Co-fund FFA - WARECOD Banking sector is considered as one of the environmental- friendly sector. However, banks can have indirect negative impacts as they invest in projects which cause harms for society and environment. On the other hand, commercial banks face with risks when environmental and social policies are stricter. In the world, there are many banks have to suffer from financial loss as their funding projects fail to complete due to the conflict with environmental and social standards
Banks are investing in unsustainable projects; however, they fail to notice and have great interest in this problem, moreover, they have not built a policy system for environmental- social safety. Some banks have set up a set of policy for safety to limit impacts on human and environment in the working area. However, in many cases, those policies fail to meet the requirements. Additionally, their main interest is the economic profit but not environmental benefits. Meanwhile, the accessibility to information of those project is limited.
Hydropower projects have been widelydeveloped in Vietnam's rivers. In just over 20 years, Vietnam has exploited more than 80% of the country's hydropower potential with nearly 1,000 large and small-scale hydropower projects built. These hydropower projects fundamentally change the ecosystem and environment in most river basins. The dense construction of hydropower has disrupted the ecological landscape of rivers and riparian areas, impacting on the community's living environment and livelihoods. Although in 2013, the government decided to remove 400 hydropower projects from planning but there are still many hydropower plants being planned and built. Currently, Lao Cai province is planning to build 6 factories. On Lo River in Ha Giang province, 3 factories are operating and 2 more factories are planning to build.
In the northern mountainous area, small hydropower plants are growing, many rivers have up to 5 or 6 small and medium hydroelectric power plants, which are equally impacting compared to large hydroelectricity. Taking advantage of loopholes, inadequacies and overlaps in the EIA appraisal policy mechanism, developers have built a series of factories without preparing EIA reports. In general, measures to protect the environment and manage environmental impacts have not been taken seriously. The reality is that environmental benefits are still being overlooked in the process of approving projects, and the issue lies in both policy and enforcement. This leads to a "gap" in the approval of EIA, especially the small hydropower project with a capacity of less than 100MW is controversial.
A typical example is the Lao Cai Provincial People's Committee (one of the localities focusing on small hydropower development in the North) has sent the document No. 4952 / UBND-TNMT to the Ministry of Natural Resources and Environment for viewing considering the authority of appraisal and approval of EIA for hydropower projects, to have a direction for handling. Another example, Ha Giang Provincial People's Committee on March 6, 2015 issued Document No. 671 / UBND-CNGTXD, approved for the investor of Song Lo 2 Hydropower Project to continue implementing, not re-establish EIA as stipulated by the State. The fact that Ha Giang "has passed the story" of Song Lo 2 Hydropower has raised the question, has this project ensured environmental regulations? After going into operation, will the project cause bad impacts on the environment?
WARECOD will participate in the implementation of the Green Banking Initiative to contribute to promoting interest in banks and developing their own safety policies. Thereby, the bank can influence investors to change in order to minimize the environmental and social impacts caused by projects that banks can lend.
Implementation results: The initiative is not only the result of promoting bank interest but also the result of promoting people's participation in decision-making processes related to human rights and the environment. This fact shows that the application of the Green Banking Initiative can be an effective advocacy to change investors in compliance with state laws and regulations on environmental protection and promoting sustainable development.
To accomplish that purpose, WARECOD identifies the Project's objective in this phaseis to promote interest and develop Bank's safety policies with the following specific objectives:
1. Stakeholders (banks, the state and the public) have better awareness on the necessary of safety policies in the process of considering project loans.
2.The community has the capacity to participate in the discussion and decision-making process related to hydropower project development
To accomplish this goal, WARECOD willimplement the following strategy:
1) Conducting research to build evidences on the relationship between banks and social impact
2) Building a community network to advocate social safety policies
3) Coordinating with GreenID and CHANGE to enhance public interest in social security policies through communication activities