Abstract
Twenty years ago, engagement with communities affected by projects was limited, even non-existent in some parts of the world. Today, Project Sponsors invest in stakeholder engagement programmes with affected communities and stakeholders with varying degrees of effort and success. Environmental and Social Impact Assessments (ESIA) and stakeholder engagement programmes are a regulatory requirement for many development projects and a condition of the majority of project financiers who require the Project Sponsor to comply with international environmental and social standards. These can be referred to as “soft laws” or “performance benchmarks”, and include the Equator Principles, IFC’s Environmental and Social Sustainability Framework and EBRD’s Environmental and Social Policy. Compliance with regulatory and international standards should not be the only driver for undertaking ESIA and stakeholder programmes. Such activities can broadly reduce and control environmental and social project risks and improve project bankability. Environmental and social risks and impacts can result in delay, cost increase and can affect the Project Sponsor’s ability to repay existing project finance and access further capital at a reasonable cost. Many Project Sponsors, however, remain unconvinced. This chapter demonstrates that ESIA and stakeholder engagement are not just about compliance with regulations and international standards but an essential part of project risk management. Drawing on practical experience, it gives examples of how risks can be reduced or increased depending on the adopted approach. The chapter concludes with a summary of the business case for using the ESIA and stakeholder engagement processes to support risk management and timely project delivery.
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Notes
- 1.
http://www.equator-principles.com/index.php/ep3/324 : ‘Designated countries are those deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment’.
- 2.
Equator Principles III (June 2013), Exhibit III: IFC Performance Standards on Environmental and Social Sustainability (1 January 2012) and the World Bank Group Environmental, Health and Safety Guidelines.
- 3.
Terminology on ‘Mitigation Hierarchy’ varies but generally is formed around the stages indicated herewith.
- 4.
For example, the EC EIA Directive requires ‘a description of measures envisaged in order to avoid, to reduce and if possible remedy significant adverse effects’.
- 5.
Including: European Principles for the Environment (EPE), which consist of the guiding environmental principles enshrined in the EC Treaty and practices and standards incorporated into the EU’s secondary legislation on the environment.
- 6.
For example, the Aarhus and Espoo Conventions.
- 7.
Reference, Stakeholder Engagement: A Good Practice Handbook for Companies doing Business in Emerging Markets; International Finance Corporation (IFC) (First Printing: May 2007).
- 8.
These are ‘indicative’ case study scenarios.
Reference
National Environmental Policy Act (1969) Pub. L. 91-190, 42 U.S.C. 4321-4347, January 1, 1970, as amended by Pub. L. 94-52, July 3, 1975, Pub. L. 94-83, August 9, 1975, and Pub. L. 97-258, Ï 4(b), Sept. 13, 1982
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van Zyl, E. (2015). Investing in the ESIA and Stakeholder Engagement Process to Improve Project Bankability. In: Wendt, K. (eds) Responsible Investment Banking. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-10311-2_24
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DOI: https://doi.org/10.1007/978-3-319-10311-2_24
Publisher Name: Springer, Cham
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