Banks backing Mekong hydropower failing on due diligence, story finds

Foremost banks working in Thailand and Vietnam aren’t doing enough to address the environmental and human rights consequences of their investments in super-scale hydropower dams alongside the Mekong River, according to a new story.

The story, by Magnificent Finance Asia, a community of extra than 90 civil society organizations led by Oxfam, and Netherlands-basically basically based completely sustainability learn organization Profundo, scrutinized the insurance policies of three banks basically basically based completely in Thailand and three basically basically based completely in Vietnam, including their ability to uphold their publicly acknowledged environmental, social and governance (ESG) commitments.

The findings present regulatory shortcomings at nationwide and regional ranges that fail to defend banks guilty for their funding decisions. The story also uncovered a lack of meaningful implementation of global requirements in environmental and human rights among Mekong hydropower funders.

Provided that the energy purchase agreements that in truth greenlight hydropower projects in a roundabout blueprint hinge on the provision of long-time interval funding, the story says banks and merchants play a extremely necessary operate in guaranteeing that environmental and social safeguards are implemented by companies at some stage in the come, operation and decommissioning of hydropower vegetation.

Consultants are calling on banks and merchants to adopt extra sustainable banking insurance policies and practices when deciding which projects to pork up. In suppose, they name on the put’s financial institutions to align their practices with global requirements.

“Mammoth hydropower infrastructure projects had been proven to motive broad social and environmental hurt,” acknowledged Bernadette Victorio, program lead at Magnificent Finance Asia. “It is time for governments, financial institutions, and completely different stakeholders to prioritize execrable-border financing fashions and guidelines that promote guilty hydropower development according to global requirements.”

The story is maybe the most fashionable proof to rob questions about why banks working in Mekong worldwide locations proceed to finance environmentally detrimental hydropower projects in neighboring worldwide locations, despite the high fees and consequences for downstream worldwide locations, including their like.

Of the six assessed banks, Thailand’s Siam Commercial Financial institution (SCB) change into as soon as evaluated as being doubtlessly the most carefully aligned with a position of 5 criteria according to global sustainability requirements. As doubtlessly the most inviting financial institution with a sector coverage on hydropower and doubtlessly the most inviting signatory to the Equator Tips, SCB commits to figuring out, assessing and managing environmental and social dangers, according to the story. On the opposite hand, all six banks scored poorly on areas equivalent to human and labor rights, review of cumulative impacts of projects, and present chain requirements.

The story also stumbled on that though banking associations working in Thailand and Vietnam support guilty funding, at the least on paper, worldwide locations equivalent to Cambodia and Laos are yet to scheme this kind of tips or guidance. The banking guidelines issued in Thailand and Vietnam, then over again, are removed from enough, the story notes, being most effective voluntary frameworks.

Decisions overly reliant on funding

Hydropower dams had been a regional sticking level in the Mekong Basin for decades. There are currently extra than 160 hydropower dams alongside the river and its tributaries, including 13 that span the river’s complete mainstream channel. With nine further mainstream projects in assorted phases of planning in Laos and Cambodia, largely motivated by the prospect of selling vitality to regional neighbors appreciate Malaysia and Singapore, the fade of damming continues unabated, despite the hazards.

The relentless damming has altered the river’s crucial seasonal flood pulse that drives regional fisheries and agricultural productivity, with implications for the lives and livelihoods of hundreds of thousands of basin residents. Dams also disrupt sediment flows and slash fish migration routes, jeopardizing ecosystems and freshwater vegetation and fauna weird and wonderful to the put. In step with the brand new story, the impacts of dams on communities and ecosystems may possibly perhaps perhaps amount to $145 billion by 2040.

Activists and watchdog teams like long pointed to the basin’s outdated governance structure as a driver of unhappy decision-making alongside the river system. The 1995 Mekong Agreement between the four decrease basin worldwide locations of Laos, Thailand, Cambodia and Vietnam and implemented thru the intergovernmental Mekong River Commission, as an illustration, is now not legally binding and would now not enable any nationwide authorities the powers to veto projects on the river, although deemed depraved to the river and its sources.

As a end result, dams like in most cases been built on a mission-by-mission foundation, with decisions focused extra on the provision of funding moderately than a genuine review of the cumulative impacts of dams or whether or now not the dam is largely required in the first drawl.

Riverside communities who in a roundabout blueprint just like the consequences of dams like also criticized the dearth of civil society enter into development decisions. Participation is in particular delicate in instances the put inclinations are positioned in neighboring or upstream worldwide locations out of doors of the governance techniques with which communities can have interaction. Many disclose they in truth feel felt left in the needless of night time.

“Finally, the developers are honest appropriate thinking about budgets, earnings and business. They don’t have faith of us or the environment, honest appropriate business money,” a Thailand-basically basically based completely environmental activist told Mongabay in 2023.

Furthermore, girls are in particular laborious hit by the consequences of neighborhood displacement and resettlement due to dams, according to the story. Unpaid care and domestic work, poverty and stress-linked health points are in most cases poorly addressed in financiers’ and developers’ affect assessments, and girls in general like agonize having access to compensation mechanisms.

Align with global requirements

Given the central operate of funding decisions in the fate of Mekong hydropower projects, and in turn, their have an effect on on the integrity of your complete river system, funding guidelines ought to be bolstered to align with environmental and human rights requirements, the story says.

It calls on banks to scheme and tell certain insurance policies on human rights and environmental due diligence aligned with U.N. tips; improve possibility review processes by brooding about gender and historically marginalized teams; pork up efforts to enhance the civic self-discipline in Asia; and scheme and enforce measures that see to resolve impacted communities and businesses. It also calls on nationwide and Association of Southeast Asian Worldwide locations (ASEAN) member drawl policymakers to position stricter environmental affect necessities for hydropower projects and to prioritize assessments of their transboundary and cumulative basin-stage impacts.

Depraved-border financing of hydropower can even like an critical affect on the Mekong put’s ability to transition its vitality sector away from fossil fuels to fulfill nationwide decarbonization targets, the story says. With this in mind, the story recommends that financial regulators support industrial banks and asset managers to scheme hydropower sector insurance policies and central banks to form extra inclusive dialogue platforms that facilitate execrable-border coordination.

Investors must rob into consideration the rights and wellbeing of communities and ecosystems to make a choice up clear the vitality transition is candy and equitable, Victorio acknowledged. “Sustainable hydropower financing is now not only appropriate about energy technology, but additionally about organising a protracted-lasting legacy of guilty and equitable handy resource administration for future generations.”

Juliette Laplane, senior coverage researcher at Profundo, acknowledged banks in truth like a operate to play in undoing a pair of of the agonize already exerted on the river system and the communities it sustains. Upholding transparency, accountability and responsibility according to global requirements will most likely be key to this process. “This entails exerting their responsibility to enable remediation when they’ve business relationships with companies focused on human rights violations.”

Carolyn Cowan is a employees creator for Mongabay. Apply her on 𝕏, @CarolynCowan11.

Banner image: The 1,285-megawatt Xayaburi Dam spans the mainstream Mekong in Laos. Communities downstream in Thailand like blamed the megadam for dwindling fish catches and unseasonal water stage fluctuations. Image by Water Alternate alternatives by Flickr (CC BY-NC 2.0).

Peek linked memoir:

Sturdy river governance key to restoring Mekong River vitality in face of dams

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