Factors that influence the independence of EIA follow-up verifiers: a developing country perspective

Abstract

Independent verification is an important aspect of practice for ensuring the credibility of an Environmental Impact Assessment (EIA). However, the independence of verifiers such as checkers, auditors, and Environmental Control Officers, may be influenced by various factors that may lead to a conflict of interest between role-players in EIA and EIA follow-up. Identifying these factors is, therefore, important. A total of 18 factors were identified by analysing literature from established verification professions and data derived within the South African context by means of interviews and workshops dedicated to clarifying independence of verifiers. The factors were divided into five categories: financial; commercial; professional; personal; and other. By shedding light on factors that influence the independence of EIA follow-up verifiers, this research aids in anticipating and avoiding potential conflicts of interest.

Keywords:

• Factors
• independence
• EIA follow-up
• verifiers
• conflict of interest

Introduction

Independence is central to current-day ethical discussions (Everett et al. 2005, p. 416) and is viewed as a cornerstone of the ethical foundations of verification fields such as chartered and public accounting, arbitration and auditing (Hong-Lin & Shore 2003, p. 935; Everett et al. 2005, p. 416; ISO 2006, p. 2). The International Association of Impact Assessment (IAIA) identify independent verification as an important component of the basic principle of a ‘credible EIA’ and state that ‘a credible EIA process should be carried out with professionalism, rigor, fairness, objectivity, impartiality and balance, and be subject to independent checks and verification’ (IAIA 1999, p. 3). Independent checks and verification also form an integral part of environmental impact assessment (EIA) follow-up and the related activities of monitoring, auditing, evaluation, management and communication (Arts 1998, p. 26; Lee & George 2000, p. 6; Wood 2003, p. 7; Morrison-Saunders & Arts 2004, p. 2). Moreover, follow-up is widely recognized as the weakest area of EIA systems and is of particular concern in developing countries (e.g. ECA 2005, pp. 46–47; Wood 2003, p. 255; DEA 2011a, pp. 7–10).

The purpose of this paper is to identify what factors might influence the independence of verifiers from a developing country perspective with a view to better anticipate and avoid conflict of interest. Examples and experience from South Africa along with perspectives drawn from the international literature provide the basis of my analysis. It is my hope that the research findings will be of relevance and interest to a broad range of EIA practitioners, notwithstanding the particular emphasis on the follow-up stages of the process.

With reference to South Africa as a typical developing country, Craigie et al. (2009, pp. 44–45) state that ‘The historical application of unjust and discriminatory laws, which has been compounded by a regime of inadequate legal enforcement, has unquestionably undermined the development of a culture of legal compliance and clouded the application of the rule of law in South Africa and negatively affected the environmental sector.’ As a result South Africa's environmental authorities were compelled to rely heavily on self-monitoring by industry (Craigie et al. 2009, p. 50) and, owing to trust issues, great emphasis has been placed on the independence of EIA practitioners (DEA 2011a, p. 16 and 25). The recent review of the South African Environmental Impact Assessment and Management Strategy (EIMS) of South Africa also referred to the importance of an independent party with no vested interest in the outcome of a particular activity as being the best way of implementing an effective compliance and enforcement regime (Wessels & Morrison-Saunders 2011, p. 30). Furthermore, a study conducted in 2011 on the independence of EIA follow-up verifiers in South Africa (termed environmental control officers, ECOs) highlighted that independence of the ECOs (from developers, government and other parties) is a concern that needs urgent attention and clarification from government and developers (Wessels & Morrison-Saunders 2011, pp. 43–44). Moreover, the South African Department of Environmental Affairs (DEA) mentions that ‘there are strongly opposing views on the issue of “independence” that are unlikely to be resolved in the short-term’ (DEA 2011b, p. 12).

Contradictory views on independence of verifiers involved in EIA and EIA follow-up create the potential for a conflict of interests between parties involved. Interestingly, the Code of Conduct of the IAIA requires members ‘to disclose to employers and clients and in all written reports, any personal or financial interest that could reasonably raise concerns as to a possible conflict of interest’ (IAIA 2013). This may, therefore, also include factors that could influence mandatory independence of verifiers.

The next section describes the research methodology after which existing frameworks and international perspectives on follow-up frameworks and verification are provided. This is followed by a description of the factors that influence independence, ending with conclusions and recommendations.

Study methodology

The research methodology is based on a mixed method approach whereby both quantitative and qualitative data collection was performed sequentially following the example of Creswell (2003, p. 21). This approach was first supported by a literature review of theoretical perspectives of other verification professions and fields as well as some international EIA follow-up case examples, consistent with the research methods advice of Creswell (2003, p. 27), Leedy and Ormrod (2010, p. 66) and David and Sutton (2011, p. 55). Professions dealing with independence and which were included for this research include the legal profession, business and financial profession, systems audit profession, EIA and EIA follow-up.

Qualitative data, used to identify the factors that may influence the independence of verifiers, was obtained through semi-structured interviews with key individuals (as per Leedy & Ormrod 2010, p. 182; David & Sutton 2011, p. 294) during 2012 as well as the outcome of a workshop on independence arranged by the South African Chapter of IAIA in 2012 (IAIAsa KZN Branch 2012a, pp. 1–8).

EIA follow-up frameworks that may influence independence requirements of verifiers

From the outset I accept that independent verification in EIA follow-up may not be valued to the same extent in every follow-up framework and system. However, contextual factors and related pressures may to some extent influence the follow-up controlling framework and the requirements of independent verification for assuring successful implementation of mitigating or impact management. Marshall (2004, p. 124) for example notes that ‘the pressures for EIA follow-up will be greatest where inherent uncertainty in impact assessment requires supplementation or where stakeholders require a controlling framework for the implementation of mitigation or impact management’. Marshall (2004, p. 124) also mentions that ‘the regulator's motivation to impose EIA follow-up will be bound up with the desire to control compliance, to reduce uncertainty, to verify earlier predictions and ultimately to improve the decision management of future EIA processes’. The type of controlling and verification framework mentioned by Marshall (2004, p. 124) may, however, vary from project to project and may be influenced by the complexity and uncertainty of a particular project. These contextual factors (e.g. Morrison-Saunders et al. 2003, p. 45) may influence the independence requirements of verifiers and also the relationship between independent verifiers and other parties involved in follow-up. This relationship is displayed in Figure 1.

Figure 1 Contextual factors, parties involved and independence required for successful EIA follow-up and verification (adapted from Morrison-Saunders et al. 2003, p. 45).

Morrison-Saunders et al. (2003, p. 44) distinguishes between three different types of EIA follow-up in relation to who does follow-up (outlined in Figure 1) and they consider internal or voluntary verification (also known as self-regulation instruments; Marshall 2004, p. 118) by proponents themselves as a first-party follow-up type. Lehmann (2009, pp. 269–273) notes that, in South Africa (as in many developing countries), both government and industry are reverting to alternative or voluntary compliance measures such as environmental management systems and other self-monitoring measures to compensate for lack of historical legal enforcement resulting from environmental authorities' resource constraints. It should be noted, however, that the merit of, and trust in, the ISO 14001 certification scheme and the ‘independent’ bodies that carry out the certification was dealt a severe blow in 2007 by revelations of serious environmental legal non-compliances at high-profile certified facilities (Craigie et al. 2009, p. 60). In the form of additional self-monitoring and verification measures, Nel and Wessels (2010, p. 51) note that ‘not entirely independent verifiers may be appointed by the regulated industry themselves’ and that these verifiers are ‘viewed as on-site enforcement surrogates’. These enforcement surrogates are popularly known as ECOs within the South African context.

Compliance with command and control-based instruments such as EIA needs to be verified, in principle by compliance monitoring and enforcement agents of authorities which are independent from the developer (Nel & Wessels 2010, p. 50). This type of verification is considered by Morrison-Saunders et al. (2003, p. 44) as second-party follow-up, with the emphasis being typically on ensuring that proponents comply with EIA approval conditions. Recent expansion of the South African inspections by the South African Environmental Management Inspectorate (EMI) has enabled more frequent on-site industry inspections by government. As mentioned previously these inspections are revealing how inadequate self-monitoring has been in South Africa and how frequently industry has failed to comply with self-monitoring and reporting requirements (Craigie et al. 2009, pp. 50–51).

The third type of follow-up, according to Morrison-Saunders et al. 2003, p. 44, involves the community and other independent persons. Morrison-Saunders et al. (2003, p. 44) state that ‘this body or persons may range from local community immediately affected by a particular proposal through to international pressure groups responding to major infrastructure or resource development projects’. Nel and Wessels (2010, p. 50) also note that ‘these verifiers may be independent (from the developer) and may include: public watchdogs; community based or non-governmental based organisations; or statutorily appointed civil-based bodies such as environmental liaison bodies’.

The ‘other independent persons’ mentioned above may also include additional independent role-players that are independent from not only the developer and their ‘not entirely independent verifiers’ but also environmental assessment practitioners (EAPs), the regulators and the community. This ‘independent from all’ verification function may be appointed by the regulatory authority, the proponent or other role players individually or jointly and may have an additional verification function over and above first-, second- and third-party follow-up frameworks.

Independent third-party EIA follow-up verification – some international examples

With the latter description of follow-up frameworks in mind, it is useful to reflect on international case examples where the independence of third-party follow-up verifiers was used to achieve certain project objectives. Ross (2004, p. 178–196) reported that, in a Canadian experiment in monitoring and management for a major diamond mining project, an independent environmental monitoring agency (IEMA) was established to serve as an independent watchdog for environmental management at the mine. The IEMA was responsible to seven organizations: the proponent (BHP Billiton Diamonds Inc.); the Government of Canada; the Government of the Northwest Territories; and the four aboriginal groups in the region. These organizations were all involved in the process of selecting and appointing IEMA members. In this Canadian case study independence is also required from government, thereby ensuring that both the proponent and the performance of government (Government of Canada and the Government of the Northwest Territories) alike are evaluated and that they are held accountable for their actions. The IEMA has also the mandated authority to recommend action to both the proponent and government, which must be responded to publicly (Ross 2004, p. 188). This is an example of third-party EIA follow-up. Interestingly the IEMA contracted an independent consulting firm, the Macleod Institute, to evaluate the IEMA's performance, and thus follow-up on follow-up (Ross 2004, p. 192).

In the UK, the Project Appraisal for Development Control at the University of Aberdeen's EIA and Planning Unit (undated), describes a similar (independent) body, the ‘Shetland Oil Terminal Environmental Advisory Group’ to determine effects of the Sullom Voe oil terminal on the Shetland Islands in Scotland (Arts et al. 2001, p. 182). This group comprised representatives from industry, government, the Shetland Islands Council, other Shetland organizations and academic experts. According to Ross (2004) the great strengths of this approach to EIA follow-up are the independence of the IEMA and its direct two-way communication with all stakeholders in the project (see Arts et al. 2001).

In Hong Kong, a need to assure and inform the public about what was happening in major projects after the EIA reports were approved led to the initiation of EIA follow-up in the early 1990s. As the EIA follow-up system developed further, quality assurance and impartiality became a prime concern which prompted the introduction of an Independent Environmental Checker (IEC) system (Au & Hui 2004, pp. 197–223). The independent IEC system requires the proponent (through permit conditions under the EIA Ordinance) to appoint an IEC (being independent from the developer and the ET) and an Environmental Team (ET). The ET implements the Environmental Monitoring and Audit programme required under the EIA Ordinance and the IEC audits the overall programme. Both the ET Leader and the IEC must be environmental professionals and have at least seven years of relevant experience. Au and Hui (2004, p. 220) categorize this follow-up approach as a Hong Kong Structure 3 management approach. In the EIA follow-up management Structure 4 of Hong Kong, an Independent Environmental Project Office (ENPO) is set up by the Civil Engineering Department and acts as an IEC for a region of with multiple developments (Au & Hui 2004, p. 2010). One of the key learning points of EIA follow-up according to Au and Hui (2004, p. 221) in Hong Kong is that ‘independent surveillance and vetting of monitoring results help to instill confidence and facilitate informed discussion among stakeholders.’

As mentioned in the introductory and previous section, the lack of environmental legal enforcement is a concern in developing countries such as South Africa and voluntary compliance measures are, therefore, heavily relied upon. One such a measure is the appointment of on-site enforcement surrogates such as ECOs during the construction phase of a project (Lehmann 2009, p. 273; Nel & Wessels 2010, p. 51). The ECO may through permit conditions be required to be independent from the developer and may fulfil various roles during EIA follow-up, such as compliance monitoring, ensuring and enforcing legal compliance, advising and/or consulting, communicating, reporting and raising awareness (Wessels & Morrison-Saunders 2011, p. 2). There are many case examples of ECOs fulfilling an independent verification function on construction sites in South Africa, such as the 125 Billion Rand Medupi coal-fired power station project of Eskom (South Africa's largest electricity provider) situated near Lephalale in the Limpopo Province of South Africa. In terms of the environmental authorization of Medupi, ‘the Environmental Monitoring Committee (EMC; with an independent chairperson), in conjunction with the developer must appoint a suitably qualified ECO who must on behalf of the EMC, on a daily basis, monitor the project compliance with conditions of the record of decision, environmental legislation and recommendations of the EMP’.

From the above I deduce that various contextual factors may influence the type of EIA follow-up framework required, which in turn influence the independent verification requirements of verifiers. In the next section I describe the factors influencing the independence of verifiers based on the analysis of the interviews and workshop.

Factors that influence the independence of EIA follow-up verifiers

It is possible to identify the factors that may influence independence as independence is an external manifestation of certain characteristics, usually in the form of relationships with another (Hong-Lin & Shore 2003, p. 936). Based on the literature review across different professions, interviews and workshops, I have identified five categories with a total of 18 factors influencing the independence of verifiers, as summarized in Table 1. The factors are discussed in the following sections under their respective category heading.

Table 1 Factors that may influence the independence of EIA follow-up verifiers

		Legal profession			Business and financial professions				Systems audit profession			South African impact assessment			EIA follow-up profession
Categories of factors	Factors that influence the independence of EIA follow-up verifiers	Independence of Judiciary: United Nations	Independence in arbitration: CCMA	Independence in arbitration: Hong-Lin & Shore, 2003	Independence of directors: Blakistan & Crabb, 2007	Independence in accounting: Everett et al. 2005	Independence in financial auditing: Bakar et al. 2005	Independence in financial auditing: PwC	Independence of systems: ISO 17021	Independence in systems: ISO 17024	Independence in systems: ISO 19011	DEAT Guideline (1998) & Legal Memorandum (2006)	NEMA/GNR 543 (2010)	EIAMS Sub-theme: Independence of EAPs	Case examples in literature	IAIAsa Kwazulu Natal event	Case study interviews & questionnaire survey
1 Financial	1.1 Direct financial interest				•		•	•	•			•	•
	1.2 Material indirect financial interest				•
2 Commercial	2.1 Employment relationsip							•				•			•		•
	2.2 Prior relationship									•		•				•
	2.3 Other existing business relationships			•				•					•
	2.4 Guaranteeing (safeguarding) independence	•								•				•			•
	2.5 Managerial advisory service	•					•		•		•						•
3 Professional	3.1 Competency (skill)	•	•			•			•	•	•				•		•
	3.2 Appearance					•			•								•
	3.3 Accountability (self-policing)		•			•	•							•	•		•
4 Personal	4.1 Family relationships			•	•			•	•			•	•
	4.2 Close personal relationships							•	•				•
5 Other	5.1 Government or political influence		•												•		•
	5.2 Transparency of reporting		•												•	•	•
	5.3 Diversity of team		•												•		•
	5.4 Intimidation threats	•							•								•
	5.5 Size of verification firm						•
	5.6 Duration of on-site service (tenure)						•										•

Financial factors

The term ‘financial interest’ has been defined by the judiciary through case law (Stellenbosch Farmers's Windery Ltd v Distillers Corporation (SA) Ltd and Another 1962 (1) SA 458 (A)), to represent a wider concept than propriety (ownership) interest in a business. In terms of financial interest a person or firm may have direct financial interest or indirect financial material interests in a client.

Direct material interest

Direct material interest is substantial, such as owning stock in the client company or receiving revenue from the company client. On the latter Bakar et al. (2005, p. 808) raises the issue of size of fees and mentions that: ‘the size of fees received by a firm (in relation to total percentage of revenue) is a threat that may influence independence and when talking about the relationship between size of audit fees and annual income, large size of audit fees is associated with a higher risk of losing the auditor's independence’.

In South Africa, following the promulgation of GN R 1183 (South Africa 1997), the Department of Environmental Affairs and Tourism (DEAT) produced a Guideline Document in an attempt to provide guidance on the statutory provision of the regulations and defines an independent consultant as: ‘a consultant not in the permanent service of the Applicant’. In addition, a consultant ceases to be independent if: ‘involved in any design or work of the same project; earns more than 50% of his or her work from the same company; and payments depend on the successful authorisation of the application’, the latter being an environmental impact assessment application (DEAT 1998; Cameron Cross Inc. 2006). This guideline is no longer in use as new regulations have been published that do not have restrictions on earnings, but the principle of payment may still be applicable.

Indirect financial material interests

Having material indirect financial interests in any client, such as having a financial interest with any entity associated with the client, may interfere with the independent exercise of the verifier's judgement (Blakistan & Crabb 2007, p. 1). The DEAT (South Africa 1997) also mentions that EAP may not have any other interest in the activity, application or appeal in respect of which that EAP or person is appointed in terms of Regulation 543 other than fair remuneration for work performed in connection with that activity, application or appeal (SA 2010).

It is thus evident that the independence of EIA follow-up verifiers may be influenced by direct financial or material indirect financial interests and should be considered in the appointment of or the engagement of a verification function.

Commercial factors

Employment relationship

In terms of Employment relationship, Blakistan and Crabb (2007, p. 1) describe an independent director as: ‘a non-executive director who is free of any business or other relationship that could materially interfere with the independent exercise of their judgment’. However, being completely free of any business relationship is not possible in EIA follow-up scenarios where verifiers are compensated for their service. In consideration of the latter. It should be accepted that verifiers will always be influenced to an extent by the employer (if the verifier is sub-contracted), the client, a regulatory authority; and the public, or by any combination of these role players.

To guard the independent verification role of the ECO at the Medupi case study, the commercial contract between the ECO service provider (being Nature Conservation Corporation, NCC) and the client is endorsed and promoted by an independent monitoring committee (Marrel 2012a). Thus a joint employment relationship exists between the verification service provider, the client and the independent monitoring committee. The joint employment principle is also evident in the Ekati case study in Canada. Where seven organizations were involved in the process of selecting and appointing the independent watchdog (IEMA) members (Ross 2004, p. 188). The employment relationship is also mentioned by PricewaterhouseCoopers (undated: 2) (PwC), which state that ‘if an employee is approached by a client with an offer of employment, the employee should discuss the matter with the audit engagement partner and the employee should be removed from any work for the client until the employment offer is rejected’. Incidentally, the Lead ECO (with the role of independent monitoring, verification and reporting of compliance of authorization conditions) at the Medupi coal-fired power station case study was approached by the proponent (Eskom as the client) with an offer of employment in the position of Environmental Manager (EM; with the role of implementing environmental conditions and management systems). After initial rejection of the offer by both the ECO and the service provider (NCC) who sub-contracts the ECO position, the EM position was eventually filled by the ECO, who was at the time of the appointment still sub-contracted by NCC. The DEA, however, expressed the opinion in a letter that a potential for a conflict of interest exists regarding this arrangement and that Eskom needs to consider different arrangements. The DEA opinion may have stemmed from the South African EIA Regulations (37(2)(b)) of the National Environmental Management Act (107 of 1998) (the NEMA), which allows for the conditions of an environmental authorization to ‘require the holder of the authorisation to furnish the competent authority with reports prepared by the holder of the authorisation or a person who is independent, at specified times or intervals – (i) indicating the extent to which the conditions of the authorisation are or are not being complied with’ (SA 2010, p. 10).

Moreover, the EIA Regulations require ‘that there are no circumstances that may compromise the objectivity of that person in performing such work’. The perceived conflict of interest, potential compromise of independence and the different opinions between the parties involved (Eskom – proponent; NCC – environmental verification and implementation service provider; and the DEA – regulatory authority) resulted in the EM resigning from NCC and being employed by Eskom directly. This resolved the conflict of interest concerns expressed by the DEA (Marrel 2012b). If the independence of the verifiers in this EIA follow-up case was identified as an issue in the early phases of the EIA process, the parties involved could have made adequate provisions to ensure that independence was maintained and that a conflict of interest was avoided.

Prior relationship

With relation to Prior relationship, ISO (SANS/ISO17024 2005, p. 5) requires a person (auditor) employed or contracted by a certification body to sign a document to commit themselves to independence from, amongst others, ‘any prior and/or present link with persons to be examined that would compromise impartiality’. Prior relations are also alluded to by the then DEAT (1998) Guideline Document, which states that ‘a consultant ceases to be independent if: involved in any design or work of the same project’. The IAIAsa KZN Branch (2012b) identified in their regional event that ‘an Environmental Assessment Practitioner (EAP) can act as an ECO but that such appointment cannot take place before the environmental authorisation is issued. Otherwise this may compromise his/her independence in motivating a benefit for a positive outcome of an EA’.

Other existing business relations

Other existing business relations, apart from the business or work performed in connection with the activity of verification, may also influence independence of a verifier and is mentioned by Hong-Lin and Shore (2003). PwC also state that a partner/employee or immediate family members may only enter into a business relationships with an audit client (or a director, officer or major shareholder of such an audit client) if the amount of the investment is immaterial; the relationship is insignificant both to the partner/employee and the other party; and the arrangement does not give any of these parties (individually or in combination) the ability to control the venture or entity. The EIA regulations under the NEMA unpacks independence in relation to an EAP or a person compiling a specialist report or undertaking a specialist process (which may include compliance monitoring) as ‘a person or an EAP that has no business (financial, personal or other interest) in the activity, application or appeal in respect of which that EAP or person is appointed in terms of these Regulations other than fair remuneration for work performed in connection with that activity, application or appeal’ (SA 2010, p. 10).

The United Nations' (UN) Rule of Law formulated basic principles in 1985 (including principles on independence of the Judiciary) for Governments to consider in their national legislation and practice that was adopted by the Seventh United Nations Congress on the Prevention of Crimes and the Treatment of Offenders held at Milan. UN (1985, p. 1) states in its first principle on independence of the Judiciary that: ‘independence shall be guaranteed’ (see Guaranteeing or safeguarding independence). Guaranteeing independence of verifiers may be done in different ways, such as a contractual agreement or by mandating independence in permit conditions. ISO (SANS/ISO17024 2005, p. 5), for example, requires that independent certification auditors sign a document that guarantees (or to commit themselves to) independence. In South Africa, EAPs are required in terms of the GNR 543 (South Africa 2010) EIA application process to sign a declaration of independence and represent this declaration in writing to the competent authority. This latter is, however, not the situation for verification functions such as ECOs in South Africa.

Managerial advisory service and/or responsibility

In relation to Managerial advisory service and/or responsibility, Bakar et al. (2005; 817) identifies and ranks six general factors influencing independence of auditors and the provision of managerial advisory services is ranked as number five. In empirical studies conducted in the past, it was found that the provision of managerial advisory services negatively affected independence (Bakar et al. 2005, p. 809). To ensure independence of individual judges the UN Basic Principles on the Independence of the Judiciary requires that that the delegation of authority to supervise the court system must be balanced (UN 2006, p. 9).

Marrel (2012a) states that: ‘independence [in relation to independent ECOs at the Medupi case study] means a completely independent function of the project’. Marrel also mentions that: ‘The project is the entity responsible for the implementation of the Environmental Management Plan (EMP) [by the Environmental Management team], whereas the independent ECO is responsible for proper quality assurance in terms of environmental legal compliance. The ECO should thus have no contractual authority only an assurance function’ (Marrel 2012a). This distinction between the implementation function of the Environmental Monitoring and Audit programme by the environmental team and the verification function by the IEC who audits the overall programme is also evident in the Hong Kong case example alluded to earlier in the paper (Au & Hui 2004, p. 205).

Professional factors

Competency (or skill)

Competency (or skill) is viewed as essential in almost all verification fields. ISO (ISO17021 2006, p. 3), for example, states that competence is the ‘demonstrated ability to apply knowledge and skills’ and United Nations Rule of Law (UNROL) (1985) requires that the Judiciary have appropriate training or qualification. On competence of the accounting field in Canada, Abbott (1983) and Gaa (1994) (as quoted by Everett et al. 2005, p. 417) wrote ‘through the mimicry of other high status professions and accountancy associations in other jurisdictions and through an emphasis on both norms of competence, i.e. education requirements, and norms of conduct, i.e. ethical requirements, accountancy associations attempt to convince relevant publics that professional privilege is deserved’.

Why is competence then necessary for ensuring independence? A possible answer to the question is contained in element 7.2 i) of ISO (ISO19011 2002, p. 22) which states that a personal attribute of an auditor is being ‘self-reliant, i.e. acts and functions independently while interacting effectively with others’. When considering the latter, I would argue that a competent professional is less susceptible to influence than an individual that is not competent. Both Lee (2012) and Marrel (2012a) are of the opinion that an independent environmental verifier in the construction field (or ECO) should have ‘a broad range of skills, knowledge and experience’. Marell (2012a) identified the following knowledge requirements of independent verifiers in construction (ECOs): environmental law and authorizations; Environmental Management Plans (EMPs); successfully providing assurance to government; financial management; contractual understanding; best practice knowledge; understanding of specific project in the local, regional and global economy; and knowledge of life.

With respect to skills, the Medupi case study ECO team, Marrel (2012a, 2012b), Coop (2012), Pillay (2012) and Koekemoer (2012) identified the following skills necessary to be an independent verifier during the construction phase of a project: leadership; advisory; change management; influence; planting seeds of change or ideas; negotiation; ability to understand and negotiate trade-offs; conflict management; project management; organizational (documentation and records); administration; clear communication; cultural awareness; investigatory; and the gaining of trust. In Hong Kong, the independent verifier (IEC) must be an environmental professional and have at least seven years of relevant experience (Au & Hui 2004, p. 205). However there are no mandatory competency requirements for independent verifiers in South Africa, except in situations where competency of ECOs is explicitly asked for in permit conditions.

Appearance

In relation to Appearance, Paterson (1970, p. 238) writes (as quoted by Everett et al. 2005, p. 429) ‘The independence of the auditor is both in fact and in appearance vital in order to maintain public confidence in his judgement and integrity’ Similarly the Canadian Chartered Accountant stated in 1968 that ‘Without appearing independent the auditor cannot expect the full confidence of the investing public and the financial community’. Neu and Wright (1992) (as quoted by Everett et al. 2005, p. 427) note that ‘this emphasis signals the emergence of a preoccupation within the profession with appearance, image, and their management’. ISO (ISO17021 2006, p. 3) also states that ‘Being impartial, and being perceived to be impartial, is necessary for a certification body to deliver certification that provides confidence’. Interestingly a contractor's environmental manager (Paul 2012) at the Medupi case study; whose environmental performance is verified by an independent verifier, raised the following concern: ‘visually, one of my biggest problems has always been that the ECO on this site need to look as independent as they can. They should not be driving around in a client vehicle and they should not be wearing client logos or uniform.’

Accountability

Accountability or evidence that shows accountability through self-policing or internal quality management systems is viewed as important to ensure confidence of verification fields. For example the CCMA (2012) commits itself to accountability by constantly measuring itself against commitments. Paterson (1970, p. 238) also mentions that the most effective means of maintaining the confidence of the public is by continual self-policing and efforts to achieve the highest standards of independence. Bakar et al. (2005, p. 809) notes that there is much support to suggest a positive relationship between audit committees (which essentially do self-policing of the financial auditing profession and may hold auditors accountable) and auditor independence, which means that the existence of an audit committee will enhance an auditor's independence. In Hong Kong the replacement of the IEC may be demanded by Environmental Protection Department if their performance is found to be less than acceptable. In Canada the IEMA of the Ekati mine ensured self-policing by contracting an independent consulting firm to evaluate the IEMA's performance. In South Africa, the Environmental Assessment Practitioners Association of South Africa (EAPSA) was launched in 2011 and will aim to hold environmental practitioners accountable. At the time of writing the paper, it was not clear if independent verifiers (ECOs) of EIA follow-up will need to, or will be able to, register at EAPSA and as such the ECO industry is not policed or held accountable by any national organization or committee. ‘Self-policing and accountability is done through the service providers themselves’ (Marrel 2012a) or by mandated EMCs such as the Medupi EMC.

Personal factors

Family relations

The issue of Family relations being a threat for influencing independence surfaces in most of the professions considered in this study. Hong-Lin and Shore (2003, pp. 935–936), for example, state that ‘an independent arbitrator is one who has no close relationship – financial, professional, or personal – with a party or its counsel. Blakistan and Crabb (2007) indicate in Nyota Minerals's Policy on Assessing the Independence of Directors that ‘family ties may be relevant in considering interests and relationships which may affect independence, and should be disclosed by the Board’. PwC also indicate that, if an engagement team member or a person in the chain of command has a close family member with financial interest in an audit client, a threat to independence may be created. PwC also mentions that it is not permissible to provide professional services to an audit client if a close family member is a director, officer or employee in a position to exert direct or significant influence (over financial statements).

Close personal relationships

A person who an auditor has Close personal relationships with may pose familiarity problems. ISO (SANS/ISO17021 2006, p. 3) refers to familiarity factors as ‘factors that arise from a person or body being too familiar with or trusting of another person instead of seeking audit evidence’. The DEA (South Africa 1998, p. 10) specifically states that ‘an EAP is a person who has, amongst other, no personal interest in the activity, application or appeal in respect of which that EAP or person is appointed’. I could find no clear evidence of family or close personal restriction requirements being discussed in the literature or case study examples for EIA follow-up.

Other factors

Government or political influence

In terms of Government or political influence the Commission for Conciliation, Mediation and Arbitration (CCMA) is a South African dispute resolution body established in terms of the Labour Relations Act, 66 of 1995 (LRA). The CCMA states that ‘it is an independent body, does not belong to and is not controlled by any political party, trade union or business’ (CCMA 2012). Jajbhay (1999, p. 54) mentions that ‘although commissioners are servants of the public, they are not public servants’. Interestingly independence from government in the EIA follow-up field is also required in the Canadian Ekati case example (Ross 2004, pp. 178–196). In South Africa 81% of 50 respondents of the survey conducted by Wessels and Morrison-Saunders (2011) were of the opinion that an ECO should be independent from the competent authority.

Transparency of reporting

In terms of Transparency of reporting, Nair (2012) is of the opinion that ‘independence in this project [construction of Medupi coal fired power station in South Africa] means, this guy (ECO function) is allowed to do their work freely without interference and to report it without fear’. Reporting lines of the independent ECO at Medupi is internally to the Assurance Manager (who reports to the project manager directly; Nair 2012) and simultaneously to external parties such as the independent monitoring committee and government via a formalized process (Marrel 2012a). The IAIAsa KZN Branch (2012a, p. 5) states that ‘objectivity can be assured by the ECO in instances where aspects overlooked during the Basic Assessment or EIA process or the EMP are highlighted and reported directly to the authority and client.’ The CCMA (2012) also have a commitment on transparency in order to ensure independence and state that the CCMA ‘work in a manner that is open and transparent, guided by our statutory obligations and commitment’. Ross also highlights the direct two-way communication with all stakeholders as a great strength of the Shetland Oil Terminal Environmental Advisory group.

Diversity of team

Diversity of team is also a factor that may influence independence. On diversity, the CCMA (2012) makes the following commitment: ‘A team of highly qualified individuals that is representative of all levels of our country's diversity’. The team principle is also evident in the Canadian Ekati, the Sullom Voe oil terminal in Scotland and the Hong Kong ENPO case examples (Arts et al. 2001, p. 182; Au & Hui 2004, p. 2010; Morrison-Saunders and Arts 2004, pp. 157–158; and Ross 2004, pp. 178–196). In the South African Medupi case study the verification team consists of a Lead ECO, an ECO and two Assistant ECOs (NCC, 2010, p. 1).

Intimidation factors

As noted above, Nair (2012) states that ‘independence in this project means: to report it without fear’. The fear mentioned by Nair (2012) relates to Intimidation factors. ISO (ISO17021:3) also identifies intimidation factors as ‘factors that arise from a person or body having a perception of being coerced openly of secretively, such as threat to be replaced or reported to a supervisor’. The UN (2006, p. 5) also refers to factors and states in Principle 1–7 that ‘as a basic premise, the independence of the judiciary must be guaranteed by the State and enshrined in the Constitution or in the law of the country’. The UN continues by stating that ‘the judiciary must decide matters impartially on the basics of facts and the application of law, without any restrictions, improper influences, inducements, pressures, factors or interferences’.

Size of the verification firm

Size of the verification firm is mentioned in the empirical study conducted by Bakar et al. (2005, p. 807) and is also rated as the highest ranked threat that may influence auditor independence. Bakar et al. (2005, p. 807) mention that ‘most empirical studies reviewed found a positive relationship between audit firm size and auditor independence and that these studies prove that large firms are more resistant to client pressures’.

Duration of on-site service (tenure)

Bakar et al. (2005, p. 807) also identifies length of time that an audit firm has been filling the audit needs as a threat that may influence independence and mentions that most writers who discuss the relationship between tenure and independence support this view. In the Medupi case study Pillay (2012) made the following remark: ‘one does tend to become softer on contractors as one comes to understand their situation and challenges’. A weakness of the independent function identified by Ross and by the Macleod Institute at the Ekati case example is the poor working relationships with BHPB and the IEMA, which were unduly sacrificed by performing the watchdog role (Ross 2004, p. 193). However, this situation, according to Ross (2004, p. 192), improved over time.

Conclusions and recommendations

In this research I have demonstrated that independence is broadly viewed as a cornerstone of various verification professions. Independent verification is also recognized as an important component of a credible EIA and forms an integral part of EIA follow-up. However, there are many contextual factors and related pressures that may influence the EIA follow-up controlling framework and subsequently the independent verification requirements of verifiers such as checkers, monitoring agencies and ECOs.

I have provided some international examples where independent verification by monitoring agencies, checkers and ECOS was required to fulfill certain project needs, including: evaluating performance and compliance; ensuring direct communication between parties; vetting monitoring results; facilitating decisions; and reporting independently.

In developing countries such as South Africa a history of poor application and enforcement of environmental law, weak EIA follow-up frameworks and the lack of trust in self-monitoring measures has resulted in great emphasis being placed on the independence of EIA practitioners (including EIA follow-up verifiers). The importance of independence is valued to such an extent that the review of the South African Environmental Impact Assessment and Management Strategy makes special mention of a party with no vested interest in the outcome of a particular activity as being the best way of implementing an effective compliance and enforcement regime. However, strong opposing views exist on the independence of verifiers which lead to a conflict of interest between parties involved in the EIA follow-up.

In these scenarios the IAIA (IAIA 2013) requires members ‘to disclose to employers and clients and in all written reports, any personal or financial interest that could reasonably raise concerns as to a possible conflict of interest’. It is therefore important to identify these factors and to be aware of these factors. It is also recommended by IAIA (IAIA 2013) to disclose these factors in situations where the issue of independence of verifiers may lead to a conflict of interest between parties involved in EIA follow-up.

The success of EIA depends in large upon successful implantation along with appropriate accounting for follow-up activities after the approval decision is granted. Importantly, the independence of those persons responsible for the verification of follow-up activities is a cornerstone for ensuring integrity and best practice. However, as I have demonstrated in this research, what constitutes independence in EIA follow-up is open to interpretation and varies according to context and related factors that influence independence. I hope that this paper may aid in avoiding a potential independence conflict of interest by shedding some light on the factors that influence the independence of EIA follow-up verifiers.

Acknowledgements

The case research would not have been possible with the continuous support of NCC Environmental Services and the Environmental Management Team of the Eskom Medupi power plant.

Notes

ISO (SANS 17021: 2006, p. 1) defines impartiality as actual and perceived presence of objectivity, and note that other terms that are useful in conveying the element of impartiality are: objectivity; independence; freedom from conflict of interest; freedom from bias; lack of prejudice; neutrality, fairness; open-mindedness; even-handedness; detachment; balance.