The Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence was adopted by the OECD Council on 28 June 2012; a revised text was subsequently adopted by the OECD Council on 6 April 2016.
The 2012 Recommendation improved in many ways the previous 2007 Recommendation, for example, by:
- providing more clarity for export credit agencies and customers, by re-structuring the provisions of the Recommendation, adding a new definitions section, and clarifying the scope of the Recommendation to align it better with the Arrangement on Officially Supported Export Credits;
- promoting coherence with related international instruments, by including provisions relating to the OECD Guidelines for Multinational Enterprises, incorporating the 2012 IFC Performance Standards as the reference standards for certain projects, and clarifying the use of other international standards and sources of guidance;
- addressing potential environmental impacts and potential social impacts equally throughout the Recommendation and explicitly including project related human rights impacts within the definition of social impacts;
- including greenhouse gas emissions within the examples of potential environmental impacts and incorporating provisions for reporting to the ECG both of projected annual emissions from projects where above 25 000 tonnes CO2-equivalent and of any actions taken to avoid, minimise and/or offset CO2 emissions for all new high carbon intensity fossil fuel power projects; and
- enhancing the provisions relating to exchanging information with other financial institutions and encouraging the use of international standards and adherence to the Recommendation by non Members.
At the same time, in recognition that certain issues needed further consideration, the 2012 Recommendation contained provisions for further technical work on the application of the Recommendation, in particular relating to greenhouse gas accounting and reporting, support for thermal and nuclear power plants, and addressing project-related human rights impacts. This technical work was undertaken by the environmental and social specialists from Members’ export credit agencies and reported to the OECD Working Group on Export Credits and Credit Guarantees (ECG).
In 2015, the ECG agreed that a thorough review of the 2012 Recommendation was not necessary, given Members’ limited implementation experience, but that some of its elements should be revised. The OECD Council concurred and, on 6 April 2016, adopted a revised text for the 2012 Recommendation. The main revisions relate to:
- Complementing the World Bank Safeguard Policies to ensure an adequate coverage of certain potential social impacts
- Supplementing the international standards and sources of guidance referenced for nuclear power plants and for projects with potential animal welfare issues
- Clarifying that the World Bank Safeguard Policies and IFC Performance Standards are those currently applicable in 2016 and that all other international standards and sources of guidance used for benchmarking projects are those applicable at the time of the due diligence.
Project-related human rights impacts
- Screening all applications to identify whether or not there may be a high likelihood of severe project-related human rights impacts occurring; where such impacts are identified, applications should be assessed or reviewed irrespective of the Member’s share in the overall project and, where appropriate, the subsequent review should be complemented by specific human rights due diligence
Greenhouse gas reporting
- Reporting to the ECG the estimated annual greenhouse gas emissions from (i) all fossil fuel power plants and (ii) all other projects, where such emissions are projected to be in excess of 25 000 tonnes CO2-equivalent annually and where the applicant or project sponsor has provided the necessary information; in this context, some optimal calculation parameters, as also adopted by other international financial institutions, for reporting such emissions have been included
Improving common practices
- Including a definition of “final commitment” and clarifying the purpose of the ex ante disclosure provisions for Category A projects of the 2012 Recommendation
- Encouraging Members to exchange information and provide consistent reports when several Members are involved in supporting exports to the same project
- Updating the provisions on the body of experience on the application of the 2012 Recommendation, so that relevant technical work may continue concerning both how ECAs are applying its provisions and what other international developments may need to be taken into account in the future
- Adopting the new OECD terminology by replacing “Members” with “Adherents” to signal that non-Members may adhere to the 2012 Recommendation.
The full text of the Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “Common Approaches”) is available on the OECD website.
Governments provide official export credits, through Export Credit Agencies (ECAs), to support national exporters competing for overseas sales. Most official export credit support involves insurance or guarantee cover for credits provided by private financial institutions. ECAs can be government institutions or private companies operating on behalf of government.
The ECG Members are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States.