Outside European Bank for Reconstruction and Development offices in Yerevan, Armenia yesterday, local environmental group Teghut Defence rallied and requested the bank not to go ahead with a 10 million dollar loan to VTB Bank Armenia. While the loan in question is designated for small and medium enterprises, VTB Bank is elsewhere involved in financing the notorious Teghut copper mining project and the Teghut Defence Group believes that any loan from the EBRD will effectively support VTB’s poor corporate standards.
The case illustrates one of the problems with EBRD lending to financial institutions. While provisions of the bank’s Environmental and Social Policy are applicable to the specific investment in a particular financial intermediary – and these are essentially national legal standards - the same policy provisions do not extend further across the intermediary’s portfolio, creating a situation of policy inconsistency and hypocrisy.
So for example a credit to a bank for financing energy efficiency measures in local businesses has to adhere to the EBRD’s lending standards in that credit line, but is free to invest in other climate-damaging or other environmentally problematic projects using non-EBRD money.
If the EBRD truly wants to promote sustainable development across its activities, it needs to apply more stringent criteria when selecting potential financial institution recipients and apply its standards consistently across its intermediaries’ whole portfolios.
http://www.bankwatch.org/newsroom/highlights.shtml?x=2256196
