Volume 3 • Issue 2 • September 2006 - CBS 2016cbs.teriin.org/pdf/EnCore/6.pdf · 2 Volume 3 • Issue 2 • September 2006 EnCoRE Coordinator, TERI–BCSD India Annapurna Vancheswaran

Volume 3 • Issue 2 • September 2006

2 Volume 3 • Issue 2 • September 2006

EnCoRE

Coordinator, T E R I –BCSD India

Annapurna VancheswaranAssociate Director, SustainableDevelopment Outreach, T E R I<[email protected]>

Editorial Board

R K Pachauri, Director-General, T E R I ;Chairman, T E R I –BCSD IndiaR K Narang, Distinguished Fellow, T E R I ;Convener, T E R I –BCSD IndiaMarcel Engel, Director, World BusinessCouncil for Sustainable DevelopmentRegional Network

Editor

Satyajeet SubramanianResearch Associate, T E R I –BCSD India<[email protected]>

Associate Editors

N Deepa, Associate Fellow, T E R IJaya Kapur, Information Analyst, T E R I

1 ABN Amro Bank

2 Associated Cement Co. Ltd

3 Air India

4 Alcatel India Ltd

5 Andhra Pradesh Paper Mills Ltd

6 Ashok Leyland Ltd

7 Ballarpur Industries Ltd

8 BASF India Ltd

9 BG Exploration and Production

India Ltd

10 BP India Services Pvt. Ltd

11 Bharat Heavy Electricals Ltd

12 Bharat Petroleum Corporation Ltd

13 Cairn Energy India Pvt. Ltd

14 Chambal Fertilizers and Chemicals Ltd

15 Coca-Cola India

16 Container Corporation of India Ltd

17 Continental Construction Ltd

18 Chennai Petroleum Corporation Ltd

19 DCM Shriram Ltd

20 Ecosmart India (Infrastructure

Leasing and Financial Services)

21 EI Dupont

22 Forbes Gokak Ltd

23 GAIL (India) Ltd

24 Hindalco Industries Ltd

25 Hindustan Lever Ltd

26 Hindustan Petroleum Corporation Ltd

27 HSBC (Hongkong and Shanghai

Banking Corporation) India Ltd

28 IBP Company Ltd

29 Industrial Development of Bank of

India (IDBI)

30 Indian Farmers Fertiliser

Co-operative Ltd

31 Indian Metals and Ferro Alloys Ltd

32 Indian Oil Corporation Ltd

33 Ispat Industries Ltd

34 ITC Paperboards & Specialty Papers

Division Ltd

35 Jaypee Cement Ltd

36 Kerala Minerals and Metals Ltd

37 Lafarge India Ltd

38 Mahanadi Coalfields Ltd

39 National Thermal Power

Corporation

40 Numaligarh Refinery Ltd

41 Oil India Ltd

42 Oil and Natural Gas Corporation Ltd

43 Petronet LNG

44 Power Grid Corporation of India Ltd

45 Power Trading Corporation of India Ltd

46 Rabo India Finance Pvt. Ltd

47 Rallis India Ltd

48 Reliance Energy Ltd

49 Reliance Industries Ltd

50 Seshasayee Paper and Boards Ltd

51 Shell India Pvt. Ltd

52 Shree Cement Ltd

53 SREI Infrastructure Finance Ltd

54 Steel Authority of India Ltd

55 Sterlite Industries (India) Ltd

56 Sun Group Ltd

57 Suzlon Energy Ltd

58 TATA Chemicals

59 TATA Motors Ltd

60 TATA Steel Ltd

61 The TATA Power Company Ltd

62 Toyota Kirloskar Motor Pvt. Ltd

63 Usha Martin Industries Ltd

64 YES Bank Ltd

T E R I–BCSD Indiacore@ter i . res . in • www.ter i . res . in /core • www.ter i in .org • www.wbcsd.org

T E R I–BCSD (TERI–Business Council for Sustainable Development) India –

initiated by T E R I – is a regional network partner of the WBCSD (World

Business Council of Sustainable Development), Geneva. It provides an

independent and credible platform for corporate leaders to address issues

related to sustainable development and to promote leadership in

environmental management, social responsibility, and economic

performance. Membership is open to organizations. The following are its

current members.

C O N T E N T SEditorial

•Point of view

The Equator Principles: time to get on boardHerman Mulder

Co-author of the Equator Principles•

FocusAdopting the Equator Principles in India:responses from Equator banks and the

International Finance Corporation•

FeatureBeyond the Equator: how social, environmental,

and ethical factors are reshaping financeNick Robins

andRitu Kumar

•Partners in change

Project Green: growing renewable energy forenergy security

New members at T E R I –BCSD India•

On the move5th T E R I Corporate Awards for

Environmental Excellence and CSRFirst Thematic Advisory Meeting of

T E R I–BCSD IndiaInternational initiatives

•Resources

PublicationsInternet resources

New arrivals at T E R I library•

Calendar of events

3Volume 3 • Issue 2 • September 2006

EnCoRE

R K Pachauri

Director–General

T E R I

Editorial

ndia is currently at the

crossroads, having recorded

consistently high rates of economic

growth in the last three years,

averaging 8% per annum. The major

implication of this is a much faster

rate of growth in infrastructure,

including roads, power plants,

airports, and habitat-related

facilities. The renewed emphasis of

the government in providing

upgraded facilities such as roads and

connectivity to rural areas is adding

to the boom that the country is

witnessing all around in the

development and growth of all forms

of infrastructure.

In this path towards development,

India has critical choices to make.

The easiest, but perhaps the one with

the most serious negative

implications, would be to merely

replicate the pattern established by

the developed countries of the North.

This, of course, would increase our

dependence on fossil fuels and

demands on natural resources. In

addition, it would create a large

footprint on the country’s

ecosystems, which are already under

stress in several parts of this nation.

On the other hand, if the choice made

favours the principle of sustainable

development, we could achieve the

same goals through greater efficiency

in the use of energy, greater and more

sustainable use of renewable sources

of energy, and a minimization of

environmental impacts along the

entire supply chain related to

construction activities. A remarkable

example of this has been created in

the RETREAT complex of T E R I in

district Gurgaon, which uses no

power from the grid, recycling all the

waste generated through organic

means and building the principles of

energy efficiency and sustainability

into the design and construction of

the complex. T E R I has also

constructed other buildings for its use

in Bangalore and Guwahati, which

embody similar principles. Currently,

T E R I is constructing a building with

80 000 square feet of covered area

for the T E R I School of Advanced

Studies, which would also be a

unique complex in a prominent part

of Delhi. All of these are examples of

socially responsible investment in the

creation of infrastructure that

embody the criteria of sustainability.

In this regard, financial

institutions – including banks and

government bodies – need to

embrace the letter and spirit of the

Equator Principles. This set of

principles was adopted by a group of

banks and banking institutions in

London on 6 July 2002. T E R I has

been engaged in promoting the

adoption and application of these

principles in India, but progress has

thus far been inadequate. However,

given the rapid rate at which

infrastructure investments are taking

place in this country, further delay in

the acceptance of these principles

would represent a missed opportunity

of huge dimensions with

consequences that would be spread

over a long period of time. While

financial institutions and banks need

to establish a strong commitment to

the Equator Principles, it is for all

elements of industry to subscribe to

them, because much of the upcoming

infrastructure involves projects being

implemented by corporate entities.

This issue of EnCoRE provides

useful information and inputs on the

Equator Principles, and, through this

publication, T E R I intends to initiate a

new set of efforts to see that these

find an appropriate place in project

activities to be undertaken in this

country in the future.

I


EnCoRE

POINT OF VIEW

least environmentallysustainable projects? In Indiaand China, where mega-projects are increasingly beingfinanced domestically, leadinglocal banks should urgentlyconsider adoption. Thesecountries, with rapidlyexpanding infrastructurerequirements, will be thesource of considerableinvestment in the comingyears, and engagement bytheir banks in the EquatorPrinciples is vital for improvedenvironmental and socialperformance in thesecountries. These governmentsshould be encouraging banksto adopt environmental andsocial standards tocomplement nationalstandards.

Other multilateral andbilateral development bankshave policies that differ insignificant ways from those ofthe Equator Principles and theIFC (International FinanceCorporation), whose policies,in part, form the basis of theEquator Principles.Considering the major rolethat these institutions play ininfrastructure financing in thedeveloping world, policies ofthese institutions should beharmonized. Pride of

ownership should not get inthe way of addressing thisissue in a coordinated fashion.Export credit agencies are alsoimportant players in theproject-finance market, andthey are currently consideringwhether they should use theEquator Principles as theirbenchmark for structuredfinance lending. I stronglyurge them to do so. To theextent that project developershave different policies to pickand choose from, or can workwith financial institutions thathave no policies at all, there isthe risk of environmentalshopping and sub-optimaloutcomes.

While the revision to theEquator Principles wasinitially driven by the changesto the performance standardsof the IFC, more importantly,the changes reflect a maturingof the banking industry inmanaging environmental andsocial risk. The new EquatorPrinciples extend the scope ofcoverage to smaller projects(with a capital cost of $10million or more), to projectexpansions and re-financings,and to project financeadvisory work. Further, therevision includes, for the first

The Equator Principles: time to get on board

Herman Mulder

Co-author of the Equator Principles and

former Senior Executive Vice President, Group Risk Management, ABN AMRO

n 6 July 2006, 40financial institutions

decided to re-adopt theEquator Principles. TheEquator Principles providebanks with a governing set ofenvironmental and socialpolicies to apply in theirproject-finance lending—thatis, projects often with the mostsignificant environmental andsocial impacts such as mines,pipelines, roads, and powerplants, and projects often inemerging markets that lackadequate regulatoryframeworks. Today, theEquator Principles coverabout 80% of the project-finance bank market.However, despite yesterday’ssuccess, the EquatorPrinciples are at risk if there isnot a convergence ofenvironmental and socialstandards amongst themultitude of players financingprojects in the developingworld.

Several major project-finance banks in France,Spain, Germany, and Australiahave not adopted theprinciples, and their lack ofadoption is troubling. Doesany credible financialinstitution wish to occupy themarket niche of financing the

O


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time, a reporting requirementfor each bank on itsimplementation performance.

The fact that these 40financial institutions arewilling to be more assertive ontheir commitments istestimony to the change thathas occurred in the financialindustry in recognizing itsresponsibility forenvironmental and socialissues. At ABN AMRO, wehave grappled with reportingissues, where clientconfidentiality and the need tobe accountable often areincompatible. We havestruggled in considering suchenvironmentally sensitiveprojects where there areconflicting pressures tosupport a major client who is

working hard to addressissues, but where outcomesare uncertain. We have alsodeveloped new products,embarked on a climate changepolicy, established afoundation, and entered adialogue with our peers andNGOs (non-governmentalorganizations). This sameprocess is occurring in manyof the world’s major privatefinancial institutions.International developmentagencies need to demonstratethe same leadership.

The Equator Principles arean impressive demonstrationthat private-sector-led,voluntary initiatives can makea difference. Increasingly,these institutions have come torecognize their responsibility.

Now it is surely time for otherplayers in the project financemarket to get on board.Convergence within thefinancial industry on auniform set of environmentaland social standards would berevolutionary in its simplicityand in raising the bar onenvironmental and socialperformance. Projectdevelopers would knowprecisely what is expected ofthem from the outset. Theextended lead times forplanning major infrastructureinvestments means that longbefore any financial institutionis involved, developers aremaking crucial decisions withinevitable environmental andsocial impacts. They need toknow what is expected of them.

• News • Articles • Case studies• Announcements • Technical notes • Suggestions

All members are requested to send latest company annual reports; environment, corporate socialresponsibility, and sustainable development reports

EnCoRE invites contributions from T E R I–BCSD India members on themes related to

sustainable development in the form of

For details on advertising and contributing in EnCoRE, please contact

The Editor, EnCoRE Tel. 2468 2100 or 4150 4900T E R I, Darbari Seth Block Fax 2468 2144 or 2468 2145I H C Complex, Lodhi Road India +91 • Delhi (0) 11New Delhi – 110 003, India E-mail [email protected], [email protected]

Contributions invited

◆◆◆◆◆


EnCoRE

F O C U S

Adopting the Equator Principles in India

Responses from Equator banks

1 For further information, please visit <http://www.equator-principles.com> and <http://www.ifc.org/enviro>.

What made ABN AMROadopt the Equator Principles?The driver for adopting theprinciples was criticism thatABN AMRO and other leadingbanks were receiving forfinancing projects withoutstructurally and consistentlytaking into considerationenvironmental and social riskswithin them. ABN AMRO,together with the IFC,convened a meeting of theleading project-financepractitioners globally to discusshow such environmental andsocial risks of project financecould be better managed. Theoutcome was the decision tocollectively develop a set ofenvironmental and socialprinciples, based on the IFC’s

policies and guidelines, tounderpin the assessment ofsuch risks. For ABN AMRO,this represented an opportunityto develop an effective riskassessment and managementframework, while, at the sametime, ensuring that this was anindustry-wide initiative. Theneed to create a level-playingfield was an importantconsideration, as banks shouldnot be competing over thisspace.

In addition, the IFCSafeguard Policies (now IFCPerformance Standards) andSector Guidelines at the timerepresented industry bestpractice, and we feltcomfortable applying these asthe benchmark for our

assessments. In re-adopting thenew principles, we haveconfirmed our continued beliefthat the IFC PerformanceStandards represent financialsector best practice.

If banks operating in Indiabegin to look at the EquatorPrinciples as guidelines,what kind of institutionalchanges would have to beput in place, for both thebanks and the lendingorganizations?For the most part, this dependson the level of due diligencethat banks are alreadyundertaking on such issues. TheEquator Principles were lessabout departing from the normor creating a radical new risk

n London, in October 2002, several leading banks decided to develop a bankingindustry framework for addressing environmental and social risks in project financing.

This framework later led to the drafting of the Equator Principles, based on the social andenvironmental safeguard policies of the IFC (International Finance Corporation). Accordingto the Equator Principles, the signatory banks would assess the present social andenvironmental risks, as well as understand any possible fallouts as a result of the impact ofany project before financing it. Financial institutions that have adopted the principles are in abetter position to assess, mitigate, document, and monitor both the credit risk and reputation riskassociated with financing development projects. When an institution adopts the principles, theyindividually affirm that it has or will put in place internal policies and processes that are in linewith the Equator Principles.1

ABN AMRO Bank, HSBC India, and Rabo India Finance Pvt. Ltd are leaders in thefinancial sector that have adopted the Equator Principles. In the following section, these banksexamine the various implications of adopting the Equator Principles in India.

I

ABN AMRO BankAndré Abadie, Head, Sustainable Business Advisory


EnCoRE

management approach, andmore about establishing greaterconsistency and structurearound an already existing partof risk management that bankshave so far been less thoroughand structured in approaching.The principles engender farmore organization, rigour, andstructure, whereby such riskscan be assessed andappropriately managed.

It must be noted that theEquator Principles do not addcomplexity for clients seekingproject financing that arealready undertaking their ownfeasibility, impact assessments,and due diligence, but rather,create a framework for thebanks to better assess andunderstand such due diligence.By referencing the IFC policiesand guidelines, there is also thecomfort that clients will be ableto rely on an accepted set ofguidelines that are already thebenchmark for most projectfinancing globally. We haveavoided the creation ofadditional hurdles by relying on

such existing approaches. Thishas been confirmed during ourconsultation with clients on theestablishment of the principles,and we are happy to share suchfeedback with you.

From an organizationalperspective, each bank needs todetermine how best to put inplace governance structures toensure that the EquatorPrinciples can be effectivelyimplemented. The approachABN AMRO has taken is toaccord primary responsibilityfor implementation of theprinciples and assessment toproject finance staff, whileproviding training and tools tobe able to assess compliancebased on the due diligenceprovided to us by clients. Inaddition, a dedicatedenvironmental and social riskmanagement team oversees theeffective assessment of projectsand advises the decision-making committees on projectcompliance with the EquatorPrinciples.

What steps could be taken toencourage banks in India toadopt the principles? Who doyou feel should take a lead inthis regard?ABN AMRO plans to organizea workshop to raise awarenessfor Indian banks and clients onthe Equator Principles, and isalso willing to host riskmanagers or project financiersfrom Indian banks in our officesin Amsterdam to showcase howthe principles are applied inpractice. We could bring theIFC and other Equator banksinto the workshop to ensurethat Indian banks view this as atrue industry approach. Wecould also compare how theIndian environmental andsocial standards meet with therequirements of the principles,to ensure that there is a morepronounced understanding ofthe variances in practice (wherethese exist) and assess to whatextent compliance with Indianstandards meets with theEquator Principles.

What made HSBC adopt theEquator Principles?HSBC believes that financialinstitutions can play animportant role in ensuring thatthe companies and projectsthey finance and adviseproperly manage their ownenvironmental and socialimpacts.

The Equator Principles,which provide a framework toensure that project financetransactions are undertakenonly after a thorough

consideration of potentialenvironmental and socialimpacts, have become theforemost industry standard andthe cornerstone of HSBC’sapproach to financing projectsand contributing to sustainabledevelopment.

In 2005, HSBC provided30% more project loans anddeclined fewer deals, reflectingimprovements in our training aswell as in the internal andexternal requirements forcompliance with the principles.

Chairing the Equator PrinciplesWorking Group and assisting inimproving the principles hashelped us appreciate thesignificance of this initiative toour business and clients.

HSBC builds upon theEquator Principles through itsown environmental sectorpolicies, which give guidance onenvironmental and socialstandards accepted by theindustry and other stakeholdersas representing good practice.We have published policies on

HSBC IndiaMalini Thadani, Head of Public Affairs


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the forest land and forestproducts sector, freshwaterinfrastructure sector, chemicalssector, and energy sector. Apolicy on the metals andmining sector will be publishedin late 2006.

If multinational banksbegin to look at the EquatorPrinciples as guidelines,what kind of institutionalchanges would have to beput in place, for both thebanks and the lendingorganizations?EPFIs (Equator Principlesfinancial institutions) areorganized differentlyinternally, and each EPFIcommits to embedding theimplementation of theprinciples into its business andrisk management processes ina manner consistent with itsorganizational structure.EPFIs that have adopted theprinciples have concentratedon implementation stepswithin their organizations,including formal changes tointernal credit policies andprocesses to mandate the useof the Equator Principles. Anychanges to the newly revisedEquator Principles will needto reflect in updates orenhancements to each EPFI’s

respective credit policies andprocedures once they endorsethe new principles.

Additionally, the newprinciple on EPFI reportingrequires that each EPFIadopting the EquatorPrinciples commits to publiclyreport at least annually aboutthe implementation processand experience, taking intoaccount appropriateconfidentiality considerations.Such reporting should at leastinclude the number oftransactions screened by eachEPFI, including thecategorization accorded totransactions, and informationregarding implementation.EPFIs believe strongly thatthis will significantly increasetransparency regarding theimplementation of the EquatorPrinciples across the industry.

What challenges do youforesee in adopting theprinciples in India?No Indian bank has yetadopted the Equator Principles.Challenges arise in applyinguniform rules-basedassessments across socially/politically/economically diversecountries, especially in Asia.

Banks in Latin America andAsia are increasingly

recognizing the benefits ofmanaging sustainabledevelopment and risk via theEquator Principles. From aproject perspective, thecurrent EPFIs are alreadyfinancing projects in Indiawith reference to the EquatorPrinciples. We hope that theselead to more banks in Asia/India adopting the principles.

One of the other challengeswould be in the implementationof the principles for any newbank. The current EPFIs haveprovided help to newcomersand would be happy to offerguidance to new Indian banks.

Brazil is a good example ofhow banks can work togetherwith business organizations totake the Equator Principlesforward. CEBDS (ConselhoEmpresarial Brasileiro para oDesenvolvimento Sustentável)is a Brazilian organizationsimilar to BCSD (BusinessCouncil for SustainableDevelopment) and they havehosted meetings to familiarizelocal Brazilian banks with theEquator Principles. HSBC andABN AMRO have alsoassisted via their local offices.A Brazilian representative,Banco Itau, which leads thelocal banks on CEBDS, nowbelongs to the EquatorPrinciples Working Group sothat we can take Brazilianissues into account.

We welcome increasedparticipation in the EquatorPrinciples from financialinstitutions in Asia and LatinAmerica. Input from emergingmarkets including India willstrengthen the principles andincrease their relevance inthese markets.


EnCoREWhat made Rabobank adopt

the Equator Principles?With its cooperative roots andcontinued global focus on thefood and agriculture business,sustainable development is acore value for Rabobank.Within the larger ambit of CSR(corporate social responsibility),the environment is seen as abusiness risk and concerns areholistically addressed in projectfinancing. Adopting theEquator Principles was thelogical extension to Rabobank’scommitment to CSR.Rabobank recognizes that withso much dispersion anddiversity in India, the EquatorPrinciples play a compellingrole for stakeholders to arriveat common standards ofbiodiversity and environmentaldegradation. The revisedEquator Principles launchedrecently have been readilyadopted by Rabobank.

Rabo India follows the globalcore values and, hence, thecommitment to CSR/sustainable developmentcontinues to be a primeconsideration while assisting therelevant projects. Rabo Indiaalso has a special focus on thefood and agriculture businessand renewable energy projects,where due checks are made toensure that assistance does notflow to ‘non-compliant’projects. As an abundantcaution, Rabo India discouragessocially and environmentallyunfriendly projects.

If banks in India begin tolook at the EquatorPrinciples as guidelines,

what kind of institutionalchanges would have to beput in place, for both thebanks and the lendingorganizations?As of now, about 40 banks haveadopted the Equator Principlesacross the globe. However, noIndian bank has yet committedto the Equator Principles,despite the unequivocalcommitment made by most ofthe state governments tosustainable development. Banksin India have generally focusedon the techno-economicfeasibility of projects withminimal regard for issuesrelating to sustainabledevelopment. There areinstances when EIAs(environmental impactassessments) have been usedmore as a formality, with allkinds of acceptable variations.

Indian banks are encouragedto come together on a globalplatform to set commonstandards on sustainabledevelopment. Education is themissing link, which should leadto the realization amongst the

banking leadership thatsustainable development is notmerely a facade, but rather, abusiness risk. I have nohesitation in saying that thefinancial sector could, andshould, play a big role as anagent of change, to implore thecorporate world for adhering toCSR/sustainable development.

What challenges do youforesee in adopting theprinciples in India?The biggest challenge Iperceive in the universaladoption of the EquatorPrinciples by the bankingfraternity is the lack ofrealization of the risk inherentin non-adherence to theprinciples. It is only a matterof time before the issue getsrecognized as a business risk,as opposed to a mereenvironmental concern. TheIndian Banks Association andorganizations like theChamber of Commerce couldplay a major role in creatingawareness amongst the financialcommunity. TERI could also

Rabo India Finance Pvt. LtdRajesh Srivastava, Managing Director and Head, Corporate and Commercial Banking


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Response from the International Finance Corporation, South Asia

he IFC (International Finance Corporation), the private sector arm of the World Bank,is one of the largest multilateral organizations, providing finance such as loans, and

equity and risk management in the developing world. In October 2002, the IFC convened ameeting of banks in London, UK, to discuss environmental and social issues in projectfinance. The banks present at the meeting then decided to develop a banking industryframework for addressing environmental and social risks in project financing. This led to thedrafting of the Equator Principles, which to date have been adopted by a total of 40 financialinstitutions.

Satyajeet Subramanian, Research Associate, TERI–BCSD India, spoke withRobin Sandenburgh and Sameer Singh, Social and Environmental Specialists at IFC SouthAsia, to understand the institution’s position on the Equator Principles and the safeguardpolicies of project financing.

T

What was the need to revisethe IFC Social andEnvironmental PerformanceStandards, upon which theEquator Principles are based?There were both external andinternal drivers to the review.Internally, the IFC had takensteps to transition to a newbusiness model of sustainabledevelopment, which is based

on the premise that long-termprofitability and strong projectoutcomes are better securedby companies that manage allof their risks well.

Also, the IFC’s growingexperience with its previoussafeguard policies had begunto indicate that these policieswere not always adequate toaddress complex project

situations on the ground, aconclusion that was bolsteredby increasing public criticismof some projects that had notachieved the intendeddevelopment outcomes.

In 2001, IFC managementrequested a review of the policiesby the IFC’s CAO (ComplianceAdvisor Ombudsman).2 TheCAO’s final report, A review of

2 The CAO, an independent office that reports directly to the President of the World Bank Group has three major roles—(1) ombudsman: to advise and assist the IFC to address complaints by people directly impacted by projects in a mannerthat is fair, objective, and constructive; (2) compliance: to oversee compliance reviews of the IFC, overall environmental andsocial performance, and specific projects; (3) advisor: to provide independent advice to the President and management onspecific projects as well as broader environmental and social policies, guidelines, procedures, and resources.

play an important role tounderscore and quantify thebusiness risk inherent for thefinancial sector.

Any professionalexperiences where theEquator Principles haveproved to be a pivotalfactor in a transaction?I have been through anexperience on an assignmentin Singapore where Rabobankgave up its leadership positionin a particular palm oilcompany because of a

perceived violation of CSRprinciples; the company wascontributing to thedeforestation of highconservation value forest. Weperceived the businessopportunity as a very short-term, unsustainable benefit forRabobank, as against muchlarger looming losses due tothe perceived violation. I amemphasizing the word‘perceived’, since we had theliberty to interpret theviolation liberally and grab theopportunity; however, we

applied a more stringentinterpretation in view of ourcommitment to the EquatorPrinciples. Such instances arequite common in Rabobank,as we have also dissociatedfrom certain opportunities inLatin America where we sawcases of deforestation in theAmazon region.

Compiled bySatyajeet Subramanian

Research AssociateTER I–BCSD India


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IFC’s SafeguardPolicies, was releasedin April 2003.Following thatreview, the IFClaunched an updateof its safeguardpolicies anddisclosure policy, aswell as key guidancematerial.

What is the roleof the IFC inhelping financialinstitutionsunderstand andthen adopt theEquator Principles?The IFC provides training to avariety of organizations all overthe world, including Equatorbanks, environmental and socialconsultants, financialinstitutions, export creditagencies, and otherorganizations interested in theEquator Principles. The IFCrecently contracted with fourcompanies to deliver thetraining internationally on itsbehalf.

The training programmewill cover the content of theperformance standardsillustrated by examples andcases. The four firms –Environmental ResourcesManagement (WashingtonDC), Overseas DevelopmentInstitute (London), ScottWilson (London), andSustainable Finance Ltd (UK)– are tasked with addressingthe training needs of EquatorPrinciple institutions as a firstpriority, and thereafterproviding training for otherstakeholders. The IFC is alsodeveloping a series ofguidance tools to help with the

implementation of thestandards. This includes alabour ‘toolkit’, which willhelp companies recognize andaddress labour issues, as wellas a Good Practice Note oncommunity engagement.

What is the level ofcompliance that the IFClooks at before they fund aproject?To obtain IFC finance,companies must demonstratethe willingness and capacity toimplement the IFC’sPerformance Standards, whichdefine the clients’ roles andresponsibilities for managingtheir projects and therequirements for receiving andretaining IFC support. Theeight performance standardsaddress1 social and environmental

assessment andmanagement systems;

2 labour and workingconditions;

3 pollution prevention andabatement;

4 community health, safety,and security;

5 land acquisition andinvoluntary resettlement;

6 biodiversity conservationand sustainable naturalresource management;

7 indigenous peoples (i.e.,social groups withidentities that are distinctfrom dominant groups innational societies); and

8 cultural heritage (propertyor sites that havearchaeological,paleontoligical, historical ,cultural, artistic or religiousvalues, as well as uniquenatural features thatembody cultural values,such as sacred trees orgroves).

The IFC works with itsclients and potential clients toassess the social andenvironmental impacts of theiroperations, and to develop aprogramme for mitigating anyimpacts that cannot beavoided. Key elements of the


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programme are embodied inan action plan, that specifiesthe steps the company willtake to achieve thePerformance Standards, and atimetable for doing so.

Is there a ‘handholding’exercise with the client toimprove their existingsocial and environmentalsystems?The IFC has every incentiveto help its clients establish andmaintain robust, effectivemanagement systems —whether these relate tofinancial management orenvironmental and socialmanagement. Ourenvironmental and socialspecialists work with clientcompanies on an ongoingbasis to help them integrateenvironmental and socialconsiderations in theirmanagement systems, assesssocial and environmentalimpacts, engage with localcommunities, and monitorand report on the results oftheir efforts. Our goal is toprovide the benefits of ourexperience and expertise – aswell as our finance – to clients.Many companies tell us that itis these elements of our offerthat bring them to the IFC.

Are these standards similaracross all nations in allsectors?To clarify, the IFC onlyoperates in emerging markets.In addition to thePerformance Standards, whichapply to all sectors, the IFCalso has a series ofenvironmental, health, andsafety (EHS) guidelines, whichcover close to 70 industrial

sectors, such as steelmanufacturing, dairyprocessing, and powergeneration, and the specificimpacts that may result fromtheir operations.

The performance standardsare technical referencedocuments that address IFC’sexpectations regarding theindustrial pollutionmanagement performance ofits projects. They are designedto assist managers anddecision-makers with relevantindustry background andtechnical information. Thisinformation supports actionsaimed at avoiding, minimizing,and controlling EHS impactsduring the construction,operation, and decommissioningphase of a project or facility.

What have been IFC’slearnings and challenges?The consultations IFC held aspart of its environmental andsocial safeguards review werethe longest and broadest thatwe have ever conducted. TheIFC had signalled that itwould meet with anyone,anywhere, any time to discussthe new policies, and theconsultations extended furtherthan any previous outreacheffort. When the consultationperiod closed in April 2005,the IFC had received,reviewed and responded tosubstantial input from theprivate sector, industryassociations, internationalfinancial institutions,intergovernmentalorganizations, governments,academic, and a wide range ofcivil society organizations.

Our current challenge isimplementation. We are

confident that we have put inplace the necessary internalresources, which includedactively recruiting new staff andexpertise. Environmental andsocial experts have been‘mainstreamed’ into linedepartments and are nowintegrated into project teamsfrom the very start of anappraisal. Investment officersare being trained on thestandards, and the IFC now hasan incentive programme thatrewards them for projects thatdemonstrate strongdevelopmental impact over thelong term.

We also have to ensure,however, that our clientcompanies have the capacityto implement therequirements of the newstandards. While amultinational corporation canmobilize resources – internalto the company or by hiringexpert consultants – smallcompanies may not be able to,and we have to make sure thatthese requirements do notdeter them from seeking IFCfinance. We are here to helpsmall businesses. We have inplace numerous technicalassistance programmes,funded in cooperation with anumber of donor countries,which enable us to providerequired expertise whereneeded. We can provide adviceand expertise on manydifferent issues, from cleanerproduction, to communityengagement, to corporatesocial responsibility. Ourability to help clients in theseareas gives all of us at IFC anenormous sense ofprofessional accomplishmentand satisfaction.


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F E A T U R E

Beyond the Equator: how social, environmental, and ethical factorsare reshaping finance

Nick Robins, Head of SRI Funds, Henderson Global Investors

Ritu Kumar, Director, T E R I–Europe

he finance industry –stretching across

banking, investment, andinsurance – has traditionallyviewed itself as having arelatively benign set of SEE(social, ethical, andenvironmental) risks, whencompared with directlyexposed sectors such aschemicals, fossil fuels, andpower. For a decade or more,however, the rising demandfrom customers for sociallyresponsible services,increasing pressure from civilsociety, changing regulatoryframeworks, and the growingimportance of intangiblecontributors to financialperformance have all ledbanks, investors, and insurersto start embeddingsustainability into theirbusiness operations. Therecent launch of Equator II isthus just an example of awider and more profoundmovement across the financialsector.

The first organized effort tobring financiers together onsustainable developmentemerged in the run-up to the1992 Earth Summit with thelaunch of UNEP’s (UnitedNations EnvironmentProgramme) statement onbanks and the environment.This was quickly followed by aparallel venture for the

insurance sector. Fifteen yearslater, the two initiatives havemerged, and together have230 signatories in over 45countries with a wide-rangingbody of work on critical issuessuch as climate change,investment, reporting, conflict,and water, as well as well-developed regionalprogrammes. So far, there isonly one Indian signatory ofthe UNEP FinanceInitiative—the newly foundedYES Bank.

More broadly, theinvestment community hasseen an explosion ofinnovation in sociallyresponsible investment.Growing out of a small‘ethical’ niche, SRI (sociallyresponsible investment) fundshave grown rapidly in the pastfive years, notably in Europe.Here, two high-profile SRIindices have been launched—the FTSE4Good series andthe Dow Jones SustainabilityIndex. In addition, the appealof ‘clean tech’ funds investingin both public and privateequities have surged on theback of concerns aboutclimate change, energysecurity, and water stress. Inaddition, major pension fundsin Europe and North America,such as CalPERS (CaliforniaPublic Employees’ RetirementSystem) and CalSTRS

(California State Teachers’Retirement System) inCalifornia, the Reserve Fundin France, the NorwegianPetroleum Fund, and the UKUniversity SuperannuationScheme have all beenpioneering efforts to integrateSEE factors into investmentand governance decision-making.

A priority area has been theinvestment implications ofclimate change, wherepowerful scientific evidencealong with tighteningregulations have madechanging weather patterns andcarbon management key areasof risk. To enable investors tomake informed decisions inthis new landscape, theCarbon Disclosure Project hasbrought together an alliance of211 institutions with assets ofover 31 trillion dollars to seekimproved reporting from 1800companies across the globe. Inthe fourth call for informationin February 2006, 19 Indiancompanies were approached toprovide information on therisks and opportunities thatclimate change presents totheir businesses. Of these, twohave declined to respond, sixhave provided the information,and the rest are either in theprocess of doing so or are yetto respond. The results of thefourth call for information are

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to be published in September2006. The Carbon DisclosureProject has plans to increaseits coverage of Indiancompanies in February 2007when the fifth call forinformation will be launched.

Along with climate change,human rights is a major areaof focus. In May 2006, forexample, CalPERS bannedinvestments in nine companiesas a result of their businessoperations in Sudan, includingthree from India. In May2006, a number of leadingpension funds and fundmanagers worth 4 trilliondollars came together with the

UN to launch the Principlesfor Responsible Investment,which captures good practicesin terms of investmentintegration and shareholderactivism.

Social, market, andregulatory pressures forfinance to do more forsustainable development areonly set to increase further.One powerful straw in thewind was the release of theCollevecchio declaration onfinancial institutions andsustainability in January 2003,backed by over a hundredNGOs (non-governmentalorganizations). This calls on

banks and investors tointegrate consideration ofecological limits, social equity,and economic justice intotheir corporate strategies.Expectations are set to risestill further, with business andreputational advantages tothose that can anticipate andshape these trends throughproactive strategies.

For further information, visit

<http://www.unepfi.org><http://www.unpri.org>

<http://www.cdproject.net> and<http://www.henderson.com/sri>

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P A R T N E R S I N C H A N G E

he dangers of excessiveoil dependence in today’s

world require us to look atways to reduce thisdependence, while augmentingthe supply of transportationfuels to keep society’s needs atpace with progressivedevelopment. While researchfocuses on alternate fuels, it isnow apparent that liquidhydrocarbon fuels willcontinue to be importantglobally, at least in the nearforeseeable future for the nextfew decades.

It is in this context that thelarge-scale production and useof bio-diesel becomesstrategically important for thenation. The availability of bio-diesel in the country willcreate a positive impact on thenation in terms of energysecurity and environmentalprotection, in addition toother social benefits such asgenerating large-scaleemployment and contributingto the overall developmentprocess in the country,especially in the rural areas.

There is little validatedinformation on large-scaleplantations of jatropha in thecountry. The jatropha curcasplant is mostly found in semi-wild conditions. There are noimproved varieties of jatrophaat present. There are also noexisting large-scale old (tenyears or more) plantations thatmay provide reliable data onyields. Inadequate seed

availability is a major problem.Jatropha curcas has never beengrown in the organized sectorand there is very littleinformation available ongermplasm. Further, widevariations in seed yields andoil content have beenreported. This limits theaccurate estimation of yieldpotentials in different agro-climatic conditions for thisplant. Under Indianconditions, where little hasbeen explored anddocumented in referredliterature, there is, therefore, aneed for intensive research toenable exploiting it to its fullpotential. The plant isundoubtedly a treasure, whichhas so far not receivedadequate attention in thecountry.

These problems, therefore,need to be adequatelyaddressed to make thecultivation and processing ofjatropha bio-diesel aneconomically attractiveproposition.

Project objectivesBP and TER I have taken up alarge-scale bio-dieseldemonstration project inAndhra Pradesh, India. Themajor objective of the projectis to demonstrate the viabilityof bio-diesel production on alarge scale, while addressingthe challenges and learningopportunities from all aspectsof the supply chain—from

cultivation to processing andend use. The major stepsinvolved in the establishmentof the demonstration projectinclude the following.P The development of

seedlings, nursery, andplantation of high-yieldingvarieties of jatropha (forvariable conditions) on aneconomic basis.

P The identification of nearcontiguous plots of landwith a wide variability insoil types, cultivationpractices, irrigation needs,fertilizer inputs, etc. forplacement underplantation.

P Determining, and puttingin place, acceptablecontractual terms forfarmers to participate inthis project, whileprotecting their short- andlong-term prospects.

P The testing of differentmodels of plantation.

P Carrying out environmentaland social impactassessment so that theproject has no negativeimpact.

P Identifying sustainablemechanisms for thecollection of seeds and itstransport to expelling/trans-esterification centresthat would maximizereturns to the localeconomy.

P Setting up oil expelling andtrans-esterification units.

P Developing an institutionalmodel for long-termownership of assets andmanagement of theprogramme.

P Determining markets forthe bio-diesel and by-products.

Project Green: growing renewable energy forenergy security

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P Setting up trainingfacilities and undertakingplanning for farmers andworkers to be engaged inthe production centres.

Projected impacts of theproject

The project would providemulti-faceted benefits tosociety, including thefollowing.

Employment opportunitiesThe total employment from8000 hectares at full-yieldingstages would generateapproximately 1.16 millionperson days from all theactivities.

Capacity buildingThe project would offer avariety of training andconsultancies in varioustechnical and functional areasto all the players operating inthe field of oilseed cultivation.These would vary fromP training the farmers

involved in jatrophacultivation on issues of landpreparation, seedplantation, usage andapplication of fertilizersand pesticides, harvesting,grading, and storage;

P training the persons workingin the expelling centres onseed decortication, machine-handling in differentprocesses, management ofthe unit, and financialissues;

P training the personsworking in the trans-esterification unit formethoxide preparation,esterification reaction,settling, draining, washingthe ester, glycerol

separation and washing,and condensing methanol,and other safety measuresfor handling the plants andchemicals; and

P developing a trainingmanual by the experts ofthe sector.

Green-cover development andrestoration of wastelands

The project will turn 8000hectares of unutilized land/wasteland into productivegreen land. This will add tothe aesthetic beauty andecological balance of the landin addition to generatingrevenue for the farmers.

Environmental impacts fromthe projectEnvironment health

Jatropha plantation for theproject will not rely on the useof harsh chemicals andfertilizers, and will involve theapplication of TER I’smycorrhizal biofertilizerapplication. This will be idealfrom the environmentalviewpoint. The use ofjatropha-derived bio-diesel isreported to result in asubstantial reduction ofunburnt hydrocarbons, carbonmonoxide, particulate matter,and non-toxic emissions ascompared to fossil diesel fuel.The project will assess theenvironmental impact toensure that it has no negativeimpact.

GHG emissionsThe increase in theatmospheric concentrations ofGHGs (greenhouse gases) isexpected to result in climatechange, which would, in turn,impact agriculture, forests,

and coastal areas. One of themain GHG emissions iscarbon dioxide (CO2)produced due to thecombustion of fossil fuels.

It is currently believed thatcarbon dioxide reduction fromjatropha-derived bio-dieselcould be as much as 80% on alife-cycle basis. This will bethe focus of a detailed study asa part of this project.

Carbon tradingJatropha, apart fromenhancing energy security,ensuring employment anddevelopment, and mitigatingenvironmental pollution, canbe instrumental in carbontrading if certain criteria ofthe CDM (clean developmentmechanism) of theUNFCCC’s (United NationsFramework Convention onClimate Change) KyotoProtocol are fulfilled. Thereductions in carbon dioxideemissions can be accumulatedand traded as carbon credits.

Time planThe project, which is expectedto take 10 years, will cultivatearound 8000 hectares of landcurrently designated aswasteland with jatropha andinstall all the necessaryequipment for seed crushing,oil extraction, and processingto produce 9 million litres ofbio-diesel per annum.

Overall deliverables fromthe project

The final outputs from theproject would be thefollowing.P 8000 hectares of land

under jatropha plantationwith clearly documented


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contracts protecting thelong-term interests offarmers/panchayats in termsof access to processingunits.

P Analysis and evaluation ofthe commercial aspects ofbio-diesel production.

P Documentation of expertiseon setting up nurseries,

plantation models(including the impact ofkey factors such as soil typeon yield and economics),and cooperative farming.

P Developing a fullunderstanding of theenvironmental and socialimpacts of all aspects of thesupply chain.

Delhi Sustainable Development Summit 2007

Meeting the MDGs: exploring the naturalresource dimensions

22–24 January 2007, New Delhi, India

P One of the largest events of its kind in the world

P More than 500 global delegates from the corporate sector, governments, institutions, and

non-governmental organizations

P CEO Forum – A unique platform for bringing together businesses for deliberation on

corporate responsibility and sustainable development

P VIP Dinner – An exclusive high-profile gathering

TERI has taken up a major responsibility of continuously providing knowledge and stimulating

debate on various aspects of sustainable development. The DSDS (Delhi Sustainable

Development Summit) – an annual international event organized by TERI since 2001 – is one

such initiative that has emerged as the only forum on global sustainability issues, with an

accentuated thrust on problems relating to the developing world. The DSDS brings the finest

minds of the world together to deliberate upon specific themes and formulate strategies to set

forth paradigms and approaches of sustainable development.

The summit series has attracted participation from a host of dignitaries worldwide,

comprising heads of governments, Nobel laureates, corporate leaders, and ministerial-level

representation from more than 25 countries around the world—Australia, Bangladesh, Bhutan,

Canada, Denmark, Ethiopia, Finland, Germany, Iceland, India, Indonesia, Iran, Israel, Italy,

Japan, Kenya, Lesotho, Malaysia, Maldives, Mauritius, Mexico, Norway, South Africa, Sri Lanka,

Sweden, The Netherlands, USA, and UK.

The DSDS 2007 will focus on the theme Meeting the MDGs: Exploring the natural resource

dimensions and will be held during 22—24 January 2007 at New Delhi, India. The CEO Forum

will be held on 21 January 2007.

For more information, please contact

Ms Annapurna VancheswaranAssociate DirectorTel. 91-11-24682100E-mail [email protected]

P Developing anunderstanding of optimumconversion technologies.

For further information,please contact

Alok AdholeyaDirector

Biotechnology andManagement of Bioresources

<[email protected]>


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Industry/sector : Oil and gas (exploration andproduction)

Annual turnover : Approximately US$ 260 million(Cairn Energy Plc, total sales 2005)

Number of employees : Approximately 600 employees in India

airn Energy Pvt. Ltd,with its corporate offices

in Edinburgh, Scotland andGurgaon, Haryana, believesthat a holistic approach to theenvironment and socialresponsibility requiresembedding these functionalaspects into all spheres of thecompany’s activities. Thus, theterm ‘corporate responsibility’encompasses the environment,security, safety and health,and cuts across the variousfunctional departments and

levels of management. Undera holistic approach, theconcept of HSE (health,safety, and environment) andsecurity envelope not onlyemployee concerns, but alsothe concerns of contractorsand the community at large.

The present efforts forenvironment managementinclude: GHG (greenhousegas) reporting; biodiversityprotection and conservation;sub-surface re-injection ofproduced water; bio-

remediation of oilcontaminated wastes; socio-economic development ofrural communities, healthcare, rainwater harvesting,and education. Cairn Energyworks in close partnershipwith NGO’s (non-governmental organizations),community representatives,the local government, and thevarious regulators, andbenchmark, as appropriate,with international goodpractices and performancestandards.

Nodal person forTER I–BCSD India:

K JaishankarDGM (Environment and CSR)

Cairn Energy India Pvt. Ltd4th floor, Orchid Plaza

Sector 54, SuncityGurgaon – 122 002, Haryana

C

Areas of interest in the next year includeP climate change,P environmental education and awareness,P forestry and biodiversity,P water conservationP alternate livelihood, andP rural economy development.

Industry/sector : Textiles, shipping, engineering,health and hygiene, and publications

Annual turnover : Rs 18 billion (FY 2005)Number of employees : 11 000

Forbes Gokak Ltd promotesseveral initiatives as a part oftheir commitment to

environmental managementand social responsibility.Prominent contributions have

been in the areas ofafforestation, townshipmanagement, and power

New members at T E R I–BCSD India

Forbes Gokak Ltd

Cairn Energy India Pvt. Ltd

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Industry/sector : BankingAsset base : Euro 506 billion (Rabobank

globally)Number of employees : 50 998 (December 2005;

Rabobank globally)

Rabobank operates through2500 offices across 38countries. It designs financialproducts and services thatsupport India’s social andenvironmental frameworktowards a sustainabletomorrow.

Rabobank was amongst thefirst financiers to support wind

farming, and hydro andbiomass projects in India. Itfurther provides technical andadvisory support to clients toadopt environmentally friendlyprocesses in the sugar andpaper sectors. Rabobanksupports the development of avibrant carbon emissionsmarket in India. Its social

responsibility initiatives inIndia include partnering andsupporting ‘Door StepSchool’, which provideseducation to underprivilegedchildren, and working inconjunction with the SujayaFoundation to providecounselling and assessment,English emersion courses, andvocational courses.

Nodal person forTER I–BCSD India

Jotdeep SinghAssociate Director

Relationship ManagementRabo India Finance Pvt. Ltd

1-A JanpathNew Delhi – 110 001, India

Gokak has often providedsupport to victims withmedical aid and relief.

Nodal person forTERI –BCSD India:

K C MehraDeputy Chairman and

Managing DirectorForbes Building, C Rai Marg

Fort, Mumbai – 400 001

Areas of interest in the next year includeP environmental education,P forestry and biodiversity,P information technology applications for rural development,P rural and renewable energy, andP water conservation.

dissemination. Efforts topromote education and healthcare in their plant locations atBelgaum, Hosur, Chennai,

and Gokak have also been athrust area for the company.During emergencies andnatural calamities, Forbes

Areas of interest in the next year includeP biofuels,P climate change,P rural and renewable energy,P water conservation, andP sustainable banking.

Rabo India Finance Pvt. Ltd


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O N T H E M O V E

5th TERI Corporate Awards for EnvironmentalExcellence and CSR

he Hon’ble President ofIndia, Dr A P J Abdul

Kalam, felicitated eight Indiancorporate houses forenvironmental excellence andCSR (corporate socialresponsibility) at the 5th TERICorporate Awards at AshokaHotel on 26 June 2006.Instituted by TER I, theawards seek to createawareness and implementstrategies for improvingenvironmental managementstandards.

TThe President of India releasing the T E R I publications

The President alsoreleased two TER Ipublications on theoccasion—Cleaner is cheaper(vol. 4) and Citizens at work(vol. 2). Delhi ChiefMinister, Ms Sheila Dikshitdelivered a special address atthe ceremony. Dr BrijmohanLall Munjal, Chairman, HeroGroup and Dr R K Pachauri,Director–General, TER I alsograced the occasion.

The winners were chosenfrom among 152 applicants.

They were selected after anintense screening by a nine-member jury, chaired by JusticeJ S Verma, former Chief Justiceof India.

TER I instituted the TER ICorporate Awards forEnvironmental Excellence in2001 and the TER ICorporate Awards for CSR in2002. The aim behindestablishing these awards wasto provide recognition to theongoing process ofenvironmental managementand protection, accompaniedby the adoption of a sociallyresponsible approach tobusiness within the Indiancorporate sector.

In his speech, the Presidentespoused the importance ofattaining energy independencein India and suggested how togo about achieving this. Heshared his vision for thecountry, set milestones, andlisted possible roles for TER Iin contributing to the cause.

Winners of the TERI Corporate EnvironmentAwardsCategory I Mecpro Heavy Engineering LtdCategory II The Madras Aluminium Company LtdCategory III First prize: The Singareni Collieries

Company LtdSecond prize: Northern Coalfields Ltd(Subsidiary of Coal India Ltd)

Winners of the TERI CSR AwardsCategory I Sakthi Masala (P) LtdCategory II Solaris Chemtech LtdCategory III First prize: Usha Martin Ltd

Second prize: Hindustan Lever Ltd CMD of Singerani Collieries receiving theT E R I Corporate Award


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over the last one and a halfyears between TER I–BCSDIndia and its members, fivethemes have been identified tobe the advocacy issues for thefuture. The themes are energy,water, climate change, health,and sustainable livelihoods.Each theme has a TAG(thematic advisory group)made up of council members.

Understanding the TAGconcept is critical for theTER I business councilmembers to identify,conceptualize, and implementactivities and projects basedon the themes upon whichTAG’s success is dependent.

In continuation, TER I–BCSD India organized its firstthematic advisory meeting tolaunch TAG and discuss theproposed thematic projectsunder it. The presentationsheld on 26 June 2006, NewDelhi were followed by a paneldiscussion.

Ms Annapurna Vancheswaran,Associate Director, SustainableDevelopment Outreach,TER I, formally welcomed theTER I–BCSD India memberswith a special mention of CairnEnergy Pvt. Ltd as the 63rdmember. A salver was alsopresented on the occasion.

After the initialunderstanding of the conceptand working of TAG through apresentation by Mr PratikGhosh, Area Convenor,TERI–BCSD India, detailedpresentations of three projectson water, health, and energyTAGs were made.

Dr Kapil Kumar Narula,Associate Director, WaterResources Policy andManagement, TER I,discussed the approaches ofthe TERI business councilthrough the proposed waterstudy to secure long-termwater availability for itsmember companies tofunction and exercise their

social right to operate. He alsospoke about TER I–BCSD’scapacity-building programmesfor its member companies onwater balance and water audits.

The project under the TAGon health, titled Assessing thefinancial implication of HIV/AIDS to Indian companies waspresented by Ms SwethaDasari, Research Associate,TER I–BCSD India.Explaining the objective of theproject, Ms Dasari stressedthat for every infection that isaverted, the company savesmoney and the cost of HIV/AIDS prevention programmesbecomes an investment for thecompany, rather than anexpenditure head.

Dr Sameer Maithel,Director, Energy–EnvironmentTechnology Division, TERI ,in his in-depth presentation,provided an overview of theproposed project under theTAG on energy, which focusedon energy consumption inbuildings through TERIGRIHA (Green Rating forIntegrated HabitatAssessment). The objective ofthe TAG on energy is tosensitize member companiesabout the need to conserveenergy in buildings and helpthem to introduce the conceptof green buildings. On briefingthe steps, he added that thelevel of energy wastage in theirbuildings would be identified,and then programmesconducted would equip thecorporate organizations withthe basic expertise required todevelop an energy managementplan for their buildings.

First Thematic Advisory Meeting of T E R I –BCSD India

Cairn Energy Pvt. Ltd being welcomed as the 63rd member of T E R I–BCSD India


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The discussions moderatedby Mr Satyajeet Subramanian,Research Associate, TER I–BCSD India, effectivelybrought about an in-depthanalysis with each of thepanellists, followed by a livelydiscussion with participantswho shared their opinions oneach of the proposed studies.

Ms Malini Thadani, HSBC(Hongkong and ShanghaiBanking Corporation) India,shared that the bank has beenrating their buildings inseveral nations. HSBC wouldnow rate the level of energyconsumption at their Mumbaioffice through TER I–GRIHA.She further stressed theimportance of having energy-efficient systems in place fornew buildings.

Speaking on water,Mr Ashok Jaitly, DistinguishedFellow, TER I, said thatindustry is facing an increasedrisk from mounting water

stress, leading to a growth inbusiness disruption, andthereby further increasingwater costs for a company.

While referring to capacitybuilding, Mr Jaitly felt that thevarious levels of companiesshould be sensitized abouthow critical water mightbecome in the coming years.

Ms Sabine Durier, IFCAgainst AIDS1, said that herorganization has tried to usethe argument of financialimpact to motivate privatesector participation in India,but companies have tended toignore it as it is not based onIndia-specific data. She,therefore, welcomed TER I’seffort to work on this type ofdata. Finally, she urged that itis also important to assess theincentives for the privatesector engagement. It isnecessary to explore thevarious models, apart fromcost benefit and financial

implication, to get moreenterprises involved in theprogramme against HIV/AIDS, she added. Dr RituKumar, Director, TER I–Europe, said that while costbenefit analyses are indeedvery useful for companies, it isalso important to establish amanagement system based onthe findings. These operationsshould go beyond thecompany, as initiatives in thesupply chain are also a part ofthe company’s responsibility.

Dr Leena Srivastava,Executive Director, TER I,concluded by sharing thatTER I would want to buildthe capacities of corporatemanagers that would, in turn,lead to a large degree ofsustainability. Creatingsustainable developmentmodels and systems wouldhave to be company driven toallow innovation andleadership to effectively run

these programmes in-house. It would beimportant to furtherwork towardsconverting exitingpartnerships intosuccess stories and todisseminate industrybest practices.

The meetingconcluded with thevote of thanks byMr G Gogulakrishnan,Research Associate,TER I–BCSD India.

1 IFC Against AIDS is the HIV/AIDS awareness and prevention programme of the International Finance Corporation.

Industry participants during the discussions


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The Equator Principles arefinancial industry benchmarksfor determining, assessing,and managing social andenvironmental risk in projectfinancing. These principles areintended to serve as acommon baseline andframework for implementationby each EPFI (EquatorPrinciples FinancialInstitution) for its owninternal social andenvironmental policies,procedures, and standardsrelated to its project financingactivities.

The EPFIs have announcedthe launch of the revisedEquator Principles. Therevision underscores how farthe financial sector hasprogressed in embedding a

International initiatives

common set of best practicesto manage social andenvironmental risks in theproject finance arena. Therevised principles reflect theexperience of the 40 financialinstitutions around the worldthat currently apply theprinciples. In developing thesechanges, the EPFIs’ activelyinvolved clients, civil societygroups, and officialdevelopment agencies, allprovide constructive andvaluable feedback that theEPFIs evaluate and considerin the revision process. TheEquator Principles applyglobally and to all sectors andhave been revised in thefollowing ways.P The principles apply to all

project financings withcapital costs above $10million. This threshold waslowered from $50 million.

Citigroup Inc.

Citigroup Inc. is a financial services company with about 200million customer accounts in more than 100 countries.Citigroup was one of the first institutions to spearhead thedevelopment of the Equator Principles that apply to projectfinance transactions in all industry sectors across the globe,including mining, oil and gas, power, and forestry. Projectfinance is the financial technique often used to providecapital to large energy and transportation infrastructureprojects and can present environmental and social challenges.More than 120 members of Citigroup’s project finance andindependent risk management team are directly involved inthe implementation of the Equator Principles. A number ofother people are also impacted, especially relationshipmanagers in those industries that are most involved in projectfinance transactions, such as oil and gas, mining, and power.

For further information visit <http://www.citigroup.com/citigroup/>

P The principles now alsoapply to project financeadvisory activities.

P The revised principles nowspecifically cover upgradesor expansions of existingprojects where theadditional environmental orsocial impacts aresignificant.

P The approach in applyingthe principles to countrieswith existing highstandards forenvironmental and socialissues has beenstreamlined.

P Each EPFI is now requiredto report on the progressand performance in theimplementation of theEquator Principles on anannual basis.

P Stronger and better socialand environmentalstandards, including morerobust public consultationstandards.

For further information visit<http://www.equator-

principles.com>

International FinanceCorporation

The Equator Principles reflectthe recent revisions to the IFC(International FinanceCorporation) performancestandards, upon which theEquator Principles are in partbased. Four firms have beentasked to deliver externaltraining on the IFC’s newperformance standards onsocial and environmentalsustainability. The firms willaddress the training needs of


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HSBC

Headquartered in London, HSBC (Hongkong andShanghai Banking Corporation) is one of the largestbanking and financial services organizations in the world.HSBC’s international network comprises over 9500 officesin 76 countries and territories in Europe, the Asia-Pacificregion, the Americas, the Middle East, and Africa. TheEquator Principles are a cornerstone of HSBC’s approachto how they finance projects and contribute to sustainabledevelopment. In 2005 they provided 30% more projectloans and declined fewer deals, reflecting improvements intheir training as well as internal and external requirementsfor compliance with the principles. Chairing the EquatorPrinciples working group and assisting in improving theprinciples have helped HSBC appreciate the significance ofthis initiative to their business and clients.

For further information visit <http://www.hsbc.com>

Equator Banks as a firstpriority, and thereafter coverthe training needs of otherstakeholders.

The IFC is using a series ofEHS (Environmental, Health,and Safety) guidelines, whichare technical referencedocuments that address the

IFC’s expectations regardingthe industrial pollutionmanagement performance ofits projects. They are designedto assist managers anddecision-makers with relevantindustry background andtechnical information. Thisinformation supports actions

aimed at avoiding, minimizing,and controlling EHS impactsduring the construction,operation, and de-commissioning phase of aproject or facility. The IFC isundertaking thecomprehensive review andupdate of the EHS Guidelines.The EHS Guidelines havebecome globally appliedreferences for private sectordevelopment, with their useextending well beyond WorldBank Group operations to adiverse external community,such as other internationalfinancial institutions,regulators, industry,academics, and commercialbanks, including theinternational banks that haveadopted the EquatorPrinciples.

For further information visit<http://www.ifc.org/

equatorprinciples> and<http://ifcln1.ifc.org/ifcext/

enviro.nsf/Content/EnvironmentalGuidelines>

GTZ and TERI partner to felicitate corporate effortstowards HIV/AIDS prevention

In order to co-opt the private sector in the fight against HIV/AIDS, TER I, in associationwith GTZ (German Technical Cooperation) has announced an exclusive award for businessengagement in the area of HIV/AIDS interventions as part of the TERI Corporate Awards.

The award will acknowledge and felicitate the efforts of companies that have successfullylaunched and executed HIV/AIDS interventions programmes either at their workplace,community, or supply chain.

The last date for submission of award applications is 30 November 2006.

For further details, visit <http://www.teriin.org/awards> or write to <[email protected]>


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Publications

Corporate SocialResponsibility. Volume 1:Concept, Accountability andReporting

Allouche J (ed.) 2006New York, USA: PalgraveMacmillan. 408 pp.Price: US$ 99.95

This book, the first of twovolumes on CSR (corporatesocial responsibility),contributes new ideas on thetheme of global responsibilityfrom a European viewpoint,and raises questions of howEuropean values can beadopted into the Americanmainstream. It looks at theconcept of CSR, theregulatory environment, andthe institutional frameworks.

From Challenge to Opportunity:The role of business intomorrow’s society

2006Geneva, Switzerland:World Business Council forSustainable Development. 40 pp.Price: US$ 10

The report sets out a ‘manifestofor tomorrow’s global business’as defined by the Tomorrow’sLeaders group of the WBCSD.It also discusses why and howthe four key areas of business

and sustainable developmentneed to be profitable in order tobe effective. The report sets outa model that provides aconstructive way for companiesto see their role and putsforward the main issues withwhich companies shouldengage. Companies able totackle issues such as poverty,climate change, and populationshifts are those most likely tosucceed in the future.

Show Me The Money: Linkingenvironmental, social andgovernance issues to companyvalue

2006Geneva, Switzerland: UnitedNations EnvironmentProgramme Finance Initiative56 pp.

The report confirms thegrowing importance of ESG(environmental, social, andgovernance) concerns to theglobal investment industry. Itilluminates links between ESGissues, financial value, andcompany profitability acrosseight industry sectors andseeks to show where and howESG issues are material – thatis, how they are or maybecome relevant – to securitypricing and, therefore, toportfolio financialperformance. The reportdraws on work by a group ofleading financial institutions

and covers the impact ofqualitative and new risk issueson company value. Industriescovered include the auto-industry, aerospace anddefence, the media, and thefood and beverage industries.

Untapped: Creating value inunderserved markets

Weiser J, Kahane M,Rochlin S, Landis J2006San Francisco, USA: Berrett-Koehler Publishers. 200 pp.Price: US$ 19.95

The book shows how servingconsumers and suppliers at thebottom of the pyramid can bethe key to addressingcorporations’ pressing needs:increased sales, a qualifiedworkforce, marketableinnovations, reduced costs, andincreased quality. But ascorporations benefit, so too docommunities, through betterproducts, prices, services, moremeaningful job opportunities,and an increased market fortheir own goods and services.The authors’ blend of provenstrategies, practical tools, casestudies, and cogent insightshows managers how tomaximize profits while helpingcommunity residents increaseincome and assets, creating arelationship of mutual gain.

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Internet resources

Institute of Business Ethics<http://www.ibe.org.uk/home.html>

The Institute of Business Ethicshelps organizations strengthentheir ethics culture andencourages high standards ofbusiness behaviour based onethical values. The instituteassists in the development,implementation, andembedding of effective andrelevant ethics and corporatesocial responsibility policiesand programmes. It helpsorganizations provideguidance to staff and aidsthem in building relationshipsof trust with their principalstakeholders. Their websiteprovides access to projectbriefings that give conciseinformation and good practiceguidance on a variety ofbusiness ethics topics. Otherresources include informationabout publications, trainingprogrammes, and events. TheTeaching Business Ethicswebsite is designed toencourage and support theteaching and study of businessethics in business andmanagement schools.

Tomorrow’s Company<http://

www.tomorrowscompany.com/>

Tomorrow’s Company is abusiness-led think-tank thataims to conduct research into,and to stimulate thedevelopment of, a new agendafor business. The programmeof the centre focuses onP an improved investment

system;P an inclusive approach to

leadership and governance;and

P closing the gap betweenbusiness and society.

Tomorrow’s Companyachieves their vision throughP acting as a networking hub

for organizations;P identifying and exploring

the future of sustainablesuccess;

P undertaking and publishingagenda-setting research;and

P promoting the adoption ofnew ideas and concepts.

Ethical Trading Initiative<http://www.ethicaltrade.org/>

The ETI (Ethical TradingInitiative) is an alliance ofcompanies, NGOs (non-governmental organizations),and trade union organizationsthat undertake a wide range ofactivities to promote andimprove the implementation ofcorporate codes of practice,which cover supply-chainworking conditions and labourcodes. Their base code andprinciples of implementationprovide the basic philosophyfrom which ETI identifies anddevelops good practice. Theyprovide a generic standard forcompany performance. Thelabour standards incorporatedin the base code constitute aminimum requirement for anycorporate code of labourpractice. The centre identifiesgood practice mainly throughexperimental projects andresearch, and shares thisthrough publications, seminars,conferences, presentations, andtheir website. Their websiteprovides an introduction toethical trade, codes of practice,and international labourstandards, including a glossary

of ethical trade terms,information about the centre’sexperimental and researchprojects, capacity-building andtraining activities, andpublications.

GreenBiz<http://www.greenbiz.com/>

GreenBiz works to harness thepower of technology to bringenvironmental information,resources, and tools to themainstream businesscommunity. Their mission is toprovide clear, concise, accurate,and balanced information,resources, and learningopportunities to helpcompanies of all sizes and fromall sectors integrateenvironmental responsibilityinto their operations in amanner that supports profitablebusiness practices. GreenBizfacilitates increasedcommunication, informationsharing, and learning amongenvironmental professionalsand other interested parties.Their website serves as aninformation clearing house onsustainable business practices,with resources from a widevariety of entities includingcompanies, NGOs, tradeassociations, governmentagencies, and academicinstitutions. Informationresources include daily newsfeeds, electronic newsletters, adirectory of organizations, andbriefing papers. Greenbiz haslaunched four additionalresource centres tailored toaddress specific issues—namely,green buildings, climate impactand risk management, bestpractices, and environmentallypreferable printing.


En

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This is a comprehensive and practical reference bookcovering all the main components of environmentalmanagement in public and private sector organizations. Thebook provides information useful to organizations andmanagers on management tools, performance measures,and communication strategies. The book provides practicalguidelines as well as sets out the context and the keyenvironmental and management drivers.

Trading with the Environment: ecology, economics,institutions and policyThe book examines both the dependence and the effects ofinternational trade on the life support systems, and looks atways in which trading regulation can be adapted to promoteecologically sustainable economic development.

International trade is described from a natural resourceand environment viewpoint. It addresses the issues from afully integrated approach, focusing on the interrelationsbetween ecosystems, economic development, and trade. Theauthors provide a carefully constructed ecological andeconomic analysis of trade and the environment, examinethe existing legal and institutional frameworks, and set out16 recommendations to achieve environmental beneficialtrade at both the national and international levels.

Paths to a Green World: The political economy of theglobal environmentThis book fills the need for a political economy view ofglobal environment politics, focusing on the ways keyeconomic processes affect environmental outcomes. Itexamines the main actors and forces shaping globalenvironmental management, particularly in the developingworld. Moving beyond the usual academic emphasis oninternational agreements and institutions, it strives tointegrate debates within the real world of global policy andthe academic world of theory. The book maps out anoriginal typology of four contrasting worldviews onenvironmental change – those of market liberals,institutionalists, bio-environmentalists, and social greens –and uses them as a framework to examine the links betweenthe global political economy and ecological change. Thistypology provides a common language for students,instructors, and scholars to discuss the issues across theclassical social science divisions. The book coversglobalization and its consequences for the environment; the

Brady J (ed.), 2005London, UK: Earthscan. 438 pp.

Andersson T, Folke C, andNystrom S, 2006

London, UK: Earthscan. 176 pp.

Clapp J and Dauvergne P, 2005Massachusetts, USA: The MIT

Press. 328 pp.

New arrivals at T E R I library


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Hilty L M, Seifert E K, andTreibert R, 2005

Hershey, USA: IDEA GroupPublishing. 380 pp.

evolution of global discourse on global environmentalgovernance; wealth; poverty and consumption; the impacton the environment of global trade and trade agreement;transnational corporations and differential environmentalstandards; and the environmental effects of internationalfinancing, including multilateral lending and aid, andbilateral and private finance.

Information Systems for Sustainable DevelopmentThe book is a valuable source of ideas and examples forpersons involved in the design of information systems forenvironmental, social, and economic sustainability. Itcombines perspectives from the public and private sectors,from the technical and management fields, ranging fromlife-cycle inventories to corporate sustainability, andintegrated management systems. The book provides thereader with a unique survey of information systems projectscontributing to sustainable development in private andpublic sectors, as well as with the conceptual andmethodological background of such systems. It providesexamples of inspiring applications based on a broad rangeof ICT (information communication technology) platforms,ranging from web-based technologies to remote sensing andGeographic Information Systems.


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C A L E N D A R O F E V E N T S

Printed and published by Dr R K Pachauri on behalf of The Energy and Resources Institute, Darbari Seth Block, I H C Complex,

Lodhi Road, New Delhi – 110 003 and printed by him at I G Printers and published at New Delhi.

Ghaziabad, India27–28 October 2006

New York City, USA7–10 November 2006

Mumbai, India16–18 November 2006

Hanoi, Vietnam17–19 November 2006

Bangkok, Thailand30 November–1 December 2006

Chennai, India4–7 January 2007

New Delhi, India22–24 January 2007

Chiang Mai, Thailand23–27 January 2007

International Conference on Green Competitiveness forSustainable DevelopmentConference Co-Chair, Institute of Management and TechnologyRaj Nagar, Ghaziabad 201 001, India.Tel. +91 120 2965083,2966128 • Fax +91 120 1967895E-mail [email protected] • Website http://www.imt.edu

Business for Social Responsibility Annual Conference: Innovativestrategies—Measurable impacts111 Sutter Street, 12th Floor, San Francisco, CA 94104 USATel. 1 415 984 3200 • Fax 1 415 984 3201Website http://www.bsr.org/BSRConferences/index.cfm

ENTECH India 2006: South Asia’s Premier Exhibition andConferenceTER I, Darbari Seth Block, IHC Complex, Lodhi RoadNew Delhi 110 003, India,Tel. 91 11 2468 2121/22 • E-mail [email protected] +91 11 2468 2144/45

APEC (Asia-Pacific Economic Cooperation) CEO ForumInternational Trade Centre, 9 Dao Duy Anh Str., Hanoi, VietnamTel. (844) 5771208 • Fax (844) 5771207Email [email protected] https://www.apecceosummit2006.org/default.asp

International Symposium on Water Resources and RenewableEnergy Development in AsiaMrs Maria Flintan, 123 Westmead Road, Sutton, Surrey SM1 4JH, UKTel. +44(0)2086435133 • Fax +44(0)2086438200E-mail [email protected] http://www.hydropower-dams.com

Third International Conference on Environmental, Cultural,Economic, and Social SustainabilityConference Organizers, PO Box K481, Haymarket, NSW 2000 AustraliaTel. +61-2-9519-0303 • Fax +61-2-9519-2203E-mail [email protected] http://www.SustainabilityConference.com

DSDS (Delhi Sustainable Development Summit) 2007The Summit Secretariat, TER I, Darbari Seth Block, IH C ComplexLodhi Road, New Delhi 110 003, IndiaTel. (+91 11) 2468 2100 or 4150900Fax (+91 11) 2468 2144 or 2468 2145 • E-mail [email protected]

International Dialogue on Science and Practice in SustainableDevelopment: Linking knowledge with actionJill Jäger, Sustainable Europe Research Institute, AustriaTel. +43-1-263-2104 • Fax +43-1-263-2104E-mail [email protected] http://www.scidev.net/events/index.cfm

Volume 3 • Issue 2 • September 2006 - CBS 2016cbs.teriin.org/pdf/EnCore/6.pdf · 2 Volume 3 • Issue 2 • September 2006 EnCoRE Coordinator, TERI–BCSD India Annapurna Vancheswaran

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