Environmental Engineering Reference
In-Depth Information
external consultants. Instead, PS1 presents the standards as a single, comprehensive, risk and
opportunities management framework, fully integrated with the core of the business.
The emphasis on risks and opportunities means that there is the need for project propo-
nents to not only avoid or reduce environmental and social risks, but also to continuously
search for opportunities that add environmental and socio-economic value to the invest-
ment. PS1 also emphasizes management accountability. Project proponents are asked to
audit the adequacy of internal management systems and procedures to implement envi-
ronmental and social mitigation measures as outlined in the EIA studies. Where found
wanting, the proponent may need to develop new business principles, clarify management
responsibilities for engagement with workers, local community, local government and
regulators, and put in place procedures for long-term monitoring and reporting on the
effectiveness of the risk management measures (Warner 2006).
The Equator Banks apply the Equator Principles to all loans for projects with a capital
cost of US$ 10 million or more (a decrease compared to the initial threshold of US$ 50 m).
They realize, however, that projects differ in their potential environmental impacts, as do
the environmental settings.
Project Categorization
As part of its review of a project's expected social and environmental impacts, Equator
Banks similar to IFC use a system of social and environmental project categorization
(
Figure 1.12
). The scrutiny applied to project financing depends on the project categori-
zation, with Category A Projects attracting the greatest attention to environmental and
social due diligence review. The question then arises, 'Who determines the environmental
category of a project?' Multi-lateral financing agencies apply banking internal mecha-
nisms and expertise. Equator Banks rely on external expert advice combined with internal
assessments based on a set of questions relating to:
1.
Who determines the
environmental category of a
project?
the sensitivity and vulnerability of environmental resources in project area, and
2.
the potential for the project to cause significant adverse environmental impacts.
Review and
Categorization
EP1
Category A
Project with potential significant adverse
social or enviornmental impacts that are
diverse, irreversible or unprecedented
EP2
Category B
Projects with potential limited adverse
social or environmental impacts that are
few in number, generally site-specific,
largely reversible and readily addressed
through mitigation measures
EP3
Category C
FIGURE 1.12
Project Categorization
Projects with minimal or no social or
environmental impacts
The scrutiny applied to project fi nancing depends
on the project categorization, with Category A
projects attracting the greatest attention.
EP Compliance
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