Politics Are Key: Unlocking the Unrealized Potential of Environmental Impact Assessment Processes

Leila Kazemi and Perrine Toledano
September 28, 2022

“Lose-lose(-lose)” realities: The risks of getting social and environmental impacts wrong

Evidence abounds of the potentially far-reaching social and environmental havoc that extractive industry (EI) projects can wreak on communities and ecosystems—from the ongoing contamination of water supplies and displacement of livelihoods of entire populations to dramatic events like the Deepwater Horizon spill in the Gulf of Mexico or mine tailings dam collapses in Fundão and Brumadinho, Brazil, and just days ago in the Jagersfontein in South Africa. 

Beyond those who bear the immediate social and environmental costs, companies and government officials can also find themselves facing considerable financial, reputational and legal ramifications for failing to adequately assess and take preventative action against such risks. ​​In April of this year, local villagers in Thailand filed a lawsuit against authorities who allegedly approved a coal mining project without adequately assessing social and environmental risks or seeking community participation in related responses and decision-making. The villagers are seeking a new and more comprehensive assessment of these risks, as well as the real opportunities to add their voice to decision-making about the future of the project – including whether it should proceed – based on the findings. This event has been described as an example of a “rural population’s growing awareness of their rights and of legal processes that hold companies and government departments accountable to the law and to climate commitments.” That same month, the US Securities and Exchange Commission filed a complaint against the Brazilian mining behemoth, Vale, claiming the company “manipulated multiple dam safety audits; obtained numerous fraudulent stability certificates; and regularly misled local governments, communities, and investors about the safety of the Brumadinho dam through its environmental, social, and governance (ESG) disclosures.”

To try to anticipate, avoid, mitigate, and address potentially dire social and environmental risks, a variety of tools and mechanisms have been developed and deployed at the national and global levels. Unfortunately, as the examples above illustrate, too often these tools and mechanisms end up being weakened in practice. Why?

A recent analysis of environmental impact assessment (EIA) processes by the Columbia Center on Sustainable Investment (CCSI), building on work by the Overseas Development Institute and others, suggests that a big part of the answer lies in political realities. Achieving actual progress on social and environmental protections takes more than noble ideas and nominal commitments to broad norms. It takes powerful actors with a strong interest in reaching the goals these measures were created to advance. However, too often it seems those with the most power to shape how well these measures work tend to have interests that are at odds with implementing social and environmental protections. Meanwhile, those actors with strong interests in promoting meaningful commitments to social and environmental protections tend to have the least influence over outcomes. 

Actual practice often fails to resemble best practice

In a chapter for a forthcoming publication by the United Nations Environment Program (UNEP) on environmental impact assessments (EIA) and development corridors (summarized in the brief, Tackling the EIA Impact Gap), CCSI discusses how political realities contribute to consistent gaps between how EIA processes are meant to unfold in theory and what actually happens in practice. In theory, EIA processes are meant to be grounded in accurate, timely, and appropriate assessments of the environmental and social risks of a given project. These reports should be scrutinized and used as inputs into meaningful public consultation processes, which empower the communities and civil society organizations being consulted to engage in dialogues about and ultimately inform key project decisions. EIA reports and the outcomes of consultations should, in turn, inform decision-making and social and environmental management plans and operations for the possible project in question. Reality rarely approximates any of these.

In practice, EIAs can sometimes be avoided altogether through creative project framing. Even when EIAs are undertaken, the content of reports can be biased, inaccurate, dated, vague, or inappropriate in terms of scope and coverage. EIA consultations can be one-way information dissemination processes from proponents to communities with little opportunity for those being consulted (or those excluded from consultation processes) to meaningfully weigh in on whether or how EI projects are developed. Finally, when it comes to influencing decision-making and planning to manage environmental and social risks, key decisions are often made before EIAs are completed. Environmental management plans do not always result from EIA processes, and even when they do, they tend to be incomplete or under-specified, or their implementation and monitoring under-resourced.

Political realities and the shortfalls of EIA processes

The persistent gap between intended and actual practice in EIA processes can reflect a disconnect between their stated goals and the priorities of those shaping whether and how they are operationalized. In essence, the problem can boil down to this: government authorities with the most power to shape relevant outcomes across EIA processes (e.g., ministries of finance and investment, extractives ministries, and heads of state) and their counterparts within companies tend to perceive EIA processes as working against their primary interests, which are to promote  EI investments and expedite projects with minimal delays, risks, and costs. These powerful actors can use their influence to effectively undermine the workings of EIA processes even while gaining reputation benefits of appearing to participate in or support them. For instance, the fact that companies typically foot the bill for EIAs and hire the consultants who prepare them can lead to biased assessments favoring company interests by under-reporting potential social and environmental risks. Similarly, when it comes to EIA consultations, communities’ access to relevant information, their capacity to decipher and analyze assessments, the timing of consultations, and the make-up of participants can be “gamed” by governments and companies convening these consultations to ensure that there is very little potential for those being consulted to impact EI projects in significant ways (mirroring the fate of FPIC processes). Finally, once the EIA report has been prepared and consultations held—i.e. the EIA box is considered “ticked”—those same government and company actors can then choose to more or less leave those inputs “on the shelf” without them having much impact on decision-making or environmental management planning.

Working politically towards more impactful social and environmental protection

For many, the political obstacles to effective EIA processes (and other efforts to address the social and environmental risks of EI projects) will sound very familiar and potentially quite daunting. However, these obstacles need not be accepted as inevitable or intractable. Instead, they need to be understood and addressed head-on. While there is no single pathway or easy template for operationalizing politically savvy approaches to EIA processes, there is nonetheless considerably more that can be done to try to tackle political obstacles. To improve the outcomes of efforts to put social and environmental protections in practice, new thinking is needed to deliberately try to mitigate the impact of powerful actors whose interests or incentives work against the goals of these efforts or to try to change those interests or incentives. 

What might this look like in practice? More focus could be given to amplifying the power of those committed to real reforms through greater attention to supporting and building strategic coalitions or targeting capacity building and other assistance specifically to reformers within government. Similarly, steps might be taken to actively limit the ability of powerful actors to influence outcomes, such as decoupling EI company money from and direct involvement in the procurement of EIA professionals through mechanisms like basket funds overseen by third-party panels. Another avenue could involve working to change the interests or incentives of powerful corporate and government officials to better align with meaningful social and environmental protections through, for example: strategic and insistent ESG-driven shareholder activism and engagement; strengthened lending practices of international financial institutions to incentivize more meaningful action (not just words) on environmental and social protections around EI projects; or stricter home country regulation of multinational corporations. Beyond addressing some of the challenges to the success of existing EIA systems, another option may be to develop alternative pathways for achieving better social and environmental protections for EI.

The need for better ways of gauging and addressing the wide-ranging social and environmental impacts of EI projects should not be an abstract aspiration but a pressing practical goal, not just for EIA professionals but for all those who care whether and how EI projects are developed. This means taking on political problems through strategies and approaches that are tailored to make progress in the real world. Being more deliberately politically savvy in how we work will be indispensable for achieving such progress on EIA processes – and beyond.