“Approximately 50% of companies have implemented sustainability practices at an average level or below”: EDB experts comment on ESG assessment results
Towards sustainable development: how the EDB implements environmental and social standards in Central Asia
Almaty, 1 July 2024. During the Eurasian Development Bank’s (EDB) Annual Meeting and Business Forum, Conrad Albrecht, Managing Director and Head of the EDB Directorate of Sustainability, delivered a presentation on the implementation of environmental and social standards in project assessments in Central Asia. He emphasised that rapid urbanisation and climate change require a new approach to infrastructure development in the region and shared the Bank’s experience in assessing projects from a sustainability perspective.
Conrad Albrecht highlighted the key aspects of incorporating environmental and social considerations into the EDB’s investment policy. He stressed the importance of environmental and social impact assessments (ESIA) in project implementation, risk assessment and long-term mitigation, regulatory compliance and stakeholder engagement.
“The Bank is actively developing tools to collect and analyse data on the positive and negative effects of a project within the investment cycle,” said Conrad Albrecht, describing a three-step process that includes pre-assessment, project review and subsequent monitoring. He also mentioned the use of analysis tools such as a list of exceptions, ESG profiling and assessment of the project’s environmental and social safeguards. The speaker outlined the types of activities the Bank does not intend to finance. These include projects that contravene national and international laws, damage cultural heritage or entail involuntary resettlement. However, he stressed that the Bank is willing to consider exceptions where a project aligns with sustainable development policy and has no alternatives.
Conrad Albrecht is confident that E&S assessments and their results offer extensive benefits for the Bank and its clients. By following the new procedure, the Bank protects its investments from environmental and social risks, obtains data on positive impacts on the region’s economy, and achieves a balance between best practices and international standards to prevent unnecessary burdens on clients. The new standards also allow the Bank to harmonise its practices with the generally accepted standards of other international development banks and improve its non-financial reporting. For clients, these assessments help identify the positive environmental and social impacts of their projects, raise awareness of and implement the best sustainability practices, and solidify their reputation as responsible companies. In general, the implementation of the new policy enhances public participation in the ESG agenda and the safety of new projects.
The first five months of testing the new E&S risk analysis system demonstrated that most clients were at an average level of ESG practice adoption. “This is a new structure for us, and we see that, out of 28 projects totalling US $4.5 billion, only 12% of initiatives are relatively mature. Some projects have significant social (creating jobs, employing people with disabilities) and environmental effects (reducing CO2 emissions, using recycled materials) that are measured and assessed. However, almost half of the companies, or 47%, scored below average, indicating the need for additional efforts in the region. In particular, we see that companies do not assess their non-financial indicators and do not disclose them publicly," he summarised.
In conclusion, Conrad Albrecht emphasised that the Bank’s main objective is to promote sustainable investments in Central Asia that are safe for the environment and people and contribute to economic growth. Although not a magic pill, high environmental and social standards play a key role in achieving this goal.
The EDB Annual Meeting and Business Forum are taking place on 27-28 June in Almaty, Kazakhstan. Watch the EDB Annual Meeting and Business Forum live at [ссылка].
Additional Information:
The Eurasian Development Bank (EDB) is a multilateral development bank investing in Eurasia. For more than 18 years, the Bank has worked to strengthen and expand economic ties and foster comprehensive development in its member countries. The EDB's charter capital totals US $7 billion. Its portfolio consists principally of projects with an integration effect in transport infrastructure, digital systems, green energy, agriculture, manufacturing and mechanical engineering. The Bank adheres to the UN Sustainable Development Goals and ESG principles in its operations.
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