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Tuesday, 10 May 2011
Page: 2206

Export Finance and Insurance Corporation

(Question No. 351)


Senator Ludlam asked the Minister representing the Minister for Trade, upon notice, on 13 December 2010:

With reference to the current environment policy and reporting procedures of the Export Finance and Insurance Corporation (EFIC), and drawing on examples of the export credit agencies operating in Canada, the United States of America (US) and Japan:

(1) In terms of establishing international benchmarks for the practice of export credit agencies and their environment policies, is it fair to compare EFIC to other export credit agencies such as Export Development Canada (EDC), Export-Import Bank of the United States (Ex-Im Bank) and the Japan Bank for International Cooperation (JBIC); if not, why not.

(2) Has EFIC adopted an environment policy that is consistent or comparative with the environment policies adopted by EDC, Ex-Im Bank and JBIC.

(3) Is EFIC complying with industry best practice; if so, can a copy of its guidelines, policies or standards outlining industry best practice be provided.

(4) Given that the EDC's implementation and compliance with its Environmental Review Directive is reviewed every 5 years by the Auditor General of Canada: (a) has EFIC's implementation and compliance with its environment policy been independently reviewed and audited by the Australian Auditor-General or an independent third party in the past 5 years; and (b) is there anything in the Export Finance and Insurance Corporation Act 1991 (the Act) that prevents the Australian Auditor-General performing this audit.

(5) Can the Minister confirm that the export credit agencies Ex-Im Bank and JBIC disclose monthly summaries of the minutes of meetings of the Board of Directors, in addition to media releases published, in order to provide a level of public accountability and to keep domestic stakeholders up to date with transactions.

(6) Does EFIC disclose summaries of its Board minutes to the Australian public; if not, is there anything in the Act that prevents EFIC from disclosing these summaries to the Australian public.

(7) Given that the Canadian export credit agency, EDC, has at least one corporate social responsibility (CSR) representative on the Board of Directors, does EFIC have a CSR representative/expert on their Board; if not, is there anything in the Act that prevents the appointment of a CSR representative/expert to the EFIC Board.

(8) With reference to the JBIC and Ex-Im Bank process, where, after receiving submissions on Category A projects, a summary of their benchmarking against International Finance Corporation Performance Standards is published to demonstrate compliance and transparency to domestic stakeholders: (a) how many Category A projects did EFIC disclose in the 2009-10 financial year; (b) does EFIC respond to public submissions on Category A projects beyond a letter of acknowledgement; if not, is there anything in the Act that prevents EFIC from responding to the substance contained in public submissions; and (c) does EFIC publish summaries of project benchmarking; if not, is there anything in the Act that prevents EFIC from disclosing summaries of project benchmarking.


Senator Conroy: The Minister for Trade has provided the following answer to the honourable senator's question:

(1) The Organisation for Economic Co-operation and Development (OECD) export credit agencies (ECAs) have agreed that they will use a common approach for addressing environmental issues relating to officially supported export credits. The agreement is referred to as the OECD Common Approaches. As a result, all OECD ECAs (including EFIC, EDC, Ex-Im Bank and JBIC) apply the same standard for transactions involving officially supported export credits.

However, a number of ECAs provide products and services beyond officially supported export credits that are appropriate to their Government mandate. As an example, US Ex-Im's mandate is largely focussed on the provision of export credits, whilst, in addition to export credits, JBIC provides a broader range of products in fulfilling a development and strategic acquisition role for Japan. EDC in Canada has a very broad mandate and operates more closely to a commercial bank.

Accordingly, the environmental policies of ECAs may need to cover both export credits and other types of business. The variations in mandate and differences in environment policies make direct comparisons somewhat difficult.

(2) As indicated in the response to question 1 it is difficult to directly compare EFIC's Environment Policy with the environmental policies of other ECAs. Some points of difference may further illustrate this:

EFIC has adopted the International Finance Corporation (IFC) Performance Standards as its benchmark for conducting environmental and social reviews of transactions (since the IFC Performance Standards were introduced in 2006 no other benchmark has been used by EFIC for transactions). The other three ECAs referenced in the question nominate and use either the World Bank Safeguard Policies or the IFC Performance Standards depending on the transaction type.

EFIC's Environment Policy applies to all transactions. EFIC understands that this is not the case for EDC and the Ex-Im Bank while JBIC's position is unclear in this respect.

EFIC considers that the standards and procedures nominated in its Environment Policy benchmark well in comparison to that of any other OECD ECA.

(3) The IFC Performance Standards are widely regarded as the best practice benchmark for environmental and social assessment. The Performance Standards and associated Guidelines are applicable to almost any type of activity.

A copy of the Performance Standards and Guidelines can be found at:

http://www.ifc.org/ifcext/sustainability.nsf/Content/PerformanceStandards

EFIC occasionally supplements the IFC Performance Standards with other guidelines or standards and this is determined according to the needs of specific transactions. For example, EFIC has referenced the community development toolkit of the International Council on Metals and Mining (ICMM) and has also used the Human Rights Guidance Tool for the Financial Sector developed by the United Nations Environment Programme Finance Initiative (UNEP FI).

(4) (a)There is no legislative requirement that the Australian Auditor-General audit EFIC's Environment Policy. The last external review of EFIC's implementation of its Environment Policy was commissioned by EFIC from PriceWaterhouseCoopers in 2004.

As part of its current Environment Policy review, EFIC is considering a regular independent audit of the application of its Environment Policy. The audit frequency has yet to be determined. EFIC's preference would be to engage a specialised environmental consultancy to undertake the proposed audit so that people with the requisite experience and skills are involved, which would enhance the effectiveness of the audit.(b)There is nothing in the Export Finance and Insurance Corporation Act 1991 (the EFIC Act) that prevents the Australian Auditor-General performing this audit. The appointment of the Australian Auditor-General to perform such an audit would be regulated by the Auditor-General Act 1997 (Cth).

(5) The US Ex-Im Bank publishes a brief summary of its Board meetings. The information provided is limited to the names of the parties involved in a transaction, the transaction type, the amount and term of the financial support provided for the transaction, the country where the transaction is located and the Board's decision.

JBIC does not appear to publish summaries of its Board of Directors meetings nor do any other OECD or non-OECD ECA publish information concerning Board meetings.

(6) EFIC complies with the reporting and other obligations of a Commonwealth authority under the Commonwealth Authorities and Companies Act 1997 (Cth)(CAC Act). Those reporting obligations do not include the provision of summaries of its Board minutes. Section 87 of the EFIC Act contains provisions which prohibit the disclosure by EFIC employees, officers and Board members of information relating to EFIC's business under the EFIC Act.

(7) The 2009 EDC Annual Report reveals there are no Board members with responsibility for CSR. EDC has an individual in its Executive whose responsibilities include CSR issues, as does EFIC. Appointments to the EFIC Board (other than the Managing Director) are made by the Minister. Both the EFIC Act and the CAC Act impose obligations and duties on EFIC Board members, including a duty to act in the best interests of EFIC with due care, skill and diligence.

Before an EFIC board position is vacated, depending on the specific position and taking account of the skills required to ensure that the Board has appropriate balanced membership to meet its functions, an extensive list of potential candidates is prepared. This list is then provided to the Minister and a short list of candidates determined. The candidates short listed are contacted and resumes submitted. The Minister then selects a suitable candidate from this list.

(8) (a) EFIC disclosed its potential involvement in three Category A projects during the 2009-2010 financial year. (b) EFIC provides a letter of acknowledgement to those that make a written submission on Category A projects. EFIC incorporates these submissions into its due diligence process prior to making a decision to provide or decline support for a transaction. Section 87 of the EFIC Act contains provisions which prohibit the disclosure by EFIC employees, officers and Board members of information relating to EFIC's business under the EFIC Act. (c) EFIC does not publish summaries of project benchmarking. EFIC is aware of only one ECA that regularly publishes a summary of project benchmarking; JBIC, which publishes a very brief overview of each of its 'Category A' projects. The published summary contains little information on a project's environmental and social impacts and resultant management response. JBIC is also not a directly comparable organisation to EFIC as it also fulfils a development and strategic acquisition role for Japan.