Environment must become factor in credit approval

Environment must become factor in credit approval

JAKARTA (JP): State Minister of Environment Sarwono
Kusumaatmadja called on bankers yesterday to go green by
including environmental considerations in the approval of credit
applications.

"Bankers have great influence over the investment process and
business trends and can condition entrepreneurs to do green
business," Sarwono said in his keynote address at a six-day
course on environment and banking.

His statement was read by Liana Bratasida, director for the
Technical Guidance section of Bapedal (the Environmental Impact
Management Agency).

He said that over the past few years the World Bank, the Asian
Development Bank, Inter American Development Bank, European Bank
for Reconstruction and Development, and African Development Bank
had requested their clients to make environmental assessments of
their development projects.

Thirty five bankers from Bank Danamon are taking part in the
course, which is held by the Office of the State Minister of
Environment and Bapedal in cooperation with the bank.

The course is the second of its kind, according to Liana, the
first having been held in cooperation with Bank Pinaesaan. Bank
Export-Import has shown interest in the program and may now be
the first state bank to take part in a similar course, Bratasida
said.

In 1989 and 1990 Bank Indonesia issued circulars saying that
environmental aspects should be considered in the approval of
loan applications. The inclusion of environmental aspects,
however, was omitted in 1991, Mas Achmad Santosa, executive
director of the Indonesian Center for Environmental Law, said in
a recent interview with The Jakarta Post.

Bratasida, who opened the course on behalf of Sarwono, told
journalists after opening the course that she was not aware of
the circulars.

"But environmental considerations are included in the tax
bill," she said.

Bratasida told the course participants that it was time to
include environmental aspects in the corporate policy as evidence
of their concrete commitment to sustainable development. Bankers
should consider the environmental impacts of the projects they
plan to finance, she said.

Without an assessment of environmental management costs,
calculations of the returns of investment would not be realistic,
Bratasida added.

Bankers should not consider environmental damages as force
majeure (loss due to unavoidable disasters) anymore because there
is evidence that the damages can be prevented. Bankers are
therefore expected not to tolerate any excess polluting resulting
from activities they finance, according to Bratasida.

She said that in America and Europe the banks are generally
held responsible for environmental damages caused by the projects
they finance.

Since May 1992, 62 European banks have signed a declaration
sponsored by UNEF (United Nation Environment Funds) to show their
commitment to the prevention of environmental damage.

Still rampant

Bratasida said that even though Indonesia has a number of laws
and regulations regarding the environment, including the 1982
Environmental Act, polluting problems are still rampant.
Therefore, the environmental strategies should be changed from
"reactive to pro-active." Emphasizing preventive actions through
an on-going campaign will in turn improve public environmental
awareness and hopefully tighten economic regulations.

"Command and control alone is not enough. We need mixed tools
to prevent environmental damages, we need market-based
instruments," she said.

She said it was not easy to change the attitude of business
people used to polluting the environment for decades but added,
"we must not be pessimistic."

Bank Indonesia and the banks in charge of channeling funds
from the Overseas Economic Cooperation Fund have agreed to
provide soft loans for the purchase of waste treatment
facilities.

"We suggest that the banks also provide soft loans for
industrial equipment as a green investment," Bratasida said.(sim)