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Guiding Chinese Investment: Government and NGO Collaboration. Douglas Whitehead Global Environmental Institute Exchange on Development and Environmental Issues Summit Parkview, Yangon, March 28 2011. Summary. Go Out Strategy Chinese FDI and its Environmental Challenges - PowerPoint PPT Presentation


  • Guiding Chinese Investment: Government and NGO Collaboration Douglas WhiteheadGlobal Environmental Institute Exchange on Development and Environmental IssuesSummit Parkview, Yangon, March 28 2011

  • SummaryGo Out StrategyChinese FDI and its Environmental ChallengesEnvironmental ChallengesChinese PoliciesInternational GuidelinesDomestic Policies and GuidelinesGEI Case StudyIPP Program

  • Since early 2000s, guided by inst. like Exim bankUS$40.65 of outbound Direct Investment OverseasSectors: Timber, Hydropower, Plantations, Mining, Oil & Natural GasRegions: SE Asia, Africa, Latin AmericaChina working to maintain Image as responsible super- powerChallenge: How to ensure best environmental impact overseas?The Go Out Strategy

  • Chinas FDIOverall Source: OECDBy sectorBy Region (hydro)Source: GEI

  • Environmental and Social Impact

    EnvironmentalEffects on biodiversityDeforestation and Watershed degradationSoil FertilityPollution and wasteSocialCommunity livelihoodsCultural valuePotential BlowbackProject related risksEffects on bilateral/regional relationsMerowe Dam, SudanChina Intl Water and ElectricSedimentation, evaporation, resettlementNam Ngum 5, Laos Sinohydro Potential flooding damage to watershed communities (under-construction)

    Loango Oil Field, GabonSinopecThreat to 67,000 hectares in National Park

  • What and Who is at Stake?Chinese Government and EnterprisesChinas ecological deficit (WWF-CCICED)Managing environmental and social risks (growing concern)

    Host CountriesGovernments: development prioritiesCommunities/indigenous peoples: livelihoodsCivil Society: Environmental/Social Welfare

  • International GuidelinesEquator Principles2008 MoU with SEPAOne Chinese Bank signatoryUNEP: Finance Initiative (UNEP: FI) Principles for Responsible InvestingGrowth in signatories from emerging market investorsUN Global Compact139 Chinese Members by 2009IFC: Policy and Performance StandardsMoU with ExIm Bank, MEPSupport for Chinas Green Credit PolicyOECD Guidelines for Multinational EnterprisesNo emerging market signatoriesGlobal Reporting InitiativeDomestic Sustainability reporting in ChinaExtractive Industries Transparency InitiativeNo support yet from China and India

  • Domestic Policies: Greening Chinese InvestmentSustainable Investment Policies2002 Environmental Impact Assessment Law (NPC), among many2008 Guidance on Centrally Owned Enterprises Fulfilling Social Responsibilities (SASAC)Market based instruments (DPS, EPBs, tax incentives, green credit, green insurance)ISO 14001 Certification RequirementsFDI-Specific2007 Nine Principles on Encouraging and Standardizing Foreign Investment(State Council)2007 Guidelines on Sustainable Management of Overseas Forests by Chinese Enterprises (SFA, SEPA)2008 Guide to Strengthen Regulation on Listed Companies (SASAC)

  • Policies: Green FinanceGreen Lending2003 Observation of Equator Principles 2007 SEPA Notice on Risk PollutionInsuranceGuiding Opinions on Pollution Liability Insurance (SEPA)BanksExport-Import BankMoU with IFC on Performance StandardsChina Development BankCADF, includes EIAsNGO Report:Environmental Report on Chinese BanksGreen Watershed, Green Earth Volunteers GEIHigh Performing banksIndustrial Bank of China (EP)Bank of China (Green Credit)CCIC

  • Governance GapChinese Side: Local Laws as DefaultExim Bank 2007 Code of Conduct requires investors to comply with local law enforcementConflicting Instructions: Economic and Commercial Councils role in encouraging observance of host country lawWeak Host Country GovernanceLaw or Policy may be good on paper, but poor in execution (Zambia, Namibia)Legislation or Policy may be piecemeal or non-existentResponse:Regional collaborationCivil Society Support

  • Opportunities: GEIs IPP ProgramIPP: Integrated Policy PackageStakeholdersChinese Government Guidelines on Environmental Conduct Environmental Policies on Chinese FDIChinese Enterprises Sinohydro Community Development Project Nam Theun 2 Workshop Chinese Chamber of Commerce WorkshopHost Country Government Partnership NLMA of Lao PDR PES and REDD WorkshopsFurther Pilots

  • Integrated Policy PackagePolicies: CCA, PES, EIA, CSR, REDD(?) EIA: incorporated into legislative process of host countriesPES: Ecological services quantified, payments contributed through fundCCA: Allocates how PES payments would go towards conservation; land use concessions; community involvementCSR: Voluntary tool, mounting domestic pressureREDD: carbon financed for reduced deforestationAdvantages:Designed to address multiple stakeholdersCommunity Development benefitsEnhances civil society participation

  • Model 2: Guarantee Fund for Community Development and Environmental ProtectionModel 1:Government- NGO- Enterprise Model

  • Guidelines and Research: Government CollaborationGuidelines2008 Guide on Sustainable Overseas Silviculture by Chinese Enterprises (SFA, with GEI)2009 Guide on Sustainable Overseas Forest Management and Utilization by Chinese Enterprises (SFA, MOFCOM, with GEI)2011 Guidelines on Environmental Conduct by Overseas Chinese Enterprises (MEP, MOFCOM, with GEI)ResearchEnvironmental Policies on Chinese FDICase Studies (Laos, Zambia)

  • Enterprise Pilot: SinohydroSinohydroMoU, GEI-SinohydroEnvironmental InstitutionNam Ngum 5 Hydropower StationSinohydroBOTEIA performed by Earth SystemsCommunity Development UpstreamCommunity ForestryCattle BreedingHousehold Biogas: 40 digesters in Ban Chim Village

  • Engaging Chinese Enterprises: Building CapacityWorkshop with Chinese Chamber of Commerce in LaoGuidelines and Performance StandardsEnvironmental Risk ManagementIncl. Chinee government (SFA, MEP, MOFCOM, MFA) and enterprises (ExIm Bank, Sinohydro, China Minmetals)Best Practices in Hydropower Development: GEI-WB joint conferenceNam Theun 2 Cascade DamsDialogue on Hydropower Informal Knowledge Sharing NetworkChallenges in future developments

  • Host Country Partnership: Lao PDRMoU with National Land Management Authority (NLMA)Sustainable, Market-based Land ManagementCapacity and Institution BuildingIncorporate policy tools (PES) in Lao National AssemblyTrainingsPESREDDOther Lao PartnersWater Resources and Environment AuthorityMinistry of Energy and MiningMinistry of Planning Investment

  • ConclusionsEnvironmental Policies on Chinese FDI growing stronger, but gaps remainStronger awareness of performance standards by enterprisesStrengthening host country governance vitalGovernment-Enterprise-NGO partnerships feasible and effective in enforcing responsible investment