This is a presentation I made at the Annual Conference of International Association of Impact Assessment at Calgary, Canada in May, 2013

1. Can we have a Global Standard
on
Prasad Modak IAIA 2013, Calgary
Environmental Social Governance?

2. 2 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
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 Im ple m e ntatio n o f Multilate ralEnviro nm e ntalAg re e m e nts (MEAs): A
Prim e r fo rAudito rs’ prepared by UNEP in cooperation with INTOSAI-WGEA,
2010

3. 3 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
What is Environmental, Social and
Governance (ESG) ?
 Term used by financial institutions
 Governance for managing impacts of
investments on environment, communities and
workers
Child LabourChild Labour Climate ChangeClimate Change Environmental PollutionEnvironmental Pollution
RegulationsRegulations
Ethical PracticesEthical Practices
Resource ManagementResource Management

4. 4 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
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.

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

6. 6 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
Forces towards Harmonization
National
ESG
Multilateral
Environmental
Agreements
Development
Financing
Institutions
Private Sector
Financing
Institutions
Communities
Markets Supply Chain

7. 7 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
Deeper and Tiered Process
Multiple Levels of Harmonization
Multilateral
Environmental
Agreements
Country
C
Country
A
Country
B
Equator
Principles
Bank
A
Bank
D
Bank
C
Bank
B
Development
Financing
Institutions
ADB
KfW
World
Bank
IDB

8. 8 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
Harmonization of What?
 Policy Principles
 Acts, Rules, Standards,
Exclusions/Prohibitions
 Procedures
 Practices
 Monitoring/Audit Protocols
 Reporting

9. 9 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
Influence by Multilateral Environmental
Agreements – Example of ESG in India
The Hazardous Wastes (Management,
Handling & Transboundary
Movement) Rules 2008
The Biological Diversity Act, 2002

10. 10 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
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

11. 11 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
Environmental and Social Safeguards of
DFIs
Development FinanceDevelopment Finance
InstitutionInstitution
Environmental and SocialEnvironmental and Social
SafeguardsSafeguards
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

12. 12 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
Commonalities in Safeguards among
Financial Institutions?
 Environmental Assessment
 Involuntary Displacement
 Indigenous Peoples
 Natural Habitats
 Physical Cultural Resources

13. 13 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
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 ConservationHigh Conservation
Value AreasValue Areas
Pornography andPornography and
ProstitutionProstitution
RacistRacist
mediamedia
Anti-DemocraticAnti-Democratic
MediaMedia

14. 14 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
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

15. 15 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
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

16. 16 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
Private Sector Financing Institutions
Principles & Initiatives
Periodic training on
Environmental And
Social Risk Assessment
Follow IFC
Performance Standards
and EHS Guidelines

17. 17 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
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

18. 18 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
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

19. 19 Can we have a Global Standard on Environmental, Social and Governance? – Prasad
Modak
Thank you for your attention
Contact: prasad.modak@emcentre.com