Whom are we fooling? A blog written on April Fool’s day.

Many of us have witnessed the genesis and growth of Environmental Impact Assessment (EIA). My own exposure to EIA was early in 1980s with Dr Bindu Lohani, who was a Professor then at the Asian Institute of Technology in Bangkok. Dr Lohani later joined Asian Development Bank (ADB) . We continued our discussions on EIA and worked on projects when I started working as a consultant at the ADB. Amongst several projects that I worked with ADB, the high points were development of a computer based expert system for EIA in 1994 with ESSA Technologies and drafting ADB’s safeguard policy update and Country Systems in 2009.

Between 1996 and 1999, I authored a book on EIA in Developing Countries with Professor Asit Biswas. While writing this book, I had an opportunity to meet with Richard (Dick) Carpenter, a Guru on EIA. Richard was involved in the drafting of the National Environmental Protection Act (NEPA) in the United States in 1970. We spent nearly 2 weeks together at the Peace hotel in Shanghai in deciphering the spirit of EIA and its role in decision making. These discussions greatly influenced me and will never be forgotten. My understanding and passion on EIA are attributed to these personalities and experiences.

As EIA became a regulatory requirement and a sign off need for financing projects, it reached a status of procedure for clearance with less emphasis on the process and desired outcomes. Richard Carpenter defined EIA as Early, Integrated and Always and many of us found that this definition was no longer valid. To me stakeholder consultation (not hearing), identification of preferred alternative (influencing project design as value add) and  preparation of environmental management plan (as a commitment for implementation) were the  most important outcomes of the EIA process. I did not see this happening but yes, the clearance process did ask for these milestones more like checkboxes that were to be clicked despite the realities.

In 1990s, I used to be on the environmental clearance committees at the State and central level in India. I opted to step out of these committees in disgust. For last 26 years, my company Environmental Management Centre LLP never did any work related to obtaining environmental clearance. We decided not to fool around.

I realized that today all what environmental clearance has achieved is creation of a huge business for consultants, environmental monitoring agencies and activists/NGOs. Environment degradation, social disruption and unscrupulous depletion of natural resources continues to remain unbated. Corruption at the end of regulators/committee members is now taken as a practice and EIA is understood more as a “form filling” process. Today, one can become an EIA expert overnight! I have authored several articles criticizing EIA as in practice in general and specific to India on my blog site. To some, many of these articles are perhaps best examples of humor with sarcasm.

But seriously, whom are we fooling?

Multilateral Development Institutions (MDIs) formulated policies on “safeguards” expanding on the “traditional” EIAs. Two interesting instruments were introduced viz. country systems and category FI (financing intermediaries) lending. Later, these safeguards were “padded” by accountability mechanisms (AM) and an ombudsman. Unfortunately, though AM were well intended, experience once again underscored that the safeguards are poorly implemented or in some cases even compromised. MFIs or the Gods of responsible financing had the feet of clay.

In parallel, MDIs promulgated the idea of country systems that looked for “policy equivalence” and adequate “implementation capacities” in the borrowing countries. This idea failed due to the countries exercising their sovereign right on governance and taking a position on not aligning with the so called “good international practices” suggested by the MFI. But we must admit that the pressures from MFI did influence the E&S governance in many countries and influenced national E&S policies and regulations.

Just like AM, many counties set up appellate authorities and green tribunals. Given the active role of judiciary in India, I often wonder who is steering India’s  environmental governance – regulators like pollution control boards or the judiciary? Given the laxity in the enforcement by the regulators, Indian judiciary seems to be the driver in issuing directions and to me this is not a good sign.

Country systems experiment miserably failed however Category FI opened the door to MFI for massive/tranche funding. FI category essentially allowed both developmental and private financing institutions to “flush” the funds, escaping the safeguard processing at the project level and push the responsibilities to the funds and borrowing financing institutions. This reduced the “cost” of implementing safeguards and processing time by passing the buck. All what was asked was establishment of the Environmental & Social Management Framework/Systems (ESMS/ESMF), imbibing the principles considered in the country systems.

ESMF/ESMS thus became an expanded version of the EIAs and the game was now to get the new checkboxes ticked for approving the investments. In the last decade, you will see that hundreds of ESMF/ESMS documents have been created at Funds and FI with flowery policy statements, impressive procedures with exhaustive annexes and tools. Just like the EIA reports, ESMF/ESMS have gotten templatized while responding to requirements of the umpteen reference frameworks like WB ESF, ADB Safeguards, AIIB ESF,  IFC PS, CDC, PRI etc. The list is expanding with new and more updated frameworks. But remember that this is essentially more of a word play of feeling good!

Today, I get calls from many of the MFI and private sector financing institutions to “generate” ESMF/ESMS for their borrowers in a whiz. “Oh Dr Modak, you can always do this work in a week as you very well know how we work” They say. And while I say not possible, there are several who say yes and that they can create such documents. In this process, the systems get developed without much understanding and do not get ingrained in the organization. The principles and procedures get understood only as risk management tools to make the investor/lender “happy” with no appreciation to the systems power as a value add and in making the borrowing ecosystem sensitive, responsible and “future ready.”

But again, whom are we fooling?

Today, the cabal is now growing like cancer, and we will see repeat of the story just like we witnessed on EIA.

Now, E&S is expanded to include governance. So, the new buzz word is ESG. Unfortunately, the so called ESG MF/MS do not integrate governance in the procedures. G is often addressed in an independent or isolated manner with no intersections with E&S. To me, G is extremely important for the effectiveness and sustainability of ESMF/ESMS. In fact, I would write the term ESG, with E in font 12, S in 14 and G in 18 as ESG.

E&S has to be anchored in governance. So, when we say ESG or ESG MS/MF, whom are we fooling?

Friends, let us not just create documents to get clearances from regulators (EIA reports) or approvals from sponsors/financing institutions (by establishing those smartly worded ESMS/ESPFs).

ESG should be a realization of an integration, guiding the organization to develop and implement road maps towards a better word

We better stop fooling around!


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Articles you may like to read

A Myopic Condition of India’s EIA System


 

Should We Stop the Environmental Clearance Process?

Journey of Environmental Assessment towards Sustainability Appraisal

How to get Speedy Environmental Clearance?

Environmental Clearance in India – Fast Track or Change of Track?

Impact Assessment of Environmental Impact Assessment

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2 comments

  1. Very well written Sir. In recent times all outputs are expected in one week. I am literally tired of telling Clients that Consultants don’t have magic wands and boiler plate ESMS does not serve any purpose. Even experienced some Companies struggling to implement ESMS that have been approved by their investors. The Companies are scared to make edits to these documents to add the practical angle as it will involve a full range of investor review. In Architecture we had a course called Professional Practice. I think this should be mandatorily taught across all streams.

  2. In my view, the problem is that entities (people/industry/organizations) certify themselves as sustainable (friendly to the environment or in sync with mother nature), but in reality, they are not. The certification problem definition and solutions can be seen at different levels.

    1. Law and Order – At the lower level, solutions could be finding innovative ways to empower law and order authorities financially, technologically, socially, or politically. So that certification can be defined and implemented effectively.

    2. Life Cycle View – At a slightly higher level, if we see certification is one of the phases in the larger system lifecycle. The phases are conceptual design, preliminary design, detailed design, development, production, test, certification, operation, support, and phase-out. Certification is towards the later part of the system life cycle. For an entity (people/industry/organizations) to be sustainable, the ‘ility’ needs to be considered and integrated from the early conceptual phase. For example, In aerospace and defense, they say ‘safety’ and ‘security’ need to be built in since the early phase of conceptual design.

    3. Marry Ecology and Economy – At a higher level, the existing systems are such that the economy is put against ecology. In that case, the economy will always win. However, if we manage to marry ecology and economy, we can build scalable solutions. Example – Textile industry is one of the largest polluters on the planet. If we can find innovative ways to transition the fashion industry from poly-fiber based (petrochemical-based, which is 80% of the market) to natural fiber-based (i.e., textiles made from bamboo, banana, nettle, lemon, hemp, abaca, coconut, etc. – a tree-based product) through different influence vectors such as creating trends, political influences or policies, or business opportunities, then large-scale transformations are possible.
    Along with fashion, numerous other industries can be looked at, including energy, transportation, construction, food production, etc. We need view at a system-of-systems level.

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