GOOD MANAGEMENT OF THE ENVIRONMENT? INCLUDE THE PRIVATE SECTOR December 2017
The private sector in the Kyrgyz Republic depends deeply on nature. Agriculture companies would not exist without productive soils and water; housing developers know that people prefer to live (and therefore buy apartments they build) in clean environments; restaurant owners realize that a scenic location will help attract more clients tempted by good food. The private sector, therefore, should be recognized as an important player in better management of environment, land and natural resources. The funds spent by the private sector to manage their environmental impacts are significant (see Figure 1).
Figure 1: Annual average private sector expenditure (KGS millions), as compared to other sources
894 Central state budget
10 Local budgets 155 Development partners 118 Civil society 665 Private sector 27%
waste water treatment
67%
protection and rational use of land
4%
other
2%
air and climate protection
Types of private sector expenditure
As well as looking at numbers, we did a survey of private sector companies. This was necessary not only to understand what motivates them, but also because the information about the positive environmental work done by private sector is scarce. The results of our survey suggest that since companies’ driving force is to maximize profits, the private sector most often considers nature as a source of income but not as something for which it has to take responsibility.
UNDP–UN Environment Poverty-Environment Initiative
“From my experience with businesses, they are primarily interested in profit. Even if it comes to so-called green investments, then they look for profits. If the business does not generate a profit, it will not invest.“ REPRESENTATIVE OF THE MINISTRY OF ECONOMICS
In the Kyrgyz Republic the reality is that in most cases, companies resort to environment protection measures only if they bring financial benefits. The results of our survey show, however, that after in-depth discussions, companies do show a willingness to accept their role and are ready to conduct their business more carefully in relation to the environment and nature.
Investing in green technology
Businesses should not be blamed for prioritizing profits. Rather the government, through the State Agency for Environment Protection and Forestry, the Ministry of Economics and the relevant sector ministries, should use green economy instruments that it has at its disposal to stimulate private sector to invest in technologies having a lower impact on nature, and to support local nature protection initiatives.
The government should use a combination of different interventions. First, it needs to educate people, including business owners, about why it is important to consider and reduce environmental impacts. Secondly, the government should stimulate companies by using different fiscal instruments, including taxes, pollution payments and tariffs on resources such as water and energy. Thirdly, the government should support initiatives that can be developed and implemented by the private sector organisations themselves, by providing the right regulatory environment. For example, support to development of green investment schemes, voluntary schemes for ecological labelling or certification of products and services. Similarly, the government should develop further systems to support the private sector to report on their environmental investments and other expenditure, which have positive environmental outcomes.
Voluntary ecolabelling or certification is a measure to reduce environmental impact created by producing food, clothes, any other items or even services (for example, tourism services) where a company can voluntarily choose to comply with a set of criteria for a particular label or certificate. The company can then use this certificate or label in order to prove to the potential customers that indeed their products or services are environmentally sustainable. This can then help to attract more customers and even open more export possibilities to the countries where such labels can be mandatory.
Information based on: Policy and Institutional Review for Environment Financing with a Focus on Biodiversity and Climate Change Adaptation in the Kyrgyz Republic (2017) Public and Private Expenditure Review (2017) For further information, visit the BIOFIN knowledge platform: http://biodiversityfinance.net/knowledge-platform
“Do you want the private sector to become more resource efficient? Then you should look at tariffs! With the tariffs for electricity and heating that we have now, businesses are not interested in investing in expensive technology; financially it does not make sense!“ BUSINESS REPRESENTATIVE
Page 1 photo credit: UNDP; page 2 photo credits: Blogtrotters (sourced from Flickr via Creative Commons (CC BY-NC-SA 2.0) and Vlad Ushakov/UNDP