Ahead of the European Investment Bank’s board of directors meeting next Tuesday (15 October), it’s likely the bank’s green energy push will be a key topic of discussion.
In 2023, the Bank invested €49bn in the “green transition,” and has publicly called itself a “climate bank” that plans even more ambitious investments in this space in the coming years.
Before these efforts move forward however, the bank must take an honest look at its own troubling history on renewable energy projects — specifically, the projects it has funded that have harmed environments and communities, which have largely gone unaddressed.
Indeed, EIB has invested in a string of problematic hydropower projects, for which it neglected to adequately identify potential negative impacts of projects before they break ground, or invest in viable solutions to problems as they arise.
For instance, indigenous community members in Tanahu District in Nepal who live near the EIB-backed Tanahu hydropower project sent a complaint to the bank in 2020 raising a range of issues around the project, including its failure to provide a land for land compensation for impacted indigenous community members, lack of meaningful consultation with community members around project details, and negative impacts on cultural sites.
Four years later, the mediation process has ended with no agreement and the investigation into the compliance of the project has been initiated, and the EIB has yet to provide a remedy — or even commit to doing so — for any of these issues.
The EIB also has a worrying pattern of continuing to fund projects even when they are found non-compliant with its own social and environmental standards.
An example of this disappointing trend – which we are familiar with through our groundwork between Accountability Counsel and Lawyers’ Association for Human Rights of Nepalese Indigenous Peoples – is the Nepal Power System Expansion which incorporates the construction of 220 kV Marsyangdi Corridor transmission line in the Lamjung district of Nepal.
Underway since 2015, this project has been funded by the EIB and the Asian Development Bank and implemented by the state-owned Nepal Electricity Authority (NEA).
The project has posed a range of unaddressed harms to the local and indigenous communities living along the Marsyangdi River, including violating their right to Free, Prior, and Informed Consent (FPIC), damages to local rivers and mountain ecosystem, and driving communities displacement from their homes and ancestral land, for which they have still not received adequate compensation.
The EIB Complaints Mechanism verified the harms and recommended the Bank to address non-compliance, but three years later, the affected communities continue to live with uncertainty of their future as their concerns have not yet been addressed.
Though the community has finally convinced the NEA to come to the negotiating table, the EIB has been conspicuously absent from these critical discussions, despite multiple efforts to encourage the Bank to engage and allocate resources to resolve the ongoing disputes.
This is a serious issue. The EIB is responsible for addressing all non-compliance issues found in its investigation, yet is missing a prime opportunity to act. The bank must ensure the NEA, their client, upholds their policies and standards around their investments.
If the bank does not take up the opportunity to right the wrongs of the past six years and ensure an ongoing dialogue between the NEA and the community reaches a constructive agreement, the bank is neglecting its obligations and commitments to provide remedies when their projects cause, contribute to, or are directly linked with human rights abuses.
We support the dialogue between the NEA and community members as a viable way to address ongoing disputes and concerns around the projects.
But the EIB too must be involved in these conversations so that it can properly exert its influence over its client to ensure that the NEA upholds and implements its commitments to community members impacted by the transmission line project. Failure to do so, the EIB is robbing the community’s opportunity to access to remedy and justice.
Not only is there a worrying track record of EIB climate finance projects causing harm, but it’s arguably even more disturbing that the EIB historically has often not done enough to provide or facilitate remedy to local and indigenous communities who have been negatively impacted by them.
If the bank wants to be more involved in the green and renewable energy solutions, it is imperative for it to course correct. If a green-focused project causes environmental and social harms — in this case to communities' livelihoods, health and safety — it arguably offsets any good that it’s trying to do in the first place.
As the EIB and its board of directors talk about moving ahead on climate finance in the coming weeks, we urge them to first reflect and correct its practice.
Unless the bank takes accountability for where its past renewable energy projects have missed the mark — and moves forward in a way that fully respects human rights of indigenous peoples and protects our ecosystem, which is instrumental to our survival — its future climate finance pushes have no hope of being truly successful.
Sutharee Wannasiri is communities associate with Accountability Counsel. Durga Mani Rai works for Lawyers’ Association for Human Rights of Nepalese Indigenous Peoples.
Sutharee Wannasiri is communities associate with Accountability Counsel. Durga Mani Rai works for Lawyers’ Association for Human Rights of Nepalese Indigenous Peoples.