By: Kyle Harris, k.harris@primeafrica.net
Large infrastructure projects involve increasing public and private partnerships. However, the funding for infrastructure projects (particularly in developing nations) creates additional compliance burdens on the project teams. Achieving environmental compliance is a key risk to investment for large infrastructure projects and increasingly is becoming a prerequisite for both private and public funding. Navigating national environmental legislative requirements, as well as the potential lender imposed compliance initiatives, can be a costly and complicated affair.
Globally, there has been a push towards a more sustainable environmental framework that takes all facets of the project life cycle into consideration. This has in part been driven by increasing global environmental awareness and realization of the shortcomings of environmental legislation in some developed and developing counties. In order to fill the gap, the International Finance Corporation (IFC) developed the Equator Principles, which can be used by the financial industry for assessing and managing environmental and social risk when providing loans to finance the construction of certain large projects. The Equator Principles as well as other environmental management systems such as the ISO14001 environmental standard, provides the public with a clear indication that companies act in an environmentally sustainable way.
The level of sophistication of national environmental legislation may vary significantly between countries. While global best practice environmental management systems such as the Equator Principles are applicable, compliance with national environmental legislation would be the first hurdle for investors. In the case of South Africa for instance, the core of the country’s environmental legislation is the National Environmental Management Act (NEMA), which serves to interpret a large body of ancillary legislation (e.g. the National Water Act, the Mineral & Petroleum Resources Development Act, the Air Quality Act and the Waste Act among others).
There is an increasing move in environmental legislation internationally towards assigning clear responsibility for the environmental consequences of development. The delegation of responsibilities and accompanying liabilities for non-compliance is the foundation of an enforceable legal system. The strong environmental framework exposes companies and potential investors to compliance with broad swathe of environmental requirements, and failing to do so can result in severe penalties in the form of fines or work stoppages. In some instances, countries levy natural resource royalties as a special tax to investors and developers. Coupled with the on-going rapid development of environmental legislation, with several major promulgations, updates and changes every year, the environmental compliance landscape can appear daunting to potential investors.
The combined resources of Prime Africa and EHS Support are ideally situated to assist with compliance related issues for international projects, including sub-Saharan African projects. Through numerous international projects, we have developed systems and tools to both navigate and mitigate potential compliance issues. Our environmental management life cycle approach is based on four components: 1) Strategic risk assessment, 2) Specialist environmental services, 3) Support and implementation and 4) Mitigation assessment. These are explained in further detail below:
- Strategic Risk Assessment: Understanding the environmental risks associated with proposed development during the feasibility assessment. Typically, interventions would include legislation analyses and legal environmental opinions. The purpose of such assessments are to quantify the nature of the legislative risk and to influence project design at early design stages with a view to minimizing environmental risk.
- Specialist Environment Studies: Utilizing multidisciplinary team of scientists, engineers and economists we provide clients with in-depth analyses of the economics associated with environment decisions. Our resource economic studies focus on understanding the project (or activity) impacts on environmental resources, valuation of the potential loss (or gain) to delivery of ecosystem services, in combination with assessment of resources rents payable, mitigation costings, and other analyses. These form the basis of informed business decision making, mitigation strategies and stakeholder communication and engagement.
- Support & Implementation: Following project approval, our team supports clients in complying with environmental licenses and implementation of the conditions of the licenses.
- Mitigation Assessment: Environmental authorities are placing increasing emphasis on the implementation of mitigation initiatives once environmental licenses have been granted. These initiatives can range from the rehabilitation and remediation of impacted land to either physical or financial offsets. Development and implementation of effective mitigation and offset programs is critical as these endeavors are costly and can directly impact on business reputation in the market place.
[hr_shadow]
Prime Africa Consultants, based in South Africa, through our partnership with EHS-Support, offers a bridge to Africa and other developing International investment locations. In partnership with EHS Support, we provide an expanded suite of environmental solutions for all developmental requirements. Prime Africa will be in the United States in October and will be presenting on a range of topics from environmental compliance in Southern Africa to market and economic analysis techniques for assessment of risks in acquisitions in Africa and other emerging markets at numerous forums. For more information on environmental compliance related issues, please contact Kevin Simpson, or Kyle Harris at k.harris@primeafrica.net or +27 82 463 5921.
