1 Presentation title - edit in the Master slide
IEMA GESA Launch Event
Exploring Future Challenges to Effective International Project Environmental and Social Assessment
Lender Panel - Perspectives of ESIA Challenges
Max Griffin, Principal Environmental & Social Adviser
Thursday 25th May 2017
2
• Export Credit Agencies (ECAs) exist to support business operating in their countries by providing government backed guarantees, insurance and (in some cases) direct lending which buy their goods and services.
• UKEF was the first official ECA, being established in 1919.
• All OECD ECAs have agreed policies which aim to apply the same standards to transactions they support in order to avoid trade distortion.
• From 2003 this has included environmental, social and human rights issues and has been documented in the ‘OECD Common Approaches’
Background and Context
3
OECD ‘Common Approaches’ 2012 (revised 2016)
3
• Applies to all 34 OECD member ECAs
• Relevant export transactions only; for
example only those with a repayment
term of 2 years or more
• Requires environmental and social due
diligence and, where applicable, post-
issue monitoring to ensure these
projects are aligned with international
standards; most commonly IFC’s
Performance Standards on
Environmental and Social Sustainability
2012
http://www.oecd.org/tad/xcred/oecd-recommendations.htm
4 4
Applicability of ESIAs to projects seeking ECA
support
4
Para.4 ii) Adherents should undertake appropriate environmental and social
reviews...as part of their due diligence
Para. 18 For a Category A project, Adherents should require an ESIA to be
undertaken...to address the issues set out in the international standards
applied to the project
Para. 19 For a Category B project... Adherents should require appropriate
information.. that addresses the relevant environmental and social
impacts of the project...may be contained in an ESIA or in project-
related assessment reports, planning and concept documents,
environmental and social studies and plans, technical documentation
of pollution control plans and criteria, applicable legal and regulatory
frameworks, community engagement activities..and information
collected during discussions with applicants
5 5
The role of ESIAs for OECD ECAs
5
• Environmental and Social Impact Assessment against International Standards is one of the foundational steps used to determine whether OECD ECA financial support can be applied to relevant projects
• ECA review of ESIA information will contribute to a go/no go decision to provide support
• The quality and completeness of the ESIA may significantly effect the speed that the financing, and hence project development, can take place
• Ongoing adherence to international standards of environmental and social management are included in affirmative covenants in order to retain the conditions of financial support
6 6
How do ESIAs affect projects which seek ECA support?
6
• The ESIA and subsequent ECA review lead to impact and risk mitigation measures being included within environmental and social management plans for project design, construction, operation and decommissioning; these can be covenanted into the financing.
• It is the implementation of these plans that helps to reduce the scale and magnitude of project-related negative impacts to the environment and people, and helps maximise the benefits of the project.
• In summary, through the use of ESIA, the financing (and enabling) of more sustainable and resilient projects can occur, and over time this contributes to sustainable development.
7 7
Feedback from UKEF experience
7
1. Early engagement with the project developer is essential to confirm the scale, scope, and timing for an appropriate ESIA in order for it to meet international financing requirements
2. Most challenges result from incomplete scoping studies
3. Baseline data collection can hold up financing (e.g. need for seasonal data and/or adequate stakeholder engagement)
4. Use of practitioner and other professional guidance is very helpful e.g. IAIA Social Impact Assessment Guidance (2015)
5. OECD ECAs publically disclose project ESIA information for Category A projects at least 30 days prior to providing support – this results in an additional level of public scrutiny; it is helpful for authors of ESIAs to know this (language, NTS, etc.)
8 8
Stakeholder engagement meeting, north west Russia.
Post-construction transfer of ownership of access road.
8
9 9
Rural bridge design, Sri Lanka.
Design for maximum river height and erosion control measures.
9
10 10
Gas pipeline route, Oman.
Mitigation for climate change induced increase in flash flood erosion.
10
Exploring Future Challenges to Effective International
Project Environmental and Social Assessment
May 2017
IEMA Workshop
Commercially confidential
12We are the world’s first Green Investment Bank GIB is a centre of global expertise in green investment
2012
4 years old £3.4bn committed
£12bn mobilised
Green and
Profitable
13Our business today
Our key markets:
Offshore Wind Waste & Bioenergy
Energy Efficiency Onshore Renewables
14Calculating green impact is what we do…
• Tried and tested green impact approach is integrated into every investment• Investment portfolio, will make significant contributions to greening the economy.
335 TWh renewable energy
130mtonnes CO2e avoided
3.4mcars
4.9mhomes
equivalent to the
energy consumed by
equivalent to the
greenhouse gases
emitted by
Our Green Impact
Promote
environmental
sustainability
Reduce
greenhouse
gas emissions
Increase
natural resource
efficiency
Protect the
natural
environment
Protect
biodiversity
15Our approach is market reference…The Green Investment Handbook is recognised globally and is now one of the most visited
and downloaded part of our website. We ensure the same rigorous & standardised
approach is applied for our partners and the broader market.
Practical guide to integrating green into investment process…
…promoted and adopted for use internationally
“The Handbook fills an urgent gap in showing
how the term ‘green’ means something of
value.”
Peter Young,
Chairman, Aldersgate Group
16Contact details
Headquarters
Atria One, Level 7
144 Morrison Street
Edinburgh
EH3 8EX
Tel: +44 (0)330 123 2167
London office
21-24 Millbank Tower
Millbank
London
SW1P 4QP
Tel: +44 (0)330 123 3070
The information in this document and any accompanying material (“The Document”) is confidential and commercially sensitive. This Document is provided to each recipient on a confidential basis solely for information purposes only. No reliance can be placed on this Document by any recipient or any other person. This Document and its contents are confidential to the person to whom it is delivered and must not be reproduced or distributed, either in whole or in part, nor its contents disclosed by such persons to any other person without the prior written consent of UK Green Investment Bank plc. Except as required by law, neither UK Green Investment Bank Plc nor any of its connected persons accepts any liability or responsibility for the accuracy or completeness of, or makes any representation or warranty, express or implied, with respect to the information contained in this Document or on which this Document is based or any other information or representations supplied to the recipient. UK Green Investment Bank Plc will not act and has not acted as your legal, tax, accounting or investment adviser. This Document does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase, any investment and UK Green Investment Bank Plc does not arrange investments for/introduce parties as a result of sharing the information set out in this Document.
Registered office: Atria One, Level 7, 144 Morrison Street, Edinburgh, EH3 8EX. Registered in Scotland under registered number: SC424067
UK Green Investment Bank plc is wholly owned by HM Government. The company is not authorised or regulated by the Financial Conduct Authority or the Prudential Regulation Authority. A wholly owned subsidiary, UK Green Investment Bank Financial Services Limited, is authorised and regulated by the Financial Conduct Authority.
Lender Perspectives of ESIA challenges
Robert Adamczyk, Senior Environmental Adviser,
EBRD, London
PUBLIC
What is EBRD?
EuropeanEuropeanEuropeanEuropean BankBankBankBank forforforfor ReconstructionReconstructionReconstructionReconstruction andandandand DevelopmentDevelopmentDevelopmentDevelopment (EBRD)(EBRD)(EBRD)(EBRD) is an international financial
institution, promotes transition to market economies in 35 countries from central Europe to
central Asia and SEMED
Together with our donors, we promote private sector competition underpinned by the rule of
law, a sustainable approach to modernising infrastructure, the efficient use of resources, and
an environment that is conducive to growth.
• Founded in 1991
• Owned by 65 countries and two inter-governmental institutions (EU and EIB)
• Capital base of €30 billion
• A+++ rated bank (from all 3 main rating agencies)
PUBLIC
The GET aims to further scale up green business volume, and to expand to new areas of activity,
such as environmental protection and technology transfer.
Green Economy Transition (GET)
initiative
1994 2006 2013 2015
Sustainable Energy
Initiative (SEI)
Sustainable Resources
Initiative (SRI)
Green Economy
Transition (GET)
Energy
Efficiency
banking team
• Energy efficiency
• Renewable energy
• Water efficiency
• Material efficiency
• Adaptation to climate change
• Environmental
protection
• Technology transfer
PUBLIC
Why does EBRD place emphasis on environment and social issues?
The Agreement Establishing the EBRD commits
the Bank:
“to promote in the full range of its activities environmentally sound and sustainable
development.”
PUBLIC
Why do Environmental and Social Issues Matter
PUBLIC
Why does ESIA mater to Lenders
19 September, 2016 22
• The Business impact:The Business impact:The Business impact:The Business impact:
• Delays or decline of permit applications
• Construction delays due to permitting
• Additional expenditure on environmental abatement,
new technologies or remedial needs
• Social dialogue
• Reputational impact Reputational impact Reputational impact Reputational impact
PUBLIC
Environmental and social due diligence
• Environmental and (increasingly) social issues pose
substantial reputational risk
• EBRD designs tailored environmental and social due
diligence on all projects
• Due diligence designed proportional to risk
• Projects ultimately required to meet National standards
and EBRD Performance Requirements, notably EU
standards such as IED and BAT requirements.
• Results of due diligence and E&S compliance considered
by Bank management and Board of Directors during project
approval process
PUBLIC
Environmental and Social Policy (2014)
• E&S Policy applies to Bank
‒Categorization of Project based on risk and EU EIA requirements
(Annex 1 projects A category).
• 10 Performance Requirements (PRs) apply to all clients and
projects
• EBRD PRs have same titles and are broadly equivalent to
IFC Performance Standards
• Also broadly equivalent to Equator Principles
• Reference to EU environmental standardsReference to EU environmental standardsReference to EU environmental standardsReference to EU environmental standards
Policy and PRs have been updated and a new E&S Policy 2014
(applicable from November 2014)
PUBLIC
• Always important
• All projects are disclosed for meaningful engagement, prior to
Bank approval: A vs B, public vs private
• Development of a Stakeholder Engagement Plan (SEP)
available in local language
• May require more than National EIA process in terms of
stakeholder engagement as well as content
• Category A projects require participatory engagement (meetings)
plus of disclosure of a fit for purposes Environmental and Social
Impact Assessment in local language (s)
• Engagement with local stakeholders needed, including NGOs
• This needs to be continuous.
Stakeholder engagement and consultation
PUBLIC
How do we compare with our peers?
IFCIFCIFCIFC• very close match, but global vs. European (EU) approach
Equator Bank’ sEquator Bank’ sEquator Bank’ sEquator Bank’ s
• Like IFC but practical implementation varies and mainly
restricted to project finance
• Environmental and Social Due Diligence required
EIBEIBEIBEIB• Similar policy vs European Principles for Environment‒ EIA and Natura 2000 of high importance
• More decentralised approach
PUBLIC
EBRD approach to due diligence
PUBLIC
EBRD due diligence
• Each project is different
• Project categorization; this defined scope of due diligence and disclosure.
• Assessment of site sensitivity and full project, including associated operations and facilities.
• Benchmark against EU IED and relevant BAT Bref Notes (BAT Conclusions) and assess environmental performance and identify opportunities
• Need to develop Stakeholder Engagement Plan (SEP) and Non Technical Summary (NTS) to ensure meaningful public consultation on all projects
• EBRD will not finance projects that are in sensitive biodiversity areas (inclusive of Natura 2000 etc) where appropriate assessments conclude there are significant unavoidable adverse impacts
• Major projects: ESIA, SEP, NTS disclosed for at least 60 days.
• An Environment and Social Action Plan (ESAP) developed for projects to allow compliance with the relevant PRs.
PUBLIC
PR1: Appraisal (1)
• All EBRD projects are subject to appraisal of potential
environmental and social impacts
• A-Category projects undergo “special formalised and
participatory assessment processes”, generally a
“comprehensive environmental and/or social impact
assessment.”
• Greenfield and major expansions that can cause significant adverse
effects are Category A.
• A category requires the disclosure of an ESIA in line with EBRD/IFC guidance prior to consideration by Board of Directors for financing
• B-Category projects also undergo due diligence process to
identify and assess potential future impacts.
• ESAP develop and agreed to allow longer term compliance.PUBLIC
PR1: Appraisal (2)
Is it Category A or B?
• Decision generally based on consideration of size, location, and
associated facilities.
• Local authority may require an EIA, this does not have to trigger IFI
qualification
• Large Greenfield cement projects (plant, quarry, transmission line)
would trigger A category requirement for the Lenders
• Large expansions or modernizations due to the environmental and
social impacts (including perceived) may trigger A category impact
• New quarries above 25 ha size or in sensitive locations – A category
• Direct effect on protected areas, such as Natura 2000 triggers A-
categorization
PUBLIC
Experience to date in Countries of Operation
• Many projects developed locally, without reference to corporate or international standards.
• EIA process often done for ‘pure’ local permitting purposes, without any detailed baseline data or in-depth assessment of environmental and social impacts; alternatives and/or recommendations to use best practice.
• EIA often does not include associated facilities
• However, permitted projects are being marketed to international companies. The EIA could
‒ affect the future value of the asset, and permits can be withdraw or operators asked to reduce output.
‒ delay project financing.
• Non Technical Summary (NTS) and SEP is a requirement of all IFI’s and the EU EIA Directive
PUBLIC
Key issues
Lack of experienced biodiversity experts.
• In some countries there are only few biodiversity experts. This becomes a bottleneck in
some projects.
Use of local standards .
• Often projects focus on local standards for abatement – Nox, dust; without taking into
account international requirements or future changes in legislations.
• Convergence of standards world-wide and on-going tightening up of standards
Social Assessment, and inclusion of local populations
• Will the local community benefit- any local taxes to local community ?
• Is this a long term risk
Importance of team undertaking EIA
• Need for mix of experts that understand both local and international requirements.
The local EIA may be required for financing in the future and could affect project finance or The local EIA may be required for financing in the future and could affect project finance or The local EIA may be required for financing in the future and could affect project finance or The local EIA may be required for financing in the future and could affect project finance or
value of asset.value of asset.value of asset.value of asset.
PUBLIC
Summary
Financial Institutions will only invest in the best projects
• Environmental standing often reflects overall performance
Transparency and public consultation are a major focus of many international institutions and EU
• Poor consultation can result in major delay to projects
• B level projects may require full EIA, SEP (NTS etc).
Stronger international focus on social and labor issues
• All projects need a SEP
Take into account LenTake into account LenTake into account LenTake into account Lender requirements when doing an ESIA.der requirements when doing an ESIA.der requirements when doing an ESIA.der requirements when doing an ESIA.
PUBLIC
How to contact us
30 May, 2017 34
For all further enquiries, please
contact:
Robert Adamczyk
Senior Environmental Advisor
ESD
Tel: + 44 20 7338 7014
Email: [email protected]
EBRD
One Exchange Square
London, EC2A 2JN
United Kingdom
www.ebrd.com
PUBLIC