The Organisation for Economic Co-operation and Development (OECD) notes that ‘export credit’ is an insurance, guarantee or financing arrangement which enables a foreign buyer of exported goods and/or services to defer payment over a period of time. Export credits are generally divided into short-term, medium-term (usually two to five years repayment) and long-term (usually over five years). Export Credit Agencies (ECAs) provide these financial services to companies that do business abroad, particularly for business activities in the Global South. Most Global North countries have at least one ECA, which is usually an official or quasi-official branch of their government.
Today, ECAs are collectively among the largest sources of public financial support for foreign corporate involvement in industrial projects in the Global South. For example, ECAs are estimated to support twice the amount of oil, gas and mining projects as do all Multilateral Development Banks such as the World Bank Group. They are thus extremely important sources of finance and insurance for the private sector. According to OECD data, in 2015 alone, ECAs in OECD member nations provided US$125 billion in credit, insurance, guarantees and interest support. ECA Watch has noted that as projects funded by ECA “are high risk due to their environmental, political, social and cultural impacts, most would not come to life without the support and financial backing of ECAs.” Therefore, as highlighted in the UN Guiding Principles on Business and Human Rights, Guiding Principle 4:
“States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence.”+ Read more
As highlighted in the Commentary to Guiding Principle 4 “[w]here States own or control business enterprises, they have greatest means within their powers to ensure that relevant policies, legislation and regulations regarding respect for human rights are implemented.” The Commentary to Guiding Principle 4 further highlights that:
“A range of agencies linked formally or informally to the State may provide support and services to business activities. These include export credit agencies, official investment insurance or guarantee agencies, development agencies and development finance institutions. Where these agencies do not explicitly consider the actual and potential adverse impacts on human rights of beneficiary enterprises, they put themselves at risk – in reputational, financial, political and potentially legal terms – for supporting any such harm, and they may add to the human rights challenges faced by the recipient State.
Given these risks, States should encourage and, where appropriate, require human rights due diligence by the agencies themselves and by those business enterprises or projects receiving their support. A requirement for human rights due diligence is most likely to be appropriate where the nature of business operations or operating contexts pose significant risk to human rights.”
The Committee on Economic, Social and Cultural Rights in its General comment No. 24 [page 14], also supports this approach by stating that:
“States parties should also consider the use of administrative sanctions to discourage conduct by business entities that leads, or may lead, to violations of the rights under the Covenant. Access to export credit and other forms of State support may also be denied in such circumstances, and in transnational contexts, investment treaties may deny protection to foreign investors of the other party that have engaged in conduct leading to a violation of Covenant rights.”
The 2016 OECD Common Approaches for Export Credit Agencies signed by all OECD member countries explicitly recognise the recommendations of the Guidelines, and provide that members should “promote awareness of OECD Guidelines for Multinational Enterprises among appropriate parties involved in applications for officially supported export credits as a tool for responsible business conduct in a global context.” Governments could also build in criteria associated with into bid evaluations for construction projects and public procurement criteria generally. Public finance institutions can build in conditionality measures associated with strong due diligence systems and standards into their financing terms.
Some States already take the opportunity to promote better conduct by making public support dependent on the potential recipient of support committing to respect international standards such as the OECD Guidelines for Multinational Enterprises (MNEs) or UNGPs. Examples of these are found in Norway and the Netherlands. In Norway, the Norwegian Export Credit Guarantee Agency (GIEK) “and Export Credit Norway (…) have established formal cooperation on [(Corporate Social Responsibility)] CSR. The cooperation includes human rights due diligence based on the expectations of export credit institutions set by the UN Guiding Principles, and is an integrated part of GIEK’s and Export Credit Norway’s loan and guarantee activities” [The Norwegian NAP, page 24]. In the Netherlands, under the “CSR policy on export credit insurance, both the government and companies are required to take responsibility for CSR. Companies using export credit insurance sign a declaration that they will seek to abide by the OECD Guidelines. The export credit agency Atradius DSB is responsible for carrying out a due diligence risk analysis of applications for insurance. The companies concerned are responsible for supplying the necessary information. If they are unable to do so, insurance will not be provided for the export transaction.” [The Dutch NAP, page 27].
According to EU Regulation 1233/2011, EU Member States must submit annual reports on the activities of their ECAs to the European Commission. Based on these activity reports, the Commission then submits to the European Parliament an annual review assessing ECAs compliance with the EU’s objectives and obligations, including the protection of the environment and respect for human rights.
Export credit relates to the following Sustainable Development Goals
17) Partnerships For The Goals
- ECA Watch website
- OECD – List of official ECAs
- OECD – ECAs at the OECD
- OECD – Sustainable Lending and Export Credits
- OECD Information on Category A and Category B Projects since 2005 (updated 16 December 2016).
- OECD Policies, practices and experiences with regard to addressing environmental and social issues: Environmental and Social Due Diligence – (updated 16 December 2016)
- The 2016 OECD Common Approaches for Export Credit Agencies
- Committee on Economic, Social and Cultural Rights, General comment No. 24 (2017) on State obligations under the International Covenant on Economic, Social and Cultural Rights in the context of business activities, E/C.12/GC/24, 10 August 2017
- Submission by Halifax Initiative: “Export Credit Agencies and the International Law of Human Rights”, Jan 2008
- Halifax Initiative, Both Ends, CounterCurrent, Fórum Suape and Ríos Vivos, Report: Export Credt and Human Rights: Failure to Protect., 2015
- Business & Human Rights Resource Centre – Export credit agencies
- EarthRights International, Export Credit Agencies and Human Rights Obligations, May 31,2006
- Shift Project, OECD Includes Human Rights Due Diligence in Recommendations for Export Credit Agencies, April 13, 2016
What National Action Plans say on Export credit
Action point 11
Ensure better coordination between federal and regional authorities in order to integrate human rights and social responsible entrepreneurship into public aid
Assurer une meilleure coordination entre les autorités fédérales et régionales afin d’intégrer des critères relatifs aux droits de l’Homme et l’entrepreneuriat socialement responsable dans les aides publiques
The NAP explains that Finexpo, an inter-ministerial consultative committee managed by the Administration of Foreign Affairs, studies the files of companies and/or banks requesting public support for an export credit and issues an opinion to the Council of Ministers, which takes the final decision on the granting of the aid. This state intervention allows Belgian companies to carry out projects in developing countries and thus contribute to growth in these countries. The action specifically involves:
“bringing together the various public services to exchange information at regular intervals. A common method for integrating the promotion of human rights and other aspects of social responsibility into the evaluation of applications will also be examined in this context. The method will be based on decisions taken in international fora (eg. OECD) on export credit.”
The NAP further states that:
“regarding Finexpo, it will be necessary to modify the official questionnaire… in order to introduce references to the promotion of human rights, and to corporate social responsibilities that go beyond issues on the environmental impact, which are already included in the questionnaire. These references will be based on decisions taken in international fora (eg OECD) on export credit.”
Action point 20
Promote state enterprises that are socially responsible
This point briefly mentions the issue of export credits in a citation of the Guiding Principle 4:
“States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence.”
Pillar 1: The State Duty to Protect Human Rights
Strand 1: Training in the Field of Business and Human Rights
Action point 1.1 (pages 29-30)
The Ministry of Foreign Affairs will:
- The General Directorate of International Economic Relations (DIRECON), will, Carry out internal actions to promote knowledge around business and human rights with the purpose that staff working in this Directorate take these criteria into account when developing their activities.
- DIRECON will periodically report to the Trade Offices and Regional Offices of the Exports Promotion Directorate (ProChile) about business and human rights.
Pillar 2: The Corporate Responsibility to Respect Human Rights
Strand 2: Promotion of Corporate Due Diligence in the Field of Human Rights
Action Point 2.1 (pages 54-55)
The Ministry of Foreign Affairs, through the General Directorate of International Economic Relations, will:
- Promote human rights in the management of public funds to promote exports carried out by ProChile, through the progressive incorporation of analysis mechanisms helping to ensure that business enterprises having access to the tools offered by this entity respect human rights. Likewise, it will establish, if relevant, requirements about sustainability and respect for human rights, as criteria to choose the business enterprises participating in programmes to promote exports and corporate activities, including SMEs and micro SMEs.
- Disclose to business enterprises who are members of ProChile the United Nations Guiding Principles, thus helping, in this was and as far as possible, to incorporate them in their activities. It will do this through information available in the website, talks or sets of tools to strengthen their capabilities, and/or through the publication of handbooks containing the Guiding Principles or another suitable instrument, with special focus on information and training provided to SMEs.
- Action point 2.4 (p. 13):
“The Ministry of Commerce, Industry and Tourism and its entities will determine the requirements regarding sustainability and respect for human rights as the criteria to select the enterprises to participate in their business activity encouragement programs, including the SME and micro SME (to this end, they will follw the OECD Recommendations for export credit entities: http://www.oecd.org/tad/xcred/oecd-recommendations.htm)”
State aid, guarantees and subsidies [page 25]
“Implements Principles 4 and 7
The Czech Republic supports exporters via the export bank Česká exportní banka, a.s. (CEB) and the export guarantee and insurance corporation Exportní garanční a pojišťovací společnost, a.s. (EGAP). The state has a duty to make sure that this support does not foster violations of human rights.
On 1 January 2004, the ECD Recommendation on Common Approaches on the Environment and Officially Supported Export Credits entered into force. That Recommendation includes a commitment by all Member States not to assist – through their institutions – environmentally harmful projects. In June 2012, the OECD Council adopted the Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence, which expands and reinforces the original provisions on the environmental and social aspects of officially supported exports. The new Recommendation establishes simpler, more readily accessible procedure for the categorisation of projects according to their environmental and social impact in the countries where they are to be implemented. The main change is the greater stress on the social impacts of projects and the aspects thereof that have a bearing on human rights in the countries of implementation.
Current state of play:
- In its activities, EGAP abides by the Recommendation of the OECD Council on officially supported export credits.
- CEB and EGAP are subject to the European Union’s sanctioning regimes. State aid will not be granted if it is to be directed towards states or individuals who have been sanctioned by the European Union.
- Aid applicants must submit a detailed environmental impact assessment for a selected export where CEB- and EGAP-backed projects have a larger-scale environmental and social impact.
- Where possible, in subsidy agreements take account of social, environmental and other non-financial indicators and requirements concerning the beneficiary and the beneficiary’s subcontractors.
Coordinator: All ministries concerned
State Duty to Protect
2.3 Actions Taken
Companies that receive susbstantial support and services from State agencies [page 13]
“The Environmental & Social Due Diligence Policy of the Danish Export Credit Agency (EKF) states that EKF is committed to implementing the UN Guiding Principles on Businesses and Human Rights (GP 4).
Since 2007 Denmark has worked actively in the OECD to ensure that export credit agencies have a common approach for evaluating human and labour rights as well as the protection of the environment (GP 10). …
When Danida under the Ministry of Foreign Affairs signs contracts with companies, it is a requirement that companies live up to Danida’s anti-corruption policy and to the UN Global Compact. A description of the applicant’s approach to quality assurance and how it will comply with Danida’s anti-corruption code of conduct and the principles of the UN Global Compact during implementation are requested from pre-qualified tenderers and form part of the tender evaluation.”
Promoting shared understanding and international cooperation on UNGPs [page 15]
“Denmark continues to work actively to ensure consistency between the different policies in the OECD including in the area of export credits.”
Appendix 1, GP 2 continued
Status in Denmark (initiatives implemented before the UN ratification of the Guiding Principles) [page 25]
“Denmark works to ensure that companies involved in Danish development cooperation respect human rights and act responsibly within the areas of workers’ rights, human rights, environment and anti-corruption within the framework of ILO conventions, UN Global Compact, the OECD guidelines for multinational enterprises and work towards implementing the UN Guiding Principles on Business and Human Rights.”
Initiatives taken or planned as a dedicated measure to implement the UNGPs (after the UN ratification of the Guiding Principles) [page 25]
“Together with other OECD members, Denmark has worked to ensure that project-related social and human rights impacts are included in the OECD Common Approaches, and also that relevant elements from the UNGPs and Human Rights become part of the way export credit agencies demonstrate due diligence. Furthermore, the revised Common Approaches now ensure policy coherence with the OECD Multinational Guidelines.”
Appendix 1, GP 4
State Duty to Protect [page 28]
“States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence.”
Status in Denmark (initiatives implemented before the UN ratification of the Guiding Principles) [page 28]
“In 2008 the state financing fund, Vækstfonden, has committed to adhere to the UN Principles for Responsible Investment (PRI). The Export Credit Agency (EKF), the Investment Fund for Developing Countries (IFU) and Investment Fund for Central and Eastern Europe) (IØ) has committed to join the UN Global Compact.
EKF’s Environmental & Social Due Diligence Policy states that EKF is committed to implementing the UN Guiding Principles on Businesses and Human Rights. EKF has also committed to the Equator Principles. These are binding international standards and frameworks for project funding. This ensures that private institutions and banks assess the environmental and social responsibility through a common set of guidelines. EKF works to promote the Equator Principles internationally, especially to institutions in the BRIC countries (Brazil, Russia, India and China). EKF uses International Finance Corporations (IFC) Performances Standards when rating a project which EKF participates in. The IFC Performances Standards mainly covers labor rights but human rights are also covered.
IFU’s overall objective is to promote sustainable economic growth, economic development and a more equitable distribution of income by co-financing private sector investment in developing countries. IFU’s investments in projects should contribute to job creation, good governance, respect for the environmental, higher social standards and community development. IFU has joined the UN Global Compact and is committed to promoting these principles in its investments. Furthermore, IFU’s CSR policy is based on UN, ILO and OECD international conventions and declarations. By promoting these, IFU wishes to contribute to the achievement of the UN 2015 Millennium Development Goals. When conducting due diligence IFU uses the Global Compact SelfAssessment tool, which contains a robust assessment of human rights conditions.
As part of the approval process, Danida Business Finance analyses potential human rights related risks including local legislation and policies and other CSR issues. Access to finance is based on buyer’s and exporter’s compliance with ILO principles on human and workers’ rights. When Danida signs contracts with companies, it is a requirement that companies live up to Danida’s anti-corruption policy and to the UN Global Compact. A description of the applicant’s approach to quality assurance and how it will comply with Danida’s anti-corruption code of conduct and the principles of the UN Global Compact during implementation are requested from pre-qualified tenderers and form part of the tender evaluation.”
Initiatives taken or planned as a dedicated measure to implement the UNGPs (after the UN ratification of the Guiding Principles) [page 28]
“The Danish Export Credit Agency (EKF) has a CSR policy which includes taking into account social, economic and environmental issues.
Companies involved in Danida Business Partnerships are required to integrate CSR strategically in their business operations and to demonstrate CSR due diligence in order to prevent and mitigate adverse impact of business activities.”
Appendix 1, GP 7
Status in Denmark (initiatives implemented before the UN ratification of the Guiding Principles) [page 28]
“Danida Business Partnerships provides financial support for the implementation of CSR partnerships and CSR initiatives in a range of Denmark’s partner countries. As part of the approval process, Danida Business Finance analyses potential human rights related risks including local legislation and policies and other CSR issues. Access to finance is based on buyer’s and exporter’s compliance with ILO principles on human and workers’ rights.
Besides following the government regulations with respect to export promotion, trade policy and political imposed trade sanctions and export controls, the EKF has initiated the development of a model that provides an overview of the business risks that could potentially be related to human rights, labour rights, environment and climate in the countries where EKF is investing. EKF is screening the companies involved in the EKF’s transactions. There has not been any cases involving human rights issues.”
1 The state obligation to protect human rights
1.3 Activities in the EU [page 21-22]
PUBLIC FINANCIAL INSTITUTIONS AND FINANCIAL INSTRUMENTS RELATED TO DEVELOPMENT COOPERATION
“The publication of the UN principles and the update of the OECD Guidelines for Multinational Enterprises in 2011 have had the effect in public export credits of increasing the amount of attention being paid to the impact on human rights in the projects guaranteed. Finland’s official export guarantee company, Finnvera, uses policies updated on 1 January 2013 for evaluating the environmental and social effects of projects. When granting export credit guarantees and confirming export credit guarantee conditions, the environmental and social impacts of the project in question are taken into consideration as part of the project’s total risk assessment. The development of Finnvera’s environmental and social impact assessment is continuing in accordance with the OECD Common Approaches agreement. As with other public export credit companies, Finnvera also reports on its progress at the expert meetings related to the OECD agreement.
In autumn 2011, Finnfund and twenty-four other providers of development funds signed the principles of good governance and guidelines on how the providers of development funds attempt to promote good governance in the companies funded and thereby support the sustainable economic development of developing countries. In addition, the activities of Finnfund itself and of the companies it funds should be both environmentally and socially sustainable. The same principles of responsibility apply to the activities of both Finnfund and Finnpartnership alike.
In its final report in February 2014, a development group established by the Ministry for Foreign Affairs and the Ministry of Employment and the Economy suggested that a development innovation programme be established alongside the current financial instruments and support services. The programme is intended to compile the monitoring services for know-how and markets both in Finland and in developing countries; to produce support and development services for operators; and to enable a programme of flexible funding through the programme’s own fund. The programme will be launched in 2014.
As a follow-up measure, the working group proposes that
- a regular dialogue be maintained with public financial institutions on the UN principles, the OECD Guidelines and other guidelines.
Principal responsible parties: Ministry for Foreign Affairs and Ministry of Employment and the Economy, continuous activities.
- in conjunction with companies and non-governmental organisations, the potential for new cooperation initiatives in the field of development cooperation funding be examined. The work carried out in the framework of the development group is used and human rights are emphasised in the new programme for business activities in developing countries that is currently being prepared, and similarly, in the Finnpartnership programme.
Principal responsible party: Ministry for Foreign Affairs, schedule 2014 to 2016.”
I – The State’s Obligation to Protect Human Rights
The National Framework
13. The Role of Public Agencies (pg 27)
The NAP recalls the CNCDH’s 2013 recommendation regarding France’s export credit agency COFACE, namely the establishment of human rights due diligence procedures including exhaustive human rights impact assessments, better transparency and information, and better civil society and affected stakeholders participation. It also recalls the CSR Platform’s recommendation for the development agency AFD and the export credit agency COFACE to reinforce their due diligence procedures and to establish grievance mechanisms.
Compagnie Française d’Assurance pour le Commerce Extérieur (COFACE) [page 28]
The French export credit agency COFACE, which provides guarantees on behalf of the State, systematically applies the Recommendations of the OECD Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “Common Approaches”), most recently negotiated in 2012 by the OECD Export Credits Group. These recommendations cover all types of credit insurance transactions with a repayment term of more than two years, and require reasonable due diligence to be undertaken to ensure that each project complies with host country regulations and the international standards of the World Bank and International Finance Corporation (IFC). The Common Approaches establish strict common standards for OECD countries, and are more ambitious than the UN Guiding Principles as they require detailed due diligence determining project impacts on human rights. They also provide for the quarterly publication of a list of projects guaranteed for more than €10 million, and the publication of data on highimpact projects on the websites of credit agencies one month prior to transactions taking place. Discussions with civil society are held regularly at the OECD. Detailed impact assessments must be completed before COFACE awards government guarantees to projects likely to have major impacts on CSR (pollution, population movements, etc.), especially human rights. The inter-ministerial guarantee commission based at the Ministry of the Economy and Finance, which authorizes COFACE to allocate public funding on behalf of the State, also examines these requirements. Impact assessments are published on COFACE’s government guarantees website, and COFACE may request to visit industrial sites while carrying out due diligence or during the guarantee period. These analyses generally result in the inclusion of specific suspensive conditions (financial covenants) and detailed action plans to manage human rights impacts during the credit period. The OECD Common Approaches only apply to credit insurance transactions of more than two years. Businesses that request government guarantees from COFACE are systematically given information on the OECD Guidelines. When applying for credit insurance, businesses must confirm they have read and understood the OECD Guidelines.
A group of technical experts from export credit agencies has been mandated by the OECD Export Credits Group to work on the implementation of the Common Approaches, particularly in the field of human rights.
The Agence Française de Développement (AFD) [page 28-29]
Regarding the development agency AFD, the NAP recalls the 7 July 2014 law on orientation and programming related to development and international solidarity policies, through which “development and international solidarity policies must integrate the social and environmental responsibility of public and private actors”, and “the AFD integrates societal responsibilities in its governance and actions”. The AFD also issues a yearly “organization social responsibility” report which covers human rights issues in accordance with ISO26000, and has established a list of exclusions which prohibits the funding of projects implying forced labour, child labour, grave environmental damage, destruction of cultural heritage, diffusion of discriminatory or anti-democratic messages and diamond mining activities conducted outside of the Kimberley Protocol. Diligence obligations and mandatory respect of ILO Core Conventions are integrated to financing agreements, and social risks are assessed in light of internationally recognized human rights standards. The AFD established a social responsibility action plan for 2014-2016, aiming to strengthen transparency, stakeholder consultations and the publication of project informations, among other . For high risk projects, the AFD demands that developers set up a grievance mechanisms, and the AFD and Proparco (a subsidiary of AFD devoted to private sector funding) are developing a grievance mechanism for social and environmental complaints. The AFD is strengthening CSR requirements in public works contracts, and has reinforced its rules and procedures to assess social and environmental impacts of each projects by aligning it to the World Bank’s safeguards. Finally the NAP indicates that article 5, part 3 of the 7 July 2014 law on orientation and programming related to development and international solidarity policies regarding financial transparency country by country is currently not being applied in France.
Actions Underway [page 30]
- COFACE Government Guarantees and the Ministry of the Economy and Finance are currently examining whether to implement an IT module widening the scope of checks, to highlight at-risk industries or countries in the short, medium and long term. This would make it possible to check compliance with the UN Guiding Principles by reviewing all credit insurance operations and assessing human rights risks.
- COFACE is continuing efforts to make information on reasonable due diligence in the social and environmental fields (which include human rights) visible and accessible on its website.
- When evaluating extractive industry projects, the AFD ensures that funding recipients comply with the Extractive Industries Transparency Initiative (EITI),
without excluding those who respect EITI standards but are not based in EITI countries.
- The AFD supports the implementation of universal social protection and the promotion of initiatives to develop decent work (the creation of decent jobs, skills upgrading, training and the transition towards sustainable employment) in accordance with the AFD’s partnership with the International Labour Office and the priority areas in the ILO-France partnership agreement.
- The AFD has implemented a grievance management mechanism to deal with environmental and social complaints.
- The AFD is reinforcing CSR and human rights criteria in 80% of pending public works contracts with high social and environmental impacts.
- The AFD is working to reduce gender inequality in AFD-funded operations.
- The AFD is reinforcing the human rights focus of social clauses.
- The AFD seeks to ensure that this policy regarding “non-cooperative jurisdictions” is respected.
Actions to be implemented:
- Allocate the resources necessary to raise business awareness of the OECD Guidelines in AFD- and COFACE-funded operations.
- Make AFD funding for businesses conditional on implementing or undertaking to implement non-financial reporting and a CSR due diligence plan for projects, or on the enforcement of host country or international standards.
There is no mention of export credit in the Business and Human Rights Chapter of the Georgian Human Rights NAP.
The German NAP contains a specific sub-section on export credit:
1.3 State support
Export credits, investment guarantees and other instruments for the promotion of external trade [page 23-25]
“The instruments of external-trade promotion in Germany provide assistance for German enterprises in accessing and safeguarding foreign markets. The range of instruments includes the provision of advice by German diplomatic and consular missions, the network of German Chambers of Commerce Abroad and the Germany Trade & Invest (GTAI) agency. The Federal Government also supports participation in trade fairs abroad, arranges visits by delegations and funds hedging instruments such as export credit guarantees, known as Hermes guarantees, to insure export transactions, federal guarantees for direct investments abroad (DIAs) and untied loan guarantees as insurance for banks against the risk of default.”
The current situation
The processing of export credit guarantees, DIA guarantees and untied loan guarantees is undertaken on behalf of the Federal Government by the mandated companies Euler Hermes and PwC. Respect for human rights is already an element in the assessment of applications. Where there is reason to do so, environmental and social aspects as well as human rights considerations are closely examined.
How closely depends on the potential impact of the project. The minimum requirement for the assumption of a guarantee is compliance with the national standards of the target country. Projects with a considerable impact on human rights are subjected to a more thorough examination.
In the case of projects falling within the scope of the OECD Common Approaches and for investment guarantees with far-reaching environmental, social and human rights implications, compliance with international standards such as those of the World Bank Group, particularly its sectoral Environmental, Health and Safety Guidelines, is required in addition. In projects with such implications, compliance with these standards must be checked and confirmed by an independent assessor. The decision to give a guarantee is taken jointly in the competent interdepartmental committees by the Federal Ministry of Economic Affairs and Energy, the Federal Ministry of Finance, the Federal Foreign Office and the Federal Ministry for Economic Cooperation and Development. Depending on the environmental, social and human rights relevance of a given project, enterprises may have to routinely report on the progress of the project as well as on the human-rights situation. If it receives complaints, the Federal Government may require remedial action.”
- “The Federal Government will ensure that human rights, which have hitherto been an element of the environmental and social impact assessment, are given more specific consideration and a higher profile in assessment procedures. It will measure the existing assessment procedures against the requirements set out in chapter III above and make adjustments where necessary. One particular priority will be measures for better identification of risks to human rights as part of the assessment process.
- Better information and greater transparency will serve to draw corporate attention, as early as during the initiation stage of projects, to the great importance attached to human rights due diligence and to the OECD Guidelines. In particular, the Federal Government will extend its support for the affected enterprises in the form of information material.
- In addition, it is planned to introduce human rights due diligence reports into the assessment procedures of the insurance instruments for foreign trade in cases where there is a high probability of serious implications for human rights.
- The National Contact Points for the OECD Guidelines (see subsection 4.2 below) will be upgraded to become the central grievance mechanism for external trade promotion projects.
The detailed procedure for assessing applications for the provision of export credit guarantees, guarantees for direct investments abroad and untied loan guarantees will be further reinforced as regards respect for human rights; this will entail measuring the procedure against the specific requirements set out in the NAP. To this aim, human rights will be treated as a separate point in future project assessments. The aim is to ensure that enterprises which avail themselves of foreign-trade promotion instruments exercise due diligence. In particular, this includes participation in grievance proceedings initiated against them before the German National Contact Point for the OECD Guidelines for Multinational Enterprises.”
The Irish NAP makes no direct reference to Export Credit.
The State-business nexus
…Export Credit Agencies and Investment Insurance Agencies (ECAs) provide government-backed loans, insurance and guarantees to support business enterprises industrial projects abroad, especially with regard to complex and risky environment. The strategic role of these public agencies (SACE and SIMEST) make them more exposed to the risk of being associated or linked with human rights infringement: they both apply the OECD Recommendation on Common Approaches and Environmental Due Diligence and conduct risk analysis on environmental and social impact in their operations.
The Lithuanian NAP makes no reference to export credit.
The Luxembourg NAP does not make an explicit reference to Export Credit.
3.3 Clarifying due diligence
Due diligence by government [page 27]
“A point raised in the consultations was that the government should also apply due diligence to its own activities, for example in providing support for companies in the form of grants or other types of finance for activities abroad, export credit insurance and trade missions. In all these cases, the government requires the companies concerned to apply due diligence.
For some time now the government has applied ICSR [International Corporate Social Responsibility] frameworks for risk assessment (due diligence) to all applications for support. These frameworks differ, depending on the goals and the nature of the instrument in question. For example, the ICSR framework for trade missions differs from the frameworks for project grants or export credit insurance. Assessment is based on the risk profile of the project or instrument, so that high-risk projects are subject to more thorough assessment than projects with fewer risks.
Companies should always take responsibility for their activities and the ICSR assessment frameworks provide guidance in this respect. Participation in a voluntary CSR agreement will of course help companies wanting support from the government to fulfil the requirements set out in the frameworks.”
ICSR in relation to export credit insurance [page 27-28]
“Under CSR policy on export credit insurance, both the government and companies are required to take responsibility for CSR. Companies using export credit insurance sign a declaration that they will seek to abide by the OECD Guidelines. The export credit agency Atradius DSB is responsible for carrying out a due diligence risk analysis of applications for insurance. The companies concerned are responsible for supplying the necessary information. If they are unable to do so, insurance will not be provided for the export transaction.
International agreements on the due diligence procedure for export credit insurance are set out in the OECD’s common approaches for export credit agencies. The common approaches apply to all OECD member states and, in terms of assessment of environmental and social impact, safeguard a level playing field between the member states’ export credit agencies. In the context of the common approaches, the OECD member states represented in the Export Credit Group have agreed that projects with potential adverse environmental and social impacts will always be screened for compliance with the IFC Performance Standards. The OECD Export Credit Group, in which all member states with export credit facilities are represented, is working on a strategy for assessing project-related human rights. The Netherlands plays an active part in this group, which is responsible for improving risk assessment.”
2.3 State ownership and practice for supporting the business sector
Principle 4 concerns the business activities of stateowned enterprises and enterprises that receive economic support or other services from state agencies:
4. States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence.
Conditions for government support for business promotion and private sector development section, [page 23]:
“The state is responsible for exercising due diligence when it provides significant economic support or other types of benefits to the business sector. This particularly affects the Norwegian Export Credit Guarantee Agency (GIEK), Export Credit Norway, Innovation Norway, Norad and the Foreign Service. The expectation that companies will observe a high standard of CSR reduces the risk that those that receive credit, loans or other financial support fail to respond correctly in difficult situations, which would affect Norway’s credibility and reputation as well as that of the company concerned. Responsible business conduct also constitutes a competitive advantage.”
Due diligence by GIEK, Export Credit Norway and Innovation Norway [page 24]:
GIEK and Export Credit Norway often provide financing for the same projects, and have established formal cooperation on CSR. The cooperation includes human rights due diligence based on the expectations of export credit institutions set by the UN Guiding Principles, and is an integrated part of GIEK’s and Export Credit Norway’s loan and guarantee activities.
Pillar II: The corporate responsibility to respect human rights
6. UN Guiding Principles in the operations of the Export Credit Insurance Corporation [page 32]
“The Export Credit Insurance Corporation (KUKE) draws upon the UN Guiding Principles on Business and Human Rights in the course of the environmental procedure related to credit insurance and export contracts guaranteed by the State Treasury. The procedure following the current OECD Recommendation published as TAD/ECG(2012)5 of 28 June 2012 and adapted to Resolution No 2/2013 of the Export Insurance Policy Committee of 6 February 2013 takes into account broader human rights issues, including the UN Guiding Principles. The issue of respecting human rights in the operation of export credit agencies was raised both in the work on the 2012 Recommendation (modification of the 2007 document) and during several years of its revision, culminating in the adoption of the current version by the OECD Council on 6 April 2016. The current version of the Recommendation, officially published on 3 April 2016 (TAD/ECG (2016) 3) takes greater account of the requirements for respecting human rights in a procedure known as due diligence in the social and environmental aspects, e.g., in the classification of export undertakings and risk assessment. The implementation of the assumptions of the UN Guiding Principles in light of the Recommendation is based on the Corporation’s gradually acquired experience in the application of appropriate methods of assessment of human rights in individual importing countries. An exchange of experience with the cooperating institutions and as part of the Export Credit Group is a great help.”
Principle 4 – Businesses receiving State support
Slovenia is bound by OECD recommendations requiring that decisions on officially supported export credits are based on the common principles for addressing environmental and social requirements for the export of capital, goods and services to certain locations. These recommendations are aimed at promoting policy coherence of OECD member countries for officially supported export credits relating to the environment, climate change, social and human rights, obligations to respect relevant international agreements and conventions and to contribute to sustainable development. (pg. 24)
The Slovene Export and Development Bank (SID Bank) is guided by the concept of responsible lending and implements the OECD policy on sustainable lending for export credit guarantees. (pg. 25)
South Korea’s NAP makes no reference to export credit.
Guiding Principle 4
“… Spain supports the OECD Council Recommendation on common approaches for export credits which benefit from official support and social and environmental due diligence.”
“Within one year after the approval of this Plan, a Working Group will be created within the framework of the Strategic Plan for the Internationalization of the Spanish Economy, which will develop a specific Action Plan to examine the coherence of policies to support business internationalization, and its alignment with the Guiding Principles. The Working Group, which will present its conclusions to the Government, will study how cooperation for development, official credit agencies, export credit and official insurance or investment guarantee agencies of all administrations are able to condition, modulate or revise its support for investment based on the exercise of the responsibility to respect human rights by the beneficiary companies, both inside and outside of Spanish territory.”
The Government will support the inclusion of human rights considerations in financial institutions for regional and international development.
Annex: Measures taken [page 22-24]
The State as actor
- “Like other state-owned companies, Swedfund International AB (Swedfund) and the Swedish Export Credit Corporation (SEK) are required to comply with the government state ownership policy for CSR, as described above. Moreover, Swedfund and SEK have social mandates specially adopted by the Riksdag. Swedfund is required to ensure that its investments comply with international standards and CSR principles, within clear and sound corporate structures that do not contribute to tax evasion, money laundering or terrorist financing. SEK is required to take account of conditions such as the environment, corruption, human rights and working conditions in its credit assessments.”
Action by government agencies
- “The Swedish Export Credits Guarantee Board (EKN) has been instructed in its appropriation directions to pursue continuous development of its work on human rights, working conditions, the environment, corruption and internet freedom, based on OECD recommendations in these areas (‘Common Approaches’ and ‘Bribery and Officially Supported Export Credits’). EKN also has instructions to ensure that its activities comply with, and information has been provided about, the OECD Guidelines for Multinational Enterprises, the principles of the UN Global Compact and the UN Guiding Principles on Business and Human Rights.”
Annex: Measures planned [page 28]
How can the State support the business sector?
- “Based on the human rights clauses in the policy instruments governing the Swedish Export Credits Guarantee Board, the Swedish Export Credit Corporation, Swedfund and other relevant state actors regarding their human rights work, continuous reviews are conducted to assess whether further improvements are needed.”
2 National Action Plan on Business and Human Rights 2020-23
2.1 Pillar 1: state duty to protect
2.1.3 The State-business nexus
Guiding Principles 4 to 5
Measure 10: Human rights due diligence by business enterprises covered by Swiss Export Risk Insurance (SERV) and supported by Switzerland Global Enterprise (S-GE)
The OECD Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence is constantly being updated and developed. Switzerland contributes to this process. The guidelines are intended, among other things, to provide greater protection against business-related human rights abuses, and they are widely recognised as constituting an international standard by export credit agencies and export risk insurance providers.
The SERV Ordinance (as amended) expressly requires insurance applicants to disclose human rights-related information. Unlike many other export credit agencies, SERV does not grant export credits, i.e. engage in direct lending, but solely provides insurance and guarantees, i.e. pure cover. SERV does not provide cover or accept liability in respect of claims relating to projects that do not meet international human rights standards because of the insured party’s activities.
Switzerland Global Enterprise (S-GE) works on behalf of the federal government and the Swiss cantons to promote exports and attract companies to Switzerland. It helps companies exploit new international markets, thus promoting Switzerland’s as a business location. S-GE has a Code of Conduct28 which is intended to ensure that its staff are not implicated in human rights abuses by Swiss companies. If S-GE determines that a company has committed a human rights abuse, it will decline the mandate in question.
|A rights-aware approach in all export promotion activities.||Human rights due diligence by SERV (source: report to Federal Council on the achievement of strategic objectives). Verification of compliance with Code of Conduct (source: S-GE monitoring report submitted to the EAER).||
EAER [Federal Department of Economic Affairs, Education and Research]
3. The core content of the National Action Plan on Business and Human Rights
3.2 Action plan for community, land, natural resources and the environment
3.2.3 Action Plan (2019–2022)
Pillar 3: Duties of the state and the business sector to provide remedy (Remedy)
|Responsible agencies||Time-frame (2019–2022)||Indicators (wide frame)||Compliance with National Strategy/ SDGs/UNGPs|
|4.||Financial aid||Study the guidelines for establishing a Hedge ECA for people who suffer from business operations||– Ministry of Natural Resources and Environment
– Ministry of Industry
|2019–2022||Studied guidelines for establishing a Hedge Fund for people who suffered from business operations||– National Strategy for Eco-Friendly Development and Growth
– SDG 11 and 16
– UNGPs Articles 24, 25, 26, 27, 28, 29 and 31
The UK 2013 NAP notes in relation to Actions Taken that [page 10]:
“To give effect to the UN Guiding Principles, we have: … (iii) negotiated and agreed the OECD 2012 Common Approaches, including a requirement for Export Credit Agencies (ECAs) to take into account not only potential environmental impacts but also social impacts, which is defined to include “relevant adverse project-related human rights impacts.” The OECD 2012 Common Approaches also require ECAs to “consider any statements or reports made publicly available by their National Contact Points (NCPs) at the conclusion of a specific instance procedure under the OECD Guidelines for Multinational Enterprises.” UK Export Finance will consider any negative final NCP statements a company has received in respect of its human rights record when considering a project for export credit.”
The UK 2016 Updated NAP makes a reference to export credit in the Actions taken section [page 8]:
“To give effect to the UN Guiding Principles, the Government has … implemented the requirements of the OECD 2012 Common Approaches, and considered relevant adverse project-related human rights impacts in providing applicable Export Credit Agency (ECA) support through UK Export Finance (UKEF). UKEF will consider any reports made publicly available by the UK National Contact Point (NCP) in respect of the human rights record of a company when considering a project for export credit. The UK has been involved with the discussions, and negotiations, on the implementation of the OECD 2012 Common Approaches and the need to amend this, in respect of ongoing experience on project-related human rights. The UK continues to be involved in negotiations on any agreed clarifications to the OECD 2012 Common Approaches.”
Outcome 1.4: Conducting Due Diligence in U.S. Development Funding and Trade Finance
“Enhancing Overseas Private Investment Corporation (OPIC) and Export-Import Bank of the United States (EXIM) Standards: OPIC and EXIM will enhance existing procedures and standards that require companies receiving their support to implement RBC principles. OPIC is reviewing its Environmental and Social Policy Statement, while EXIM has developed an improved mechanism for interested parties to provide comments, complaints, or suggestions on the environmental and social consequences of its pending and currently approved transactions, including reviewing ways to improve the new portal for online submission.” – Implementing Department or Agency: OPIC, EXIM