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Finance GreenWatch » 1. BANK, 4. Asset management & Pension » Legal Perspective: Green Finance Investment & Environment Protection (Sudan Vision Daily)

Legal Perspective: Green Finance Investment & Environment Protection (Sudan Vision Daily)

By: Dr. AdbelGadir Warsama Ghalib: Our culture, nowadays, is vastly changing to embrace a new sense of care towards the environment. Most people now look for and support environment conservation & betterment.

Governments, institutions and individuals are all becoming key determinants in this respect.
Looking for money to support public expenditure and budgets, governments used to work hard to get oil, gas & natural resources, in doing this, along with the assistance of big multinational companies, they are not paying enough attention to preserve the ecology & the environment within the places they are working-in.
 By time, this led to vast destruction and abuses of the environment & the habitat of living creatures. This adverse attitude makes our planet a dangerous and risky place for any one living there-in.
About twenty years ago, banks, financers & investment companies were not featured on environmentalist’s hit lists.
As we know, activists used to focus on large polluters in the oil fields, big factories & timber industries …etc. Over time, the pressure and green groups realized that one effective way to halt destructive practices is to take on the institutions that pay & bankroll them. Now, it is believed that the private financial sector more than any other has the ability to begin the ecological U-turn modern society so desperately needs.
Non-governmental organizations NGOs – known as BankTrack –
had actively collaborated with banks to jointly work and tackle environmental and social concerns.
The direct action and dialogue are paying off as banks begin to set what is known as “Green Goals”. As good examples, HSBC has promised to cut carbon emissions; Bank of America has pledged to shun investments in logging operations in the world’s most sensitive forests. More examples are there. Even more important is the introduction of new industry standards, such as the Equator Principles which “promote reasonable environmental stewardship and socially responsible development” by evaluating the threats or dangers that projects pose to forests, natural habitats, indigenous population ……etc
More than 80% of the global-project-financing market had jointly signed the Equator Principles, including US giants Citigroup, JPMorgan, Chase Manhaten, Bank of America & European banks including ABN Amro, Barclays, HSBC, ING ……, this indicates that YOU CAN DO WELL & DO GOOD and it is clear that every one is now interested in the balance between sustainability and economic development.
 Let us hope that this international fever spreads and our financers and banks follow suit and redraft their strategies and policies to cater for healthy & clean environment.  This is very simple and could be achieved by not financing any project that is likely to harm environment. We need green financers, green investors, green policy makers, green institutions & green NGOs.
Inter-marriage between finance investment and environment protection needs clear vision and firm strategy, it could be difficult at the beginning however, we need to start the march for the betterment of the coming generations.
Now, worldwide, extensive environmental-impact assessments are carried out before the work gets the green light to start particularly in projects that could harm the environment or the societies.
A good example is the pipeline running from Chad oil fields through Cameroon to the Atlantic, this project is supported by the World Bank and Citibank as the financer & Exxon Mobil have committed themselves to preserve the environment and they had provided compensation and health care to the local people whose lives and livelihoods were disrupted.
Also, a special Trust Fund was established to give all Chadians a share of the profits and this clearly shows a new era and a new relation between investment finance, the environment and the social development of the concerned areas.
 There are other examples such as the pressure on Citibank regarding a new pipeline through an Ecuadorian ecological preserve, wherein the CEO of Citibank was classified as environment villain for not applying the Equator Principles.
Another example wherein banks were criticized for funding BPs controversial Baku-Tbilisi-Ceyhan (BTC) pipeline, which will run through Azerbaijan, Georgia & Turkey to bring Caspian Sea oil to the west. BankTrack argued that the project violates the Equator Principles in key areas including environmental and social issues.
This indicates the fact that there is still some criticism to certain banks regarding their credit & finance policies, but no one can deny the fact that every day more and more banks, institutions and NGOs are likely to keep working together in issues relating to environment protection and conservation. The reason, we believe, is simply that socially and environmentally responsible investment makes good business sense.
Most giant banks as HSBC, Citigroup, ABN Amro… say green issues are increasingly important when they consider funding global projects in future, Equator Principles will be seen as a catalyst for how banks conduct themselves in other areas of their business. 
The World Bank & many regional finance institutions developed a standard procedure not to finance any project nor purchasing any merchandise unless due diligence is taken to ensure that their action will not harm or endanger the environment. Of course, environmentalist should rejoice & be thankful for this support.
I remember in Sudan, we used to use DDT for very long time in our homes & farms to kill insects…….. The World Bank used to finance purchasing DDT to kill insects in our agricultural projects, now DDT is no longer used nor financed by the World Bank after discovering its dangerous effects on human beings, animals & soil.
Many governments, interestingly, are encouraging banks and finance companies to go for green investments and as a sign of support those governments are cutting taxes or waving taxes by giving tax-haven to entities financing projects after taking all required necessary measures to preserve environment and give due care to social development.
A good example is Holland, wherein most Dutch banks have their own green fund. At least 70% of the capital in the green fund must be invested in so called “Green-Projects”, these are projects for which green certificates have been issued by the concerned Ministry. Experience shows that when financing projects with a green certificate, the green funds charge lower interest rates compared to commercial rates.
At the global level, the fabulous good works of a banker were recognized by giving The Nobel Peace Prize to Professor Mohamed Younis the founder of Grameen Bank who cares for financing poor people to develop their society. Bankers should take the lesson and understand the message, that financing should not only go for big projects that could harm the society and the environment. Micro-finance, no doubt, plays a major role in elevating poverty, enhance economy and preserve the environment and the indigenous society.
Apart from this, financing big projects should be undertaken after ascertaining that environment in not harmed. I believe that it is not difficult to do this, and this was proved to me when I visited different places including Fiat Motors Factory in Italy & Massey Ferguson Heavy Trucks factory in USA, wherein they are producing heavy equipments without damaging the environment, you never notice that there is a big factory in the area unless you go inside. The place is very clean, the air is very clean, people are very clean, no noise, no bad smell, no filthy water running, no scraps…………
I believe we need to educate our people how to follow this and we need to add this civilized attitude to our daily life & our culture.
Moreover, The United Nations is striving hard to achieve this, through the support of the United Nations Environment Programme Finance Initiative (UNEP FI) and other agencies, it had successfully launched what is known as the Principles of Responsible Investment PRI, which is to be considered as the first broadly defined effort to unify investors on a global basis around the environmental, social and governance principles that legitimize sustainable and responsible investment.
We need, to benefit from other countries and the international experience in relation to maintaining and adopting clean and green investments so as to take a positive role in keeping our globe environmentally acceptable and looks GREEN.
Needless to say that, some banks in the region started to look into giving green finance, however, the regulators and other public or private institutions along with NGOs should give more attention towards adopting a clear strategy in this respect and should consider giving certain incentives to banks going green and giving green finance.

 

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