The European Bank for Reconstruction and Development (EBRD) should improve its biodiversity standard, as recent changes to its environmental policy are not sufficient to ensure the bank does not finance nature-damaging projects, a campaign group has said.
Prague-based CEE Bankwatch released recommendations to strengthen safeguards on nature under the bank’s Environmental and Social Policy (ESP), including introducing no-go-areas for project financing and ruling out offsetting.
The policy, which is undergoing revision, consists of a set of commitments from EBRD, followed by 10 requirements that its clients must meet, ranging from working conditions to biodiversity conservation.
“The draft 2024 EBRD ESP overall contains clearer language than the 2019 one and brings improvements in some standards, for example with regard to the need for the bank to better analyse country governance contexts when appraising projects,” said CEE Bankwatch.
However, the biodiversity standard contains almost no changes and does not take into account any of the proposals submitted by the group, according to the report.
CEE Bankwatch urged EBRD to replace ‘no net loss’ with ‘no loss of biodiversity’ as the main objective of the standard, as well as expand the list of species that trigger a critical habitat assessment to include near-threatened and vulnerable species.
“Ensuring whole ecosystem integrity, especially for transboundary ecosystems, should be a key principle in financiers’ institutional policies,” said CEE Bankwatch.
“Financial institutions should require funding proposals and assessments to evaluate cumulative, ecosystem-wide impacts prior to awarding financing, and prohibit financing to activities which seriously and negatively impact ecosystem integrity.”
“LACK OF EVIDENCE”
The group called for introducing no-go areas, whereby financing would not be authorised for projects in areas such as UNESCO sites, free-flowing rivers, primary and old-growth forests, Key Biodiversity Areas (KBAs), Ramsar sites, and at-risk marine or coastal ecosystems.
As well, it said EBRD should exclude biodiversity offsets, currently allowed under the bank’s policy as a final resort to mitigate impacts on nature that cannot be avoided or minimised.
“Public banks and financial institutions should focus on protecting biodiversity and ecosystem viability instead of betting on compensation while contributing to habitat destruction,” said the recommendation.
“There remains a critical lack of sound evidence that offsets and compensation can prevent biodiversity loss. The experience of using these mechanisms at different multilateral development banks (MDBs) has also been unsuccessful all around the world.”
Over the last two years, some MDBs have taken steps to limit or even rule out financing to projects that include offsetting.
For example, in its latest biodiversity standard, approved in 2022, the European Investment Bank (EIB) closed the door on biodiversity offsets, deciding not to allow for compensation in critical habitats or areas of high biodiversity value.
Yet, a study published last year in the Conservation Biology journal found that most MDBs, including the African Development Bank and the Asian Development Bank, have failed to set out robust requirements on offsetting.
By Sergio Colombo – sergio@carbon-pulse.com
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