A presentation made by Dr. Prasad Modak at the Annual Conference of International Association of Impact Assessment at Calgary, Canada in May, 2013

1. ©2013 Ekonnect Knowledge Foundation
By at
Dr. Prasad Modak, IAIA, 2013, Calgary
Director, Ekonnect Knowledge Foundation

2. Global Environmental Governance
“the sum of organizations, policy instruments, financing
mechanisms, rules, procedures and norms that regulate
the processes of global environmental protection”
Auditing the Implementation of Multilateral Environmental Agreements (MEAs):
A Primer for Auditors’ prepared by UNEP in cooperation with INTOSAI-WGEA,
2010
©2013 Ekonnect Knowledge Foundation

3. What is Environmental, Social and
Governance (ESG) ?
 Term used by financial institutions
 Governance for managing impacts of investments on environment,
communities and workers
Child Labour Climate Change Environmental Pollution
Regulations
Ethical Practices
Resource

4. National ESG
 The extent and rigor of National is uneven as national
priorities are different and so are the implementation
capacities.
 Harmonization of ESGs is however needed given the
globalization of economies and when it comes to managing
of regional/global issues.
©2013 Ekonnect Knowledge Foundation

5. 5
The “Players”
Split Governance ?
Parallel Governance?
Ambiguities?
Conflicts?
Overlaps?
Financing Institutions, Markets,
Communities, Supply-Chains, Workers,
Global Agreements
©2013 Ekonnect Knowledge Foundation

6. Forces towards Harmonization
National
ESG
Multilateral
Environmental
Agreements
Development
Financing
Institutions
Private Sector
Financing
Institutions
Communitie
s
Markets
Supply
Chain
©2013 Ekonnect Knowledge Foundation

7. Deeper and Tiered Process
Multiple Levels of Harmonization
Multilateral
Environmenta
l Agreements
Country
C
Country
A
Country
B
Equator
Principles
Ban
k A
Ban
k D
Ban
k C
Ban
k B
Developmen
t Financing
Institutions
AD
B
KfW
World
Bank
IDB
©2013 Ekonnect Knowledge Foundation

8. Harmonization of What?
 Policy Principles
 Acts, Rules, Standards, Exclusions/Prohibitions
 Procedures
 Practices
 Monitoring/Audit Protocols
 Reporting
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9. Influence by Multilateral Environmental
Agreements – Example of ESG in India
The Hazardous Wastes (Management,
Handling & Transboundary Movement)
Rules 2008
The Biological Diversity Act, 2002
©2013 Ekonnect Knowledge Foundation

10. How have Development Finance
Institutions (DFI) been influencing ESG?
Loan covenants /guarantees to investors and entrepreneurs,
financing public infrastructure projects
Borrowers required to conform to DFI Environmental and Social
safeguards
Knowledge Creation (Case studies) & Capacity Building
©2013 Ekonnect Knowledge Foundation

11. Environmental and Social Safeguards of DFIs
Development Finance
Institution
Environmental and
Social Safeguards
Asian Development Bank
(ADB)
Safeguard Policy
Statement
World Bank Ten Operational Policies
Inter-American Development
Bank (IDB)
Sustainability Standards
International Finance
Corporation (IFC)
Performance Standards
Bilateral DFIs Subscribe to IFC
Performance Standards
©2013 Ekonnect Knowledge Foundation

12. Commonalities in Safeguards among
Financial Institutions?
 Environmental Assessment
 Involuntary Displacement
 Indigenous Peoples
 Natural Habitats
 Physical Cultural Resources
©2013 Ekonnect Knowledge Foundation

13. What are the differences in Safeguards
among Financial Institutions?
 ADB- List of Prohibited Investment
Activities
 FMO, Netherlands and IFC – Exclusion
List
 Wider exclusion list – FMO, Netherlands High Conservation
Value Areas
Pornography and
Prostitution
Racist
media
Anti-Democratic
Media
©2013 Ekonnect Knowledge Foundation

14. Points of conflict in DFI Safeguards and
Indian Requirements - Environmental
 International Finance Corporation’s Environmental Health &
Safety Guidelines
 Specific standards for emissions and effluents
 Borrower required to follow more stringent standards between
IFC and Host Country
©2013 Ekonnect Knowledge Foundation

15. Points of conflict in DFI Safeguards
and Indian Requirements - Social
Stage of conducting public consultation in environmental
assessment
Involuntary displacement – Responsible institution for
Resettlement and Rehabilitation
Compensation for titleholders and non-titleholders
Compensation for economic loss in addition to physical loss
©2013 Ekonnect Knowledge Foundation

16. Private Sector Financing Institutions
Principles & Initiatives
Periodic training on
Environmental And
Social Risk
Assessment
Follow IFC
Performance
Standards and EHS
Guidelines
©2013 Ekonnect Knowledge Foundation

17. The Pyramid of Harmonization of ESG
Policy Principles
Monitoring & Reporting (Responsibility, Scope, Rigor, Timing)
Procedures (Responsibility, Scope, Rigor, Timing)
Acts, Rules, Standards, Exclusions
(Best) Practices
Divergence increases as we move to the base
©2013 Ekonnect Knowledge Foundation

18. Role of Impact Assessment
 Encompasses Policy to Practice
 Addresses Sustainability at various Tiers
 Involves numerous and diverse stakeholders
 Harmonizing Impact Assessment will therefore help towards a
Global ESG Governance
©2013 Ekonnect Knowledge Foundation

19. Questions / suggestions ?
Email prasad.modak@emcentre.com,
prasad.modak@ekonnect.net
URL: http://www.ekonnect.net/
©2013 Ekonnect Knowledge Foundation