New industry-led ESG standard launched to build trust in sustainable hydro projects

An industry-led hydropower sustainability standard was launched Sept. 8 at the World Hydropower Congress, aimed at certifying hydro projects around the world under environmental, social and governance performance metrics.

The standard is designed to help companies "demonstrate their ESG credentials and secure green finance," a spokesperson for the International Hydropower Association told S&P Global Platts.

"Developed by a coalition of industry, governments, multilateral and financial institutions and civil society organizations, the certification scheme aims to build trust and promote transparency in the hydropower sector," the IHA said.

Large hydro projects involving extensive civil works can have significant environmental impacts on land use, natural habitats and human habitations.

In future projects would have to meet strict performance criteria following an independent assessment to be awarded a Certified Sustainable Hydropower label, the association said.

Projects could be certified during planning, construction and operation phases.

"Due to the scale of investment required, the hydropower sector needs a credible, transparent certification scheme that will incentivize the best projects," said Ashok Khosla, Chair of the Hydropower Sustainability Council.

The council, which organized a public consultation on the standard, includes representatives of social, community and environmental organizations, governments, commercial and development banks and the hydropower sector.

Developers, operators and manufacturers from Australia, Brazil, Canada, China, France, Germany, Iceland, Sarawak (Malaysia), the UK and the US have either confirmed they will put forward projects for certification or have urged their clients to comply with the new standard, the IHA said.

The International Energy Agency had stated its support for it, the association said.

Achieving certification would help projects demonstrate alignment with the green bond requirements of the Climate Bonds Initiative and the EU Taxonomy for Sustainable Investment, as well as with World Bank and IFC performance standards, the IHA said.

It expected its members to certify new projects under the standard, in line with its updated membership charter. The IHA has around 90 members operating in over 120 countries.