The murder of environmental activist Berta Cáceres in Honduras on 3 March has highlighted the risks that development finance institutions (DFIs) face when managing their investments and projects in developing countries. Cáceres was the leader of the Civic Council of Popular and Indigenous Organisations of Honduras (Copinh), winner of the 2015 Goldman environmental prize, and led the resistance against the Agua Zarca hydro-electricity generation scheme on the Gualcarque river. Copinh were defending the rights of the indigenous Lenca People in Río Blanco and northern Intibucá claiming that the project would disrupt their access to the river.
Two European DFIs, FMO from the Netherlands and Finland’s DFI, Finnfund, are financing the project alongside other organisations and are taking the brunt of Copinh’s anger. Copinh released a statement asking FMO to withdraw funding from the project. “We condemn those institutions that support this project of death, which makes them violators of the historic collective and individual rights of the Lenca People, including FMO, providing US$15 million, and Finnfund, providing US$5 million.”
FMO reacted to the killing of Cáceres by halting all its activities in Honduras and establishing consultations with locally affected communities. Cáceres was shot at her home by unidentified assailants and this followed the killing in July 2013 of the indigenous leader of the Lenca people, Tomás García. Finnfund and FMO have spoken out against the murders and insisted on a full investigation, as well as providing transparent accounts of their actions in the country.
The negative impact of the project, as reported by Copinh, is rejected by the DFIs. “The project does not disrupt the livelihoods or prevent the local communities [gaining] access to water, nor does it result in any involuntary resettlements,” Finnfund’s spokesperson, Tapio Wallenius, told Development Finance. “Free, Prior and Informed Consent (FPIC) has been obtained repeatedly, both for the older and for the later, final version of project design. The technical design of the project can be checked on the project company DESA’s web site by anyone willing to get exact information. It is a run-of-the river scheme with no large dams, but instead only a small weir and a minor reservoir of the size of one or two football fields.”
Both FMO and Finnfund undertake an extensive due diligence process before committing to such projects. “FMO focuses its investments in developing countries with weak governance because this is where we can make a difference,” said FMO spokesperson, Paul Hartogsveld. “It is part of our mandate. FMO is also aware that in many cases, our clients do not possess the knowledge and/or experience in implementing projects to the international standards of best environmental and social practice that FMO requires.”
For the Aqua Zarca project, FMO undertook two due diligence trips to understand the environmental and social impacts of the project as well as to assist the client (DESA) in devising mitigation measures. FMO has also undertaken annual monitoring trips and has relied on very frequent independent E&S advisors’ visits.
“FMO strongly believes in accountability,” said Hartogsveld. “Its own environmental, social and governance due diligence is verified through the implementation of an internal Four Eye process. FMO also evaluates its projects and publishes these evaluations on its internet. We have an Independent Complaints Mechanism in place to allow for grievances to be brought to our attention.”
Finnfund’s spokesman said that the communities in the area potentially affected by the project support it, and that the resistance comes mainly from outside this area. “Nonetheless, we have taken it seriously,” said Wallenius. “The relocation of the project to another side of the Gualcarque river was one of the measures through which it was meant to be made absolutely sure there would be no adverse effect and resistance for the project.”
The two DFIs report that they were constantly monitoring the situation in Honduras and had repeatedly been in contact with Cáceres. “In 2014 we told Finnish NGOs that together with FMO, we would be happy to have a teleconference with Copinh, and this willingness was communicated to Copinh by the NGOs,” added Wallenius. “This meeting never materialised, for reasons we do not know. We later heard that Berta Cáceres was planning a trip to Europe, to meet Finnfund. This was just before she was murdered. We were shocked by the news of the murder, and lament the fact that the trip was never realised.”
FMO’s CEO Nanno Kleiterp and its Director for the Energy Sector will be travelling to Honduras, accompanied by internal and external independent experts. They will visit the local communities “as soon as safety requirements allow us”, said Hartogsveld.