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CLASII » Chinese Guidelines
The first Chinese tools for environmental evaluation and planning appeared at the end of the 1970s, when the State Council created the “Environmental Protection Law of the People’s Republic of China.” This law was modified in October 2014 and incorporated mandates that guarantee, for the first time in China, public access to information for communities affected by projects determined to be environmentally damaging. In 2003 they enacted the “Law on Evaluation of Environmental Impact Studies of the People’s Republic of China.”
The Chinese environmental guideliens that apply to Chinese foreign investments appear in the mid-2000s, coinciding with the start of the massive indebtedness of Latin America and Africa to China. Various Chinese guidelines encourage banks and firms to use additional Chinese legislation and international best practices, especially when these offer higher standards than those of the host country. Further, the Chinese guidelines emphasize that Chinese banks and firms should “strictly” respect the legal framework of the country in which they operate.
The majority of Chinese guidelines have been promoted under the title of “Guides,” “Guidelines,” and “Directives.” The majority are not binding (an important exceptions in the Green Credit Directive that applies to Chinese banks) nor do they have punitive mechanisms. Nevertheless, they do indicate a gradual advancement in the development of monitoring and implementation mechanisms that go much further than statements of good intention.
Although the environmentla standards of Chinese banks are less detailed than those of multilateral banks such as the World Bank, the Interamerican Development Bank, and the International Financial Corporation, it is also true that Chinese banks have started from a baseline of better regulations than those the multilateral banks had when they first began financing projects.
Chinese guidelines that apply to Chinese firms operating abroad
Sustainable Infrastructure Guidelines for Overseas Chinese Enterprises. English
Nine Principles on Encouraging and Standardizing Foreign Investment. English
A Guide on Sustainable Overseas Silviculture by Chinese Enterprises. English
Guidelines on Fulfilling Social Responsibility by Central Enterprises. English
Administrative Regulations on Contracting Foreign Projects. English
A Guide on Sustainable Overseas Forests Management and Utilization by Chinese Enterprises. English
Interim Regulations on Supervision and Management
of State-owned Assets of Enterprises. English
Guide on Social Responsibility for Chinese International Contractors. Chinese and English versions are both included in the document. For the English version, scroll to page 60.
Lineamientos sobre Protección Ambiental en la la Inversión y Cooperación External. Spanish
Lineamientos sobre Responsabilidad Social en Inversiones Mineras en el Extranjero. Spanish
Chinese guidelines that apply to Chinese banks that operate overseas
Guidance Opinion of Further Guiding and Regulating the Direction of Overseas Investment. English and Spanish
Environmental Risk Management Initiative for
China’s Overseas Investment. English and Spanish
Guiding opinions on energy conservation credit.English
China Banking Association’s Corporate Social Responsibility Guidelines (Excerpt). English
Directrices de Crédito Verde. Spanish
Notice of the CBRC on Issuing the Guidance on Commercial Banks’ Management of Reputational Risks. English
Environmental Assessment Framework. See “Chinese Outward Investment: An Emerging policy framework.” Pages. 218-229.
Other rules that apply to Chinese banks and firms
UNEP Statement on Energy Efficiency The China Development Bank (CDB) and the Industrial and Commercial Bank of China (ICBC) are signatories of the Investment Initiative of the UNEP Finance Initiative. This initiative encourages its members to commit to sustainable development, the improvement of social and environmental practices, and to promote open communication between all sectors. The CDB has representatives in various Latin American countries such as Venezuela, Brazil, Ecuador, Colombia, and Argentina. The ICBC has branch offices in Mexico, Brazil, Peru, and Argentina.
The Equator Principles. Until now, only the ICBC has adopted the Equator Principles, but the Chinese Banks’ Association highlights their relevance for the development and expansion of investments, signaling that Chinese financial institutions should take advantage of the Equator Principles to support their economic and financial development.
The UN Global Compact. In 2007 the China Banking Regulatory Commission enacted the official direction “Opinion on the strengthening of social responsibility in financial institutions” which requires that large banks, such as the China Development Bank and China Import-Export Bank adhere to the 10 principles of the UN Global Compact. Likewise, the Global Reporting Initiative (related to the Global Compact) is being adopted by various Chinese estate firms.
Sustainable Banking Network. In 2012 a network of regulatory agencies was formed for the banking sector in emerging economies and committed to advancing sustainable finance aligned with international best practice. The Chinese Banks’ Association, the China Banking Regulatory Commission, and the Chinese Ministry of Environmental Protection.
Key international treaties recognized by China
Note: This is not a comprehensive list. The majority have been ratified and are in operation.
Convention on Biological Diversity (ratified)
International Covenant on Economic, Social and Cultural Rights (ratified)
UN Declaration on the Rights of Indigenous Peoples (China voted in favor)
Convention on the Rights of the Child (ratified)
Vienna Convention for the Protection of the Ozone Layer (ratified)
International Convention for the Protection of New Varieties of Plants (ratified)
Convention on the Conservation of Migratory Species of Wild Animals(non-binding)
Convention on International Trade in Endangered Species of Wild Fauna and Flora (ratified)
Ramsar Convention on Wetlands of International Importance (ratified)
International Tropical Timber Agreement (ratified)
United Nations Framework Convention on Climate Change (ratified)
Rio Declaration on Environment and Development (adopted by the UN and its member countries)
Convention Concerning the Protection of the World Cultural and Natural Heritage (ratified)
Kyoto Protocol (signed)
Analysis on Chinese guidelines
Chinese Outward Investment: An emerging policy framework. IISD and IIER, 2012. This is a compilation of more than 80 primary sources on legal rules and public policies relevant to Chinese foreign investment.
Understanding China’s Overseas Foreign Direct Investment: A Mapping of Chinese Laws and Stakeholders Oxfam Hong Kong, 2012. This publication highlights the legal and normative framework that applies to the foreign investments of Chinese firms.
Analysis of China’s overseas investment policies. Center for International Forestry Research. 2011. This document is about Chinese investment flows, the actors that participate, and the development of regulatory frameworks.
Environmental and Social Policies in Overseas Investments: Progress and Challenges for China. World Resources Institute. 2013. The report details the growth of Chinese investment at the global level, describes the principle Chinese governmental agencies involved in overseas investments, and explains the importance of environmental and social policies for preventing risks. It briefly describes collaborations between the International Financial Corporation and Chinese financial institutions, and the roles of government agencies in relation to banks and state firms.
Case studies on the implementation of Chinese guidelines
Benchmarking the Policies and Practices of International Hydropower Companies. International Rivers, 2015. This report seeks to understand the environmental and social policies of Chinese firms and compare them with international best practices in the sector, measure the implementation of these poliices, and advise firms how to improve performance. The report includes two cases in Ecuador, the Coca Codo Sinclair dam and Paute Sopladora.
Going out: but going green? Friends of the Earth and Banktrack, 2014. The report presents 7 case studies financed by Chinese banks. The studies analyze the implementation of Article 21 of the Green Credit Directive which refers to Chinese overseas investment. It signals the lack of transparency of information, poor relations between firm, bank, and the public, and a lack of observance of the rich to free, prior, and informed consent. The report recommends the creation of a department under the Banking Regulatory Commission.
China’s Mining Industry at Home and Overseas: Development, Impacts and Regulation and China Mining at Home and Overseas: Case Studies. Greenovation Hub, 2014. The first document presents information about the Chinese regulatory frameowrk and the institutions that regulate mining activity. The second presents four case studies in China, Peru, Laos y Cambodia. The study highlights the importance that firms conduct “due diligence” to evaluate passive and new environmental and social risks of operations that they are acquiring.
Corporate Social Responsibility for Respecting Human Rights in China and Globally. Peking University International Law Institute Beijing Rong Zhi Corporate Responsibility Institute Tracktwo Global Business Initiative on Human Rights, 2014. This is a publication from a project implemented with the participation of various companies, including some Chinese, about lessons regarding implementation of the UN Guiding Principles on Business and Human Rights relating to the UN Framework “Protect, Respect and Remedy.”
Altos y Bajos de las Salvaguardas: Cómo funcionan el BNDES, el Exim de China, el BID y la CAF. DAR, CDES, CEDLA Y Ambiente y Sociedad, 2014. Spanish. The report seeks to understand whether banks apply their safeguards during the project cycle and compare the quality of their application between banks. One of the case studies is the Coca Codo Sinclair dam in Ecuador, financed by the China Export-Import Bank, this case study was conducted by CDES, Ecuador.
China Development Bank’s overseas investments: An assesment of environmental and social policies and practices. FOE 2012. This report covers four case studies in Canada, Birmania, India, and Indonesia. It suggests that the social-environmental policies of the China Development Bank are more deficient than other international financial institutions.