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Intl. Financial Institutions continue investing in socially and environmentally controversial projects, says new research; incl. IFIs comments

The research “The Impact of International Financial Institutions on the Environment and Socio-Economics: The Cases from Armenia and the World” by Sofia Manukyan, a researcher, human rights defender & environmentalist, alleges International Financial Institutions (IFIs) continue investing in projects that are problematic from the perspective of overall wellbeing and environmental protection.

The Business and Human Rights Resource Centre has invited all IFIs mentioned in the research to respond. Asian Development Bank, European Investment Bank, KfW Development Bank & Sberbank responded.  Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, International Finance Corporation, Korea Development Bank & World Bank did not respond.

Materials with full information and the IFIs' responses & non-responses are below.

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21 July 2020

The Impact of International Financial Institutions on the Environment and Socio-Economics: The Cases from Armenia and the World

: Sofia Manukyan

...[R]ich countries, corporations and big financial institutions, such as World Bank and its International Finance Corporation, European, Russian, Asian and other development banks continue investing in programs in different countries, especially in energy sector, which are problematic from the perspective of overall wellbeing and environmental protection. Therefore the goal of this research is to

 study energy investments of financial institutions and the harms caused to the environment,

 study the outcomes of such investments on the socio-economic situation of the locals this way understanding the link between unsustainable projects and the socio-economic situation of communities based on examples from the world and Armenia,

 present the clash of these investments with human rights,

 suggest policy recommendations to the state and investors which will not contradict with the obligations of the state in the sphere of environmental, socio-economic and human rights protection...

[refers to Asian Development Bank, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, European Investment Bank, International Finance Corporation, KfW Development Bank, Korea Development Bank, Sberbank, World Bank]

Read the full post here

20 July 2020

Asia Infrastructure and Investment Bank did not respond

20 July 2020

European Bank for Reconstruction and Development did not respond

20 July 2020

International Finance Corporation did not respond

20 July 2020

Korea Development Bank did not respond

20 July 2020

Response by Asian Development Bank

: Asian Development Bank

ADB welcomes monitoring and research into our policies and operations, and values such inputs from our stakeholders. We encourage open dialogue during the preparation of such studies to ensure timely identification and understanding of issues, particularly those affecting local communities, and to ensure accuracy of information.

Our Armenia Resident Mission (ARRM) in Yerevan would welcome the opportunity to meet with the Open Society Foundations Armenia to discuss their observations. If this is of interest please let me know and I can connect you with relevant parties.

Download the full document here

20 July 2020

Response by European Investment Bank

: European Investment Bank

...The EIB welcomes constructive comments from interested stakeholders regarding its projects and activities, and appreciates the opportunity to comment on your report. We regret however not having been contacted prior to the publication of this report, which may have avoided some misleading statements and outdated information. 

We would first like to inform you that, contrary to what is stated in your message, the EIB has not been involved in the financing of the Amulsar gold mine in Armenia. Similarly, the EIB loan for the Nenskra hydropower plant in Georgia has not been signed and there is currently no EIB financing in place for this project. Information on the status of the EIB loan for this project, together with environmental and social documents related to the project, are published on the EIB website.

With regard to the Yerevan Solid Waste Project, for a total cost of EUR 28.4m, this project has undergone a stringent and comprehensive appraisal to ensure all applicable standards and criteria are fully respected...

Download the full document here

20 July 2020

Response by KfW Development Bank

: KfW Development Bank

KfW support to renewable energy projects: Renewable energies, including hydro power, are a central component of German Development Cooperation which supports its partner countries in providing people with sustainable access to energy and in adopting climate-friendly approaches. KfW Development Bank promotes the expansion of renewable energy world-wide and supports its partners in setting up clean and sustainable energy provision systems...

KfW support to Small-hydro power plants, Armenia: KfW is aware of the general concern over the environmental issues related to the small hydropower sector, therefore KfW has arranged additional measures to minimise the risk of negative impacts on the environment. Particularly, a strategic cooperation with WWF to exclude controversial SHPPs in Armenia has been established. Certain projects in risky areas are excluded from the eligible list.

KfW support to Vorotan Cascade, Armenia: Vorotan Cascade, consisting of 3 hydro plants which supply 20% of Armenia’s energy was built between 1970 and1989. The plant saves around 540.000 tons of CO2 per year. Since the construction of the Vorotan cascade, the operator lacked the capacity for rehabilitation measures. As a result, the three plants were in need of repair and could not produce optimal output for current or future energy needs. 

KfW was asked to provide a loan to the Armenian government for rehabilitation and modernisation of the power plant...An Environmental and Social Impact Assessment (ESIA) with an Environmental and Social Management Plan (ESMP) were developed and an additional ecological specialist study is currently underway. The implementation of the ESMP is closely monitored and reported upon. The rehabilitation of the Vorotan Cascade is on-going since autumn 2017 and will be finalized in the first half of 2021.

Download the full document here

Company response
20 July 2020

Response by Sberbank

: Sberbank

Sberbank is not a shareholder of this company. We do not provide further comments on this topic.

20 July 2020

World Bank did not respond