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Research Report

Enhancing financiers’ accountability for the social and environmental impacts of biofuels

Jan Willem van Gelder
Denise Kouwenhoven
Copyright Date: Jan. 1, 2011
Pages: 48
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Table of Contents

  1. (pp. 1-11)

    This chapter provides an introduction to the growth of the global biofuel sector and briefly summarises the social and environmental issues related to the expansion of biofuel production, especially in forest-rich countries. This chapter also draws on the findings of separate research (Van Gelder and German 2011) exploring the different groups of financiers involved in financing investments in biofuel feedstock cultivation and biofuel production in select forest-rich countries in Asia, Africa and Latin America.

    The global biofuel sector grew considerably in the period 2000–2009, driven primarily by concerns about fossil fuel prices and availability, a renewed quest by many...

  2. (pp. 12-26)

    Responsible or sustainable financing can be described as integrating the environmental, social and governance (ESG) impacts of financial services in the financing decision-making process. In addition, the sustainability concept includes a longer-term financial dimension and an ethical dimension. The concrete meaning of sustainability for the financial sector is a controversial issue and continues to evolve (Gerster 2011).

    Different groups of financiers use different terminology for what is basically the same activity. In the private banking sector it is often called Sustainable Banking (FT 2010), whereas institutional investors generally refer to Socially Responsible Investing (SRI) (Richardson 2007). To avoid any misunderstanding,...

  3. (pp. 27-31)

    This chapter analyses regulatory options for governments to motivate or assist private financial institutions in developing and applying sound responsible financing policies, especially with regard to the financing of feedstock and biofuel production.

    The first paragraph considers specific regulations that could require financiers to ascertain that companies producing feedstocks and/or biofuel meet certain social and environmental criteria, before they decide to finance them. The subsequent paragraphs examine how governments could motivate or assist private financial institutions in developing and applying generic responsible financing policies. Although this approach focuses on a wider problem than avoiding the financing of feedstock and biofuel...

  4. (pp. 32-33)

    Various groups of financiers are involved in financing investments in biofuel feedstock growing and biofuel production in forest-rich countries in Asia, Africa and Latin America. In 20 country studies researched in a related project, an estimated US$ 2.0–2.7 billion was invested in growing feedstocks for biofuel in the past 10 years. Investments in producing biofuel from these feedstocks were estimated at US$ 5.7–6.7 billion since 2000 in the 20 country–feedstock pairs studied.

    These investments were financed not only by private entrepreneurs, but also by public financiers (government subsidies, (multilateral) development loans and grants and investments by state-owned...