioned on intermediaries located in countries considered as tax havens.
Putting people first
"People should be at the heart of each operation" – this was the strong message from the discussion on EIB's support for projects that contribute to development. Even though only 10% of the EIB's financing goes to operations outside the EU, it is still seen as a "critically important development partner". It was recognised that the EIB is not a development bank, but that its operations do have a development impact. Civil society members underlined that the Bank's approach should be tailored to country contexts and regional specificities, with an appropriate balance between public and private sector lending, and focus on local people's needs and life improvement. Less focus should be given to European economic interests. NGOs made it clear that upholding high standards and thorough implementation is crucial, in order to make sure projects contribute to sustainable development and do not end up harming the local population. A call was made to enhance monitoring and due diligence at all phases of the project. The Bank is currently reviewing its environmental and social assessment and monitoring processes in order to improve its reporting, make it less reliant on project sponsors' evaluations and thus also respond to some civil society criticism. NGOs also invited the EIB to do more to ensure the engagement of civil society groups both locally and internationally. The EIB announced its commitment to follow-up on concerns over the New Forests Company project in Uganda. "If allegations are true this is not acceptable," EIB President Philippe Maystadt said adding that the EIB will conduct its own investigation in relation to the allegations made. He concluded the event by praising its constructive exchanges, thanking the Board members for their contributions and indicating that that the Board is looking forward to a continued dialogue.