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30 October, 2006
Neo-conservative Paul Wolfowitz, President of the World Bank, issued sharp criticism at China last week for the way in which the country runs its investment projects in developing countries. According to Wolfowitz, Chinese banks should stop their current practice of ignoring workers and human rights when investing abroad.
A key point in Wolfowitz’s assertion was the fact that Chinese banks fail to adhere to the international Equator Principles.
Earlier this year, dozens of commercial banks and lenders signed up to a revised version of the Equator Principles. These principles are a voluntary benchmark for the financial industry, consisting, among other things, of a set of environmental and social standards that should be met by banks when they fund global projects. To date, some 80% of all commercial banks have adopted the guidelines.
Trade unionists everywhere might take an interest in this, since the Equator Principles are partially based on the social and environmental loan conditions of the International Finance Corporation (IFC), the World Bank’s lending arm for the private sector. Cause for some optimism is that the IFC, earlier this year, also adopted a new of social standards. These new IFC standards now include a commitment to respect all ILO's core labour standards, including the right to freedom of association and collective bargaining.
When all is tallied, this means that a majority of the world’s operating banks, of whom many are involved in mining, oil, gas or other extraction projects in developing countries, have now declared, albeit voluntarily, to demand the respect for the core ILO standards in their projects.
Reg Green, ICEM’s Health,
Safety and Environment Officer
In reacting to a Financial Times article on this subject, Reg Green, ICEM’s Health, Safety and Environment Officer, wrote in a letter-to-the-editor that the World Bank’s quest for further endorsements of the Equator Principles a sound idea. However, in addition to endorsing the principles, he said that countries could, and should, go a step further.
Green wrote, “The single most important asset that African countries currently possess is their mineral wealth. It is also well known that where mineral wealth is concerned there are major temptations to corruption.”
Green said more African countries would do well to commit themselves to the Extractive Industries Transparency Initiative (EITI) principles, an international effort to “improve governance in resource-rich countries through the full publication and verification of company payments and government revenues from oil, gas and mining.” ICEM has been supportive of the EITI initiative. In his Financial Times letter, Green describes the EITI as a promising development, even though it is still very young.
Finally, and ironically, the World Bank, which criticises Chinese banks for not abiding by the Equator Principles and the ILO standards, recently issued a highly-circulated publication entitled “Doing Business,” which encourages violation of a number of ILO Conventions by countries in order to make their economies more "investment friendly."
For more information:
EITI : http://www.eitransparency.org
Equator Principles: http://www.equator-principles.com
IFC adopting ILO standards:
http://www.icftu.org/displaydocument.asp?Index=991223448&Language=EN