cdf sustainable finance- sapna mulki

8/6/2019 CDF Sustainable Finance- Sapna Mulki

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ACRONYMS

BB Bank of BarodaBSE Bombay Stock Exchange

CETP Common Effluent Treatment Plant

CII Confederation of Indian IndustryCSE Centre for Science and Environment

FICCI Federation for India’s Chamber of Commerce and Industry

GRI Global Reporting InitiativeHLL Hindustan Lever Limited

IFC International Financial Corporation

ICICI Industrial Credit and Investment Corporation of India

IDBI The Industrial Development Bank of IndiaLSE London Stock Exchange

MoEF Ministry of Environment and Forestry

OECD Organisation for Economic Co-operation and Development

PPP Public- Private PartnershipRBI Regional Bank of India

RCCA Responsible Corporate Citizenship AdvisorySPCB State Pollution Control Boards

SSI Small Scale Industries

SRI Sustainable Responsible InvestmentSIDBI- Small Industries Development Bank of India

SIV South Indian Viscose

TISCO Tata Steel and Iron CompanyTNPCB Tamilnadu Pollution Control Board

UCC Union Carbide Chemicals

UCIL Union Carbide India Limited

UNEP FI United Nations Environmental Programme – Financial Initiative



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Executive Summary

Emerging as one of the global economy’s leaders, India needs to realize its role andresponsibility in promoting sustainable financial practices. Responsibility in upholding social

and environmental values can promote sustainable economic growth and increase the resilience

of the local market. This report was compiled as a preliminary step to highlight the necessity for and benefits of adopting environmentally sustainable financial principles in lending and

investment practices particularly towards the funding of extractive industries.

Case studies comparing and contrasting the losses and profits of extractive industries show that

there is a positive correlation between environmentally risks and financial investments. Ten case

studies have been presented to demonstrate how the financial prosperity of a business isdependent upon its ability to uphold a set of values that respect societal needs, environmental

conservation and environmental laws, policies and standards.

Examination of the financial risks associated with environmental non-compliance and benefits

linked to environmental sustainability demonstrate to lenders and corporations that these factorsare worth monitoring in portfolios or in activities. There are other ethical reasons associated with

corporations and financiers going green, but the focus is on financial reasoning.

Integrating environmental concerns into project finance is not only an issue of ethical business

conduct but is also a matter of improving efficiency. Extractive industries have always been adriving force in India as the revenue generated from the sector has contributed significantly to

the nation’s economic growth. However, the cost of pollution, waste generation, and resource

loss will be incurred by all stakeholders mainly by investors, thus limiting the expansion withinthe sector.

Quantifying the impact of environmental degradation on business or overall economic performance is difficult. Nonetheless, based on the best available knowledge, there is increasing

agreement amongst scholars and business professionals, on the substantive and noticeable

negative impact that environmental risks have on business performance in the long-run.

Therefore, lenders and investors should start paying heed to other factors that could affect profit

and performance. A way to account and avoid social and environmental threats is for a business

to integrate Environment Impact Assessments (EIA) and Environmental Audits (EA) into their corporate strategy. Increasingly so, international lending authorities such as the Asian

Development Bank and International Finance Corporation are demanding that standards, rules

and norms based on socio-environmental values are adhered to.

This report is highly relevant at a time when global markets are demanding progressive ways of

taking businesses into an era where the sustainability of future generations is a prime concern. Itnot only seeks to educate but also provide evidence in support for environmentally sustainable

project finance. There is a great need for clairvoyance and out-of-the box thinking from investors

and lenders because the current business as usual attitude, is threatening continuity of theeconomy and the natural environment. As a result it will pose a gargantuan challenge to the

Indian economy, if not addressed soon.



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work environment for employees. Therefore, the responsibility falls upon the government to

create the right kind of financial services that will help SSIs grow sustainably while increasing

output.

The extractive sector is labor and resource (labor, land, capital and technology) intensive and

therefore, closure of any industry creates a domino effect resulting in loss of jobs, social unrest,and negative economic performance (Roy, 2008). Clearly, the industrial sector is a crucial

element of the Indian economy. The only way it can continue to contribute significantly to the

economy is if it is regulated so that it benefits both human livelihoods and the environment.

The reality is that the challenge of enforcing regulation has been overwhelming, and as a result it

has created a shameful environmental and social rights record for the entire nation. According toa report published by the United States-Asia Environmental Partnership (1996), industrial growth

taking place between 1963 and 1991 resulted in a six-fold increase in toxic releases and

depletion of natural resources.

“Industrial effluent largely comes from the 3 million small- and medium-sized units thatare scattered throughout the country, particularly in the production of paper, sugar,

leather, and chemicals. Unfortunately, only about half the medium - to large-scaleindustries have partial or complete effluent treatment” (para 8).

Authorities recognized the scale of the problem and hence identified and targeted 17 highly polluting industries and 24 environmental problem areas with a focus on chemical and

engineering industries because they are at the top of the list as major contributors to air, water,

and waste pollution (OECD, 2006, p.7). Engineering industries such as iron and steel plants,textiles, pulp and paper, tanneries and chloralkali units have also been identified as needing the

most reform. Although they recognize the problem, the will to tackle it is lacking.

The Indian government has exercised judicial power to straighten out some the most notorious

industries. The number of public litigations and human rights abuses caused by industries

coincides with the expansion of the sector (Roy, 2004, para 4). The Supreme Court has played a

pivotal role in preventing further environmental degradation and human related losses - “Judgeshave

tremendous power, in particular in PILs, to design innovative

solutions, direct policy

changes, catalyse law-making, reprimand officials and enforce orders” (Rajamani, 2007, p.296).

One of the landmark moments environmentally related to PILs was in the case M.C. Mehta v.

Union of India (Delhi Vehicular Pollution) case, where the Supreme Court held that air pollution

in Delhi caused by vehicular emissions violates right to life under Article. 21 and thereforedirected all commercial vehicles operating in Delhi to switch to CNG fuel mode” (Oak, 2009,

para. 4). The M.C. Mehta Foundation website reports that the case also required relocation of

over 9,000 industries within the city to a designated industrial zone (Oak, 2003, para. 3). Another case M.C. Mehta v. Union of India (Ganga Pollution [Tanneries] Case) where upto 50,000

industries within the Ganges basin were required by the Supreme Court to close down area

operations and relocate (M.C. Mehta Foundation, 2003, para. 3). Many of these industries weretanneries which emitted their effluent into is the Ganges, the most revered and most polluted

rivers in the world.



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Despite the successes in implementation of environmental law the risky disposition of industries

persists. It is clear that policing industries over so vast an area is a challenging task and is not

successfully changing the sector to become more sustainable. As a result environmental pollutionand loss of business/employment becomes a persistent threat to society and to future generations.

Therefore, other solutions need to be explored. The promotion of ESPF provides a number of advantages to industries and to those that fund them. The gains to an extractive resource industry

from investment in environmentally sound technologies will ensure continuity and higher

productivity in the long run. Some advantages gained from switching to greener practices are: Risks are mitigated.

Costs are reduced in production and waste management. Consistent performance and ability to withstand market competition is attained. Product marketability is increased as consumers opt more for “green” products.

Creating financial incentives could be a viable alternative as they will satisfy every business’

need to reduce costs. A new set of influential players such as banks, lenders and investors would

benefit in creation of financial incentives and norms that promote sustainability in the sector, asthey will increase the profitability of their portfolios – thus, sustaining their business for the long

term.

In India, lenders and investors are driving forces for most large-scale industries as they are the

sole sources for large amounts of capital. “The Industrial Development Bank of India (IDBI),and Industrial Credit and Investment Corporation of India (ICICI) are the major financial

institutions that may provide capital for industrial development, including mining” (Chatterjee,

2003).

Lenders and investors are losers/beneficiaries of the losses/profits generated by their investees

depending on business performance. Performance in the industrial sector is dependent oninnovative technology that is energy efficient, environmentally sound, ensures resource recovery

and at the same time achieves optimal production capacity. In spite of that, what are the reasons

for the low response in switching to greener practices and how can we overcome the barriers?

There are three possible reasons for the lack of commitment towards achieving government

issued environmental standards. Firstly, monitoring and enforcement of environmental impact

assessment regulations which would lend to more environmentally cautious investment arelimited in India. Secondly, there are little to no incentives within the system to integrate the triple

bottomline (people, planet and profit). Thirdly, education and awareness targeting investors and

lenders about environmental risk and liability is limited.

Instead, accountability towards environmental risks has tended to be voluntary. Furthermore, it

has often been limited to big industries allowing them to gain an edge against their internationalcompetitors. The fact that there are a few Indian industries who have achieved some degree of

internationally accepted environmentally sustainable standards is proof that the issue is on their

radar screen.



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2. Stakeholders of Project Finance

Clearly, industries, government, lenders and investors are not the only stakeholders in the issueof project finance, though, they are the highly influential conduits in the process of change to

greener practices (see Appendix I). Other stakeholders such as environmental interest groups,

research think tanks and the media (See Appendix II) promote and define standards of ESPF.The non-traditional stakeholders in ESPF play a role as information providers and apply pressure

for change to the stakeholders higher in the hierarchy of financial decision-making.

The power of information is demonstrated in the means of redress it creates for workers and local

communities affected by industrially inflicted environmental disasters. Yet, often the final

decision for compliance is left upon a judicial or environmental implementing authority (e.g.Supreme Court, Pollution Control Board (SPCBs) and the Ministry of Environment and Forestry

(MoEF) and/or the leaders of the industrial and financial institutions (e.g. banks, fund managers

and multilateral agencies). Such cases often do not reach the court or are quickly swept under the

rug.

Information in this case can be a friend or a foe. Industries are often presented in a negative light

in the media and by NGOs for lack of upholding social and environmental values. As a solutionto the long lasting acrimony, extractive industries could work with both the media and NGOs to

promote transparency and to encourage dialogue between all stakeholders. Through an open

forum (with the media as an intermediary) it would attract more ideas on how to createmechanisms that effectively integrate sustainable project finance.

Multilateral agencies such as the Federation for India’s Chamber of Commerce and Industry(FICCI) and the Confederation of Indian Industry (CII) already provide forums for dialogue and

a platform for broader reforms. In the case of project finance, multilateral agencies have the

ability to facilitate harmony between production goals and the promotion of environmentallyconscious decisions by bringing all stakeholders together.

3. Current Initiatives Globally and Nationally

Part of this report seeks to present existing ESPF initiatives for the purpose of demonstrating that

more can be done to strengthen this particular aspect of financial diversification; therefore, it is

not unrealistic to be having such a discussion. The issue of project finance and environmentalstandards is on the tables of some financial institutions and extractive industries, although the

number is very small.

Having recognised the importance of ESPF, in 2007 the Regional Bank of India (RBI) released a

memo encouraging local Indian banks to consider integrating sustainable project finance into

their portfolio assessments. But it is yet to be seen if any stakeholders have fully followed suit.The memo stated that “The contribution of financial institutions including banks to sustainable

development is paramount, considering the crucial role they play in financing the economic and

developmental activities of the world” (RBI, 2007, p.1). Certainly, RBI’s announcement is proof of a higher body willing to serve as a platform to explore the application of sustainable project

finance.



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At the global level several international banks have signed on to the Equator Principles (EP). The

EP is the first real effort implemented by the International Finance Corporation (IFC) to ensurethat the projects financed by banks are “socially responsible and reflect sound environmental

management practices” (IFC, 2006).

According to a recent journal article in Ecological Economics “A growing body of research

points to the fact that capital markets react to environmental news and thus create incentives for

pollution control in both developed and emerging market economies” (Dasgupta and Goldar,2005, p. 81). The article continues to state that the market generally penalizes environmentally

unfriendly behaviour by up to 30 percent (Dasgupta and Goldar, 2005, p.81).

International financial regulatory organizations certainly have caught on with the rhetoric and are

also making their own contributions. IFC Executive Vice-President, Mr Peter Woicke states:

“The adoption of the Equator Principles confirms that the role of global financial

institutions is changing. More than ever, people at the local level know that theenvironmental and social aspects of an investment can have profound consequences on

their lives and communities- particularly in the emerging markets where regulatoryregimes are often weak. And if financial institutions want to operate in these markets,

there is a bottomline value in having clear, understandable, and responsible standards for

investing” (Ravindran, 2003, para. 6).

Adoption of the EP is a ground breaking step in project finance. The EP has underwritten

approximately “USD 14.5 billion of project loans in 2002, representing a whopping 30 percent of the project loan syndication market globally” (Ravindran, 2003, para. 6). Despite the fact that the

EP has garnered immense support from 13 internationally leading banks we are yet to see a

similar effort in India, which has an equally impressive portfolio. Even though Indian banks stillhave a long way to go until they fully integrate ESPF, there are still few existing project finance

initiatives, which are briefly described below.

Public Government Institution Initiatives:

Bank Guarantees: Under this scheme, a state board requires the non-complying firm to

post a bank guarantee to ensure the implementation of corrective actions in accordance

with the negotiated compliance schedule. Normally, 10 percent of the estimated totalcompliance cost is required as a bank guarantee. If the non-complying firm fails to

comply in time, the SPCB forfeits a portion or all for the bank to use at its discretion. The

forfeiture is a powerful monetary penalty for a violator and a significant deterrent againstfuture non-compliance. However, this instrument may not be applicable to SMEs which

operate on small profit margins and cannot afford such a deposit (OECD, 2006, p. 22).

Subsidies for Pollution Control Installations: The central and state governments have

introduced a number of subsidies for pollution control equipment and treatment

installations. The Common Effluent Treatment Plant (CETP) subsidy scheme isundertaken by the MOEF to enable cluster of small-scale industries to establish or

upgrade CETPs. The central and state governments subsidize each 25 percent of total



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project costs, 30 percent is secured through loans from financial institutions, and the

remaining 20 percent is covered by the participating small industries themselves (OECD,

2006, p. 22).

Private Financial Institutions Initiatives:

Global Reporting Initiative (GRI): this methodology quantitatively scores a company intwo categories: Performance and Disclosure. To evaluate performance, this methodology

assesses five areas; energy intensity, use of recycled materials, use of recycled water,

greenhouse gas emissions, and management of hazardous substances. GRI has annualcompetitions where financial institutions with transparent reporting tools are utilized.

Bank of Baroda (BB): has a started a scheme for financing energy efficiency projects.The primary recipients of this scheme are small and medium enterprises for financing

SMEs for acquisition of equipment, services and adopting measures for enhancement of

energy efficiency/conservation of energy. Up to 75 percent of the total project cost. This

scheme is a promising option for the thousands of leather tannery factories that are spread

throughout India. Owners of leather tanneries are small businessmen who often find itvery difficult to install efficient technologies to control carbon emissions and treat waste

as they are mostly financed through personal loans.

YES Bank: is a private Indian bank that was awarded Best Emerging Markets Sustainable

Bank of the Year Award for “providing responsible financial services, minimizing their environmental impact, supporting local communities, launching a Sustainable

Responsible Investment (SRI) fund in India and engaging in microfinance” (Fernando,

2008, para. 7). The awards event is organized by the Financial Times and IFC. The Bank has Responsible Corporate Citizenship Advisory (RCCA) team that provides advice on

promoting social entrepreneurship to private and public businesses of all sizes and NGOs

involved in the environmental, education and health sectors. YES Bank also gives specialattention to the creation of initiatives in microfinance, Sustainable Investment Banking

(SIB) and agribusiness and rural banking.



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II. CASE STUDIES

4. Cost of Environmental Non-Compliance

As of September 2000 there were approximately 3,500 cases pending on polluting industries

(See Appendix III). Gujarat had the highest number of pending cases at 1,600 (IndiaEnvironstat,2000). In 2005 the United States Environmental Protection Agency found that there were 1,551

initially non-complying industrial facilities, of which 1,351 facilities complied with subsequent

SPCB orders and 178 were shut down, with 22 units defaulting. The trend shows a negativecompliance in large industries in India in recent years (OECD, 2006, p.12). Companies that were

shutdown eventually went bankrupt and had to default on their loans for which banks and

investments firms needed to pick up after. Furthermore, the loss of jobs and reduced standard of living resulting from shutdown non-compliant industries is a reality that affected entire societies.

As noted by Semenova and Hassel (2008), “polluting industries typically have higher

environmental regulations and constraints than clean industries” (p. 3). The following case

studies are presented to demonstrate that industries with poor environmental records increasesthe likelihood of a fate of either shutting down or spending large sums of money to upgrade

systems as per environmental standards. Companies with the least environmental concern haveincurred huge financial losses from regulatory penalties, temporary or permanent shutdown, poor

stock performance and negative media reports. All of which have resulted in narrowed pools of

fund sources, credit and collateral.

Union Carbide: Bhopal Gas Tragedy

Location: Bhopal, Madhya Pradesh (MP)

On December 3, 1984 a highly toxic Methyl Isocyanate (MIC) gas leaked into the homes of

millions in Bhopal, MP – instantly claiming the lives of 18,800 people through suffocation

according to official estimates from the Government of India (GOI). The events that unfolded

from that night made it one of the largest industrial disasters in world history. Even after 25years, the intensity of the tragedy is as great. The Christian Science Monitor reports,

“Contamination levels in soil and water samples at the plant were more than 10 times higher than

in surrounding areas, indicating that the plant was the source of the contamination. Mercury andlead contamination have even found their way into samples of breast milk” (Baldauf, 2004, para.

15).

The lethal gas originated from the Indian subsidiary of Union Carbide Chemicals (UCC), Union

Carbide India Limited (UCIL) plant after a large volume of water was introduced into the MIC

tank and triggered a reaction that resulted in the gas’ release (UCC, 2008, p.1). There areconflicting reports as to the causes of the reaction however, what should have been certain to

such an industry is that all risks were accounted for in every way possible.

UCIL was a subsidiary of the U.S. Company UCC, which had been a major multi-national

chemical corporation since its formation in the 1930s. “UCIL was a diversified manufacturing



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company, employing approximately 9,000 people and operating 14 plants in five divisions.

Annual sales were nearly USD 200 million, and UCIL shares were publicly traded on the

Calcutta Stock Exchange” (UCC, 2008, p.1). Closing stock value for the company in 1983 wasvalued at USD 62.750 and following the public announcement of the disaster the stock value

plummeted to USD 45.875. The stock values had dropped by USD 16.875, which for a USD 3

billion company was a significant loss (UCC, 2008).

UCIL’s loss was also felt by the government and stakeholders who had investments in the huge

company. UCIL was one of the first major foreign investments made in India during a campaigninitiated in the 1960s by the Indian Government to attract foreign investments to drive the

country’s green revolution. When UCC India was created in 1963, 50.9 percent of the company‘s

stocks were owned by the U.S. subsidiary while the remaining shares were sold to Indianfinancial institutions and thousands of private investors in India (UCC, 2008, p.1).

When Dow Jones Chemical eventually bought UCIL it was barely hanging on. In 1994 the UCIL

was isolated as the events from that night unfolded against its favour. The Company tried to

mitigate any further risks by utilizing the media to reassure all those concerned about thecompanies attempt to contain the risks from the toxic gas leak i.e. employees, suppliers,

customers, and shareholders.

Following the disaster, UCIL was required by the Supreme Court to pay a penalty of USD 470

million to cover the medical expenses, rehabilitation and rejuvenation of damaged infrastructureand the natural environment. Ultimately, the company was absorbed into DJC and their factories

were shutdown. Rehabilitation operations were taken over by the Indian government from

monetary dispersal to project monitoring.

Not only was the Bhopal tragedy the worst in India’s environmental history, but it also led to

significant losses of one of the largest companies in India and MP’s economy. Jobs were lost aswere lives and the community fabric was damaged. Events from that tragedy within minutes

incapacitated those who could earn an income for their families and contribute to the local

economy. Based on the Bhopal case study the direct link between economic loss and

environmental degradation has never been clearer.

SIV Industries (formerly South India Viscose)

Location: Coimbatore, Tamilnadu

A news report published on September 4, 2005 described South Indian Viscose (SIV) Industry as

“A closed chemical factory in Tamilnadu waiting to be another Bhopal” (Blacksmith Institute,

2004, para. 1). Located in Sirugumalai village, Tamilnadu on the banks of the Bhavani River SIV experienced a gradual shutdown of its various units starting from 1997 until 2001. The

primary cause for the cessation of manufacturing and production was due to illegal dumping of

effluents into the Bhavani River and non-compliance with environmental standards for its production facilities and equipment.



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The SIV industry manufactured and marketed rayon, wood pulp, rayon yarn, VSF and other

industrial chemicals. Owned by Shapoorji Pallonji Group, it is a well established group of

entrepreneurial ventures within the Indian market and abroad. As one of the oldest companies inIndia it has stakes in various sectors of the economy ranging from construction to real estate

acquisition. One such significant holding it has is within the Tata Sons Limited where it is the

single largest private stock holder of about 18.5 percent (Shapoorji Group, 2008, para. 1). Thegroup therefore has a reputation amongst its peers of being a major economic player. In the

global arena, the group understands the benefits of conforming to international standards

concerning the promotion of responsible business decisions as it demonstrated by being the firstcompany in India to receive an ISO 9001 certification in the construction industry.

Even though the Shapoorji Pallonji Group claims to conduct itself in an environmental andsocially responsible manner, such is not reflective of SIV Industries, which has a tainted history

of environmental negligence. Disposal of untreated effluent from its wood pulp, rayon and VSF

plants caused various serious chronic illnesses in residents living nearby its premises. Though the

company did start off on a good note with 1,00,000 shares out of which 25,000 shares were

issued to directors etc. 85,500 shares to foreign collaborators, and 1,39,500 shares offered to the public (ICICI, 2008, para. 2).

Between 1987-88 and 1995-96, SIV’s bottomline swelled by almost 9 times - from INR 7.21

crore to INR 63.80 crore (Revathy, 2001, para. 1). Profits quickly took a turn in the opposite

direction in 1997 when the Tamilnadu Pollution Control Board (TNPCB) shut down their wood pulp division due to environmental misconduct, despite a massive programme for modernisation

and upgrading of the plants between 1994 and 1995 (Revathy, 2001, para. 4). “Sales and profits

were adversely affected that year. Turnover dipped to INR 291.80 crore from INR 421.34 crorein 1996, and the company incurred a net loss of INR 31.64 crore against a profit of INR 70.80

crore at the end of the previous fiscal year, the reason being suspension of production for nearly

three months (January-March 1997)” (Revathy, 2001, para. 4).

Soon after, the rayon and VSF divisions were also shut down for three months for the same

reason. The year 1999 was a trying one for SIV Industries as government regulators pounded on

their doors for late payments on electricity bills and unsatisfactory environmental standards.From a Business Line Report in March 2001, SIV had an outstanding debt of over INR 447 crore

as of March 31 including an unsecured loan of INR 368 crore (M. Sabarinath, 2001, p. 6).

Inability to withstand the myriad of environmental problems and inadequate production capacityits stock was traded in the range of INR 8 for the most part of 1999 except for December when it

rose to INR 18 fuelled by takeover rumours (M. Sabarinath, 2001, p. 9). Huge losses were

incurred as a result. In 2006 the company’s assets, totalling 122 crore, were liquidated as per theHigh Court ruling. The assets were 683 crore short of how much the company owed.

A multitude of factors based on environmental and human safety concerns promoted the ultimateclosure of the company. Due to non-conformity to TNPCB standards the company sustained high

production costs, which made it vulnerable to the poor market conditions in 1999. In addition,

the company came under pressure from public activist groups and NGOs that represented theinterests of local farmers and fishermen whose livelihood depended on a healthy Bhavani River.



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SIV’s failure could have been avoided had its business stakeholders given more attention to

social responsibility on the basis that the local communities depended on healthy fish

populations from the river. Extractive and chemical industries fail to realize that there is aninnate relationship between humans and the environment. For every factory that is constructed

human lives and the environment will be impacted. For that reason constant independent

environmental impact assessments are critical in order to prevent accumulation of environmentalviolations and eventual closure.

Hindustan Lever Limited (HLL) now Hindustan Unilever

Location: Kodaikanal, Tamilnadu

Hindustan Lever Limited (HLL) was a subsidiary of Unilever Plc an Anglo-Dutch multinational

corporation (MNC) that owned approximately 50.9 percent of the HLL shares. Before it was

closed down by the TNPCB in 2001 HLL was the largest mercury producing factory in the world

(Zwart and Tuder, 2006, p.2). Unilever Plc’s products have become household names all over the world – Omo, Blue Band, Lipton and Dove are just few examples from the popular and

diverse product line.

In 2001, Hindustan Lever’s thermometer factory in Kodaikanal (Tamilnadu, India) was found

(by Greenpeace India and Palni Hills Conservation Council) to have dumped 7.4 tonnes of mercury waste in surrounding areas. An enquiry was carried out by independent environmental

consultants and the government. Investigations concluded that Greenpeace India and the Palni

Hills Conservation Council were founded on many of their claims.

Mercury is a toxic chemical when it comes in contact with water. Mercury’s compound bio-

accumulates in the food chain, even in fish, and can cause severe neurological, physical, andkidney-based disorders (Sharma, 2003, p. 1050). According to R K Singh, a member of the

Indian People’s Tribunal that investigated the health and environmental impacts of the mercury

from the thermometer factory at Kodaikanal stated, “We found several cases of kidney failure

and nervous breakdown among workers of the closed factory” (Sharma, 2003, p. 1050).

In 2006, victims of mercury poisoning from the factory source took to the streets of Mumbai to

protest the social injustices and to discourage shareholders from investing in Unilever for quick profits. They also appealed to shareholders to insist that investees uphold high social and

environmental standards within company structures (Bio-Medicine, 2007, p.1). Findings on the

impact of the mercury were at both ends of the spectrum. “The board investigations revealed thatsome chemical emitting odour was dumped at two places along the State Highways, where the

water supply pipeline was laid at four feet below the ground” (Dinakar, 2003, para. 7).

Another study carried out by the Department of Atomic Energy found extremely high levels of

mercury outside the factory and deep inside the Pambar Shola forest- a critically threatened

canopy forest protected under Indian law. This eventually led to the state courts decision to closethe HLL factory. A major investment of the firm had gone down the drain and it emerged as a

risky business to interest groups and the general Indian public.



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Ironically though, HLL’s closure did not directly impact Unilever’s international stocks. In fact,

the average market value in Amsterdam increased by four percent from the day of the mediareports about the subsidiary’s shutdown. On the London stock exchange it was almost 5 percent

higher. This was equivalent to a market value increase of approximately 1.5 billion euros (Zwart

and Tuder, 2006, p.6).

This particular case-study brings to question whether investors and lenders are sensitized to the

negative impact that their investments have in other countries granted. It also raises theimportance of investor education and awareness. Access to unbiased information that will help

investors make educated decisions on the most ethical way to invest their money is a much

needed tool in India. Furthermore, company transparency would not only have protected theenvironment, but also its domestic investors.

Vedanta Resources Plc

Location: Niyamgiri Hills, Orissa

Vedanta Resources Plc is a major British metal and mining company operating iron ore,aluminium, copper, zinc and lead sites all over the world. In 1986 Vedanta acquired Vedanta’s

Sterlite Industries (India) Limited (“Sterlite”) as a subsidiary. During acquisition of Sterlite

financial lenders such as JP Morgan and HSBC, and Citigroup - the world’s biggest financialservices company, Australia’s Macquarie Bank, and India’s home-grown ICICI Securities reaped

about 13 million pounds in fees (Nostromo Research Centre, 2005, p.28). Sterlite was at that

time a profitable investment. However, that has changed in subsequent years.

Sterlite has been embroiled in several court cases on issues pertaining to mining in ecologically

sensitive areas to violation of factory codes. The latest battle in 2003 with various activist groups began when the company wanted to obtain approval from the Indian Supreme Court to mine

bauxite in the Niyamgiri Hills in Orissa. The court case led to the negative portrayal of Vedanta

which ended up significantly diminishing their fund pool.

Investors such as the Martin Currie Investment Management based in Edinburgh, Scotland,

withdrew its shares worth USD 2.3 million (NDTV Profit, 2008). By the end of 2007 the world's

second largest sovereign pension fund, operated by the Norwegian government, sold all itsVedanta shares (worth around USD 13 million). The Government’s Council on Ethics Fund

(2007) stated that they sold its shared because Vedanta was associated with an “unacceptable risk

of contributing to severe environmental damages and serious or systematic violations of humanrights [in India]” (para.1).

On November 23, 2007 the Indian Supreme Court barred Vedanta from mining bauxite in the Niyamgiri hills (The South Asian, 2008). However, the court ordered Vedanta’s Indian unit,

Sterlite, instead to provide a new proposal that addresses human rights and environmental

concerns which would then be reviewed by the court.1

On August 8, 2008 the Indian Supreme

1 Since Vedanta is a foreign based company which does not have stocks in the Indian market the Supreme Court

refused to address the case.



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Court consented bauxite mining activities as per the environmental guidelines and safeguards

laid down in Sterlite’s report (not made public).

Despite the approval given by the Indian Supreme Court the tribal communities and

environmental organizations strongly protest the decision. The tribal communities that depend on

the Niyamgiri Hills are in uproar because they believe their lands have been unjustly taken awayfrom them. A company questioned by the international community on its business ethics should

raise a red flag to investors and lenders. Messy land acquisitions for industrial purposes have

caused a lot of upheaval in communities throughout India. In such situations investors andlenders may consider ethics. Associations with companies who fail to address their social and

environmental short comings not only diminish reputational benefits but it also reduces sources

of capital, as seen in this case study.

5. Companies Performing within Environmental Standards

Empirical findings generally suggest that there is a positive but weak relationship betweenenvironmental conservation and financial performance (Semenova and Hassel, 2008, p. 3).Positive correlations show that Dowell et al. (2000) that companies in environmentally sensitiveindustries that adopt more stringent environmental standards have higher market values.

Industries that do not comply with environmental standards are not only susceptible to judicialaction but they are also most likely not functioning at optimal capacity due to inefficient energy

consumption, and outdated facilities and technologies. The performances of companies that have

made the switch to greener practices definitely surpass those that do not. The appeal of asustainable business is that there are fewer surprises, and thus, fewer losses. A company that is

able to strike a balance between sustainable resource extractions and meet market demand is one

that will continue its legacy in the market.

Additional benefits are not only to the company but to those it depends on. It is always easier to

run a company when employees are happy about their treatment. When an extractive companyhas respect for its environment it will more likely to best manage the resources. Since natural

resources are finite, industries need to bear in mind that their businesses will be directly affected

by that very fact. In order to ensure continuity the industry must extract with least possibleimpact to the environment, increase efficiency, reduce/prevent costs and mitigate any other risks.

The following case studies are presented to demonstrate that companies have more to offer the

average lender and investor than a company that has a poor environmental compliance record.The case studies will show that complying companies display all the benefits that have been

discussed in the previous paragraph.



17

MSPL Limited (Baldota Group)

Location: Karnataka and Maharashtra

MSPL is one of India’s largest iron-ore and steel companies with exports going largely to China.

The company is committed to reducing costs and increasing savings through environmentallysustainable practices and installation of green technologies. Narendrakumar Baldota, Chairman,

of the Baldota Group stated, “We firmly believe that effective and efficient generation of green

power coupled with responsible environmental care considerations as a corporation is vital for maintaining a competitive edge” (IndiaPRwire, 2006, p. 1).

The company is a leader in its arena partly because it has shown commitment to integratingenvironmental sustainability into their business practices. Implementation of a “Zero-Waste

Management” plan involves more investment in research and development to create production

processes and technologies that consume less energy and generate less waste.

Given that the challenge of global climate change is a proven threat to every aspect of humanlivelihood and biodiversity, MSPL has created its own renewable energy source from wind farms

for their operations in the Indian states of Karnataka and Maharashtra. As a result, MSPL has become less dependent on other costly sources of energy such as grid power. The wind energy

project contributes to 10 percent of the company’s total revenue. In 2006, the company sold the

2.5 million carbon credits valued at INR 200-250 crore (Business Line, 2006). Sustainableenvironmental practices are now lending to their favour in generating profits to expand their

business, thus, a good sign for investors and lenders.

Very few companies or industries in the Indian market and even around the world have

demonstrated efforts to promote sustainable development and environmental conservation.

However, MSPL are wary of any consequences to their mining activities. In recent years tooffset their carbon footprint and ecological damage from excavation of large expanses of land for

mining, they planted millions of trees on company owned land (MSPL, 2007). Additionally,

MSPL has put in place an OHSAS 18001, Occupational Health and Safety Management System

for its employees.

Clairvoyance and effective corporate governing in every aspect of their triple bottomline has

allowed for the company to expand. As the company improves its environmental preparedness itis promoting them to become more cost-effective and creating sustainable sources of revenue.

Because of a fairly good environmental performance the company’s reputation is boosted and it

reduces its risk factors as a viable recipient of funds.

Tata Iron and Steel Co. Ltd (TISCO)

Location: Jamshedpur, Jharkhand

Tata Iron and Steel Limited (TISCO) is the sixth largest producer of steel in the world and a

pioneer of CSR projects in India. The company has significantly contributed to environmental



18

and resource conservation, reducing its green house emissions and preserving water. TISCO is

the ideal example of a company that has managed to meet market demand, and minimize its

impact on local communities and the natural environment.

Its commitment to environmental sustainability has enabled the company to develop state-of-the-

art pollution control systems to prevent and control pollution. For example, Tata Steel is makingmajor upgrades to their facilities by phasing out the use of the highly polluting coke, a primary

fuel source for melting iron. Switching to coal tar, which is a by-product of steel manufacturing

and less harmful to the environment, has saved them over INR 9.1 million (CII, 2007).

Tata steel seems to be ready for the forthcoming challenges. In 2000, it completed a project

costing INR 7,000 crore (USD 1.5 billion) to completely modernize its 90-year old steel plant.This spurred much optimism in the market as lender and investors predicted better efficiency and

high product quality which would in turn lead to greater returns.

Because of its commitment to improving its environmental performance it has also increased

TISCO’s appeal as a fund recipient. The International Finance Corporation (IFC) in 2005 loanedTISCO over USD 300 million for expansion of its Jamshedpur plant given its successful

sustainability record in a highly risky sector. Iyad Malas, IFC’s director for South Asia, saidduring an announcement of the loan that “This is an excellent example of IFC’s support for a

world-class company in a key industry in the Indian economy… particularly because of its

leadership role in, and commitment to, sound environmental and corporate social responsibility practices” (Shanahan, 2005, para. 5).

Investment in greener technologies is helping the company increase its production, and at thesame time withstand intense competition from international players. In India alone, demand for

steel is five to six percent and is expected to rise in the coming years (IRIS, 2005, para. 9).

Therefore, if the company is to sustain itself in the iron sector, it must boost energy savings andensure sustainable resource management.

According to the IFC sustainability determines how reliable and profitable an investment will be

in paying back the loans. The TISCO case study proves that environmental sustainability is aviable investment as it boosts reputation which in turn attracts investment. The IFC’s decision

exhibits current trends in the financial arena towards reducing environmental impacts in industry.

Madras Cement Limited (MCL)

Location: Chennai, Tamilnadu

The Alathiyur plant of Madras Cement Limited (MCL) has been rated the “greenest” cement plant in the country by the Centre for Science and Environment (CSE) as part of its Green Rating

Project for the cement industry. The rating criterion is based on over 25 factors from waste

management to corporate governance, and is one of the few available ratings in the world.



19

MCL is one of the few large-scale energy intensive industries in India that has found a way to

become profitable by re-focusing operations towards renewable energy. The company owns

large wind mill farms with a capacity of 33 Mwh at two locations in Tamilnadu (EnergyManager Training, 2005, p. 1). As a result of adopting wind energy projects power consumption

has reduced by 10 percent between 2000 and 2007 which saved the company INR 2.96 million

per year. It has also achieved an operating efficiency of equipment from 100 to 115 percent(Energy Manager Training, 2005, p. 2).

Other initiatives include capturing rainwater to sprinkle on roads to reduce dust generation; water recycling to maintain plantations near-by; bituminous roads in and around the plant and mines to

suppress fugitive emissions. Such small efforts not only save the company millions of rupees

every year but it also reduces the burden on the natural environment.

Chemfab Alkalis Limited

Location: Pondicherry, Tamilnadu

Chemfab Alkalis Limited (CAL) was incorporated as a public limited company in 1983. It is thefirst Chlor-Alkali industry in India to adopt environment-friendly and energy-efficient ion

exchange membrane electrolyser technology in India for the manufacturing of caustic soda and

chlorine, which initially required a more potent element, mercury (Energy Manager Training,2004).

Chemfab has a research and development unit that explores ways to optimize its energyefficiency with the aim of increasing its operational utility and thereby achieving one of its many

commitments to sustaining natural resources. One way by which it achieves this goal is by using

hydrogen to power major processes at its plants. The company has also installed simple filter technologies to recover and reuse water. In total the Chemfab has invested INR 33.44 lakhs in

eco-friendly projects within its plant, which has saved them INR 20.04 lakhs (Energy Manager

Training, 2004, p. 2).

Chemfab is progressive because it has significantly integrated environmental sustainability into

its business plans. Much of Chemfab’s managerial decisions are based on careful budgetary

analysis geared towards making significant investments in clean and efficient technologies and inturn ensure greater returns to their shareholders and their continuity.

Until 2003, when Chemfab was experiencing low competitive stock value, (INR 54 with a PEmultiple of 5.72) due to high power costs, which jumped to 58 percent when it was dependent

completely on the power grid (Rao, 2003). Though that has gradually changed in recent years.

whereas now it has switched mostly to cleaner hydrogen gas for fuel.



20

Shriram Food and Fertilisers Ltd. (now DCM Shriram Consolidated Ltd)

Location: Delhi

Shriram Food and Fertilisers Ltd. (Shriram Ltd) was at the bottom of the ranks in the stock

market only two decades ago but is now rated as one of the most environmentally safecompanies in the country according to CSE. Shriram Ltd experienced difficulty when it

encountered a judicial case in 1985. In the Shriram Gas Leakage Case v. Union of India (1985)

the former was accused of releasing toxic oleum gas fumes from its plant killing one person andhospitalizing hundreds. The plant was closed and given only 10 weeks to reopen contingent upon

creating a reparations agreement (Towards Sustainability, p.27).

Because the incident took place a few months after the Bhopal gas tragedy it served as a

reminder that India’s people and environment were still vulnerable from industrial

pollution/accidents. Furthermore, it also brought to light the importance of moderating a sector

that provides huge employment and is notorious for not adhering to environmental standards.

The closure of the plant affected 4,000 employees (UNESCAP, 2003, para. 1).

The plant was re-opened ten weeks later by the Supreme Court with the fear that jobs would be lost and a critical

export would be greatly impacted.

Governmental proviso was applied through weekly inspections, periodic health checks for the

workers, setting up of safety committees comprising workers’ representatives, training of workers in safety measures etc. The court also expressed the need to set up an Environment

Court since the number of cases involving industries, and disasters and public litigations were

rapidly increasing. The Environment Court was not seen through. Despite this, Shriram Ltdlearned an important lesson, which emphasized the responsibility of companies to manage their

risks and recognizing their liability in human-caused industrial disasters. Shriram Ltd, in

response revamped their entire organizational structure and focused on environmentalsustainability.

To mitigate any further risk the company constantly monitors energy consumption, effluents,

carbon emissions and resource management. Today, company officials value human safety andensure it through the ongoing training and development of operating staff and workmen. Having

taken extraordinary leaps in their business Shriram Ltd has gained a reputation of being one of

the most eco-safe industries in the country. At the same time its new business strategy inenvironmental sustainability has revived confidence in the market.

The company’s turn around tremendously improved its reputation. In 2004 IFC loaned thecompany USD 54 million in 2004 for its expansion and modernisation plans. In that same year

the company raked in over INR 1,400 crore in profits (The Financial Express, 2004, para. 2).

Shriram Ltd successfully acquired a large loan amount because it took a “number of steps tomake its operations fully compliant with local environmental and social regulations as well as to

start aligning them with international best practices” (IFC, 2006, para. 14).



21

III. THE WAY FORWARD

6. Conclusion and solutions

According to Colin Monks, Head of European Equity Research, HSBC:

“It is becoming clear that sustainable development will be one of the major drivers of

industrial change over the next fifty years and that there is a growing demand from both

companies and institutional investors to understand its financial impacts. Itfollowstherefore that the successful brokers will be those that anticipate this demand,

respond to it with robust financially relevant research and thereby differentiate

themselves in an increasingly crowded marketplace” (UNEP FI, 2005, p. 3).

Monks’ statement is a reflection of the increasing reference that business leaders are making on

the relationship between environmental performance and financial success. ESPF may be a new

concept that most businessmen are still trying to grasp, but there are those whose increased

success has been due to realizing the importance of taking into account the triple bottomlinewhich has in turn made them attractive recipients for large loans.

The direct relationship between social/environmental performance and financial

performance/risk of companies has been proven in several empirical studies (Griffin and Mahon,

1997, Orlitzky and Benjamin, 2001, Orlitzky et al ., 2003, Dowell et al., 2000, Konar and Cohen,2001, and King and Lennox, 2002). At the same time there are an increasing number of

consumers and investors who are scrutinizing environmental performance of industries (Afsra,

2006). A company that takes into consideration the triple bottomline is an indication to investorsand lenders of a business that is able to maximize profit by using a limited amount of natural

resources (Guenster et al ., 2006), and reduce its production costs by investing in alternative

sources of renewable energy and reduce waste (Dowell et al ., 2000).

Although the links between environmental risk and performance have been confirmed it is not

necessarily inclining companies to act in accordance. Private lenders and investors in India may

not yet be ready to consider ESPF but some well-respected and clairvoyant financial leaders areof the opinion that only good will result in such a change. Nachiket Mor, President of ICICI

Foundation for Inclusive Growth believes that banks would be safer in their investments within

industrial corporations if environment cell/team, policy and systems were created within the banking system (2008, slide 4). If banks could reasonably quantify environmental risks with the

help of environmental consultants or by building teams in fiscal terms, it would make it easier to

determine the worth of an investment that tends to have a high environmental and social risk.

Additionally, lenders and investors alike can make project finance based decisions on the EIAs

and EAs conducted by the government before getting approval for operations. However, thosecertificates are not always a guarantee for safety. In fact as learned from case studies on non-

compliance, a significant number of companies that get the green light even after government

approval end up being taken to court for breach of environmental laws. Therefore, lenders andinvestors need to ensure that such risks are mitigated by conducting their own independent

assessments and regular monitoring. Ultimately, independent investigations ensure safety for all



22

stakeholders. Abiding by government regulations is an incentive for every business. As shown in

the case studies it reduces costs ad most of all mitigates risks.

While environmental legislation is an incentive to regulate the industrial sector, it does not do so

to the extent that it halts environmentally destructive behavior in the sector. However, the

government as the highest authority in the country has the ability to bolster laws and regulations by increasing salaries of environmental auditors/inspectors to increase the quality of

investigations and frequency of policing. An additional incentive that can be created by the

government is providing reasonably attractive tax breaks for companies that demonstratecommitment to the environment.

The public services that local governments and related parastatal agencies offer can aidtremendously in furthering the cause of project finance. Parastatal agencies could provide

services in the form of impact assessments and evaluations to determine how environmentally

safe industrial projects are. The advantage to increasing the role of parastatals is that it serves as

a standard and trustworthy source of information for all project finance stakeholders.

Furthermore, such agencies would help to build the public-private partnership.

Within the private sector, a lot can be done to encourage EPSF – for example raising awarenessamongst lenders and investors to have a more socially and environmentally inclusive lending

criteria/outlook is a solution to alleviate the backlash from bad investments. The relationship

between investors and lenders and companies is such that pressure from the former would mostlikely have a significant influence over a company’s environmental performance.

However, we have seen in some case studies that due to lack of education in ESPF, manyinvestment and lending firms have failed to recognize the loss when a company’s subsidiary has

been closed down. By raising awareness of the link between market value and environmental

performance it may encourage the development of voluntary efforts with the help of industrial

consortiums and organizations such as the CII, UNEP FI and so on. The point is that there isenough information and channels to distribute relevant information to stakeholders and therefore

there is no reason why lack of awareness should be an issue. Furthermore, there are existing

networks and support systems that can facilitate such information sharing and partnerships.

A growing concern regarding the impact that businesses have on the environment is

commensurate to the information gathered thus far from case studies and scholarly research. Aswe move further into the 21

stcentury, we are finding ourselves running into greater turmoil

including environmental problems due to an accumulation of decades long of bad decisions.

Therefore, it is time that leaders recognize that they are significant players in the global struggleto creating sustainable communities supported by socially and environmentally responsible

businesses. The concepts under which ESPF are founded are germane to our current socio-

economic, political and environmental situation. Therefore, we must alleviate the problem beforeit gets out of control.



23

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28

IV. APPENDICES

Figure 1.

The Project Finance Quadrant: Relationship between stakeholders

In the figure above, the arrows represent the existing/missing links between the four main

stakeholders in project finance. The red arrows indicate existing relationships betweenstakeholders while the dotted arrows represent the gap between stakeholders. As demonstrated,

an understanding amongst investors and lender and extractive industries on the importance of

ecosystem services is lacking in the Indian context. The relationship between investors and

government is also lacking in terms of public- private partnership projects (PPP).

The stakeholders in the centre contribute to the entire dynamic through information sharing,

raising awareness and creating platforms for discussion on project finance issues. Thestakeholders in the centre are highly influential in either building or destroying the reputation of

government, investors and lenders and companies through media. Therefore, the role of the

centred stakeholders is vital to act as agent to facilitate better communication and understanding between all stakeholders.

Government

MediaLocal and Tribal Communities

Research think tanksInterest Groups

International Financial Organizations

Environment

Extractive IndustriesInvestors& Lenders

(Supreme Court of India, parastatal agencies, PCBs andMoEF)

(Banks, fundmanagers, privateequity groups)

(Flora and Fauna)

(High environmental risk companies e.g. Chemical andmining)



2 9

S t a k e h o l d e r A n a l y s i s

S t a k e h o l d e r

H o w a f f e c t e d b y l a c k o f a p p r o p r i a t e

m e a s u r e s f o r e n v i r o n m e n t a l l y s u s t a i n a b l e

p r o j e c t f

i n a n c e

C a p a

c i t y / m o t i v a t i o n t o p a r t i c i p a t e

i n p r o m o t i n g

e n v i r o n m e n t a l l y s u s t a i n a b l e p r o

j e c t f i n a n c e

E x t r a c t i v e i n d u s t r i e s

- R i s k o f c l o s u r e

- R i s k o f i n c u r r i n g p e n a l t i e s

- T h r e a t o f n a t u r a l r e s o u r c e d e p l e t i o n .

- R e p u t a t i o n a f f e c t e d b y

h i g h r i s k f a c t o r a n d

v i o l a t i o n o f e n v i r o n m e n t a l l a w s

- L i m i t e d c a p i t a l b a s e d u

e t o h i g h r i s k

i n v e s t m e n t .

- L o w m o t i v a t i o n ; h i g h i n f l u e n c e

- R e d u c t i o n i n c o s t f o r m a n u f a c t u r i n g a n d w a s t e

m a n a g e m e n t .

- W i t h i n f i s c a l c a p a c i t y t o i n s t a l l p o l l u t i o n c o n t r o l

e q u i p m e n t ; a n d r e s e a r c h r e n e w a b l e e n e r g y s o u r c e s .

- I n c r e a s e c o m p a n y ’ s m a r k e t v a l u e

G o v e r n m e n t o f I n d i a

( S u p r e m e C o u r t o f I n d i a ,

P o l l u t i o n C o n t r o l B o a r d ,

M o E F , a n d R B I )

- N a t u r a l r e s o u r c e d e g r a

d a t i o n

- H i g h p u b l i c c o s t o f r u n

n i n g c o u r t c a s e s .

- I n a b i l i t y t o a r r e s t t h e p r

o b l e m t h r e a t e n s t h e

c o m m u n i t y ’ s t r u s t i n g o

v e r n m e n t .

- L o w

m o t i v a t i o n ; h i g h i n f l u e n c e

- L e g i s l a t i o n i s i n f l u e n t i a l i n c o n t r o l l i n

g i n d u s t r i a l .

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p u b l i c a n d p r i v a t e e n t i t i e s t o i m p l e m

e n t E S P F .

- I t i s i n t h e g o v e r n m e n t ’ s i n t e r e s t t o u p h o l d t h e

i n t e r e s t o f i t s p e o p l e a n d t h e e n v i r o n

m e n t .

I n v e s t o r s a n d L e n d e r s

( I n t e r n a t i o n a l f u n d

m a n a g e r s , P r i v a t e e q u i t

y )

- M o n e t a r y l o s s e s f r o m i n v e s t i n g i n r i s k y

b u s i n e s s e s

- B a d r e p u t a t i o n f r o m f u n d i n g f a i l e d p r o j e c t s


- L i t t l e

i n t e r e s t t o i m p o s e e n v i r o n m e n t a l i m p a c t

s t a n d a r d s

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- C o m p e t i t i o n b e t w e e n b a n k s

C o n s u m e r s

- C o n s u m e r s w h o p r e f e r

t o b u y p r o d u c t s f r o m

e n v i r o n m e n t a l l y r e s p o n

s i b l e c o m p a n i e s h a v e

a l i m i t e d r a n g e t o c h o o s e f r o m


- I n c r e a s i n g n u m b e r o f c o n s u m e r s a r e b e c o m i n g

e n v i r o n m e n t a l l y c o n s c i o u s a n d w i l l i n g t o s p e n d t h e

e x t r a

b u c k f o r g r e e n p r o d u c t

R a t i n g A g e n c i e s

- I m p a c t o f E S P F i s m i n i m a l

- L o w m o t i v a t i o n ; l o w i n f l u e n c e

- R a t i n

g s a r e i n f l u e n t i a l i n r a i s i n g a w a r e n e s s o n

c o m p a n y p e r f o r m a n c e a n d r e p u t a t i o n



3 0

- C o m p e t i t i v e c o m p a n i e s a r e c o n c e r n e d a b o u t r a n k i n g

h i g h

a s i t w i l l a t t r a c t m o r e f u n d s a n d

p r o f i t s

T r i b a l / L o c a l c o m m u n i t y

- L o s s o f l i v e l i h o o d

- E m p l o y m e n t o p p o r t u n i t i e s

- A c c e s s t o b e t t e r i n f r a s t r u c t u r e

- H i g h

l y m o t i v a t e d ; l o w i n f l u e n c e

- P I L s

h a v e i n f l u e n c e d c l o s u r e o f c o m

p a n i e s

- A c c e s s t o j u d i c i a l p r o c e s s i s l i m i t e d

I n t e r e s t G r o u p s

( e n v i r o n m e n t a n d h u m a

n

r i g h t s )

- L o s s o f b i o d i v e r s i t y

- H u m a n r i g h t s a b u s e s

- H i g h

l y m o t i v a t e d ; h i g h i n f l u e n c e

- I n f l u e n t i a l i n r a i s i n g a w a r e n e s s a n d d

e n i g r a t i n g

r e p u t a t i o n s o f p o l l u t i n g i n d u s t r i e s

- M o t i v a t e d b y i n t e r e s t t o r e p r e s e n t i n t e r e s t s o f

m a r g

i n a l i z e d

I n d u s t r i a l c o n s o r t i u m s

- I n d u s t r i e s r e p r e s e n t e d a r e v u l n e r a b l e

- H i g h l y m o t i v a t e ; h i g h i n f l u e n c e

- C o n s

o r t i u m s a l l o w f o r t h e s h a r i n g o f

i d e a s a n d

r e s o u

r c e s w h i c h c a n b e h e l p f u l i n c r e

a t i n g

i n c e n

t i v e s f o r t h e i n t e g r a t i o n o f E S P F b y c o m p a n i e s

a n d t h e i r i n v e s t o r s

- F r o m

a b u s i n e s s p e r s p e c t i v e t h e r e i s a n e e d t o

p r o m

o t e e n e r g y c o n s e r v a t i o n

R e s e a r c h t h i n k t a n k s

- I m p a c t o f E S P F i s m i n

i m a l

- H i g h l y m o t i v a t e d b u t h i g h i n f l u e n c e

- t h o r o u g h r e s e a r c h a n d a n a l y s i s c a n p r

o v i d e

m e c h a n i s m s t o a d o p t E S P F

M e d i a

- I m p a c t o f E S P F i s m i n

i m a l

- L o w

m o t i v a t i o n b u t h i g h i n f l u e n c e

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i n r e p o r t i n g

s t o r i e s o f n o n - c o m p l y i n g c o m p a n i e s

t h e f o r m e r t e n d

n o t t o c o n t i n u e r e p o r t i n g o n t h e i s s u e

- I f r e p

o r t i n g w a s c o n s i s t e n t a n d m a d e

p u b l i c i t w o u l d

h e l p b u i l d a w a r e n e s s a n d s u p p o r t f o r

E S P F

cdf sustainable finance- sapna mulki

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