Brazilian Development Bank’s vetting of international investments shows little regard for social and environmental impact.
Brazil’s National Development Bank (BNDES) failed to detect a raft of illegalities and serious social and environmental problems when agreeing to finance a controversial highway project through the Bolivian Amazon, according to an international coalition of organisations in a complaint published today.
The coalition argues that the development bank – the world’s third biggest, with a larger portfolio than the World Bank – is financing major infrastructure projects across the Amazon with insufficient analysis of whether or not they are legal, or of their social and environmental impacts. The coalition is calling on BNDES to urgently reassess its methods for selecting projects that pose significant risks to the world’s largest rainforest and its indigenous and traditional communities.
BNDES is a majority public-funded bank with major infrastructure projects across Latin America and parts of Africa. In 2015 alone it provided US$ 36 billion for projects globally.[i]
In 2011 BNDES signed a U$332 million contract for the construction of a controversial highway that threatened to cut through protected, indigenous land in the Bolivian Amazon - the “TIPNIS” National Park and Indigenous Territory. Documents obtained by Conectas Human Rights, the Centre for Labour and Agrarian Development of Bolivia (CEDLA) and Global Witness show that between 2009 and 2011 the bank failed to act on a series of illegalities, including:
- Widespread illegalities during the bidding round, as detailed in a leaked 2010 report by the Bolivian Comptroller General obtained by the organizations
- Failure to consult indigenous communities in TIPNIS about the construction of the highway, as is their right under Bolivian law
- Lack of an environmental impact assessment prior to the bidding round, indicating systematic failures by the Bolivian Highways Administration
- Legally flawed Environmental Impact Assessments of routes 1 and 3 of the highway, which failed to consider the future impacts of construction and were heavily criticised by the Bolivian environmental authority at the time.
BNDES cancelled its TIPNIS contract in 2012 after widespread protests prompted the Bolivian government to ban road construction in the area. The bank responded to criticism of its involvement saying that all of the legal environmental requirements had been met[ii] and that it had respected the “legal framework established by the Bolivian authorities.”[iii]
Information obtained by the organizations, however, shows that data on all of the illegalities outlined above was available to the bank well before it signed the financing contract, yet these were not properly addressed by its socio-environmental risk analysis.
Since the TIPNIS case, the bank has reformed its Socio-Environmental Policy, which now contains clearer requirements about the information needed by the bank before an investment outside Brazil will be made. But the coalition group claims the policy is still insufficient to guard against potential human rights abuses committed against local communities.
“BNDES’ policies still lack sufficient requirements to consult with impacted communities before a project goes ahead,” said Juana Kweitel, the programs’ director of Conectas. “Until this is dealt with, the bank will continue to risk financing projects that are environmentally and socially unsound and that represent a threat to the Amazon, as in the TIPNIS case.”[iv]
“It is clear from the documents we obtained, and from the TIPNIS communities themselves, that their right to free prior and informed consent was not respected, despite the fact that this is mandatory under Bolivian law,” said Silvia Molina of CEDLA.
Conectas Human Rights, CEDLA and Global Witness are calling on BNDES to:
- Ensure the social and environmental legal compliance of its projects by improving its due diligence assessments
- Directly involve
communities and other interested parties across the entire life-cycle of any
projects the bank is involved in
- Provide an independent complaint mechanism that is adequate to the needs of affected communities
- Promote accountability and when damages occur, provide effective remedies to the parties affected.
Caio Borges - Conectas – Email: [email protected], + 55 11 38847440
Silvia Molina - CEDLA – Email: email@example.com, +591-2 2799848
Chris Moye – Global Witness – Email: [email protected], +44 7525592737
Notes to editor:
[i] Banco Nacional de Desenvolvimento Econômico, Recent News 1/25/2016 http://www.bndes.gov.br/SiteBNDES/bndes/bndes_en/Institucional/Investor_Relations/Financial_Information/
[ii] Banco Nacional de Desenvolvimento Econômico e Social (BNDES) (30 de setembro de 2011), carta do BNDES ao jornal Valor Econômico. Disponível em : http://www.bndes.gov.br/SiteBNDES/bndes/bndes_pt/Institucional/Sala_de_Imprensa/Notas/2011/Institucional/20110930_carta_valor.html
[iii] Centro de Informação sobre Empresas e Direitos Humanos (9 de setembro de 2014), resposta do BNDES ao relatório da ONG. Disponível em: http://business-humanrights.org/en/bndes-response-to-ngos-report
[iv] Free, Prior and Informed Consent is guaranteed by the Bolivian State’s ratification of the International Labour Organization’s Indigenous and Tribal People Convention 169.