U.S. investors criticize World Bank target for renewables
BRATTLEBORO, Vermont, US, 2004-08-04 (Refocus Weekly)
The World Bank proposes to invest US$200 in renewable energies this year, but that is $30 million less than last year’s investment, claims a group of investment advocates.
In 2000, the World Bank Group commissioned the Extractive Industries Review
to determine if the Bank’s oil and gas investments around the world were
environmentally sustainable. The EIR was headed by Emil Salim, chair of the 2002
World Summit on Sustainable Development in South Africa, who delivered his final
report late last year. The Bank struck a subcommittee of its board to discuss
management's response to the review, and circulated a draft management response
for public comment that ended in July.
The full WBG board will meet August 4 to determine how to implement the EIR
recommendations.
It is “our understanding that the current baseline for the Bank's investment
in renewables is set at the level of its average annual investment in the sector
over the past three years,” says a group of socially-responsible investment
advocates including Boston Common Asset Management, Christian Brothers
Investment Services, Domini Social Investments, as well as religious investors
such as the Interfaith Center for Corporate Responsibility. The Bank’s “interpretive
departure” from the EIR recommendations means that the suggested target of
$200 million for 2004 will actually be $30 million less than what it invested in
2003.
The EIR calls for the Bank to “aggressively increase investments in renewable
energies by about 20% annually,” and the draft management response is that the
increase is “fully consistent with the direction in which we are headed, and
we will redouble our efforts.” The SRI coalition questions the math behind
management's definition of ‘redouble,’ explains William Baue, author of ‘Keeping
Score: The Mathematics & Linguistics of the World Bank Extractive Industries
Review.’
“Since the Bank achieved investment in renewables and energy efficiency of
approximately $400 million in both 1994 and 1996, we find that to be a more
appropriate target to strive to attain,” the group suggests.
“We commend the Bank for establishing a renewables target and for assisting in
the necessary shift to renewable energy sources,” the letter states. “Based
on its expertise, experience and commitment, the World Bank is well poised to
help deliver on the need and demand for renewable energy in emerging economies
with the potential to change societies. Targeted investment in renewables and
energy efficiency can support the Bank’s poverty alleviation goals while also
providing direct benefits to communities, including reducing air and water
pollution and supplying a source of energy that is sustainable.”
Socially responsible investors “look to the Bank to be the catalyst for
increased investment in renewable energy,” and some investors already include
renewables in their portfolios as a hedge against regulatory, market and other
risks associated with fossil fuels. “Demand for renewable energy (and as a
result, investment in the sector) has been somewhat hampered by the reluctance
of many companies to proactively manage CO2 emissions and seek renewable-based
energy sources,” and the SRI group says the Bank’s commitment to renewables
will “encourage companies to make this transition with greater ease.”
“Socially responsible shareholders are increasingly asking companies about
their assessment of climate risk and their investments in renewables,” and
concern “is so great that at least 25 shareholder resolutions were filed this
year seeking disclosure of the financial risks associated with climate change.”
“There is great concern that not enough investment is being undertaken in
renewable energy,” it adds. “We believe with responsible planning and with
the World Bank’s help in promoting renewable energy, it will be possible to
protect both shareholder value and the Earth’s climate.”
It wants the target for renewables to be tied to overall lending to fossil
fuels, and making such a link “will demonstrate that the Bank seeks to
decrease the world’s dependence on fossil fuel projects.” It wants the Bank
to ensure that lending on energy efficiency does not exceed 50% “since energy
efficiency is often easier to finance than renewables and could easily draw
support away from them.”
It wants large-scale hydro to be excluded from the Bank’s renewables portfolio
because such projects have “a unique potential for severe, adverse
environmental and social impacts,” and recommends that the Bank deploy
additional experienced staff to renewable energies.
The SRI group manages $29 billion of assets.
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