About Us

ODL’s ESG procedure OECD Recommendation on Common Approaches OECD Recommendation on Bribery OECD Recommendation on Sustainable Lending Practices

ODL is committed to implementing the climate policy and goals set out at the Paris Climate Conference. This means that achieving net-zero greenhouse gas emissions by 2050 will be the norm and a condition for our insurance and financial aid products.

In order to uphold responsible and sustainable business practices, which respect the environment, human rights, and contribute to the fight against corruption, money laundering and the financing of terrorism, ODL also supports:

  • United Nations Sustainable Development Goals, especially goal 9, 14 and 15;
  • Multilateral environmental standard and agreements, including the European Green Deal
  • The OECD Guidelines for Multinational Enterprises
  • World Bank Safeguard policies and IFC performance standards
  • The Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (SFRD)
  • The Directive 2013/34/EU of the European Parliament on the disclosure of non-financial and diversity information by certain large undertakings and groups
  • The Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (Taxonomy)
  • The Guidelines regarding the disclosure of sustainability reports by the businesses (CSRD)
  • The environmental and social goals and commitments of the Luxemburgish Government

In addition to the OECD Recommendation of the Council on Common Approaches for Officially Supported Export Credits and environmental and social due diligence, the Revised Recommendation of the Council on Bribery and Officially Supported Export Credits and the Recommendation on Sustainable Lending Practices and Officially Supported Export Credits, ODL has adopted in April 2022 an ESG procedure, in cooperation with its traditional client base. This procedure is applicable to all insurance and financial support applicants, as well as insurance requests taking into consideration governance, environmental and social criteria, and sustainable financing. The procedure is reviewed on an annual basis and will gradually reduce greenhouse gas emissions within the projects ODL supports.

Although ODL has never supported the fossil fuel energy sector in the past, we added the exclusion of the support of the fossil fuel energy sector to the Procedure to underline that ODL supports the goals outlined in the Council Conclusions on export credits approved on 15 March 2022. In line with these conclusions, ODL will not provide support to :

  • New Coal-fired power-plant
  • The supply of equipment to existing coal-fired power plants
  • Exploration and operation of new coal mines, new oil fields or new gas fields
  • Expansion of existing oil or gas fields or coals mines
  • Exploration, production, transportation, storage, refining and distribution of crude oil, natural gas and coal and unabated power generation.

For the time being, ODL may still cover applications that have an indirect link to the fossil fuel sector in limited and clearly defined circumstances that are consistent with the goals of the Paris Agreement such as:

  • Activities or sectors that use fossil fuels for production, including but not limited to heavy industry with need for high temperature (e.g. cement and steel production) or the transport sector;
  • The maintenance or other services intended to ensure the continued safe operation of installations or infrastructure of fossil fuels , thus maintenance dredging works that are essential in keeping the ports and their access channels safe and navigable.
  • Infrastructure works, such as the construction or improvement of a road network that will not be used exclusively for the fossil fuel energy sector

 

The National Institute for Sustainable Development and Corporate Social Responsibility (INDR) promotes CSR and offers full support to companies. As a centre of expertise, it undertakes a normative role, distributes knowledge on CSR and collaborates with the main players in sustainable development. Link :  https://indr.lu/fr.

ODL’s ESG procedure

The new internal procedure regarding ESG includes an analysis at two levels:

  • Pre evaluation of each insurance / financial support applicant and of all parties involved with the help of an ESG form, which is to be completed by the company
  • Pre evaluation of each insurance request for which the amount of the contract exceeds 5 million euros and which does not fall within the scope of the OECD Common Approaches. The procedure based on the Common Approaches applies to any insurance request for single-risk export insurance for an amount equal to or above 10 million SDR and with a repayment period of more than 2 years.

By ESG, ODL designates environmental, social and good governance criteria used to analyse and assess the degree to which sustainable development issues are taken into account. In order to complement the assessment, ODL has decided to include the fight against corruption, money laundering and financing of terrorism in its definition of governance.

Classification of parties and transactions concerning governance matters:

  • Green: no negative information on governance issues
  • Yellow: PEP located in an OECD country or limited/insignificant information on governance issues older than 5 years
  • Orange: PEP located in a non-OECD country or recent limited/insignificant negative information on governance issues
  • Red: Serious negative information on governance issues such as suspicions that the transaction could be tainted by corruption, money or capital laundering, or financing of terrorism, or that a party involved is on a debarment list (financial sanctions) or has been convicted of breaching bribery laws.

Classification of parties and transaction concerning social and environmental matters:

  • Green: projects that contribute positively to the environment or that do not cause any harm to the environment (including existing projects that do not increase plant capacities or do not weaken the environmental and social footprint of the plant; that are not located in or near sensitive areas or sensitive sectors) and that do not have a negative social impact
  • Yellow: projects that risk having a limited negative environmental and/or social impact
  • Orange: projects that have a limited negative environmental and/or social impact
  • Red: projects with a negative environmental and/or social impact

If after the approval of cover, any breaches in ESG are detected, ODL will take appropriate measures ranging from the nullity of the insurance policy, in particular by refusing payment or indemnification or by requesting a reimbursement of the sums already paid, to future exclusion of any form of public support.

OECD Recommendation on Common Approaches

The OECD Recommendation on Common Approaches applies for single-risk export insurance applications with a contract amount above 10 million SDR and a repayment term of more than 2 years.

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.

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.

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.

In addition to categories A, B and C, ODL has introduced a category E for “existing operations”. This category is assigned to supplies and services for existing plants which do not involve any substantial changes in capacity and function nor any substantial environmental or social impacts. Projects in Category E will be subject to a summary environmental and / or social impact 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.

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.

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.

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.

Forms

OECD Recommendation on 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.

The members of the Working Party on Export Credits and Credit Guarantees of the OECD adopted a revised Recommendation in 2019 aimed to strengthen measures to prevent bribery of foreign public officials. ODL has incorporated this recommendation into its EGS procedure.

The procedure is applicable to all transactions, whether for the short term or the medium and long term. Thus, the application forms for insurance and financial support for export inform the insured or applicant of the legislation in force and require a declaration of non-involvement in acts of corruption as defined in the OECD Convention.

Guidelines

ODL is committed to the fight against bribery and applies increased vigilance by carrying out in-depth checks in the processing of a file:

  • if the exporter or anyone acting on their behalf 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 ODL 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 ODL has reason to believe that bribery may be involved in the transaction.

If, before approval of the 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, ODL 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, ODL will refuse any form of public support.

If, after approval of the cover or other support, bribery is proven, ODL will take appropriate measures, ranging from the nullity of the insurance contract in particular by refusing payment, indemnification, or by requesting refund of the sums paid, to the exclusion of any future official support.

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

Documentation

OECD Recommendation on Sustainable Lending Practices

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.