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Polluters Clean Up Act to Attract Lenders THE MOSCOW TIMES, 12 October 2005 By Stephen Boykewich, Staff Writer 
While Russian industries are still major polluters, they have made huge strides
toward environmental responsibility as they seek Western funding, the World Bank
said Tuesday.
The first of its kind, a new report by the bank ranks 75 major Russian businesses by their impact on the environment. The report, which is based on government statistics, tracks companies' environmental progress from 2000 to 2003 and will be updated each year, the authors of the study said. Some of the worst polluters are making significant progress. Electricity giant Unified Energy Systems is in 73rd place in terms of environmental impact -- just ahead of regional power producers Tatenergo and Irkutskenergo. But in terms of improvement since 2000, UES ranks 22nd. The firm that has shown the greatest improvement since then is oil major Tatneft, which placed 28th on the overall ranking. Trends matter more than overall position, said Alexander Martynov, director of the Moscow-based Independent Ecological Rating Agency, which conducted the study. "Different kinds of companies have different kinds of impacts. A metallurgical company is never going to be able to minimize its objective environmental impact to the point that, say, a car manufacturer can," he said. "What matters more is the progress companies are making toward minimizing that impact." Igor Kozhukhovsky, UES's environmental accountability chief, said the firm was undertaking "radical reform that was changing the course of the company" through stricter environmental policies. "It's unfortunate that we didn't wind up in first place overall, but as a ranking based on objective measurements, this rating is a valuable instrument," Kozhukhovsky said. The rankings are based on six criteria: quantity of water intake; polluted water output; air pollution from facilities and from vehicles; hazardous waste output; and land use. The criteria were chosen to maximize the number of companies that could be evaluated, Martynov said. The list of 75 was based on AK&M rating agency's 2002 evaluation of Russia's largest companies. Significantly, the ranking does not include transportation, financial or telecommunications companies, which, in Martynov's words, warranted "other methods of evaluation as to their environmental performance." As a result, state pipeline monopoly Transneft was left off the list -- a company that has come under heavy fire from environmentalists and government officials for what they call a disregard of environmental laws. Crusading bureaucrats like Oleg Mitvol, the deputy head of the Federal Service for the Inspection of Natural Resources Use, have put environmental issues in the public eye recently. But the major incentive for Russian businesses to clean up their act appears to be increased scrutiny by international lenders. Since 2003, 27 of the world's largest banks have adopted the so-called Equator Principles, a set of voluntary guidelines under which the financing for development projects depends in part on their social and environmental impact. The World Bank participated in drawing up the principles. Pavel Ananenko, a Moscow-based HSBC Bank representative, said the guidelines were changing the way his company did business. "In 2004, the first year after the adoption of the Equator Principles, we financed 46 projects that were assessed in terms of the principles for a total of $3.5 billion. Twelve other projects were not approved on the basis of several reasons, but lack of responsible environmental policy was one of them," he said. Ananenko pointed out that when Dutch bank ABN Amro decided to fund the joint Russian-German construction of the Baltic Sea pipeline, it published a statement saying it had closely considered the pipeline's potential environmental impact. "Among the signatories to the Equator Principles are all the major foreign banks working in Russia," Ananenko said. "I think that in the near future we will see these banks paying more and more attention to environmental safety." However not everyone was satisfied with the World Bank's new ranking, including some of those it treated kindly. "We're referring to companies as 'better' or 'worse' from the point of view of this ranking -- but every company is apparently complying with state requirements. We have all the necessary licenses and have conducted the necessary assessments," said Tatneft environmental safety director Ravil Gareyev. "We're producing a product that the state and the public require," he said. "If life is a game and we're all players, we need to be playing by clear rules." Mikhail Zhukov, an official with the Economic Development and Trade Ministry, said that was precisely what the ranking helped provide. "The point is not the rating itself; the point is that companies have a standard against which to measure themselves," he said. "It's a way to help keep things moving in the right direction." Vladimir Chuprov, who heads Greenpeace Russia's energy campaign, said he had seen no improvement at all. "I wouldn't say that business has gotten less responsible about environmental issues, but that's only because the situation couldn't possibly be worse," he said. Chuprov said he had seen no evidence that the Equator Principles were having an impact in Russia: "From my point of view, the World Bank has been included in this game only in order to remove any possible responsibility from businesses already working here or those that want to." © Copyright 2005 The Moscow Times. All rights reserved. PRINTER-FRIENDLY VERSION | E-MAIL THIS PAGE |
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Environmental standards loom ever larger in banks' lending decisions, by Susanne Bergius, ENDS Report, December 2008
60 Second Profile on the Equator Principles, Good Practice Newsletter from ICMM, December 2008
Banks increase their environmental requirements
Promoting Greater Responsibility in Project Financing by Natasha Cappon, Canada, Spring, 2008
China to bring in green loan benchmark, 25 January, 2008
A Question of Principles, Infrastructure Magazine, by Kimberley Gaskin, June 2007
Citigroup to scale up its green spending,The Financial Times, 8 May 2007.
Polluters Clean Up Act to Attract Lenders, The Moscow Times, 12 October 2005
Mizuho To Adopt Environmental Standards In Project Financing, CNNfn, 26 October 2003
Dexia adhθre aux "Equator principles", La Tribune, 22 September 2003 (in French)
Western Banks Set Standards for Eco-Friendly Lending. Japanese Banks Far Behind. NGO Keeping Close Watch, Nikkei, 5 September 2003
Equator Principles Why Indian Banks Too Should be Guided by Them, The Hindu, 25 July 2003
Project finance Standards for Lending, Financial Mail, 25 July 2003
Banks' green pledge earns mixed response, swissinfo, 10 June 2003
Major Banks Endorse Equator Principles, The Peninsula, Qatar, 5 June 2003
Loan rules with an eye on nature, International Herald Tribune, 5 June 2003
IFC Head's Remarks at Equator Principles Press Conference, 4 June 2003