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1 September 2000.

THE LARGEST ENVIRONMENTAL REVIEW OF PRIVATE INVESTMENTS ABROAD SO FAR

89 companies co-owned by Danish investors in Poland and India reviewed by international consultants and experts

According to a recently published report, Danish companies investing abroad do not speculate in bringing their environmental problems to the host countries. Independent consultants involved in a review of 89 projects in Poland and India found no evidence suggesting that any of the Danish companies had invested in activities abroad so as to evade the Danish environmental regulations. The initiative to the report was taken by the Industrialization Fund for Developing Countries (IFU), the Investment Fund for Central and Eastern Europe (IØ) (The Danish International Investment Funds) and the Nordic Environmental Finance Corporation (NEFCO).

This is the most extensive investigation ever made of the environmental status and occupational health and safety conditions of projects co-financed by private Danish investors.

The summary report (enclosed) is available both in Danish and English, whereas the country reports on the Indian and Polish projects, respectively, are only available in English.

Further copies of the reports may be ordered by tel. +45 33 63 75 00 or by e-mail ifu@ifu.dk

The environmental policy of the Danish International Investment Funds can be seen on www.ifu.dk.

For further information and comments please contact:

Deputy Managing Director Jørgen Dan Jensen, IFU/IØ, tel. +45 33 63 75 00

Managing Director Harro Pitkänen, NEFCO, tel. +358 9 1800 341 (Helsinki)

When Did it Start and Who Took the Initiative?
It took a few years to make the review. IFU and IØ, investing in developing countries and Central and Eastern Europe in collaboration with Danish trade and industry, took the initiative in 1997. The review comprises the projects in Poland and India, which are the countries in which the largest number of investments is made. The Nordic Environmental Finance Corporation (NEFCO) decided also to participate, as IØ and NEFCO often work together in Central and Eastern Europe. Furthermore, the Environmental Facility for Central and Eastern Europe (MIØ), which is administered by IØ, was also involved in the review. The Danish Environmental Protection Agency contributed financially and had an advisory role.

Who Answers for the Quality?
In order to ensure its objectivity and professional quality, an international panel of experts, headed by Professor Poul Harremoës of the Technical University of Denmark, was attached to the review. Other members of the Panel were Professor Rathin Roy of the University of London, Professor Andrzej Urbanek of the Warsaw University of Technology and Deputy Managing Director Jørgen Dan Jensen of IFU/IØ.

Environmental consultants from India and Poland, with the assistance of the environmental advisers of the Investment Funds, undertook the reporting and the visits to each of the 89 companies.

Assistant Professor Michael Wendelboe Hansen from the Copenhagen Business School’s Department for Intercultural Communication and Management was entrusted with the quantitative analysis of all results and the drafting of the report.

What is the Purpose?
The review was initiated after the Danish International Investment Funds in 1996 had decided to formalise their environmental policy. By consolidating all data regarding the individual projects, the Funds wanted to get a better understanding of the environmental status and occupational health and safety conditions. The report, with its results and recommendations, first and foremost serves as a management tool, which may contribute to further strengthening the environmental awareness.

What are the Most Essential Conclusions?

  1. The reviewed projects are generally not involved in industries with a potentially serious adverse environmental impact, a/o because they are small or because their activities do not affect the environment; however, there are exceptions, such as cement factories. As soon as Danish investors take charge of these factories, more is done for the environment. As a result of the Danish/Nordic investments more attention is paid to the environment, both in the companies, in the local community and in the country.
  2. In a few cases, the environmental consultants found the local environmental rules or regulations to be infringed. In two cases they found reason to recommend immediate action, and the problems were quickly solved. In one case, a small company was discharging chemicals into the toilet. In another case, a company was storing organic waste, for which it had no procedure for further treatment.
  3. In Poland, almost 2/3 of the projects were observing the environmental requirements in force in Denmark and the EU. In India, almost half of the companies were observing the Danish standards.
  4. Shortage of funds, lack of infrastructure for handling of waste in the host countries and lack of comprehension among the staff are important reasons why not all of the projects observe the Danish environmental standards in all respects.

What do the Experts Recommend?

  • The international panel, headed by Professor Poul Harremoës, recommends the companies to continuously strive to identify areas in which it is feasible to improve the environmental standard.
  • The Panel recommends the Funds to strive to improve their work for a good working environment and for a mitigation of the adverse environmental impacts of the projects, a/o by training their own staff and by requesting the project companies to prepare environmental reports.
  • The Panel finds that NEFCO and MIØ, which are especially dedicated to environmental investment in projects in Central and Eastern Europe, show good results, and recommends similar facilities for developing countries.
  • The Panel finds that the Danida Environment and Training Facility works well for project companies in developing countries and recommends a similar facility for Central and Eastern European countries.
  • The Panel advises the Funds to regularly report to the public on the environmental status of the projects.

What do the Funds say?
The Boards of the Funds have approved the main contents of the recommendations. In the preface of the report, Managing Director Sven Riskær of the Danish International Investment Funds and Managing Director Harro Pitkänen of NEFCO state that the Funds will undertake a systematic follow-up on the reports. They will continue to pursue their strategy of increasing awareness of and their sense of responsibility for the environment and occupational health and safety conditions among partners and staff.