What's At Stake
Communities worldwide have become alarmed about the negative impacts of global finance institutions like the World Bank on the environment and human rights. But other secretive government bodies such as the Export Credit Agencies (ECAs) have as big, if not bigger, impacts. ECAs for the most part have no developmental mandate or obligations, yet they finance projects that can create great environmental and social harm and they account for one of the single biggest sources of debt in the developing world.
What are Export Credit Agencies?
Export credit agencies, commonly known as ECAs, are public agencies and entities that provide government-backed loans, guarantees, and insurance to corporations from their home country to do business oversees, including in developing countries, emerging markets and middle income countries. Most industrialized nations have one ECA. Today, ECAs are collectively among the largest sources of public financial support for foreign corporate involvement in industrial projects in the less wealthy countries. In the last fifteen years ECAs have dramatically increased their support for resource extraction and energy projects, providing far more financing for these harmful projects than all other public banks combines (including the World Bank Group). Many of these projects have very serious environmental and social impacts. For example, ECAs finance greenhouse gas-emitting power plants, large scale dams, mining projects, road development in pristine tropical forests, oil pipelines, chemical and industrial facilities, forestry and plantation schemes, to name a few. ECAs often back such projects even though the World Bank Group and other multilateral banks find them too risky and potentially harmful to support.
In recent years ECAs are estimated to have supported over $100 billion annually in what are called "medium and long-term transactions," a great portion of which are large energy and infrastructure projects in developing countries, emerging markets and middle-income countries. Because most of these projects 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. Hence, ECAs are strategic linchpins that play an enormous part in the harmful impacts of corporate globalization. Pacific Environment believes that these public banks therefore have a public duty to ensure that this financing does not result in harmful impacts to the environment and, moreover, should be directed to support environmentally and socially desirable uses such as renewable energy and end-use energy efficiency.
To date, over 90% of Ex-Im Bank's energy portfolio is based on fossil fuels, and a series of politically-motivated decisions to fund high-carbon projects puts Ex-Im even further out of step with the U.S. Administration's pledges to promote clean energy jobs and tackle climate change.Pacific Environment has worked for over a decade to reform key international finance institutions such as the U.S. Export Import Bank and Overseas Private Investment Corporation to preserve and protect our natural environment than undermine it.