Evaluating the Application of Eu Environmental Standards in European Public Banks’ Investment Projects in Third Countries

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Evaluating the Application of Eu Environmental Standards in European Public Banks’ Investment Projects in Third Countries EVALUATING THE APPLICATION OF EU ENVIRONMENTAL STANDARDS IN EUROPEAN PUBLIC BANKS’ INVESTMENT PROJECTS IN THIRD COUNTRIES: TOWARDS LEGAL ENVIRONMENTAL INDICATORS This work is part of the Mozaïek research programme, financed by the Netherlands Organisation for Scientific Research (NWO). © Daria Ratsiborinskaya, 2016 ISBN/EAN: 978‐90‐6464‐978‐3 Print: GVO drukkers & vormgevers B.V. All rights reserved. No part of the thesis may be reproduced, stored in a retrieval system or transmitted in any from or by any means, without the permission in writing of the author, or, when appropriate, of the publishers of the publication. Evaluating the Application of EU Environmental Standards in European Public Banks’ Investment Projects in Third Countries: Towards legal environmental indicators Het evalueren van de toepassing van EU milieu-standaarden in investeringsprojecten van Europese publieke banken in derde landen: Op weg naar juridische milieu-indicatoren Thesis to obtain the degree of Doctor from the Erasmus University Rotterdam by command of the rector magnificus Prof.dr. H.A.P. Pols and in accordance with the decision of the Doctorate Board The public defense shall be held on Thursday 10 March 2016 at 11:30 hours by Daria Nikolaevna Ratsiborinskaya born in Moscow, Soviet Union DOCTORAL COMMITTEE Supervisor: Prof.dr. F. Amtenbrink Other members: Prof.dr. J.W. de Zwaan Prof.mr.dr. H.H.B. Vedder Prof.dr. M.G. Faure Copromotor: Dr. W.Th. Douma TABLE OF CONTENTS CHAPTER I INTRODUCTION 1 1. Legal environmental standards 2 2. Research question: towards legal environmental indicators 5 3. Research scope 7 4. Methodological approach 9 5. Outline 12 CHAPTER II 15 1. GENERAL DICHOTOMY BETWEEN PRINCIPLES AND STANDARDS: THE THEORETICAL DEBATE 17 1.1 Principles and standards: distinction based on the degree of weight, abstractness and precision 17 1.2 Principles and standards: distinction based on the measure of conduct 22 1.3 Principles and standards revisited 24 1.3.1 Principles 24 1.3.2 Standards 27 1.3.3 Legal standards as a special category 29 2. GENERAL DICHOTOMY BETWEEN PRINCIPLES AND STANDARDS: EUROPEAN UNION LAW 34 2.1 The EU legal order 34 2.2 Principles and standards in EU environmental law 36 2.2.1 Principles 38 2.2.2 Standards 43 CHAPTER III 49 1. APPLICATION OF EUROPEAN ENVIRONMENTAL STANDARDS IN THIRD COUNTRIES: EXPLANATION OF THE TERM 50 2. APPLICATION OF EUROPEAN ENVIRONMENTAL STANDARDS IN THIRD COUNTRIES: THE ACTORS 52 2.1 The European Union as a promoter of environmental standards 54 2.2 International Financial Institutions as promoters of environmental standards 57 3. APPLICATION OF EUROPEAN ENVIRONMENTAL STANDARDS IN THIRD COUNTRIES: THE RATIONALE 62 3.1 Rationale for the EU to apply standards in third countries 62 3.1.1 EU objectives 62 3.1.2 EU values 63 3.1.3 Renewed raison d’être 65 3.1.4 Interest from third countries 66 3.2 Rationale for IFIs to apply standards in third countries 68 3.2.1 Economic attractiveness of ‘green’ investment 69 3.2.2 International legal developments 70 3.2.3 Public nature of IFIs 71 3.2.4 Pressure from the general public 72 4. APPLICATION OF EUROPEAN ENVIRONMENTAL STANDARDS IN THIRD COUNTRIES: THE FRAMEWORKS 73 4.1 Application of standards in third countries by the EU: general frameworks 74 4.1.1 Multilateral Environmental Agreements 74 4.1.2 International environmental protection 75 4.1.3 Copenhagen criteria 76 4.1.4 Development aid 77 4.2 Application of standards in third countries by IFIs: general frameworks 78 4.2.1 The United Nations’ Principles for Responsible Investment (PRI) 79 4.2.2 The World Bank Group Environmental, Health, and Safety (EHS) Guidelines 79 4.2.3 The International Finance Corporation (IFC) Policy on Environmental and Social Sustainability 80 4.2.4 The Organisation for Economic Co-operation and Development (OECD) Corporate Governance Principles 81 4.2.5 The Equator Principles (EPs) 81 4.3Application of standards in third countries via foreign direct investment:a specific regulatory framework83 4.3.1 FDI: definition 83 4.3.2 European Union and FDI: shaping a new investment policy 85 4.3.3 IFIs’ environmental regime and FDI: increased demand for certainty in standards’ application 89 CHAPTER IV 94 1. ACCOUNTABILITY OF INTERNATIONAL FINANCIAL INSTITUTIONS 94 1.1 IFIs as actors in accountability relationships 94 1.2 The public nature of IFIs 96 2. ACCOUNTABILITY AS A NORMATIVE CONCEPT 98 2.1 Disciplinary approaches towards the concept of accountability 100 2.1.1 Legal approach 100 2.1.2 Political approach 101 2.1.3 Administrative approach 102 2.2 Accountability concept revisited 103 2.2.1 Integrated approach 103 2.2.2 Results-based accountability 105 3. ACCOUNTABILITY AS A MECHANISM 3.1 Three components of the accountability mechanism 108 3.2 ‘Processes’ as a component of the accountability mechanism 110 3.2.1 Objectives 110 3.2.2 Assessment 111 3.3 ‘Consequences’ as a component of the accountability mechanism 3.3.1 Seven types of consequences 116 3.3.2 Formal and informal consequences 117 3.4 ‘Preconditions’ as a component of the accountability mechanism 118 3.4.1 Transparency 119 3.4.2 Yardstick 121 CHAPTER V 124 1. EPE DECLARATION AS A LEGAL FRAMEWORK FOR BANKS’ ENVIRONMENTAL ACCOUNTABILITY 126 1.1 The European Principles for the Environment: nature 128 1.2 The European Principles for the Environment: character 129 1.3 The European Principles for the Environment: application 131 2. THE MECHANISM OF EPE BANKS’ ACCOUNTABILITY 134 2.1 ‘Processes’ as a component of EPE Banks’ accountability mechanism 135 2.1.1 Objectives of EPE Banks 135 2.1.2 Assessment of EPE Banks’ environmental conduct 137 2.2 ‘Consequences’ as a component of EPE Banks’ accountability mechanism 143 2.3 ‘Preconditions’ as a component of EPE Banks’ accountability mechanism 145 3. THE MISSING INSTRUMENT OF THE EPE BANKS’ ACCOUNTABILITY MECHANISM 149 CHAPTER VI 154 1. FUNCTION AND DEFINITION OF AN INDICATOR 157 2. GENERAL TYPOLOGY 160 2.1 Classification according to subject matter 161 2.1.1 Economic indicators 162 2.1.2 Social indicators 162 2.1.3 Environmental indicators 163 2.2 Classification according to data type 164 2.2.1 Quantitative data 164 2.2.2 Qualitative data 165 2.3 Classification according to structure and hierarchy 166 2.4 Classification according to conceptual framework 167 2.4.1 Descriptive and performance indicators 167 2.4.2 Policy performance indicators and legal performance indicators 169 2.4.3 Performance indicators: conceptual frameworks 171 3. ANALYSIS OF EXISTENT LEGAL INDICATORS 174 3.1 Practical examples of legal indicators 174 3.1.1 The EBRD legal indicators 175 3.1.2 The World Bank Worldwide Governance Indicators 177 3.1.3 The OECD competition law and policy indicators 178 3.1.4 The Block-Roberts measurement system of mandatory labour standards 179 3.1.5 Legal indicators for human rights standards 180 3.1.6 The World Justice Project Rule of Law Index 182 3.2 Lessons to be learned from the existing legal indicators 183 4. TOWARDS LEGAL ENVIRONMENTAL INDICATORS 185 CHAPTER VII 189 1. LEGAL ENVIRONMENTAL INDICATORS: THE DEFINITION 190 2. THE THREE-STAGE MODEL FOR THE CONSTRUCTION AND USE OF LEGAL ENVIRONMENTAL INDICATORS 191 3. DESIGNING THE METHODOLOGY 194 3.1 The scope of the evaluation 194 3.1.1 Specifying the standards to be evaluated 195 3.1.2 Specifying the evaluation level 196 3.2 The conceptual framework of evaluation using legal performance indicators 198 3.3 The evaluation method 202 3.3.1 Legal performance evaluation: assigning scores to indicators 202 3.3.2 Evaluation of standards’ application 204 3.4 Validation method 206 4. CONSTRUCTING INDICATORS 207 4.1 Distilling illustrative indicators 207 4.1.1 Indicator of commitment to the European Principles for the Environment in a project’s general objective 4.1.2 Indicators for the environmental impact assessment standard 208 4.1.3 Indicators for the access to environmental information standard 211 4.1.4 Indicators for integrated permit requirements for industrial installations standard 213 4.2 Data sources 214 4.3 Data compilation method 215 4.4 Sample evaluation form 216 CHAPTER VIII 221 1. CRITERIA FOR SELECTING THE INVESTMENT PROJECTS 221 1.1 Kuzbass Pishekombinat project 223 1.2 Irkutsk Oil and Gas Company project 224 1.3 WHSD central section road project 225 2. APPLYING THE EVALUATION METHOD 226 2.1 Standards’ application: Kuzbass Pishekombinat project 226 2.2 Standards’ application: Irkutsk Oil and Gas Company project 233 2.3 Standards’ application: WHSD central section road project 239 3. ANALYSING AND VALIDATING THE RESULTS 246 3.1 Analysis of the proof of concept 246 3.2 Analysis of the legal environmental indicators’ usability 247 CHAPTER IX 251 1. Application of European environmental standards as part of EPE Banks’ accountability: the study framework 252 2. In search of the possibility to evaluate the application of European environmental standards in EPE Banks’ investment projects: lessons learned 254 2.1 The need for legal environmental indicators 254 2.2 Conceptualising and constructing legal environmental indicators 256 3. Legal environmental indicators as an evaluation instrument: the challenges 257 3.1 Using legal environmental indicators: internal challenges 258 3.2 Using legal environmental indicators: external challenges 259 3.3 Using legal environmental indicators: dealing with challenges 260 4. Studying the application of legal environmental standards: the future 261 4.1 Suggestions for future research 262 4.2 The European Principles for the Environment: future prospects 263 4.3 Legal environmental
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