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Social and Environmental Safeguards in International Development Finance
Case StudyPULP Mills in Fray Bentos - Uruguay
Presented by Center for Human Rights and Environment (CEDHA) - Argentina
Harvard Extension Program - June 19, 2007Jorge Daniel Taillant – [email protected]
Principal Proponents
• Companies - Botnia/ENCE• IFC• MIGA• Private Banks (ING / BBVA / Nordea / NIB)• Finnvera (Finnish Export Credit Agency)• Uruguayan Government
(National and Local)
Uruguayan Gov Netherlands
Spain
Key Source of Problem
• Environmental Impact Assessment Summary – Orion – April 20, 2005– Two Mills ENCE/Botnia measured separately– Incomplete EIAs and failed engagement generate speculation and mistrust– “Consultations indicate that the project enjoys broad public support”
Principal Oposition• Gualeguaychu Assembly (40,000 personas)
(Public/Business/NGOs)
• Select NGOs and Public in Uruguay • Argentine Government (National, Provincial and Municipal)• Uruguayan Prosecutor• Press• CEDHA
Gualeguaychu Assembly40,000 persons
Entre RíosGov
UruguayanNGOs
Argentine GovTaking to Bridge
A Few Questions to Answer
• What is the case about? Contamination? Business? Politics?
• Who governs the situation? (what rules?)
• Who is responsible?
• Where can we go with the case? (Media, Streets, Court, Government, World Bank)
• We chose Accountability thru Finance.
Definition of Accountability"Accountability is the means by which power is used responsibly"
This goes beyond an exclusive focus on the process of reporting upon - or accounting for - decisions and actions. Accountability also involves taking account of the needs, concerns, capacities and dispositions of affected parties, and explaining the meaning and implications of, and the reasons for, actions and decisions. Accountability is thus a measure of the quality of the relationship between an agent (a body offering a service or product) and a principal (the person or group for whom the service or product is intended). The more powerful the agent, the greater potential there is for abuse and exploitation of the principals. Accountability is the countervailing force which confronts power and ensures that it is exercised responsibly.
-Humanitarian Accountability Partnership
Possible Channels of Action
• CAO• Inter-American Commission of Human Rights• European Commission for Violations to
European Citizens• Spanish/Finish Courts (Finnvera - ECA)• Criminal Actions in Argentina against CEOs• International Court of Justice• Legal Action in Uruguay• Equator Bank Compliance Claim (to BBVA and ING)
• OECD Guidelines for Multinational Enterprises• UN Human Rights Norms for Transnational
Corporations• UN Global Compact• Generally on Corporate Social Responsibility
Commitments
Corte Internacional de
Justicia
Grounds of Action at CAO
• Violations to Environmental and Social Safeguards
• Violations to Disclosure Policy• Violations to International
Waterways Policy• Poor Stakeholder Consultation• Poor EIAs• Violations of International
Treaties
CAO Audit
Findings
• Complaint by 40,000 Stakeholders – “IFC’s due diligence to satisfy itself that the EAs
were complete in all material respects was inadequate and not incompliance with the organization’s Disclosure Policy” (CAO, Feb 22, 2006)
– Insufficient evidence that proper consultation has occurred
– No cumulative impact study; IFC Fosters Separation of Projects!
– Need to generate transboundary trust in Local Communities
– Botnia’s beginning construction undermines legitimacy
– Special Efforts must be made to legitimize future studies
– Must study impacts of eucalyptus tree farming on water
– Must examine International Law Obligations; MIGA says not needed!
– Establishes legitimacy of (Gualeguaychú Assembly)– IFC Fails to Give Clarity on how it will address Study
Flaws– “Further technical information and facts will not
be sufficient”
Grounds of Action at IAHRC (for Responsibility of Uruguayan Gov. To Project)
• Right to Life• Right to Physical Integrity• Rights of the Child• Judicial Process• Progressive Realization of ESCR• Right to Health• Right to a Healthy Environment• Access to Information• Access to Justice
We asked for Preventive Measures
Mixed Results• Withdrawal of One Pulp Mill• Withdrawal of One Major Financial Bank (480m)• Posibility New Compliance Procedure at Equator Banks• Debate Opening at OECD of Bank Liability to Guidelines• Improvement of Remaining Mill• 18 Month Delay Board Vote Date @ WB• Investigation process initiated at IAHRC• Greater Attention to Policy Procedures• Awareness Building /• Experience
What we discovered
• Finance Network is Precisely Crafted• Actors are far more related than they
seem• World Bank (through IFC) plays a critical
role in technical and financial legitimacy• Government and State Actors are far more
related than it seems• The network is self sustaining and
legitimizing
Exploratory StrategiesArticulation of Actions
IACHR Indep. Control Mechs
Social Movements
Human Rights
NGOs
Prvt Banks
IFIs
Safeguards
Others?
OECD -NCPs
CSR
Press
UN CAOWorld BankBoard
NationalGovernments
Companies