Environmental Audit Committee




The Environmental Audit Committee publishes its Seventh Report of Session 2002-03 today, The Export Credits Guarantee Department and Sustainable Development.  

Export credit agencies have huge potential to be a strong and dynamic force for sustainable development across the globe.  

John Horam MP, Chairman of the cross-party Committee at the time the Report was agreed, said:

"… despite a commitment to take sustainable development into account in considering applications for support, there has been little noticeable change in the balance of ECGD's portfolio, which remains dominated by projects in unsustainable sectors".

He added that

"We are pleased that ECGD has made some progress in incorporating sustainable development criteria into the assessment of some of the applications for support it receives, and welcome its policy of constructive engagement with its clients,  but we are at a loss to understand why applications relating to aerospace projects should be exempt from impact screening procedures.  The Government and ECGD must now  work together to ensure that the UK provides strong leadership to the international community of export credit agencies".

The Committee's report examines the extent to which ECGD's portfolio and operations reflect the Government's commitment to environmental protection and sustainable development and the extent to which ECGD's revised mission statement and the development of its Business Principles have led to changes in the ways in which ECGD incorporates sustainable development considerations.

The Committee made a number of recommendations and conclusions including:

The balance of ECGD's portfolio, with over half in aerospace and defence, has remained the same despite the introduction of its Business Principles and case impact screening procedures.

We recommend that ECGD ensure that the sustainable development impact screening performed by the DTI's Export Control Organisation for sharp-arms defence exports is at least as rigorous as those which it uses for civil projects.

We recommend that ECGD bring all aerospace-related applications within its impact screening processes.  (Paragraph 23) We recommend that ECGD adopt a clear predisposition to disclosure of information relating to the projects it supports, especially information regarding social and environmental impacts.

We endorse ECGD's policy of constructive engagement and its attempts to improve the quality of the projects it supports.

We recommend that ECGD should develop its capacity to support environmental exports further and should explore the possibilities of offering extended terms of finance and other incentives such as fast-track processing.

There is no circumstance under which it would be acceptable for ECGD, using taxpayers money, to support projects which exploit children or employ bonded or forced labour.  We were therefore pleased to receive a further note from ECGD assuring us that "it is the Department's policy not to provide support for any project that involves the use of bonded or forced labour. The policy statement in the guidance notes for the impact questionnaire will be amended to provide greater clarity on this point". We look forward to receiving copies of the amended text. We recommend that a similarly categorical statement is made in respect of child labour and the guidance notes suitably amended.

We recommend that in future, applications for support for projects in IDA-only countries are accepted only when they meet at least two of the debt sustainability criteria.

We recommend that ECGD treat obtaining unanimity as a priority during the negotiations on revisions to the Common Approaches; and we further recommend that the Government take a leadership role in reaching international consensus to ensure that common environmental criteria are a key component of all decisions relating to the granting of export credits guarantees.