Background material for NGO programme |
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To help prepare for the discussions during the NGO programme at the Annual meeting, we have prepared some material to help you understand how various teams work within the Bank. This will be especially useful for those NGOs who have had limited contact with the EBRD to date. Summaries of interviews with EBRD staff members that have been published in past issues of the EBRD-NGO Newsletter can be found below. They aim to provide you with the insight into the decision-making process behind the EBRD projects, policies and country strategies. The Environment Department's main function is to implement the EBRD's environmental mandate. The team appraises all projects financed by the Bank to ensure that they comply with the EBRD’s Environmental Policy and Procedures. The ED also helps develop environmental investments and capacity building projects. Environment Department’s key tasks include:
We use the word “environment” in the broad sense, meaning not only ecological impact but also worker, health, safety and community and social issues. What does “screening” a project mean? One of the most important stages in assessing a project is the so-called “screening”. This is the first step in our environmental appraisal process which is carried out to identify the potential environmental issues associated with a proposed project. It is also used to specify the types of environmental information we need to assess, such as environmental risks, potential liabilities, regulatory compliance, environmental impacts, health and safety problems, and community concerns. In particular, we use screening to identify areas where we can build potential environmental benefits or enhancements into a proposed project. At the end of the “screening” stage, the Bank’s environmental specialists assign a category to each project —“A” if it needs an Environmental Impact Assessment, “B” if it needs an Environmental Analysis which is a study of the future impacts, but where impacts can be readily identified and mitigated and therefore do not need a full Assessment. A project is screened as category “C” if it does not need either of these studies. Even if the EBRD’s investment in a category C project is not expected to result in significant environmental changes, we may require other types of information, such as a safety study or public information programme. If we do not have enough information to assign a category, we will call it an “IEE”, which means it requires an initial environmental examination before we can classify it is an A, B or C project. At the screening stage, the project will also be assigned a “1” or “0” category, indicating whether an environmental audit of the project facilities is needed. All projects that go through local banks or funds are categorised as “FI”, meaning financial intermediary. These projects are handled differently. Which are the criteria taken into consideration when screening a project? The specialists in the Environment Department have to consider a large number of questions to arrive at the appropriate screening for a project. For example, we want to know:
We also look at what has been going on in the past at the facilities so that solutions can be built into the project. This would include reviewing potential risks or liabilities to the Bank if we were to make a loan or take an equity stake in the company or project. At this stage in the screening process, we would also determine whether the proposed project is considered a high risk with regard to the labour standards included in the Bank’s Environmental Policy. What sort of environmental information is disclosed for each category of project and how is this provided? Disclosure requirements are very comprehensive and are summarised in the Annex 2 of our Environmental Policy. All projects have a Project Summary Document (PSD) posted on the EBRD web site prior to review of the project by our Board of Directors. The number of days it is posted before Board review depends on whether the project is private or public sector. For category A projects, there is a minimum number of days that the Environmental Impact Assessment must be in the public domain in the local language before Board review. The timing ranges from a minimum of 60 days for private sector projects to a minimum of 120 days for public sector projects. For category B projects, the project sponsor must place in the local public domain a summary of the project’s environmental issues and the environmental action plans, as specified in Environmental Impacts sections of PSDs. The requirements for category C projects vary from project to project. Because they are often corporate loans, we have an opportunity to encourage transparency and accountability at the corporate level, such as agreeing to provide information on environment and social issues on the company’s website. Financial intermediaries are encouraged to be more transparent but there are no specific requirements regarding disclosure. How do we set requirements for financial intermediaries? For the FI projects, we first look at what type of project it is — microfinance, insurance, private equity funds, pension funds, leasing, residential mortgage and so forth. We have different environmental procedures tailored to each type of financing. The procedures set out how FIs should undertake environmental due diligence regarding their borrowers and investments as well as how transactions should be monitored. During due diligence, we assess the FI’s existing environmental policies and procedures against the Bank’s requirements and we look at their capacity to implement them. We also assess the general environmental issues associated with the FI’s current and future portfolio. When we know what kind of transaction it is and the issues associated with both the FI and its portfolio, we can structure the requirements. After the initial stage of assessing a project, or the so-called “screening”, the EBRD undertakes consultation with the public. Has consultation with the public always been a requirement of the Bank? The EBRD incorporated public consultation requirements in its first Environmental Policy approved in 1991 and in its Procedures approved in 1992, which included requirements for disclosure and public consultation on draft Environmental Impact Assessments (EIAs). A commitment was also made to follow international standards, such as the UNECE Convention on EIA in a Transboundary Context (the “Espoo Convention”). Following a review of the Environmental Policy and Procedures in 1996, significantly more detailed public consultation requirements became part of the Policy. Since then EIAs, which are part of the required documentation for category A projects, should be disclosed by the project sponsors at locations near the project site and in a culturally appropriate way, and the Executive Summary should be available in the local language. More requirements were also imposed on the scoping stage of the EIAs because in a number of cases insufficient consultation had been conducted at the early stages of the EIA process. How has the EBRD put its requirements on disclosure and consultation into practice? For category A projects (which have usually been in oil/gas, mining, power and energy) and transport (port restructuring, roads and urban transport) sectors, appropriate levels of public consultation were based on the needs of each project and its stakeholders. Many project sponsors seemed to think that public consultation essentially meant putting copies of documents into libraries and having one or more public meetings. Meetings were often structured to be a lengthy presentation on the project and clarification of the audience’s questions but no real discussion. The EBRD considered this approach to be disclosure of information but not meaningful consultation. The EBRD also provided technical assistance to improve public consultation on several projects and to enhance communication between businesses and the public. How did things change in 2003? During 2002 the EBRD undertook a review of its Environmental Policy and proposed a number of improvements, including increasing public disclosure requirements. These improvements were incorporated into a draft policy which was posted on the Bank’s web site (www.ebrd.com) for public review and discussed in several workshops, which were conducted – with the assistance of NGOs - in London, Moscow, Szentendre (Hungary) and Baku. Bank staff also conducted client surveys, undertook workshops for the EBRD’s Board of Directors and explored other ways of obtaining comments and suggestions on the policy before it was submitted to the Board of Directors. In 2003 the Bank issued three documents: a revised Environmental Policy, Environmental Procedures and Public Information Policy. These documents made a number of enhancements to public participation and disclosure requirements. The Bank acknowledged that many of the EBRD’s external stakeholders expected organisations such as the EBRD to report more fully on greenhouse gas emissions, environmental expenditure and the environmental “footprint” of the Bank. Therefore, in the revised Environmental Policy, the EBRD agreed to publish an Annual Environmental Report containing significant information on these issues and the environmental aspects of the projects approved during the year. The Environmental Report was expanded in 2005 into an annual Sustainability Report, which covers both environmental and social commitments in the Environmental Policy. The majority of changes in the 2003 Environmental Policy relate to consultation and disclosure of information. The revised policy includes a requirement that all EIAs for Category A projects must be translated into the local language. This represents an important step forward from the 1996 policy, which only required the project sponsor to use “best efforts” to translate the full EIA into the local language. The EBRD now requires project sponsors of Category A projects to submit a Public Consultation and Disclosure Plan (PCDP) at an early stage of the project planning (e.g. scoping). The PCDP must identify potentially affected parties and document how the project sponsor intends to communicate with them, what types of information will be disclosed and how comments will be taken into account. It needs to be made available to the public during the scoping process so that it can be discussed early in the project development. The project sponsor is required to follow up on the consultation process by informing the stakeholders how their comments were taken into account and what the final decisions are. The 2003 policy strengthens obligations regarding Category B projects by requiring a summary of issues and mitigation measures to be disclosed locally (via newspapers or other suitable means) prior to consideration of the project by the EBRD’s Board of Directors. The EBRD requires project sponsors of Category A projects to report annually to the public on their project’s environmental, health and safety, and consultation status. For other categories of projects (B, C, and Financial Intermediary or ‘FI’ projects) the project sponsor is required to update the project summary document on the EBRD’s web site with a brief summary of the environmental issues for the reporting year. What is the main role of the EBRD’s social specialist in the Environment Department? The main task is to ensure that projects implement the social components of the Bank's Environmental Policy, as revised in 2003. Before, the Bank's focus had been more on the environmental side of the policy, but adding social considerations reflects that sustainable development – which the Bank has a mandate to promote – includes both a social and an environmental dimension. It also reflects international best practice amongst IFIs and the private sector. (See bellow: Social aspect of Environmental Policy) What are the priority social issues for the EBRD in transition countries and what is the role of the EBRD’s social specialist in addressing them? The first priority for the EBRD in addressing social issues is that our projects do not adversely affect anyone, especially vulnerable groups. The Environmental Policy establishes minimum standards in line with international best practice for certain areas: the protection of indigenous peoples, involuntary resettlement and a number of core labour standards and cultural heritage in areas affected by Bank-financed projects. So one of the tasks of the social specialist is to ensure that projects where such issues arise meet these standards, which are really about avoiding harm and mitigating adverse impacts. But in addition, we also work with sponsors and encourage them to take more proactive measures, so that the Bank’s projects bring positive developments. How does the Environment Department assess and monitor social issues relating to the Bank’s projects and strategies? At a practical level, to improve a project so that the benefits reach as many people as possible means being involved in the Environment Department's appraisal of all projects, highlighting issues and suggesting actions that are needed. On bigger projects, it also involves close collaboration with sponsors, field visits and a lot of monitoring. What is the role of the community development programmes? Community development programmes enable companies to engage with the community and plough back some of their profits into the local area; this is increasingly seen as a form of good corporate citizenship. It is particularly important when a company is developing new facilities or processes and/or large natural resources. These projects will, of course, have impacts on the respective communities and the programmes are there to ensure that the impact is positive. Communities should be able to choose what is most important to them: health, education, culture, infrastructure, and livelihood. For example, a community development component of an Indigenous People’s Plan might involve encouraging publications in the language of an indigenous/minority group, or providing additional support to children of certain groups who seem to leave school younger and without qualifications. In developing such initiatives it is also necessary to make sure that the decisions are not being made by only one dominant sector of the community. Community groups need to represent all the different members – the Bank has to ensure that the old, young, women, minorities and other vulnerable groups benefit equally from the programmes. Is the increasing focus on social issues and development having an impact on the EBRD’s projects and sponsors? We are trying to engage and work closely with all stakeholders in a given project – from the company to the local community – in order to achieve a visible impact. The standards in our Environmental Policy require that indigenous people must not only be compensated for any hardship experienced as a result of a project but must also benefit from a project. Finally, the increased attention we are now paying to social issues will be evident in the revision of the Environment Policy which is taking place in 2007. What is 'monitoring' of a project from the EBRD’s perspective? Following the consultation with the public and after the EBRD decides to fund a project, the Bank begins the process of monitoring how the project is implemented. Monitoring is an integral component of project implementation. It serves two purposes: the first is to track the implementation by the client of the Environmental Action Plan or other agreed mitigation measures, as well as to monitor the project's compliance with applicable national and international regulations and standards, with the client's own corporate environmental, health and safety and social polices, and with the requirements of relevant international conventions and agreements. The second purpose is to measure the ongoing impacts associated with the project and the effectiveness of mitigation measures, as well as to identify any new issues of concern. For each project, environmental and social monitoring requirements are outlined as early as at the initial stages of project appraisal and are further specified through the project cycle, based on the results of the due diligence and of any public consultation that has taken place. Throughout the due diligence process, the Environment Department actively works with its clients to identify a scope and frequency of the monitoring requirements and any project components that might require specific monitoring actions. Specific project monitoring requirements are commensurate to relative risks posed by the project. Has 'monitoring' of projects always been a requirement of the EBRD? Project monitoring has always been one of the fundamental requirements of the EBRD’s Environmental Policy, from the very first edition of the policy and throughout its subsequent revisions in 1996 and 2003. Once the environmental and social due diligence is completed, detailed monitoring requirements are recorded in a number of contractually binding documents, such as Environmental and/or Social Action or Management Plans, Community Development Programmes, loan agreements, etc. Who is involved in the process of monitoring? The resources and mechanisms used for monitoring depend on the nature of the project and the environmental and social issues associated with it. The most basic monitoring tool, used on virtually all projects, is the review, by Environment Department specialists, of periodic monitoring reports submitted by the client. Reporting frequency is at least annually, but for higher-risk projects the Bank may require more frequent reporting. In addition, EBRD specialists may visit the project site(s) and surrounding communities. More complex projects typically require additional monitoring mechanisms such as including environmental performance criteria in the project completion test, or third-party monitoring, for example a requirement for periodic audits of the project by an independent engineer or consultant. What is the role of NGOs and the general public at the project monitoring stage? NGOs and the general public play an increasingly important role in the monitoring of complex projects: for instance national NGOs participated in the monitoring of the Baku-Tbilisi-Ceyhan (BTC) pipeline project and are actively involved in the implementation of various off-set programmes that are additional to the Environmental Action Plan. It is also good practice to publish independent consultants' reports on the project website so that affected stakeholders and the general public can easily access the findings of the monitoring and further recommended actions. How does monitoring of social issues differ from that of environmental issues? Monitoring the implementation of the Bank's current Environmental Policy actually means monitoring projects against both environmental and social performance criteria. Prior to the 2003 revision of the policy, social issues were considered in the general context of the company/community interaction. The 2003 Environmental Policy, however, explicitly covers worker protection and labour issues as well as a range of social issues such as cultural heritage, involuntary resettlement and indigenous populations. It also identifies international guidelines that EBRD uses as a benchmark in its assessment and monitoring of social impacts. Please give examples of monitoring requirements of EBRD projects. When dealing with large infrastructure projects, the monitoring requirements may be significantly greater for the construction phase as opposed to the operational phase. For instance, on the BTC project we implemented quarterly monitoring during the construction phase, and annual monitoring during the operational phase. This monitoring is performed by an independent environmental consultant although EBRD staff members typically participate as well. The results of this monitoring are made available to the public. Although, formally speaking, project monitoring starts during implementation, after the project has been approved by the Board of Directors – it is, in reality, an ongoing and interactive process between the Environment Department and the client. Evaluation of projects within an organisation like the EBRD serves various functions including quality assurance and control, learning and accountability. Evaluation takes place after the Bank’s involvement in a project is critical to ensuring that the institution learns from past experience (both positive and negative) and continually improves its performance. What is the evaluation cycle? The Evaluation Department (EvD) does not become engaged until the project is considered “mature” and is selected for evaluation. A project is mature once construction (for green-field projects) is complete, and generally not until there has been at least 18 months of operation. Each year EvD defines which projects are mature and ready for evaluation. All mature projects are evaluated using a self assessment tool undertaken by the bankers, called an expanded monitoring report. EvD then takes a random sample of approximately 60 per cent of these projects, of which roughly half receive an independent assessment. The other half are subjected to a fully independent evaluation. Depending upon the size and scope of the project, the Environment Department will either handle the project directly or may engage consultants to support them, including independent environmental auditors for very large projects. Upon completion and review by EBRD management, a summary of the independent evaluation is published on the EBRD website. Why does EBRD evaluate projects? The primary objective of evaluation is to improve the Bank’s future performance by drawing lessons from past experience. Bankers may also share the evaluation findings with their clients to encourage improvements on existing projects. In the design of new projects, bankers are required to review and make reference to past lessons learned. While there are several thousand lessons in the database, it is surprising how often the same issues emerge. To give a few examples:
The sampling framework used by EvD also allows EvD to provide a “report-card” on the Bank’s overall performance. This appears as the Annual Evaluation Overview Report which is fully disclosed on the web site. How does EvD evaluate sectoral policies and country strategies? In the last few years, EvD has also begun to undertake sector reviews. These are special studies that look back at the history of the Bank and its performance in a given sector and the results can be used to help develop new sector policies. For the 2006 Power and Energy Policy, EvD undertook sector reviews of the extractive industry sector and the power and energy sector. Both of these reports were published in full on the web site as part of the Bank’s public disclosure and consultation process, as defined in the Bank’s Public Information Policy. In 2007, EvD completed sector review of Agribusiness Sector. It has not been feasible to undertake similar reviews for country strategies, but each new strategy will incorporate a section on past experience. How does the EBRD’s Environmental Evaluator undertake a project evaluation? All evaluations start with the conditions established at the start of the project, based on the EBRD policies in place at that time, any additional environmental covenants included in the project, and relevant national and international laws and treaties. We focus on the success of implementation of the project. The evaluation process involves a review of project files and in almost all cases where we undertake an independent evaluation this will include a site visit by someone from EvD. On projects with a major environmental component, EvD sends a number of staff members on site visits, and on very large project evaluations, EvD may even hire additional technical, environmental and/or social experts to assist. Each evaluation is unique to the project, but in addition to meeting with the client, may also include visits to local municipalities, regulators, project stakeholders, and local or international NGOs when appropriate. These site visits, and the associated interviews with stakeholders, are extremely important in our understanding of the project and reaching and informed assessment of performance, transition impact, etc. EvD looks at a variety of indicators including fulfilment of objectives, transition impact, sound banking, additionality, environmental impact and bank handling. Environmental impact assesses the project performance against the relevant polices and laws and includes ecological, emissions, occupational health and safety and social parameters. EvD has two environmental indicators – Environmental Performance - which is a compliance measure of performance against standards at the time of the evaluation, and - Environmental Change - which is a measure of the change from the start of the project to the time of evaluation. All the indicators listed above are then combined to come up with an overall measure of project success. Cumulatively, through the end of 2007, the Bank’s overall project success rating is 58 per cent. Some 87 per cent of the projects receive a Satisfactory or better rating on Environmental Performance while 76 per cent are scored Some or better on Environmental Change. EvD’s overall assessment of the bank’s performance on environment is positive, which is reflective of the improving environmental conditions in the Bank’s countries of operation; however, there remain areas for improvement. Political counsellors and their role The EBRD has four political counsellors whose primary responsibility is to monitor compliance with the Bank's Article 1 mandate, analyse political developments in the countries of operations and advise the Bank's management. Alan Rousso, Director of Strategy and Analysis Unit, covers Russia, Ukraine. Oleg Levitin, senior political counsellor, covers central and south-eastern Europe and the Baltic states. Mahir Babayev, senior political counsellor, covers Azerbaijan, Georgia and Central Asia. Franklin Steves, political counsellor, covers Moldova, Belarus and Armenia. The counsellors provide regional and country-specific advice to the management and the Board of the Bank and draft new country strategies. How are EBRD country strategies being drafted and what do they involve? The political counsellors help the EBRD’s Board of Directors to decide whether countries are committed to and applying the principles of multiparty democracy and pluralism – in keeping with the Bank’s mandate. To prepare a detailed assessment, the counsellors conduct regular visits to the country, consult with experts and undertake additional research. Their full political assessment appears as an annex to the Country Strategy. It covers political accountability (including the conduct of elections, separation of powers, political competition, the development of a party system and the role of civil society), the rule of law (the independence and functioning of the judiciary, corruption and crime), civil and human rights (basic freedoms, including freedom of speech, religion, assembly and association) and external relations. The EBRD’s political counsellors are well-qualified to carry out this work, having lived and worked in the region for many years. They usually speak the local language and have a deep knowledge of the politics, society and culture of the countries they cover. Desk research In addition to visiting the country, the political counsellors conduct desk research. This involves locating and analysing the latest reports on elections, human rights developments, media issues and the rule of law from recognised international and national sources. These include:
Country Strategy missions In the run-up to a new country strategy, the political counsellors undertake a specific mission to the country, often with other senior Bank officials, to gather information and conduct policy dialogue with the country’s authorities. Over the course of several days, counsellors meet with the relevant government authorities, representatives of other IFIs and donor organisations, representatives of national and international NGOs, recognised experts from the policy community, diplomats and the media. Counsellors often travel to project sites and/or points outside the capital city. Political assessment The political assessment aims to be a fair and balanced representation of the country’s commitment to, and application of, the principles of multiparty democracy and pluralism in accordance with the Bank’s mandate. It reflects the latest information available from the range of sources described above. The counsellor uses his expertise to find the relevant information and to put it into perspective. Different sources inevitably offer different points of view. The counsellor’s role is to weigh up these differences and to provide a coherent and defensible assessment that can form the basis of consensus among the Bank’s management, the authorities from the country of operations and the Bank’s other shareholders.
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