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Critic says responsible Belt and Road investments are in the hands of Chinese bankers and investors

Author: South China Morning Post (Hong Kong), Published on: 14 June 2019

“China’s promise of responsible belt and road investments is in the hands of its bankers”, 12 June 2019

… Chinese banks and corporations have been reinforcing a negative reputation with local people in places like Kenya, Myanmar and Peru, where Chinese-supported projects are taking root… [the] investment approach which ignores community feedback is costing Chinese firms dearly…

… Regulators in China seem to be considering a new, wider interpretation of “green”, including the potential adoption of accountability frameworks for Chinese overseas investment. These frameworks, which are meant to protect the environment and local people and give them a way to raise grievances and receive remedies, have been a mainstay of multilateral development lending for decades. Although the affected communities have struggled to access tangible remedy through many of these existing accountability frameworks, they have at least provided a direct avenue to voice their grievances with investors, often when engagement with local-level project developers is not possible…

… the Asian Development Bank presented a draft policy it developed with funding from China, announcing it as the basis for discussion and possible adoption by Chinese financial institutions. It was a solid draft… The draft has the potential to launch an accountability office for Chinese finance that would – at least on paper – start to plug a currently glaring gap.

In the Chinese context, there are two essential elements needed to move safeguards and accountability forward: first, top-down leadership mandating them, and second, a clear business case for why they matter…  Investors must understand these losses as resulting from poor social and environmental risk management in order for them to make better business decisions. And for the few bankers and policymakers who are getting information about local grievances and who are seeing the daily news stories about reputational harm, they cannot help but start to act on it.

… it is imperative that Chinese financial institutions move quickly on implementing effective safeguard and accountability frameworks as China continues to invest abroad…

Read the full post here