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These are geared to agricultural lending institutions at various levels, as below.
Banks and other financial institutions which lend to the agricultural sector, which includes livestock, forestry, fisheries, aquaculture, as well as the primary processing, transforming and conversion of agricultural products, should establish an in-house environmental department. In small institutions, this department could consist of a single lending officer whose duties include reviewing all proposed and existing loans for their effect upon the environment . In larger institutions. ,a specialized officer may be named as the environmental officer, or environmental ombudsman.
All present loans should be screened by using the Environmental Impact Assessment Process (EA) described above. Any, and all new, loans should be sent forward to the loan committee only after EA has been carried out and a brief descriptive narrative of the effects of the proposed loan on the environment is included in the format of the Checklist provided on page 49. This EA should be reviewed by the Loan Committee before the loan is approved, renewed, extended or renegotiated.
The Environmental Officer should be required to check the loan portfolio continually to ensure that the premiss upon which the loan was made continues to be valid and to note and report any unanticipated environmental consequences of the loan. These subsequent reports should be sent to the loan committee as part of any proposed action on the loan by the committee.
Local level institutions are the foundation of a nationwide program of environmentally conscious lending. The environmental officer should establish linkages with regional and with national level lending institutions and draw upon these larger institutions for expertise and assistance in assessing the effects on the environment of their institution's lending program.
In those countries where financial institutions are organized along state or regional lines, financial institutions at this level should undertake to develop a more extensive and sophisticated EA capability in order to assist the local level banking institutions, as well as to evaluate the effects of local level bank lending decisions on environmental resources that extend beyond the geographical scope of these local institutions.
The consequences of a local lending decision may manifest themselves in unanticipated ways beyond the geographical boundaries of the local bank. Downstream or downwind pollution are examples. Likewise, regional institutions have a role to play in preventing environmentally destructive industries from moving from one locale to another, seeking to avoid environmental remediation.
Many natural resources can be managed effectively only on a regional or national basis. In cases such as widespread forest resources or migratory species, state or regional Environmental Officers will fill a coordinating role in harmonizing the lending policies of several local level lenders.
At the state or regional level, financial institutions should staff the environmental department with one or more full time professionals. These would assist local banks to undertake studies when such work is beyond the capabilities of personnel at the local level. This regional environmental department can, in turn, call upon specialized personnel at the national level when the proposed loan's effects exceed the analytical capabilities of the regional officers.
The regional environmental officers should also be asked to carry out a periodic evaluation of the lending programs of the local level banks. This evaluation should be used by regional and national officials in evaluating the performance of personnel at the local level.
Financial institutions at the national level should establish and staff an environmental department the chief functions of which are to develop lending guidelines that incorporate EA as one of the criteria of loan approval. The national environmental department would also serve as a resource in support of regional and local banks to help them carry out their evaluations, and as a mechanism to oversee their compliance with these environmental guidelines. In some cases, this department may be located within the national office of a commercial bank operating a branch network throughout the country.
The national level environmental department would also be assigned a liaison function. It should establish and maintain contacts with international financial and aid institutions, such as the World Bank, FAO, regional development banks, the EEC and bilateral aid programs. This contact would both enable the new environ mental department to help train new staff, and serve as a technical resource that could be drawn upon to assist in difficult evaluations, in planning and developing general guidelines, and in channeling international capital flows to environmentally acceptable loan projects.
This articulation of environmental concerns from the local level through the regional and national to the international levels of banking will permit the concerns and the knowledge at the local level to flow upward, while the research and the technical expertise at the national and international levels can be made available to local level institutions. It is frequently the case that local level lenders' clients have developed quite innovative techniques for managing environmental problems that can be used outside the local setting; conversely, research at the national and international levels is frequently useful to local level lenders.