Report illustrates Chinese investments’ environmental & social impact in Latin America with cases of best practices & challenges

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22 June 2015

“A Line in the Equatorial Forests: Chinese Investment and the Environmental and Social Impacts of Extractive Industries in Ecuador”

Author: Rebecca Ray and Adam Chimienti, BU Global Economic Initiative

…After an examination of the Ecuadoran economy and its general engagement with China, this paper performs a case study on the experiences of Chinese state-owned Andes Petroleum and PetroOriental, in order to draw lessons for future Chinese investments for the upcoming expansion of Andes Petroleum’s concessions into the Ecuadoran Amazon that may test both Ecuador’s legal framework and Andes’ corporate goodwill. We find that the record of Andes Petroleum and PetroOriental have had relatively positive experiences in Ecuador to date when compared to other domestic and foreign-owned firms in the sector. However…this expansion is the first new concession under Ecuador’s recent law on prior consultation, and problems have already arisen in how the law has been applied. How the government, Andes Petroleum, and civil society handle this situation will determine whether the Ecuador-China relationship becomes a model of responsible oil production or whether it will betray the vision behind the country’s impressive legal framework. Special attention should be paid to transparency and public accountability for all actors involved: government, civil society, and the oil companies themselves.

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14 April 2015

Study finds Chinese firms can beat global peers on social responsibility

Author: Toh Han Shih, South China Morning Post

Although China's huge investments in Latin American resources have generated environmental and social problems, Chinese companies operating in the continent have sometimes surpassed global peers in terms of corporate social responsibility (CSR) said Chinese state-owned oil giant Sinopec had a better environmental record in Ecuador than most of its competitors...Chinalco Mining Corp International in Peru...built a new town with modern sanitation to relocate 5,000 local residents for the construction of its Toromocho copper mine...

Chinese standards still faced challenges when it came to enforcement...Latin American exports to China used twice as much water and emitted at least 12 per cent more net greenhouse gas emissions per dollar..."Chinese-financed infrastructure investments like dams and railways pose extremely serious threats for deforestation"...positive examples of Chinese corporate social responsibility were due to Chinese companies, Latin American governments and local civil society working together...

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14 April 2015

[PDF] China in Latin America: Lessons for South-South Cooperation and Sustainable Development

Author: Rebecca Ray, Kevin P. Gallagher, Andres Lopez & Cynthia Sanborn, Global Economic Governance Initiative, Center for Transformation Research, Research Center of the University of the Pacific, Global Development & Environment Institute

Latin America’s recent commodity boom accentuated environmental degradation and social conflict across the Americas. The Latin American commodity boom was largely driven by new trade and investment with China, and concentrated in the petroleum, mineral extraction, and agricultural sectors — sectors endemic to environmental degradation and often the source of social conflict over rights and working conditions... as China ‘goes global’ it is important to mitigate the social and environmental impacts of its global activities in order to maintain good relations with host countries and to reduce the potential risks associated with overseas investment. Although some Chinese firms have demonstrated an ability to adhere to best practices in the social and environmental arena, by and large and Chinese firms operating in Latin America thus far lack the experience or policies in place to lessen the impacts of their investments in the region... It is in the interests of the Latin American and Chinese governments, as well as Chinese firms, to put in place the proper social and environmental policies in order to maximize the benefits and mitigate the risks of China’s economic activity in Latin America...

[This Report refers to China National Offshore Oil Corporation (CNOOC), China Petroleum and Chemical Corporation (Sinopec), Jungie Mining, Soy and Iron exports, Solar panels imports, Sinochem, China National Petroleum Corporation (CNPC), Golden Dragon Affiliates, Shougang, Aluminum Corporation of China (Chinalco), and Zijin Mining Group.]

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