Number: 1997-06
WHEREAS, the total amount of development funding from all industrialized nations and the multilateral development banks (MDBs) has remained relatively stagnant over the past 15 years, having around $55 to $60 billion dollars per year; and
WHEREAS, the dollar amount of investments and loans in developing countries and the former Soviet bloc by the private sector of the financial services industry which was minimal during the “debt crisis” of the 1980s, but it has grown during the 1990s so that it now overshadows the official development funds generated by government agencies and MDBs, rising to over $170 billion in 1995; and
WHEREAS, the level of investment in developing and transitional economies by private sector lenders and investors is expected to grow between 10% and 15% over the next five years, while the official funds are expected to stall; and
WHEREAS, some observers believe that much of this investment, whether planned for the purpose or not, is evading stronger environmental regulation and enforcement in the industrialized countries; and
WHEREAS, the kinds of investments being financed span the full gamut of large scale industry, including mining, timber and other resource extraction, manufacturing, transportation, energy production and chemical processing; and
WHEREAS, the environmental impacts of such loans and investments will vary depending upon the types of projects financed and where they are sited, the quality of pre-construction environmental analysis, the care devoted to design and implementation, the degree to which the mitigation measures are carried out, and environmental laws are enforced, and the level of informed local public participation; but many examples of current projects reveal a potential for increased adverse impacts on indigenous and local peoples, to native fish and wildlife populations, forests, coastal and other wetlands, fresh water and many other crucial natural systems; and
WHEREAS, undiagnosed and disregarded environmental impacts may threaten the economic viability of projects and other investments, and thus environmental risks should be taken into account, along with all economic and political risks, in the decision making processes of financial institutions; and
WHEREAS, on the other hand, there are new opportunities for investments in clean water and sanitation, renewable energy and conservation, pollution reduction technologies and sustainable harvested forest, fish, wildlife, and agricultural products, which are economically profitable as well as environmentally sound; and
WHEREAS, since 1983 the National Wildlife Federation has promoted reforms in the lending decisions of the MDBs, especially to ensure that they include analysis of all environmental factors and mitigation of impacts, and to increase the effective participation of local people affected by such loans; and
WHEREAS, the same rationale that made it imperative for the MDBs to incorporate environmental factors into their lending decisions also applies to the private sector lenders and investors; and
WHEREAS, although decisions on the direction of industrial development and how to handle the resulting environmental impacts are ultimately the responsibility of the governments of each country, nevertheless, the influence on small economies of major investors and lenders, whether foreign or domestic, is persuasive, and this influence can be exercised either to promote more effective environmental management or to impede it; and
WHEREAS, the integration of selected environmental issues into the credit decision making process is becoming standard practice at only a handful of private sector financial institutions anywhere in the world, but many of the resources most important to National Wildlife Federation, such as wetlands and endangered species, are still excluded from such consideration;
NOW THEREFORE, BE IT RESOLVED that the National Wildlife Federation in its Annual Meeting assembled April 3-6, 1997 in Tucson, Arizona, hereby calls upon private lenders and investors operating in developing and transitional economies to integrate environmental issues into their core financial decision making processes, including risk ratings; to ensure that environmental impact assessments and other needed studies are prepared and used in such processes and during implementation; and to monitor compliance with local and relevant international environmental laws and regulations by their borrowers; and
BE IT FURTHER RESOLVED that the National Wildlife Federation calls upon the MDBs to ensure that whenever they co-invest in or provide political risk insurance to private sector projects, the same policies, procedures and other environmental practices will apply to the private sector projects as would apply to their direct loans to governments; and
BE IT FURTHER RESOLVED that the National Wildlife Federation calls upon private sector lenders and investors to examine their portfolios and to devote more financial resources to environmentally sound investments and loans.