6-7. A Case Study on Development Stoppage Due to Disregard for Environmental Impact Assessments

Neglecting environmental impact assessments (EIAs) in large-scale development and infrastructure projects can have a serious impact on a project’s progress. An EIA is a crucial process for understanding potential impacts on the natural environment and local communities and for taking appropriate measures. However, if this process is neglected in favor of short-term cost reduction or a faster schedule, it can not only result in a failure to obtain government permits but also lead to opposition from local residents and environmental groups, often culminating in the cancellation of the development.

1. Typical Examples of Neglecting Environmental Impact Assessments

In one energy-related project, the company proceeded with the project based on only a simplified survey to shorten the construction period. It was later discovered that the project was destroying the habitat of a rare species. When this information was reported in the media, public criticism mounted, and the government demanded an additional investigation. As a result, the permit was not granted, and the plan was canceled. In another case of an overseas mining development, neglecting the risk of groundwater contamination led to the expansion of an opposition movement by local residents, and international funders announced their withdrawal, making it difficult to continue the project.

2. Factors Leading to Project Cancellation

Several factors contribute to project cancellation when EIAs are neglected:

• Violation of Regulations: Failing to conduct a necessary assessment can lead to administrative penalties or the revocation of permits.

• Opposition from Local Communities: Lawsuits and protests by residents and NGOs can increase social pressure.

• Increased Investment Risk: A lack of transparency in environmental management can cause investors and financial institutions to withhold funding.

• Damage to Corporate Image: A stance that goes against growing environmental awareness can damage brand value.

3. Lessons Learned for Recurrence Prevention

The cancellation of a project due to a neglected EIA not only results in enormous losses for a company but also leads to a loss of social trust. Therefore, the following initiatives are essential:

• Thorough Investigation from the Initial Stage: Comprehensively assess a wide range of impacts on ecosystems, air quality, water quality, and soil.

• Dialogue with Stakeholders: Engage in early consultation with local residents and environmental groups to share concerns and discuss countermeasures.

• Utilize International Standards: Refer to international frameworks such as the IFC Performance Standards and World Bank Guidelines to establish a globally applicable assessment system.

• Management Commitment: Position environmental considerations not as a cost but as an investment and integrate them into the business strategy.

4. Impact on Corporate Value

Properly conducting an EIA and ensuring transparency is not just about regulatory compliance; it leads to a long-term increase in corporate value. Companies that prioritize sustainability are more likely to be valued by investors and consumers. Conversely, neglecting an EIA can expose a company to significant business risks, such as project cancellation and difficulty in securing funding.

In conclusion, while neglecting an EIA may seem to offer short-term benefits like cost reduction and speed, it is a dangerous decision that ultimately leads to project cancellation and a decline in corporate reputation. It is crucial for companies to strategically incorporate environmental impact assessments to balance risk management with sustainable growth.