This was the title of an article that ran in the Hindu Business Line, one of India's leading national newspapers.

Environmental and Social activist groups have signigicant impacts on development projects. From the perspective of a project sponsor or a developer, there are thus several environmental and social risks/considerations that should be taken into account in order to ensure the successful completion of the projects. The question is, who should bear these risks?

The general theoretical consensus is that the party that is able to control a given risk the best, at the least cost, must be the party that is best suited to bearing this risk. However, when it comes to environmental and social risks, it has often been unclear as to which party is best suited to bear these risks. Is it the government which can exercise some measure of control on activist groups and use the treasury to recompense say, displaced groups? Is it the project sponsor who has the greatest control over the planning of the project?

The article makes a case that is the the debt-funding agencies that provide capital for the project, that are best suited to bear environmental and social risks and ensure sustainable development. Among other things, the article encourages even local banks to adopt a version of the IFC's Equator principles while sanctioning loans, and adopting measures to enforce sustainable development.

Posted by ashwin at May 9, 2006 10:08 PM