Public finance institutions can build in conditionality measures associated with strong due diligence systems and standards into their financing terms. The 2016 OECD Common Approaches for Export Credit Agencies signed by all OECD member countries explicitly recognise the recommendations of the Guidelines, and provide that members should “promote awareness of OECD Guidelines for Multinational Enterprises among appropriate parties involved in applications for officially supported export credits as a tool for responsible business conduct in a global context.” Governments could also build in criteria associated with into bid evaluations for construction projects and public procurement criteria generally. Access to export credit and other forms of State support may also be denied in such circumstances, and in transnational contexts, investment treaties may deny protection to foreign investors of the other party that have engaged in conduct leading to a violation of Covenant rights.” “States parties should also consider the use of administrative sanctions to discourage conduct by business entities that leads, or may lead, to violations of the rights under the Covenant. 24, also supports this approach by stating that: The Committee on Economic, Social and Cultural Rights in its General comment No. A requirement for human rights due diligence is most likely to be appropriate where the nature of business operations or operating contexts pose significant risk to human rights.” Given these risks, States should encourage and, where appropriate, require human rights due diligence by the agencies themselves and by those business enterprises or projects receiving their support. Where these agencies do not explicitly consider the actual and potential adverse impacts on human rights of beneficiary enterprises, they put themselves at risk – in reputational, financial, political and potentially legal terms – for supporting any such harm, and they may add to the human rights challenges faced by the recipient State. These include export credit agencies, official investment insurance or guarantee agencies, development agencies and development finance institutions. “A range of agencies linked formally or informally to the State may provide support and services to business activities. + Read moreĪs highlighted in the Commentary to Guiding Principle 4 “here States own or control business enterprises, they have greatest means within their powers to ensure that relevant policies, legislation and regulations regarding respect for human rights are implemented.” The Commentary to Guiding Principle 4 further highlights that: “States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence.”įor more information on how export credit and human rights, including frameworks ECAs can use to better integrate human rights and due diligence into their activities, see the Danish Institute for Human Rights’ Means of Implementation.

ECA Watch has noted that as projects funded by ECA “are high risk due to their environmental, political, social and cultural impacts, most would not come to life without the support and financial backing of ECAs.” Therefore, as highlighted in the UN Guiding Principles on Business and Human Rights, Guiding Principle 4:

According to OECD data, in 2015 alone, ECAs in OECD member nations provided US$125 billion in credit, insurance, guarantees and interest support. They are thus extremely important sources of finance and insurance for the private sector. For example, ECAs are estimated to support twice the amount of oil, gas and mining projects as do all Multilateral Development Banks such as the World Bank Group. Today, ECAs are collectively among the largest sources of public financial support for foreign corporate involvement in industrial projects in the Global South. Most Global North countries have at least one ECA, which is usually an official or quasi-official branch of their government. Export Credit Agencies (ECAs) provide these financial services to companies that do business abroad, particularly for business activities in the Global South.

Export credits are generally divided into short-term, medium-term (usually two to five years repayment) and long-term (usually over five years). The Organisation for Economic Co-operation and Development (OECD) notes that ‘export credit’ is an insurance, guarantee or financing arrangement which enables a foreign buyer of exported goods and/or services to defer payment over a period of time.

Define export trade