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Transcript of Guiding Chinese Investment: Government and NGO Collaboration Douglas Whitehead Global Environmental...
Guiding Chinese Investment: Government and NGO Collaboration
Douglas WhiteheadGlobal Environmental Institute
Exchange on Development and Environmental IssuesSummit Parkview, Yangon, March 28 2011
Summary
• Go Out Strategy• Chinese FDI and its Environmental Challenges• Environmental Challenges• Chinese Policies
– International Guidelines– Domestic Policies and Guidelines
• GEI Case Study– IPP Program
• Since early 2000s, guided byinst. like Exim bank
• US$40.65 of outbound Direct Investment Overseas
• Sectors: Timber, Hydropower, Plantations, Mining, Oil & Natural Gas
• Regions: SE Asia, Africa, Latin America
• China working to maintainImage as responsible super-power
• Challenge: How to ensure best environmental impactoverseas?
The “Go Out Strategy”
Environmental and Social ImpactMerowe Dam, SudanChina Int’l Water and ElectricSedimentation, evaporation, resettlement
Nam Ngum 5, LaosSinohydroPotential flooding damage to watershedcommunities(under-construction)
• Environmental– Effects on biodiversity– Deforestation and Watershed
degradation– Soil Fertility– Pollution and waste
• Social– Community livelihoods– Cultural value
• Potential Blowback– Project related risks– Effects on bilateral/regional
relations
Loango Oil Field, GabonSinopecThreat to 67,000 hectares in National Park
What and Who is at Stake?• Chinese Government and
Enterprises– China’s ecological deficit
(WWF-CCICED)– Managing environmental and
social risks (growing concern)• Host Countries
– Governments: development priorities
– Communities/indigenous peoples: livelihoods
– Civil Society: Environmental/Social Welfare
International Guidelines• Equator Principles
– 2008 MoU with SEPA– One Chinese Bank signatory
• UNEP: Finance Initiative (UNEP: FI) Principles for Responsible Investing
– Growth in signatories from emerging marketinvestors
• UN Global Compact– 139 Chinese Members by 2009
• IFC: Policy and Performance Standards– MoU with ExIm Bank, MEP– Support for China’s ‘Green Credit Policy
• OECD Guidelines for Multinational Enterprises
– No emerging market signatories• Global Reporting Initiative
– Domestic Sustainability reporting in China• Extractive Industries Transparency Initiative
– No support yet from China and India
Domestic Policies: Greening Chinese Investment
• Sustainable Investment Policies– 2002 Environmental Impact Assessment
Law (NPC), among many– 2008 Guidance on Centrally Owned
Enterprises Fulfilling SocialResponsibilities (SASAC)
– Market based instruments (DPS, EPBs, tax incentives, green credit, green insurance)
– ISO 14001 Certification Requirements• FDI-Specific
– 2007 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 Finance• Green Lending
– 2003 Observation of Equator Principles – 2007 SEPA Notice on Risk Pollution
• Insurance– Guiding Opinions on Pollution Liability
Insurance (SEPA)• Banks
– Export-Import Bank• MoU with IFC on • Performance Standards
– China Development Bank• CADF, includes EIAs
– NGO Report:Environmental Report on Chinese Banks
• Green Watershed, Green Earth VolunteersGEI
– High Performing banks• Industrial Bank of China (EP)• Bank of China (Green Credit)• CCIC
‘Governance Gap’• Chinese Side: Local Laws as Default
– Exim Bank 2007 Code of Conductrequires investors to comply with local law enforcement
– Conflicting Instructions:Economic and Commercial Councils’role in encouraging observance of host country law
• Weak Host Country Governance– Law or Policy may be good on paper, but
poor in execution (Zambia, Namibia)– Legislation or Policy may be piecemeal or – non-existent
• Response:– Regional collaboration– Civil Society Support
Opportunities: GEI’s IPP Program• IPP: Integrated Policy Package• Stakeholders
– Chinese GovernmentGuidelines on Environmental ConductEnvironmental Policies on Chinese FDI
– Chinese EnterprisesSinohydro Community Development ProjectNam Theun 2 WorkshopChinese Chamber of Commerce Workshop
– Host Country GovernmentPartnership NLMA of Lao PDRPES and REDD Workshops
• Further Pilots
Integrated Policy Package• Policies: CCA, PES, EIA, CSR, REDD(?)
– EIA: incorporated into legislative process of host countries– PES: Ecological services quantified, payments contributed
through fund– CCA: Allocates how PES payments would go towards
conservation; land use concessions; community involvement– CSR: Voluntary tool, mounting domestic pressure– REDD: carbon financed for reduced deforestation
• Advantages:– Designed to address multiple stakeholders– Community Development benefits– Enhances civil society participation
Model 2: Guarantee Fund for
Community Development and
Environmental Protection
Model 1:Government-NGO-Enterprise Model
Guidelines and Research: Government Collaboration
• Guidelines– 2008 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)
• Research– Environmental Policies on Chinese FDI– Case Studies (Laos, Zambia…)
Enterprise Pilot: Sinohydro• Sinohydro
– MoU, GEI-Sinohydro– Environmental Institution
• Nam Ngum 5 Hydropower Station– Sinohydro—BOT– EIA performed by Earth Systems
• Community Development Upstream– Community Forestry– Cattle Breeding– Household Biogas: 40 digesters
in Ban Chim Village
Engaging Chinese Enterprises: Building Capacity
• Workshop with Chinese Chamber of Commerce in Lao
– Guidelines and Performance Standards– Environmental Risk Management– Incl. Chinee government (SFA, MEP,
MOFCOM, MFA) and enterprises (ExIm Bank, Sinohydro, China Minmetals…)
• Best Practices in Hydropower Development: GEI-WB joint conference
– Nam Theun 2 Cascade Dams– Dialogue on Hydropower – Informal Knowledge Sharing Network– Challenges in future developments
Host Country Partnership: Lao PDR• MoU with National Land
Management Authority (NLMA)– Sustainable, Market-based
Land Management– Capacity and Institution
Building– Incorporate policy tools (PES)
in Lao National Assembly• Trainings
– PES– REDD
• Other Lao Partners– Water Resources and Environment
Authority– Ministry of Energy and Mining– Ministry of Planning Investment