Environmental, social and human rights issues play an important role in the promotion of exports and trade.

ODL has established environmental and social guidelines for the selection of projects eligible for official support as well as a two-step process in the prevention of transactions involving bribery.

Environmental and social due diligence

Projects in the industrial sector may have consequences for the importing country’s inhabitants and the environment. In order to prevent and mitigate adverse environmental and social impacts of projects, ODL complies with the OECD guidelines on environmental and social due diligence for export credits.

Potential environmental impacts may include, but are not limited to, generation of significant air emissions, including greenhouse gas emissions, effluents, waste, hazardous waste, wastewater, noise and vibrations, significant use of natural resources, and impacts on endangered species.

Potential social impacts may include, but are not limited to, labour and working conditions, community health, safety, and security, land acquisition and involuntary resettlement, indigenous peoples, cultural heritage, and project-related human rights impacts, including forced labour, child labour, and life-threatening occupational health and safety situations.

Transactions to be assessed and policies issued for category A and B projects

Transactions under instruction

In accordance with the OECD Recommendation on Common Approaches, ODL publishes the list of environmentally and/or socially sensitive projects (category A) under consideration. Information is made public at least 30 days before final commitment, as well as accepted projects classified in category A and B.

Project Name Country Publication Date EIA Link
       

Policies emitted for category A and B projects

(*) Categories of amounts expressed in millions of euros:

Category

1
Up to 10,000,000 EUR
2
10,000,000 – 30,000,000 EUR
3
30,000,000 – 70,000,000 EUR
4
70,000,000 – 100,000,000 EUR
5
More than 100,000,000 EUR
Exporter Paul Wurth S.A.
Bank Consortium of banks including ING Bank NV, Seoul Branch which is our agent
Project Name Improvement of an existing steel plant in Dangjin-gun/Korea and convert it into an integrated steel plant
Country South Korea
Category* 3
Environmental classification A
Date of acceptance June 2008
Exporter Paul Wurth S.A.
Bank Consortium of banks including Deutsche Bank AG, London Branch which is our agent
Project Name Extension of a steel plant
Country Russia
Category* 5
Environmental classification B
Date of acceptance December 2009
Exporter Paul Wurth S.A.
Bank Consortium of banks including Natixis which is our agent
Project Name Extension and modernization of the steel plant located in Orissa
Country India
Category* 3
Environmental classification A
Date of acceptance February 2010
Exporter Paul Wurth S.A.
Bank Consortium of banks including Crédit Agricole CIB which is our agent
Project Name Extension of existing steel production facilities in Jamshedpur
Country India
Category* 3
Environmental classification B
Date of acceptance February 2010
Exporter Paul Wurth S.A.
Bank Consortium of banks including Landesbank Baden-Württemberg, Seoul Branch which is our agent
Project Name Extension of existing steel production facilities in Dangjin (phase III)
Country South Korea
Category* 2
Environmental classification A
Date of acceptance January 2012
Exporter Paul Wurth S.A.
Bank KfW Ipex Bank GmbH
Project Name Extension of existing steel production facilities in Orissa
Country India
Category* 4
Environmental classification A
Date of acceptance December 2013
Exporter Paul Wurth S.A.
Bank KfW Ipex Bank GmbH
Project Name Extension of existing steel production facilities in Orissa
Country India
Category* 2
Environmental classification A
Date of acceptance October 2015

Procedural guidelines

The environmental and social guidelines of ODL are based on the OECD Recommendation and are intended to set out the criteria used for the environmental and social due diligence of transactions evaluated by ODL. The guidelines identify the principal environmental and social impacts and define the requirements of ODL. The impacts identified will determine, in addition to the economic and financial aspects, the eligibility of the project for official support.

1. Screening

The screening procedure is based on the answers provided by the exporter and/or lender to the questions listed in the application form. The questionnaire is required for any request of official support.

ODL reserves the right to require the exporter and lender to provide additional information on a case by case basis for any project situated in an environmental sensitive area or sector or that may have negative social impacts.

2. Classification of the projects

Based on this first assessment, ODL proceeds to a temporary classification into category A, B or C established by the OECD.

  • Category A: a project is classified as Category A if it is likely to have significant adverse environmental and/or social impacts. These impacts may affect an area broader than the sites or facilities of the work area. Category A includes, in principle, projects located in sensitive sectors or located within or near sensitive areas. An indicative list of Category A projects is given in Appendix I. In category A, the impacts are often considerable and irreversible. For such projects, an Environmental and social Impact Assessment (ESIA) must be carried out. Besides, such an evaluation is frequently required by the host country.
  • Category B: a project is classified as Category B if its negative environmental and/or social effects are less severe than a Category A project. Generally, these effects are fewer, site-specific, rarely irreversible, and mitigation measures are easier to implement.
  • Category C: a project is classified as Category C if it is likely to have minimal or no environmental and/or social impacts.

3. Environmental and social review

ODL benchmarks the project environmental and social performance against international standards applicable to the project such as the ten safeguard policies of the World Bank, the eight performance standards of the International Finance Corporation, or any other relevant internationally recognized standard, such as the European Union standards which would be more restrictive.

All projects have to comply with host country standards.

If ODL deems it necessary, an independent expert is called upon to assess the potential environmental and social impacts. In addition, if there is a high likelihood of severe project-related human rights impacts, the environmental and social review of the project may need to be complemented by a specific human rights due diligence.

Where appropriate, ODL will assess the potential environmental and / or social impacts of any associated facilities and consider any statements or reports made publicly available by the National Contact Point (NCP) at the conclusion of a specific instance procedure under the OECD Guidelines for Multinational Enterprises.

4. Evaluation, decision and monitoring

The evaluation based on a complete ESIA may lead to 2 types of results:

  • The project can be supported but often the support is subject to conditions to be fulfilled before or after the final commitment. When the ESIA of a project indicates the need to put in place mitigation measures and, when ODL includes conditions in its insurance policy, a monitoring of the project is required, on at least an annual basis. Indeed, project monitoring ensures that obligations and commitments are effectively respected. The responsibility for monitoring usually lies with the project sponsor or independent consultants. In case project monitoring is required, ODL requires the exporter or lender to provide monitoring reports as regularly as possible. In case of non-compliance with the conditions of official support, ODL takes the appropriate measures to restore compliance with the conditions.
  • The project, as submitted, cannot be supported as the environmental and/or social impacts are not acceptable.

5. Disclosure

Taking into account the competitive context and constraints of business confidentiality, ODL publishes on its website:

  • Transactions under review (ex-ante disclosure)

For all category A projects the ESIA and /or other relevant information available as soon as possible during the project review process and at least 30 days before a final commitment to grant official support.

In case the information related to the project has not been made public due to exceptional circumstances, ODL must explain the circumstances and notify the OECD.

  • Policies issued (ex-post disclosure)

After final commitment to grant official support, ODL publishes all category A and B projects.

The list includes the exporter‘s name, the project description, the country of destination, the counterparty, the amount category, the environmental classification and an eventual electronic link to the ESIA.

See transactions under consideration and policies issued for category A and B projects.

6. Information sources

In principle, documents required for the assessment of environmental and social aspects must be submitted by the applicant (the exporter or the bank in case of financing). The earlier and more complete the transmitted information on the environmental and social impacts are, the sooner the request will be processed.

ODL will also take into account other available information; in particular reports of other credit insurers or financial institutions associated with the project, from Luxembourg embassies located in the host country, as well as relevant information of non-governmental organizations and media.

Fight against bribery

In accordance with the terms of the OECD Convention on combating bribery signed on 21 November 1997, Luxembourg has taken steps to criminally punish acts of bribery of foreign public officials, by implementing the OECD Anti-Bribery Convention into the Luxembourg law of 15 December 2001.

On 14 November 2006, the Working Party on Export Credits and Credit Guarantees of the OECD adopted a Recommendation aimed to strengthen measures to prevent bribery of foreign public officials. Further to this Recommendation, the Ducroire has developed an ethical Charter applicable to all transactions, be it for short-term or medium- and long-term export credits, and is committed in the fight against bribery by undertaking a due diligence in the award of official export credit support.

Thus, the insurance application form and the questionnaire for the allocation of financial support from the State inform the insured / applicant of the legislation in force and require an anti-bribery declaration as defined in the OECD Convention.

Guidelines

The Ducroire commits itself to combat bribery and to undertake enhanced due diligence in the treatment of a file:

  • if the exporter and, where appropriate, the applicant, appears on the publicly available debarment lists of one of the following international financial institutions: World Bank Group, African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development and the Inter-American Development Bank;
  • or if the Ducroire becomes aware that the exporter and, where appropriate, the applicant or anyone acting on their behalf in connection with the transaction, is currently prosecuted before a national court, or, during the five years preceding the application, was sentenced by a national court or has been subject to equivalent national administrative measures for violation of laws against bribery of foreign public officials of any country;
  • or if the Ducroire has reason to believe that bribery may be involved in the transaction.

If, before credit, cover or other support has been approved, there is credible evidence(1) that bribery was involved in the award or execution of the export contract, the Ducroire suspends the approval of the application during the enhanced due diligence process. If the enhanced due diligence concludes that bribery was involved in the transaction, the Ducroire will refuse to approve credit, cover or other support.

If, after credit, cover or other support has been approved, bribery has been proven, the Ducroire will take appropriate action, ranking from the nullity of the insurance contract with the denial of payment, indemnification, or refund of sums provided, to the exclusion of any future official support.


(1)As defined in the Anti-Bribery Convention of the OECD from 21 November 1997.

COMMITMENT REGARDING SUSTAINABLE LENDING

The ODL is committed to supporting only loans to low-income countries that promote the economic and social progress of a borrowing country without jeopardizing its financial future and long-term development prospects. As a result, these loans are expected to generate net positive economic benefits, promote sustainable development by avoiding unproductive expenditures, preserve debt sustainability, and promote good governance and transparency.

Thus, in order to support the Joint World Bank-IMF Debt Sustainability Framework for Low Income Countries which seeks to mobilise the financing of development needs of lower income countries while at the same time ensuring that that these countries do not build-up excessive debt in the future, ECG Members have since 2008 adhered to a set of Principles and Guidelines to promote sustainable lending practices in the provision of official export credits to lower income countries.

The Recommendation on Sustainable Lending Practices and Officially Supported Exports Credits was adopted by the Council meeting at Ministerial level on 30 May 2018.