Companies will have to cover environmental damages

Oct 20, 2008 06:32 GMT  ·  By
Heavy deforestation is a very widespread phenomenon that raises environmental concerns in most countries, including Argentina
   Heavy deforestation is a very widespread phenomenon that raises environmental concerns in most countries, including Argentina

Argentina recently took the first steps in becoming the first country in its region to make insurances a must for companies and corporations engaged in activities that may pose risks to the environment. Officials, who made the announcement on Thursday, said that this measure would affect over 35,000 businesses throughout the country, which will have to comply as soon as possible.  

In Europe, selling environmental insurances is common practice, but it's not compulsory, in that companies can choose not to apply for them. The European Commission currently has no ways of enforcing such a measure throughout the Union. But Argentine law-makers say they've understood the importance of such a decision, especially given the degree in which the country's environment is affected by severe deforesting and mining activities.  

The law, which came in effect this month, was passed through the Congress as early as 2002, but only now has it started being enforced. Currently, there is only one company selling insurances of this type, which spawned controversies regarding monopole. But government officials say that other insurance firms have already applied for authorization and that their requests are being processed.  

These environmental insurances will range anywhere from 120,000 pesos (some $36,000) to 50 million pesos ($15 million) a year. The yearly fee is set based on several factors, including the company's activity, its chemical or toxic output quantities and the risks that are involved with its production processes. Law-makers say that this is the fairest system, considering that some companies have thousands of employees, while others have tens. The differences in profit are also significant.  

"In Argentina, lawmakers understood that this [environmental insurances] had to be made obligatory," said Undersecretary Sergio Chodos, at the Environment Secretariat. Environmentalists and ecologists saluted the initiative and said that it was high time a large country such as Argentina took steps to prevent permanent and irreversible damages to its environment.