Posts Tagged ‘ regulatory reform ’

When Environmental Responsibility Gets in the Way of … Environmental Responsibility

Impact assessment or IA – also known as and including environmental assessment, environmental impact assessment, social impact assessment, health impact assessment, and a host of other discipline-specific variations along those lines – involves the critical evaluation of the consequences of past, present, and future development. Most commonly, IA is applied to specific projects to assist decision-makers and the public to understand potential environmental, social, cultural, health, and economic impacts – both positive and negative – and to inform the development of measures to mitigate adverse effects and enhance beneficial outcomes. The scope of IA has expanded from its original focus on the biophysical environment to encompass a broad range of issues reflective of today’s society, including gender and identity, Indigenous rights and interests, and inter-generational health and well-being, among other considerations. As such, IA, when done properly and well, is recognized as a vital tool in promoting sustainable development, and legislative frameworks have evolved to establish robust procedures for IA in many jurisdictions, including Canada.

Unfortunately – ironically, even – today’s IA frameworks, born of well-founded intentions to foster sustainability and protect the natural and human environment, often hinder the advancement of projects that are critical to a sustainable future.

Earlier this week, we saw yet another example of the challenge facing Canada and other jurisdictions trying to advance clean energy transition projects: how do we thread the needle, balancing timely project development with legitimate objectives of environmental and community protection at the local level?

https://www.reuters.com/markets/commodities/glencore-may-look-elsewhere-recycling-hub-after-italy-rejects-fast-track-2023-10-01/

In this example, a regional-level government in Italy chose to require a full impact assessment instead of an available fast-track approval process for a proposed electric car battery recycling facility pilot project at an existing facility, prompting the proponent to consider looking elsewhere for more favourable conditions for its project.  This outcome illustrates how even a well-intentioned IA framework can undermine progress towards climate action goals, while also impacting global competitiveness.

When an impact assessment process takes many years to complete, like it does here in Canada, it creates a real barrier to getting so-called “green” projects built, delaying the transition to a more sustainable economy and exacerbating the climate crisis we face. In very practical terms, there is a procedural conflict between what needs to be done to address global climate change – including rapid development and deployment of clean energy-related projects – and what needs to be done to protect local ecosystems and communities from the effects of those projects. The latter, too often, is typically accomplished through a complex process that has proven to be unwieldy and time-consuming, undermining the achievement of the former. This conflict is costing us, in economic opportunity, competitiveness, security, and well-being, both now and, through delayed mitigation of the effects of climate change, in the future.

IA frameworks and other regulatory processes urgently need to be retooled to reconcile these two vital aspects of environmental responsibility. We need to develop and apply more timely and efficient ways to evaluate and implement green projects, drawing on our collective knowledge and experience in assessment – and especially management – of the environmental, social, cultural, health, and economic impacts of development.

There is a tremendous breadth and depth of practical experience in Canada and elsewhere in this regard. We need to leverage this expertise to develop trusted, efficient, and expedited decision-making processes that respect and achieve both our local and global environmental goals.

As I was writing this post, I was reminded of Janus, that ancient Roman mythological figure usually depicted with two faces. Janus is known as the god of change and transition, overseeing progress from one time to another, one state or condition to another. Surely there is a metaphor there: these two sides – faces, if you will – of environmental responsibility are part of the whole and both are essential for a successful transition to a clean energy future.

Too Little for Too Long

At the end of September, the Institute of International Finance held its annual meeting in Washington.  The IIF is a global association of financial institutions, whose mission is to “support the financial industry in prudently managing risks, including sovereign risk; in developing best practices and standards; and in advocating regulatory, financial, and economic policies that are in the broad interest of [its] members and foster global financial stability.”

Prominent on the agenda was international financial regulatory reform, over which considerable debate is ongoing. On the one hand, the G20 plan tougher financial regulatory requirements.  The IIF, on the other hand, while acknowledging the need for reform, calls for a cautious approach, arguing that stricter rules could compromise a fragile economic recovery.  In his speech to the IIF’s annual meeting, Bank of Canada Governor Mark Carney was critical of the IFF’s position, in part because it fails to assume any economic benefit from reducing the risk of future financial crises and because banks already have until 2019 to adapt to the changes. The contrasting viewpoints are summarized succinctly in this Globe and Mail article by Kevin Carmichael, titled “Carney, Waugh spar over new banking rules” (September 26, 2011).

Bank of Canada Governor Mark Carney

What jumped out at me from Mr. Carney’s remarks is this gem of a quote:  “If some institutions feel pressure today, it is because they have done too little for too long, rather than because they are being asked to do too much, too soon.

This statement reflects the reality that increasing demands for transparency, accountability, ethical behaviour, and consideration of non-financial material issues (like environmental, social, and governance issues) have been apparent for some time, and there is diminishing justification – and tolerance – for delayed action.  This is relevant not only to financial institutions, but to other corporate sectors as well.

The pressure to which Mr. Carney alluded will only increase with prolonged inaction, as the gap between corporate behaviour and performance and emerging stakeholder expectations and regulatory requirements continues to grow.

 

Click here for Governor Mark Carney’s full remarks to the IIF.

Click here to link to the IIF’s paper, “The Cumulative Impact on the Global Economy of Changes in the Financial Regulatory Framework” (September 2011).

Click here to link to the IIF’s latest paper on cumulative economic impact of regulatory reform, addressing revisions (October 2011).