One of the arguments in making the business case for sustainable development is that improved sustainability performance will result in lower risks for the financial institutions that provide debt and equity funding as well as insurance to the industry. If these institutions were able to recognize good environmental and social performance, they would reward companies with lower costs of capital and insurance premiums. Thus, the financial institutions are potentially an important leverage point to improve sustainability performance.
The World Bank has a set of detailed environmental and social guidelines for its lending activities to industry, through the International Finance Corporation (IFC) and for insurance services offered through MIGA, as well as some specific policies on the mining sector. Private lenders broadly apply these, including export credit agencies, regional banks, and others – even where no World Bank financing is involved. Banks make significant efforts to analyse risks, and many expect adherence to World Bank and IFC guidelines as a minimum. In this regard, the standards of the multilateral banks (led by the World Bank) have become important global policy instruments. They have challenged the borrower countries to implement their requirements.
National export credit agencies (ECAs) – considered the quiet giants of mining finance – have somehow managed to remain outside the public debate and avoid vociferous NGO lobbing. They have remained less rigorous in their application of social and environmental criteria and less accountable for the environmental consequences of their finance – although exceptions include the UK, Australian, Canadian and US ECAs. By not adhering to broad standards ECAs lower the standards of other finance agencies.
Possible next steps
i) Establish a supranational finance body to vet/approve extractive industry projects with respect to corporate responsibility – a sort of international ombudsman – that could help maintain consistency.
ii) OECD governments must continue work on harmonizing Export Credit Agreements with best practice.
48 ROOM TO MANOEUVRE?
1 Technical papers commissioned include: Blench, R. (2002) Biodiversity Issues: The Enabling Environment and Mining. Prepared for the MMSD October 2001 workshop on Mining and Biodiversity. London: IIED and WBCSD. Vorhies, F. and Bertrand, N. (2002) An Exploratory Paper on Economic and Financial Mechanisms to Build Synergies and Reduce Conflicts Between Mining and Biodiversity. Prepared for the MMSD October 2001 workshop on Mining and Biodiversity.
London: IIED and WBCSD. O’Keefe, Ed (2002) Mining, Sustainable Development and Biodiversity Issues. Prepared for the MMSD October 2001 workshop on Mining and Biodiversity. London:
IIED and WBCSD. All available at www.iied.org/mmsd/activities/biodiversity.html
2 Richards, D. (2002) Mining and Protected Areas. Prepared for the MMSD October 2001 workshop on Mining and Biodiversity. London: IIED and WBCSD. Phillips, A. (2002) Mining and Protected Areas. Prepared for the MMSD October 2001 workshop on Mining and Biodiversity.
London: IIED and WBCSD. See www.iied.org/mmsd/activities/biodiversity.html
3 See www.icmm.com/html/biodiversity.php
4 See www.riia.org
5 Much of the material in this chapter was taken from the two papers presented at the MMSD October 2001 workshop by Richards, D. (2002) Mining and Protected Areas. Prepared for the MMSD October 2001 workshop on Mining and Biodiversity. London: IIED and WBCSD.
Phillips, A. (2002) Mining and Protected Areas. Prepared for the MMSD October 2001 workshop on Mining and Biodiversity. London: IIED and WBCSD. See
www.iied.org/mmsd/activities/biodiversity.html. However, the material presented here is the author’s interpretation of the material contained in the papers.
6 Hotspots are characterised by both high levels of endemism and high levels of threat, see Myers et al. (2000). Endemic bird areas contain two bird species that have a breeding range of less than 50,000 sq km, see ICBP (1992). Eco-regions are large units of land or water with distinct climate, ecological features, and plant and animal communities. They are considered to be some of the richest, rarest and most endangered areas, and hence of critical conservation concern; see http://nationalgeographic.com/wildworld (a WWF initiative called Global 2000).
7 See www.edenproject.com
8 A report on biodiversity and EIA commissioned by the International Association of Impact assessment has gone some way towards addressing the integration of biodiversity into EIA systems, but further work is needed.
ICMM (2002) www.icmm.com
IUCNc (1994) Protected Area Management Categories. IUCN, Gland.
IUCNa – Amman Resolution Recommendation 2.8, see www.iucn.org
IUCNb - http://www.iucn.org/info_and_news/press/miningbiodivstat.pdf and for the Terms of Reference of this relationship http://www.iucn.org/info_and_news/press/newfebruary03.htm IUCN (2002) Environmental Sustainability Guidelines on Mining and Petroleum Extraction Activities
in Arid and Semi-Arid Zones.
King, M. (2000) Presentation by King M. (Richards Bay Minerals) on Greater St Lucia Wetlands Park, South Africaat the Technical Workshop on World Heritage and Mining, Gland, Switzerland, 21-23 September 2000.
Koziell, I. (2001) Minutes of the 1st Mining and Biodiversity Workshop.Hurlingham Club June 2001.
Koziell, I. (2001) Minutes of the 2nd Mining and Biodiversity Workshop.Hurlingham Club October 2001. See http://www.iied.org/mmsd.
Koziell, I. (2003) Minimising negative environmental impacts: Protecting Sensitive Areas: Access and Management Issuesin RIIA (2003) Extractive Industries and Sustainable Relationships. London:
Royal Institute for International Affairs.
MEM (1998) ‘Mining and the Emerald Isle’.Mining Environmental Management 6 (5). London.
MMSD/IIED (2002) Breaking New Ground.London: International Institute for Environment and Development.
Nostromo Research (2001)The case against QMM/Rio Tinto in Madagascar. Report commissioned by Friends of the Earth (England, Wales and Northern Ireland) for presentation to the Malagasy Government. London. Available at the Mines and Communities website
O’Keefe, E. (2001)Presentation at June 2001 MMSD Mining and Biodiversity Workshop.
Porter, G. et al. (2001) Review of an Ileminite Project in South East Madagascar. Unpublished report.
Conservation International, Washington, D.C.
QMM S.A. (2001) Ileminte Project: Social and Environmental Impact Assessment and Environmental Management Plan.QMM S.A.
Ramos, B. (2000)Case Study: Donana National Park. Presentation at the IUCN/ICME/UNESCO World Heritage and Mining Workshop, Gland, Switzerland, 2000.
Sassoon, M. (1998) ‘Los Frailes Aftermath’. Mining Environmental Management 6(4): 8-12 Stokes, M. and Derham, J. (2000) The Regulation and Construction of a New Zinc Mine. Workshop
on Mine Waste Management. Brussels, July 2000.
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