Financial analysis is normally required to make a decision on any type of investment. Financial institutions and other sources of private sector funding follow a well defined due diligence process when evaluating loan and investment proposals, consisting of verifying the technical, financial and legal aspects of the project, evaluating the creditworthiness of the borrower, and assessing the risks involved.
The actual cost of waste and waste management is very often hidden in the management overhead accounts and do not find their way to the project cost analysis. Environmental risks are also still often undervalued. It is here that the main challenge of mainstreaming Resource Efficient and Cleaner Production lies.
Bankers and investors have a valuable contribution to make in protecting the environment while maintaining the health and profitability of their businesses. They have crucial links with commercial activity, including activity that degrades the environment. A number of financial institutions have joined the UNEP Finance Initiative. Through it they express their commitment to sustainable development and support for the precautionary approach to environmental management which attempts to anticipate and prevent environmental degradation.
Financial institutions are big businesses in their own right and taking an eco-efficient approach to their own operations is sometimes their first real exposure to environmental issues. This improved environmental performance generally brings with it an improved financial performance and a willingness to consider this area more proactively. Some years ago the phrase 'environment makes business sense' was first used; since then it has been a key theme in convening meetings around this subject.
The following considerations may help banks to orient their lending towards Resource Efficient and Cleaner Production:
In most financial institutions by far the greatest level of attention is paid to past costs, including regulatory costs. It is not common for future potential cost to receive the same level of assessment in a loan application than past financial costs. Yet the weight of regulation is getting heavier, not just in developed countries. This does mean that a true assessment of risk must factor in the future costs of operation as well as the past performance.
The UNEP DTIE project 'Strategies and mechanisms for promoting Resource Efficient and Cleaner Production investments in developing countries' has formulated training programmes which will be implemented in five pilot countries and then made available for adaptation and use worldwide.
In addition to this, a global initiative for improving environmental management accounting, led by UN-DESA, is in the process of preparing new policies and suggested prevention-oriented practices for the consideration the world community and the ISO. There is a long way to go, but the process has undoubtedly begun.
For more information see the Cleaner Production Financing Initiative.
The growing focus on Resource Efficient and Cleaner Production as a sustainability strategy requires new attitudes, new knowledge and skills for all professions, academic as well as non-academic. The Resource Efficient and Cleaner Production concept implies that environmental considerations are integrated in planning and development activities.
The educational institutions should play a primary role in activities such as below:
Training should be directed towards companies and their employees, public authorities, technological and academic institutions and NGO's. 'Educate the educator' activities are important in order to make educational planners and teachers able to incorporate Resource Efficient and Cleaner Production in the curricula.
The initiatives should be directed towards changing both the knowledge and the attitudes of the managers of industries, regulatory personnel, technologists, academics and NGO's. Those trained in science and engineering may not automatically have the appropriate skills to develop Resource Efficient and Cleaner Production systems.
The skills that are required for Resource Efficient and Cleaner Production are different from those needed for managing existing production systems efficiency. Part of any long-term plan must incorporate environmental concerns into educational curricula in general, and into all engineering and business management courses in particular.
Role of Universities
Universities bear profound responsibilities to increase the awareness, knowledge, technologies and tools to create an environmentally sustainable future. They must play a strong role in Resource Efficient and Cleaner Production education, research, policy development, information exchange and community outreach. The role of universities in Resource Efficient and Cleaner Production promotion is not limited to realigning the formal degree programmes. Training of in-service personnel and applied research also should be covered by the universities.
Education and training must be supported by research and similarly research activities must be complemented by education and training to ensure that there is closely co-ordinated development.
The university education and training programme for Resource Efficient and Cleaner Production may have four components:
How Can NGOs Promote Resource Efficient and Cleaner Production?
NGOs and other public groups can be more pro-active and create enabling rather than offensive/defensive situations for the industry to integrate Resource Efficient and Cleaner Production in their environmental actions.
The following websites are intended for persons who are interested in partnerships between and with nongovernmental organisations and industries. The links include directories of potential NGO partners and a collection of partnership success stories. Many programs are now supporting such partnerships, and industry executives are advised to learn about how these work.
Examples for NGO-Networking for Resource Efficient and Cleaner Production
Examples of partnerships