Through the OECD (Organisation for Economic Co-operation and Development), detailed rules, guidelines and recommendations have been issued relating to the member countries’ public export financing organisations (Export Credit Agencies, or ECAs) and activities. The OECD consists of 35 relatively rich countries and is best known for its statistics and more in loans they can manage to bear in the long term.
The agreement only applies to loans where the state is responsible for repayment, i.e. loans to public enterprises and/or loans with a special state guarantee. The shared responsibility obligates the ECAs to check IMF/World Bank assessments of a country’s debt (Debt Sustainability Analysis, or DSA), refrain from financing unproductive projects, and respect any debt ceilings. ECAs are urged to ask the country’s authorities for confirmation that the project in question is in accordance with their own lending and development plans.
“Arrangement” – regulates guarantee terms and conditions
The Arrangement on Officially Supported Export Credits states general principles for public, long-term export financing as well as specifically permitted guarantee conditions. Some important general principles are that guarantees are to be priced according to the risk of loss and that the guarantee period must correspond in length to the lifetime of the financed product. The agreement specifically regulates minimum prices (premiums), repayment profiles, periods, equity requirements, degrees of cover, financing of local content, etc. The agreement also specifies the conditions that make it possible to deviate from the standard terms. For example, some latitude is permitted to match another ECA’s financing offer. In addition, exports in certain sectors, such as renewable energy, can be favoured with better-than-standard financing terms. For more information on specific terms and conditions, please look up the agreement itself. There, the common principles and standard sets of rules are shown first, followed by separate sets of rules for ships, nuclear power plants, aircraft, renewable energy/climate measures, railways, coal-fired power plants and project financing.
“Common Approaches” – to social and environmental sustainability assessments
Through the Common Approaches (i.e. Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence), last updated in 2015, ECAs in the OECD have developed common guidelines for surveying and assessing environmental and social risks in individual cases. The guidelines are based on recognised international conventions and recommendations from the UN and OECD that relate to the protection of human rights, employee rights, the environment and the climate.
“Recommendation” – on corruption risk
In 2006, the ECAs in the OECD agreed on common measures to estimate the risk of, and counteract, corruption in the cases we finance. This is called the “Recommendation”, i.e. the OECD Council Recommendation on Bribery and Officially Supported Export Credits. Since 2006, the anti-corruption field has evolved greatly in terms of both legislation and international standards and practice. GIEK’s approach is also more conservative than what the Recommendation entails, and we are now taking part in the work of updating the Recommendation.
SL Agreement – on sustainable lending to poor, debt-ridden countries
Through the SL Agreement, last revised in 2016, the ECAs in the OECD undertake a shared responsibility for helping ensure that low-income countries do not take up more in loans they can manage to bear in the long term. The agreement only applies to loans where the state is responsible for repayment, i.e. loans to public enterprises and/or loans with a special state guarantee. The shared responsibility obligates the ECAs to check IMF/World Bank assessments of a country’s debt (Debt Sustainability Analysis, or DSA), refrain from financing unproductive projects, and respect any debt ceilings. ECAs are urged to ask the country’s authorities for confirmation that the project in question is in accordance with their own lending and development plans.
MNE Guidelines – OECD guidelines for multinational enterprises
The MNE Guidelines are guidelines for responsible/ethical business operations in multinational enterprises (MNEs). They cover 46 countries (including 12 non-OECD countries). The guidelines are sector-independent and deal with everything from human and employee rights to the environment, consumer interests, corruption, technology, competition and taxation. In addition to complying with the MNE Guidelines itself, GIEK urges its customers to do so. Although compliance with the guidelines is voluntary for companies, breaches can be reported to a national, independent complaints body, called a National Contact Point (NCP). From 2000 to 2015, some 320 complaints in total were reported to the NCPs.