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News Article

Positive Project Impact: Lever for Global Sustainability

By Cas Biekmann | Thu, 09/02/2021 - 16:50

Scientists warn that the world can no longer stall the energy transition and must halt disastrous climate change. For a more sustainable world, companies need to ensure that projects at the root of this transition leave a net positive impact, too. Addressing the social and environmental responsibilities of these projects is the way to start, agree experts.

The energy sector has a major role in battling climate change: “The energy industry has a huge environmental responsibility. If our sector does what it has to do, we could decrease the world’s CO2 emissions by 90 percent,” said Montserrat Palomar, Head of Sustainability at Enel Green Power. But renewable energy projects are not without environmental and social impact. If the world is to make a sustainable energy transition, it is to be sustainable through and through.

Palomar stresses the responsibility companies have in ensuring that projects are done sustainably in every sense of the word. “If energy is clean and sustainable, it can serve as a root for greater sustainability across other sectors and segments,” said Palomar. Building sustainable projects is not at all impossible because many stellar examples already exist in Mexico and elsewhere. One major factor is collaboration, Palomar said. “This change does not depend on government, population and business separately. We need to work together.” If projects have a negative impact, everyone involved loses, said Julia González Romero, Elected Counsel at González Calvillo. “Tackling this process the wrong way means that projects get halted and communities experience harm. Nobody benefits from such a situation,” she said.

Héctor Sánchez López, Independent Member of the Board of Directors at CFE, completely agrees on the responsibility various actors have in making the world more sustainable through an equitable and fair process. He particularly highlights the responsibility of those that have the capital to enact change. “Investors have to be socially and environmentally responsible,” he said, adding that “selfish” investments for pure financial gains should no longer be part of anyone’s portfolio if crucial climate goals are to be achieved. In that sense, investors can focus on new technology such as storage. “If we have sufficient storage, we can truly boost the energy transition,” said Sánchez.

Responsibility, duty and accountability are especially applicable to companies developing energy projects, added Sánchez. He lamented that accountability was, at times, an issue in the Mexican context. Sánchez also criticized the notion of “offsetting” negative effects in one area by generating benefits elsewhere because actions should be taken locally whenever possible. Even though more stringent legal requirements can help foster answerability, Sánchez firmly believes that this is an issue that should be arranged between companies and communities. “The Mexican government used to get involved in the past, but addressing local impacts is truly the responsibility of companies. In the end, communities can benefit a lot from renewable energy, so they have a vested interest in these projects,” he said.

María Cristina Hernández Calzada, Partner at Vera & Asociados, thinks there is a spectrum of varying social responsibility where a lot of private companies have high consideration for ESG practices while others are perhaps not doing enough. Nevertheless, she argued that the government has done a good job in strengthening the environmental requirements that intersect with social impact processes. “We are headed the right way. The government might be a bit short on human resources to do its evaluations efficiently but it is setting very positive and higher standards,” she said. 

The optimal approach differs for every project because social and environmental characteristics are never the same. To really know how the table is set, it pays to invest in adequate research and then formulate an optimal engagement plan. “The social investment companies make always pays itself right back. It translates to a healthy relationship with communities during the entire project’s life cycle,” she said.

Cas Biekmann Cas Biekmann Journalist and Industry Analyst