The document discusses sustainability and corporate social responsibility in the context of project financing. It outlines key concepts like sustainable development, environmental and social risks, and standards like the Equator Principles that financial institutions use to manage risks. Compliance with these standards often requires assessment and engagement with stakeholders at early stages of project development.

1. Sustainability and CSR
Karen Clarke-Whistler and Leon
Botham
Golder Associates Limited

2. Agenda
• Environmental and Social Risks
• Equator Principles and International
Standards of Good Practice
• Practical Advice

3. Definition of Sustainable Development
“…development that meets the
needs of the present without
compromising the ability of future
generations to meet their own
needs.”
UN Brundtland Commission Report (1987)

4. Key Concepts
• Basic human needs are met with a fair
distribution of resources
• Natural resources are replenished at the
same rate as they are consumed
• Wastes production is prevented and wastes
broken down at the same rate they are
produced
• Biodiversity is maintained
… many interpretations

5. Environmental
management
Emissions, effluent
Tailings/waste
Contamination/
Liability
Energy usage
Raw materials
Water usage
Transportation
Land use &
biodiversity
Health and safety
Engaging local
communities
Workforce/labour
relations
Social impact/social
investment
Business ethics
Product impact
Supply chain
Media/NGOs
Governance
Profit/Growth
Investor relations
Transparency &
Reporting
Compliance
Innovation
Royalties & Taxes
Government
Relations
Financial/Economic Social Environmental
Sustainability Issues

6. Social
Acceptability
Practical Definition of Sustainable DevelopmentPractical Definition of Sustainable Development
Ecological
integrity
Ecological
integrity
Social
equity
Social
equity
Economic growthEconomic growth
SustainabilitySustainability
Economic
EnvironmentalSocial

7. Corporate Social ResponsibilityCorporate Social Responsibility::
corporate response to sustainable developmentcorporate response to sustainable development

8. Environmental issues
• Environmental footprint
• Biodiversity
• Emissions to land, air and water
• Acid generation and legacy issues
• Health and safety
• Stakeholder engagement
• Community quality of life

9. Value to
the
Business
Unrelated to operational
impacts
Related to operational
impacts
Business and
societal value
Philanthropy Social
Investment
Strategic social
investment
Social performance
management
Consultation , Engagement
Integration in the business
Social Contribution

10. Conclusion• Sustainable
development is the
most important issue
of the 21st century
• Like it or not, our
society will have to
deal with this issue
during the century

11. Business Case
Compliance
Eco-Efficiency
Eco-
Effectiveness
Social
Responsibility
License to Operate
Operational Efficiency
Access to Capital
Competitive Advantage
New Alliances
Cost / Risk Reduction
Reputation Enhancement
Innovation
Customer Loyalty
New Markets
Recruitment & Retention
Sustainability
©2005 BRIDGES to Sustainability

13. • 54 financial institutions
• Banks, export credit agencies, development
agencies
• Includes all top project finance banks (in
terms of debt underwritten)
• Represents >95% of global cross-border
finance

14. Equator Principle Banks
• Europe: Barclays, HBOS, HSBC, Royal
Bank of Scotland, Standard Chartered;
BBVA, Banco Galicia
• Canada: Scotiabank Royal Bank, BMO
Financial, CIBC

15. Preparation
• Guidelines for managing
environmental and social risks
• Links project financing with
sustainable development
• Applies to lending and advisory
services

16. Preparation
• Capital costs > $10 million
• Non-OECD or Low- and Middle-Income
OECD Countries
• Main focus on extractive sector,
chemicals, forestry, energy
• Increasingly applied to corporate finance

17. • 10 Equator Principles, based in IFC
Performance Standards and EHS Guidelines
• Policy-based
• Not strict guidance
• Subject to interpretation between banks

18. Understanding the Equator Principles
EQUATOR
PRINCIPLES
REGULATIONS IFC
PERFORMANCE
STANDARDS
EHS General and
Sector Guidelines
Other World Bank
Guidelines
• Voluntary initiatives

19. Performance Standards on Social &
Environmental Sustainability (2006)
• Replace Safeguard Policies:
• New:
1. Social and environmental assessment and management
systems
2. Labour and working conditions
3. Pollution prevention and abatement
4. Community health, safety and security
5. Land acquisition and involuntary resettlement
6. Biodiversity and natural resource management
7. Indigenous peoples
8. Cultural heritage
(www.ifc.org/enviro)

20. Environment, Health and Safety Guidelines
(2007)
• Replace
– Pollution Prevention and Abatement Handbook
– General Environmental Guidelines, Hazardous
Materials, Life and Fire Safety, Occupational Health
and Safety, PCBs, Wastewater Re-use, Wildlife
Management
• New
– General EHS Guidelines (Q2 2007)
(www.ifc.org/enviro)

21. Environment, Health and Safety Guidelines
(2007)
• Replace
– Mining and Milling – underground and
open pit, draft Precious Minerals, Coal
Mining, Coke Manufacturing, Copper
Smelting, Aluminum, Base Metals and Iron
Ore, Iron and Steel, Lead and Zinc, Nickel
• New
– Mining (Q4 2007)
– Smelting and Refining (inc. aluminum) (Q4
2007)
(www.ifc.org/enviro)

22. Industry Codes & Standards
• Extractive Industries Transparency Initiative
• ICMM Principles of Sustainability (requirements
recently updated)
• ‘Towards Sustainable Mining’ (MAC)
• ‘Enduring Value’ (MCA)
• International Cyanide Management Code
• Etc.

23. • Sustainable development issues go beyond
compliance
• Consideration of environmental and social
issues at an earlier stage of project
development (Pre-EIA)
• More formal approach to stakeholder
relations
Risks to Extractive Sector

24. • Community relations and stakeholder
engagement initiated at exploration
• Additional up-front costs
• Large companies do not want to inherit
legacy of poor social (and environmental)
management
Risks to Extractive Sector

25. What should you do?
– Got a geologist? Now hire community
relations resource
– Be strategic in identifying social
development issues
• Link to Project impacts and priorities
• Tie into community needs
• Harmonize with government initiatives,
policies and programs

26. Dealing with Financial Institutions
Be prepared:
– different interpretations
– limited internal capacity
– highly sensitive to NGOs
– application to projects in developing
and developed world
– application to corporate finance
– carbon risk will become a key issue –
trading opportunities

27. Summary
• Bank will be come involved in
Projects at an early stage (e.g.,
advisory services)
• Borrowers subject to detailed
assessment
• Annual reporting requirements for
borrowers and lendors