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Is The BRICS Bank Ready To Act As An Engine For Sustainable Development?

13/10/2016 3:08 PM IST | Updated 14/10/2016 8:21 AM IST
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Amit Dave / Reuters

The last year saw certain historical decisions taken at the global level that could put countries on not only the path to sustainable development, but also help in addressing climate change on a "war footing."

The first of these is the adoption of the 2030 Agenda for Sustainable Development, including the Sustainable Development Goals, in September 2015 by 173 countries. This was followed very soon by the adoption of the Paris Agreement by Parties to the United Nations Framework Convention to Climate Change in December 2015. The most recent development is the Paris Agreement coming into force next month, with more than 55 countries accounting for over 55% of the total global emissions ratifying the Paris Agreement in October 2016. The agreement will come into force on 4 November 2016, at the start of the 22nd Conference of Parties to the United Nations Framework Convention to Climate Change to be held in Marrakesh.

While the BRICS bank has a social and environmental framework, experts feel that these principles are more aspirational rather than concrete.

In view of this, there is a lot of pressure on nations—as well as their groupings and alliances—to put in place policies and programmes which would ensure effective implementation of the Paris Agreement, and also put countries on a path to achieve their 2030 Sustainable Development Agenda.

In the backdrop of all of this, the leaders of the BRICS (Brazil, Russia, India, China and South Africa) will meet in Goa, India on the 15th October for the 8th BRICS Summit, with the theme of "Building Responsive, Inclusive and Collective Solutions." So the question that arises is, are the BRICS nations geared up to meet the requirements of meeting their respective sustainable development agendas? More specifically, is the BRICS bank—the "New Development Bank"— ready to act as a crucial engine for sustainable development?

In its first year of operations, the New Development Bank (NDB) has funded/supported more than US$900 million worth of infrastructure and energy projects within the BRICS countries—and all of the approved projects are in the realms of clean energy solutions (such as rooftop solar, wind etc) or those that support renewable energy (such as gird infrastructure support projects for renewable energy). What is also important to note is that these projects have been supported in domestic currencies as opposed to the USD and this new practice is being seen as a country-friendly approach.

The New Development Bank is now poised to reach out to other countries outside the BRICS for funding projects and it will be interesting to see if the current practice of supporting only clean energy solutions and infrastructure in local currencies continues.

While the bank has defined certain kinds of investments as eligible for NDB financing, in the absence of a clear definition of sustainable development, it is possible that some projects that come under the category of "clean coal" for instance, could end up being financed by the bank. If the NDB is going to be something new, it will need to break away from the hitherto followed model of supporting an extraction-oriented model of development, which while it has worked in the past has also caused immense destruction.

We urge the bank to continue to fund only those projects that are in the realm of truly clean energy...

Further, while the bank has a social and environmental framework, experts feel that these principles are more aspirational rather than concrete. What's required is a framework that could monitor environmental and social performance standards of projects; further there are certain clauses in the existing policy that could give room to the host country to waive certain standards for certain projects. More importantly, from its current policies, it does not appear that the bank has put in place adequate mechanisms to address any adverse impacts of projects on communities.

What is also of concern is that the policy formulation of the NDB has neither been transparent nor participatory. It appears that the bank did not have any public consultations with any set of stakeholders, particularly civil society groups, while formulating its policies.

In view of the above, as leaders prepare for the BRICS summit in Goa later this month, we call upon them to ensure that the policies of the NDB are adequately strengthened so that the bank commits to only fund those projects that are truly sustainable and in the spirit of the Paris Agreement of "Net Zero Emissions" by the second half of the century. Further, we also urge the bank to continue to fund only those projects that are in the realm of truly clean energy, including infrastructure supporting it. It should also support the research and development of clean energy solutions, which could range from grid infrastructure and battery storage to energy efficiency and sustainable transport.

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