To all Financial Institutions (Banks, Pension Funds and Insurance Companies)
‘Getting the Environment into Business!’
I, along with millions of others around the world, have come to realise the importance of the world’s environment, especially in the context of our health and economic well-being. Many have taken small steps to help in reversing the many results of all of us ignoring the consequences of our way of life. But, we need a new way of thinking in terms of taking action, as part of our journey together. One way of bringing this change about is to encourage you, as ‘guardians’ of our financial capital, to only invest in businesses which meet certain criteria with regard to the environment. I would suggest that these criteria are used as a basis for deciding whether to invest or make loans to businesses:
1. Management System
Social and environmental management systems (according to the complexity of the operation) must be in place so that your auditors can confirm that the business is operated in compliance with the Sustainable Environment standards (see below) and the laws of the countries it operates. Such a system could be based on the ISO 14001 which is a voluntary international standard for environmental management systems – http://www.iso.org/iso/iso_14000_essentials . As part of such a system, appropriately trained auditors are appointed either by yourselves or an external consultancy is used – see below.
2. Ecosystem Conservation
A business must conserve existing ecosystems and aid in the ecological restoration of critical areas. They can achieve this by taking steps that protect waterways, wetlands and soil from erosion and contamination, prohibit logging and other deforestation, maintain vegetation barriers, and prevent negative impacts on natural areas.
3. Wildlife Protection
Appropriate action must be taken so as to mitigate any effects on wildlife due to any developments undertaken by the said business. This is particularly important for endangered species and their habitats. This includes educating workers, prohibiting hunting and the removal of plants and animals from their lands, protecting nesting places, and either releasing captive wildlife or registering animals with the proper authorities.
4. Water Conservation
The business must demonstrate that they are conserving water by keeping track of water sources and consumption. Its practices and equipment may need to be modified — or new technology installed — in order to reduce water consumption or to avoid contamination of springs and rivers on and near the property. The business should have the proper permits for water use, treat wastewater and monitoring of water quality.
5. Community Relations
An important part of any business is its relationship with local communities. As part of that, it should inform surrounding communities and local interest groups about their activities and plans. And consulting with interested parties about the potential impacts of the business and demonstrate that it has taken into consideration and amended its plans accordingly, should there be any negative consequences of its operation, is essential. As well as that, contributing to local development through sustainable employment, training and public works, all helps in developing good relationships. Any project will need to take into account how it will affect the way of life of local communities.
6. Use of chemicals
It is important that the business is working towards the elimination of chemical products that pose dangers to people and the environment, as an important part of its health, safety and well-being policies. Those policies need to show how the business intends to do this and what evidence it will provide to auditors to show that appropriate action has taken place.
7. Energy Use
As part of an environmental audit, the business needs to show that it is increasing its use of sustainable renewable energy, based on the effective use of wind, solar, water, waste and recycled products (providing they themselves do not cause environmental problems) as well as other appropriate renewable materials, on a year-on-year basis.
8. Integrated Waste Management
The business has programmes for managing waste through recycling, reducing consumption and reuse, in a sustainable, environmental and safe way. Waste is segregated, treated and disposed of in ways that minimize environmental and health impacts. Workers are educated about properly managing waste, at work and in their communities.
9. Buildings and Equipment
All buildings and equipment used by the business to demonstrate that they meet the above criteria. As well as that, buildings need to provide living spaces that enhance resident health by eliminating toxic materials and increasing the quality of air, through proper ventilation. With new buildings, the materials used should meet the latest sustainable environmental building standards – see for example: http://www.breeam.org/
10. Financial Assistance
The financial criteria that you have in deciding whether to invest or to give a loan will also need to take into account that the business involved is committed to the long-term sustainability in all areas of its operation, and that you are also committed to it as a long-term partnership. See – http://en.wikipedia.org/wiki/Corporate_sustainability
http://www.dsdni.gov.uk/finance_and_governance_for_vcu.pdf (although this is for the voluntary and community sector, it is a good basic guide for businesses to remind themselves why they exist)
http://www.ifc.org/ifcext/gfm.nsf/AttachmentsByTitle/FMS-EO-Supplychain/$FILE/FMS-EO-Supplychain.pdf (this is just an example of making finance available in a sustainable way)
11. Co-operation with External Bodies
As an optional criteria, a business is encouraged to co-operate in partnership with non-governmental bodies and the United Nations in developing a Green Economy – see http://www.unep.org/greeneconomy/AboutGEI/WhatisGEI/tabid/29784/Default.aspx ; http://www.unepfi.org/about/index.html
12. Use of Auditors
Your auditors must be trained in environmental auditing and be independent, having no direct or indirect links with the business to be considered for an investment or loan. See IEMA or similar bodies for examples of certification: http://www.iema.net/training/delegates/fciea . A full report must be produced giving the reasons a business either meets all the criteria or not. If it only meets some of the criteria, then a timetable should be suggested along with any available assistance, to aim for attaining all the criteria.