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In Ecuador, 38.48% of companies invest in environmental protection.
Posted On 01 Sep 2021
The business investment in caring for the environment is still low in Ecuador . According to official figures, only 38.48% of companies invest in environmental protection and management of natural resources in the country (Survey of companies: Environmental economic information in companies 2019 – INEC) . One of the main factors is the ignorance of the current legal regulations, where insurance plays a key role as a model to promote a green industry.
In Ecuador, 38.48% of companies invest in environmental protection.
In this context and in order to contribute to a corporate culture that contributes to the care of natural resources and mitigates its ecological footprint, Oriente Seguros shares an analysis in this regard, including the types of businesses that most require an environmental guarantee and how it works in benefit of the environment.
Some data on the environmental impact of companies in the country:
- According to the aforementioned study, the average environmental expense was $ 41.26 thousand dollars per company in 2019, which was 3% less than the expense recorded in 2017.
- This survey also revealed that the manufacturing sector is the largest consumer of electricity from the public grid, demanding 57% of the national system.
- Of the companies surveyed, 70.50% generated liquid hazardous waste. Of these, only 48.73% said they knew the amount generated. In total, the companies reported that they generated 24,948,951.51 tons of liquid hazardous waste. Regarding solid hazardous waste, more than 90% stated that they had this type of waste, of which only 45% knew the amount.
What does the Law say and what is the role of the environmental guarantee?
- The Organic Environmental Code determines as mandatory the subscription of environmental guarantees for projects, works and activities of medium or high impact, according to the risks they generate, affecting the environment. This requirement is part of the environmental mitigation plans that every company within this group must present to the competent environmental authority.
- ” The importance of linking the plan and the guarantee is based on the fact that the policy covers possible breaches that may occur in the development of the environmental management plan, since the client has certain obligations such as economic, technical, legal, among others, ” he explained. Daniela Molina, business director of Oriente Seguros.
- It is important to take into account that in addition to the requirement from the Ministry of the Environment, the Decentralized Autonomous Governments where the activities, projects or works are carried out may have different types of categorizations for the requirement of environmental guarantees or licenses.
What is an environmental guarantee?
- Projects, works or activities that have a medium and high impact on the environment must comply with the environmental regulation and have an administrative authorization, such as Environmental License when the competent environmental authority is the Ministry of the Environment, Water or Ecological Transition. Among the requirements for environmental regularization is the environmental impact study (which must include an environmental management plan) and the policy or guarantee for environmental responsibilities. Decentralized Autonomous Governments may have different requirements and categorization of impacts.
- The guarantee for environmental responsibilities supports compliance with the Environmental Management Plan. The plan establishes actions for the prevention, mitigation, evaluation, control and compensation of possible environmental impacts caused in the execution of these projects. In this sense, this insurance product represents a key tool to guarantee the protection of the environment.
About the advantages of an environmental guarantee:
The environmental guarantee implies important benefits not only for the environment, but for the entities involved, among the most important are:
- Have a strategic partner in law enforcement.
- To be an organization recognized for its responsibility to the planet.
- Increase your economic benefits by improving cost control and reducing environmental impacts throughout the life cycle of the product or service.
- Achieve more efficient processes with less use of raw materials and natural resources such as water and energy, among others.
On the industries that most need an environmental guarantee:
- It is a mistake to think that these guarantees cover companies only in strategic sectors, since the valuation, in this sense, also includes other aspects such as the activities inherent to the industries, size of the locations where it operates, materials used for manufacturing and materials it produces, without neglecting how much is produced.
- In other words, “whether you have a lubricator that uses industrial chemicals or you are a mining company with larger operations, the risks of environmental contamination are present. That is why it is very important to investigate and comply with the established regulations, in order to minimize any type of environmental impact ”, added Daniela Molina.
- According to market data, among the sectors that most demand this type of insurance are:
- Construction,
- Mining,
- Hydrocarbons,
- Gas stations,
- Factories,
- Farming,
- Fishing,
- Transport of materials,
- Wholesale of pharmaceuticals or chemical products,
- Hospitals and clinics,
- Hotels,
What to expect from the environmental guarantee?
- To obtain the guarantee for environmental responsibilities, the companies must rely on the Environmental Management Plan that frames the actions of prevention, mitigation, evaluation, control and compensation of possible environmental impacts caused in the execution of the project.
- In parallel, with the implementation of the plan and its environmental guarantee, it is necessary to take into account the coverage and characteristics that environmental insurance offers, depending largely on the scope of each environmental management plan of projects, works or activities that generate medium and high impacts.
- The companies in the sectors, mostly described, will have the environmental regularization and the respective administrative authorizations, granted by the Ministry of Environment, Water and Ecological Transition. Once this requirement is met, the guarantee intervenes, which ensures 100% of the different activities of the environmental management plan.
- This guarantee is a figure that supports regulatory compliance with the environmental management plan, no protection or liability coverage with third parties or environmental remediation is determined. For this other type of coverage, it can be contracted through civil liability policies that have special protections.
