requirements of international investors as an ehss...

The world’s leading sustainability consultancy

Requirements of international investors as an EHSS management tool

Minex, London Elena Amirkhanova 02 December 2013


Contents What’s this layout for? Formatting for contents slide – this slide has slightly different spacing between lines to emphasise topics

Agenda

■  Introducing ERM ■ Requirements of international investors as an EHSS

management tool ■ Case studies ■ Contacts

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§  Leading consultancy providing environment, health, safety, risk and social services for over 40 years

§  Delivers innovative solutions to enable our clients to maximize earnings, comply with regulations and improve their corporate reputation and public perception

§  Sustainability is at the heart of the services we provide and how we operate our business

§  170 offices in 40 countries worldwide

§  > 5000 professional staff

§  Completed projects in > 190 countries

Introducing ERM

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ERM: Services across the Mining Project Cycle

Decommissioning Operation Construction Design Exploration and Appraisal

ERM provides services across the entire mining value chain

Impact Assessment and Planning •  Strategic and economic

assessments •  Environmental planning and

environmental impact assessments

•  Environmental mitigation actions

•  Social impact assessment and management plans

•  Environmental management plans

•  Integrated environmental, social, health impact assessments

•  Site selection •  Best Available Technology

(BAT) studies •  Best Practicable Environmental

Option (BPEO) studies

Performance Assurance and Operation Risk Management •  Air quality and noise •  Water, wastewater and water

management •  Environmental management

information systems (EMIS) •  Auditing and verification •  Management systems •  Compliance auditing •  Health and safety •  Risk management •  Safety culture •  SHE cases •  SHE management systems •  Safety culture transformation •  Reliability / Availability analysis •  HAZID / HAZOP

Contaminated Site Management •  Site investigation and

remediation •  Strategies for contaminated

sites •  Construction management

services •  Decontamination,

decommissioning and demolition

•  Water, wastewater and water management

•  Sustainable remediation

Sustainability and Climate Change •  Sustainable business

strategies •  Water sustainability •  Energy auditing •  Supply chain management •  Reporting, assurance,

communication & branding •  Stakeholder engagement &

local communities •  Life cycle assessment (LCA)

and life cycle management •  Carbon and water

footprinting

Transaction Services •  Quantification of sustainability

risks and liabilities •  Evaluation of potential

sustainability opportunities •  Fair value / ARO

assessments •  Gap analysis and

benchmarking •  Strategic advice pre due

diligence phase •  Technical support during deal

negotiation •  Liaison with other advisors •  Post-merger integration

support

Closure

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Delivering sustainable solutions in a more competitive world © COPYRIGHT 2011 ERM 5

Extractive industries are being impacted by non-technical risks

Repor&ng Frequency by Type of Delay (%)

Type of Delay Reported

Non-technical issues (e.g. stakeholder, community, environmental, political etc.)

Commercial (e.g. cost or contract-related)

Technical

73% of sample GS Top 190



Study of Sample of 19 Goldman Sachs Top 190 Projects by Cause of Delay “Of the 190 projects, we

have seen an average of 12 months delay for non-‐producing fields”

Goldman Sachs Research

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Lenders Requirements: Scope

RISK MANAGEMENT

Capex & Opex

Civil & Criminal Action

Growth & Operations Liabilities Reputation /

Brand Access to

Capital

ENVIRONMENTAL •  contaminated land & water •  biodiversity loss •  greenhouse gas emissions / climate change impact •  renewable energy •  waste management •  water scarcity

SOCIAL •  workplace health, safety and quality access to medicine •  labour standards in the supply chain •  child labour •  relations with local communities

GOVERNANCE •  risk management and control systems •  bribery / corruption •  business ethics •  lobbying •  stakeholder dialogue disclosure and reporting

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Main International Finance Institutions

World Bank Equator Principles Financial Institutions ■  Equator Principles ■  8 IFC Performance Standards

International Finance Corporation ■  Sustainability Policy ■  8 Performance Standards Development Banks ■  Environmental and Social Policies Export-Credit Agencies (COFACE, ONDD etc) ■  «Common Approach» OECD

National Investment Corporations (OPIC) ■  Policies

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Equator Principles: 1.  Review & Categorisation 2.  Social & Environmental Assessment 3.  Applicable Social & Environmental Standards 4.  Action Plan & Management System 5.  Consultation & Disclosure 6.  Grievance Mechanism 7.  Independent Review 8.  Covenants 9.  Independent Monitoring & Reporting 10.  EPFI Reporting

What are the Main Lenders’ Requirements?

IFC Performance Standards: PS1: S&E Assessment & Management System PS2: Labour & Working Conditions PS3: Pollution Prevention & Abatement PS4: Community Health, Safety & Security

PS5: Land Acquisition & Involuntary Resettlement PS6: Biodiversity Conservation & Sustainable NRM PS7: Indigenous Peoples PS8: Cultural Heritage

1.  Country EHSS laws and regulations 2.  EU E&S standards

IFC EHS Guidelines: General EHS Guidelines •  Environmental •  Occupational Health & Safety •  Community Health & Safety Industry Specific Guidelines •  Thermal Power Plants

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Scoping E&S

Baseline

E&S Impact

Assessment

E&S Management

Plan

E&S Management

System

E&S Monitoring

Lenders E&S Requirements: Approach

Stakeholder Engagement

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Project

Client

Social and Economic Assessment Confidential Client

Location & Date Russia, 2010, 2012

Scope SIA was one of the loan requirements for a project development. Company has initiated social and economic assessment in order to •  identify if appropriate processes are in place to manage key social and

economic impacts and issues •  assess existing initiatives, provide feedback on their success and

suitability •  provide a planning tool for managing social and economic impacts,

including social investment and mine closure

Key Aspects

ERM has reviewed operations in the following way: •  1: Profiling the operation and associated communities and identify key

+/- issues •  2: Identifying and assessing socio-economic impacts and sharing

results with stakeholders •  3: Developing management responses to key issues •  4: Reporting the results of the assessment to stakeholders

Case Study: Social and Economic Assessment

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Project Client

Identification of Social Risks

Confidential Mining Client

Location & Date

Southern Russia, 2011

Scope Company was considering an international finance for on of its projects and hired ERM to undertake a Lenders DD including a detailed social review of the Company’s social performance through visits to the corporate office and interviews with internal and external stakeholders and developed an Engagement program and Program to minimize social risks

Key aspects As the result Company has made improvements around: Communication between the corporate and the site levels, Leadership commitment Targeted social program Working with land users to register their rights

Case Study: Identification of Social Risks

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Project Client

ESIA and Resettlement planning Energy Resources

Location & Date

Mongolia

Scope ERM was hired to conduct ESIA for coal mining project in Mongolia to obtain international financing from the international financial institutions.

Key Aspects

Preparation of ESIA, Action Plan for Mine and Coal Transport Infrastructure Project as well as Public Consultation, Resettlement Action Planning and Monitoring & Evaluation processes followed by on-going monitoring and evaluation of environmental and social performance as the Project is being implemented. Key aspects were: to provide ‘real-time’ inputs into the planning and decision making process for the Project, so that impacts could be avoided or investigated in the design stages. Managing resettlement risks through a combination of early engagement with herders as well as through a strategic approach to public consultation and disclosure.

Case Study: ESIA and Resettlement Planning

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Environmental and Social Management System: IFC PS 1 and ISO/OHSAS

v  Environmental and Social Management

Program and Action Plan

w Organizational resources and capacity

y Stakeholder Engagement

{ Reporting

z Monitoring

x Training

u Environmental and Social Assessment

Requirements: •  Development and implementation

of management system •  7 elements in IFC PS 1 •  17 elements in ISO/OHSAS •  ISO/OHSAS: lack of social

elements

Environmental

and Social

Assessment and

Management

System

Plan

Act Do

Check

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Contacts

Elena Amirkhanova Partner, Global Lead Sustainable Finance Services | ERM UK 2nd Floor | Exchequer Court 33 St Mary Axe | London EC3A 8AA | UK | [email protected]

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