China has adopted a raft of new measures in an effort to make BRI projects more environment-friendly.

The Ministry of Commerce announced last week that it has formally adopted the measures, which include applying international standards on sustainability. Until now, BRI projects were only required to adopt host country practices.

The measures were hailed as a “truly important step for China’s overseas finance” and will include pollution control, climate change and biodiversity protection, alongside local community inputs.

A Ministry of Commerce spokesman said that work was progressing on supply chain innovation and around key areas “such as enhancing innovation capability, promoting coordinated and green development, improving the level of openness and promoting security and stability, so as to further improve the modern supply chain system and modernise China's industrial chain and supply chain.”

The measures will ensure a ‘green development concept’ throughout the entire process of foreign direct investment and cooperation, and ensure environmental impact assessments and due diligence are carried out in accordance with internationally accepted standards.

The Ministry of Commerce stated: “If the host country does not have relevant laws and regulations, or if the environmental protection standards are too low, encourage enterprises to adopt the standards prevailing in international organisations or multilateral institutions or Chinese standards for investment and cooperation activities.”

The measures also include consulting local communities in the design process and throughout the investment, building a green brand of ‘China Construction’ and creating green overseas trade zones with low environmental impact development, as well as promoting green technology cooperation.

An important step

Dr Christoph Nedopil Wang, Director of the IIGF BRI Centre, said: “It’s a truly important green step for China's overseas finance. On July 16, the Ministry of Commerce together with the Ministry of Ecology and Environment released the "Guidelines for the Green Development of Foreign Investment Cooperation.

“A lot of our work comes to fruition here. The guidelines are a significant step forward. They build on existing Chinese guidelines for overseas finance.

“The guidelines incorporate many of the recommendations developed through consultative processes with Chinese and international partners, including WRI, ClientEarth and WWF. “Obviously, I am happy to have contributed as one of the authors to the Green Development Guidance from its inception in December 2019 to its publication in December 2020.”

“The Green Development Guidance with the Traffic Light System has been an intense consultation process with even more partners, including Chinese, multilateral and international financial institutions, research organisations, government agencies and NGOs. 

“The new guidelines particularly incorporate a number of key elements. They focus on all three aspects of green: pollution control, climate change and biodiversity protection. They explicitly integrate all project phases for green overseas finance, from inception to implementation and reporting, and they explicitly integrate Chinese, international or multilateral environmental standards for project evaluation and stakeholder integration, particularly in countries whose institutions are not sufficient to properly reduce environmental risks, with focus on green technologies in energy, and green innovation.

“The next step is to give the guidelines more teeth and build capacity  both in China and internationally, for example in financial institutions, project developers, host countries, to apply these guidelines together with the Traffic Light System to foster green development.

“Furthermore, commercial financial institutions should receive their independent framework, not through MOFCOM, which is the ministry responsible for enterprises, but through relevant regulators for the financial sector in cooperation with BRI ministries.

The world is still facing climate change, biodiversity loss and pollution, while the economic development gap is still looming large. It can only be tackled by building bridges and working together on our common challenge.”

According to S&P Global, in the first half of this year, China recorded 29 green bonds issues overseas with a total value of $10.2 billion, compared with a total value of $8.5 billion under 19 bond issuances for all of 2020.

(Writing by Charles Lavery; Editing by Anoop Menon)

(anoop.menon@refinitiv.com)

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