European Investment Bank (EIB) | Complaints Mechanism (CM)
The European Investment Bank (EIB) is a multilateral development bank founded in Brussels in 1958. It was created by the Treaty of Rome, which established the European Economic Community (EEC). The EIB was originally headquartered in Brussels before moving to Luxembourg in 1968. It has remained headquartered in Luxembourg, even as the EEC was ultimately absorbed into European Union (EU).
European Investment Bank (EIB)
Created In: 1958
Member Countries: 28
Largest Shareholders: Germany, France, Italy, and the United Kingdom
Mission: To serve as the European Union’s bank and provide finance and expertise for sustainable investment projects that contribute to EU policy objectives.
The Accountability Office: Complaints Mechanism (CM)
Established in: 2008
Functions: Compliance Review, Problem Solving, and Advisory
More than 90 percent of the EIB’s financing is for activities in Europe; however, the EIB is also active in 160 countries around the world.
In 1988, the bank’s lending stood at roughly €10 billion. This increased to €45 billion in the mid-2000s. Lending rapidly expanded in response to the 2008 financial crisis, with €79 billion in 2009. By 2016, lending decreased to less than €77 billion euro. These financing levels make the EIB the world’s largest multilateral borrower and lender. By comparison, the World Bank Group—including the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, and the Multilateral Investment Guarantee Agency—committed roughly €52 billion in 2016.
The Environmental and Social Principles and Standards, adopted in 2009, are the focus of the bank’s policies for responsible financing. The bank also considers responsible borrowing, management of its internal environmental footprint, and other factors as components of its corporate responsibility.
Access to information about the EIB’s activities is governed by the current Transparency Policy, which was adopted in March 2015 after public consultation.
The Accountability Office
The accountability office of the EIB is called the Complaints Mechanism (CM) and it applies to both private and public sector EIB operations. The CM takes a flexible approach to its functions; it conducts compliance reviews and problem solving, gives advice and recommendations to EIB Management, and reviews implementation of corrective actions. It may accept complaints from any person or group alleging operational “maladministration” by the EIB.
Submit a complaint if you believe the EIB has failed to act according to:
- Applicable law;
- EIB policy;
- Human rights; or
- The principles of good administration.
The CM office will respond within 10 days, acknowledging receipt of the complaint. This may include, or be followed by, a decision as to whether the complaint will be processed. If so, the office will conduct an investigation using a flexible approach, which may include compliance review and/or problem solving. The office concludes its work with any recommended corrective actions and issues a conclusion report. If you are not satisfied with the result, within one year, you may appeal to the European Ombudsman.
After over two years of delay, the European Investment Bank (EIB) completed its review of the rules governing its Complaints Mechanism (CM). Accountability Counsel, together with partners, advocated for the EIB to use this review to enhance the CM’s effectiveness, accessibility, and compatibility with human rights.
Unlike many other independent accountability mechanisms, the CM lacks a formal project-by-project reporting line to the Board of Directors. Also unlike other accountability mechanisms, there is no ‘cooling off period’ before bank staff can work for the mechanism or before mechanism staff can return to the bank upon expiration of their term. Concerns about the independence of the mechanism are compounded by the lack of transparency in hiring processes. This has been demonstrated most recently in the selection process for a new CM director, which the EIB undertook without the involvement of external stakeholders.
In a report published in 2015, the European Court of Auditors found that those directly affected by EIB activities were often unaware of the bank’s role in financing. A lack of knowledge of EIB financing in turn affects knowledge of the availability of the CM. The EIB does not publish sufficient information about its activities, particularly with financial intermediaries, to ensure that the CM is accessible to affected communities.
Further, the CM’s current procedures vary considerably depending on the type of complaint and when it is filed, which can be confusing, particularly for external stakeholders. For example, complaints filed after the activity is approved for financing by the Board of Directors are admissible. Complaints filed during the appraisal period are admissible, but the appraisal team is first given the opportunity to address the concerns raised. Those filed during pre-appraisal are not admissible, but the concerns raised in the complaint are forwarded to bank staff.
Also, due to understaffing and other constraints, the CM frequently fails to comply with the deadlines in its own policies. These variations and delays create needless barriers for complainants.
The CM requires additional resources and authority within the bank in order to provide a fully effective and equitable complaint process, and EIB staff incentives must be aligned to respond appropriately to harm caused by bank activities. The EIB does not appear to be sufficiently including the CM’s experiences and findings into evaluation procedures.
Nonetheless, the ability for CM complainants to appeal to the European Ombudsman is a unique and promising feature of the CM; however, its decisions are non-binding. The European Parliament, in a resolution in 2016, called for the EIB to “update the Memorandum of Understanding between the EIB and the European Ombudsman in order for the Ombudsman to exercise external scrutiny over the EIB more actively and to improve monitoring procedures and further accountability of the EIB.” The memorandum of understanding is currently under review by the Ombudsman and the EIB, though it is not subject to public consultation.
Transparency and Legitimacy
Complainants do not have equal opportunity to provide input on conclusions reports because the CM shares its draft report with the EIB and complainants sequentially, and the complainants do not see the final report until after it and the management response are issued. Additionally, though the CM policy requires publication of initial assessments and conclusions reports, the case registry does not contain relevant documents for most cases.
The most recent CM review was undermined by limited opportunities for stakeholder engagement. Nevertheless, we coordinated closely with our partners to engage with the EIB, CM, and other stakeholders to address the challenges with the CM.
In 2015, we sent a joint letter outlining expectations for the review, which was at the time anticipated to take place shortly. The letter called for two rounds of public consultation open to all stakeholders, a civil society discussion with the Board of Directors at the upcoming Annual Meeting, publication of the report of the experts’ panel, and a review of the memorandum of understanding between the EIB and the European Ombudsman.
In February 2016, we sent a joint letter to the EIB Board of Directors outlining principles of effectiveness for the CM. These included:
- Legitimacy, which is hindered by marginalization of the CM within the EIB, lack of cooperation by EIB staff, and disconnect between the CM and the Board.
- Accessibility, which requires informing project stakeholders about the EIB’s financing role and the existence of its accountability mechanism.
- Predictability and equitability, which are hampered by inadequate resources and imbalance in opportunities to provide feedback on the CM’s conclusions reports.
- Transparency, which is lacking in many cases where the CM fails to make information publicly available.
In January 2017, with the CM review set to start in the subsequent few months, we sent another joint letter to the Board, renewing our expectations for the consultation process. Unfortunately, the EIB had not sufficiently addressed our recommendations, lacked transparency, and hamstrung stakeholders. As a result, in February 2017, we sent a joint letter to EIB President, Werner Hoyer, expressing our concern that the selection of a new head of the CM was occurring prior to the revision of the operating procedures and without any external consultation.
In June 2017, the EIB started public consultations on the draft Complaints Mechanism Policy. To our dismay, the EIB Group Complaints Mechanism Operating Procedures were excluded from public consultation. This is a key document concerning all the technical details of policy implementation. That same month we sent another joint letter to President Hoyer explaining that, “without the procedures, it is impossible to understand how the EIB-CM would handle a complaint, rendering the whole consultation process meaningless.”
Accountability Counsel’s Policy Director Kindra Mohr attended the public consultation in Brussels on 29 June, 2017 to continue to advocate for reforms. Kindra also participated in an NGO strategy session organized by our partner Counter Balance.
In July 2017, the EIB responded to our June 2017 letter on our concerns about the consultation process. They outlined that the EIB’s draft procedures were published on their website and that stakeholders are welcome to provide comments on them, as a part of their contribution to the public consultation of the revised policy. However, the procedures still appear to be out of the official scope of the consultation. Although the EIB did not provide two rounds of formal public consultation, as we requested, the EIB stated that they would welcome comments on the revised draft policy.
On 29 September, 2017, Accountability Counsel and 24 partners submitted joint recommendations on the CM’s draft policy and procedures with a particular focus on the grave threats to the CM’s independence posed by these documents. Other stakeholder contributions to the review can be found on the EIB’s website.
In September 2018, the EIB released a revised draft of the new CM policy and procedures. Though some of the problematic provisions we identified were modified, the revised policy remained inadequate to ensure the independence of the CM. Prior to the October 2018 EIB Board meeting, Accountability Counsel and its partners disseminated to EIB Executive Directors a letter imploring them to address the most pressing issues before approving the policy.
At our urging, the draft policy was further revised before the November 2018 Board meeting. The latest draft included revisions of at least some of the provisions we identified as problematic; for instance, the latest draft included an additional reporting requirement, instructing the CM to provide twice-yearly updates on complaints to the Board. However, the latest draft did not go far enough to ensure that the CM was independent of undue influence from EIB management.
Nonetheless, the Board voted to approve the latest draft policy on 13 November, 2018. While disappointed by the many shortcomings of the policy review, Accountability Counsel has continued to advocate for reforms that will better equip the CM to provide redress to communities that have suffered harm, including at the CM’s 10 Year Anniversary event at EIB Headquarters in Luxembourg in January 2019.
Accountability Counsel’s Executive Director, Natalie Bridgeman Fields, worked closely with Professor David Hunter to recommend a policy governing an accountability office for the EIB for the first time in November 2006. They presented the proposed mechanism to the EIB in 2006 at a meeting organized by CEE Bankwatch Network, and updated their guidance in 2007.
Many of the recommendations in the 2007 discussion paper were adopted as part of the EIB’s Complaint Mechanism.
Documents by Release Date
Sep 2018 – Accountability Counsel submitted a joint letter to EIB Board of Directors, identifying key weaknesses of the CM Policy.
Sep 2017 – Accountability Counsel submitted joint comments to the EIB, providing recommendations on strengthening the draft CM Policy and Procedures.
Jun 2017 – Accountability Counsel submitted a joint letter to the EIB President, highlighting flaws in the public consultation process for the CM review.
Feb 2017 – Accountability Counsel submitted a joint letter to the EIB President, expressing concern about the selection of a new head of the CM without external consultation.
Jan 2017 – Accountability Counsel submitted a joint letter to the EIB Board of Directors, renewing expectations for the delayed CM policy review.
Apr 2016 – European Parliament adopted a resolution calling on the EIB to “update the Memorandum of Understanding between the EIB and the European Ombudsman in order for the Ombudsman to exercise external scrutiny over the EIB more actively and to improve monitoring procedures and further accountability of the EIB.”
Feb 2016 – Accountability Counsel, and other civil society organizations, submitted a briefing for the EIB Board of Directors on Principles of Effectiveness for the CM.
Nov 2015 – European Court of Auditors released a special report.
Jul 2015 – Accountability Counsel submitted a joint letter to the EIB President, outlining expectations for the CM policy review.
Jun 2015 – Expert Panel recommendations based on its review of the CM.