China drafts environmental guidelines for firms investing abroad

September 16, 2008

China is drafting environmental guidelines for companies investing in or providing economic aid to overseas countries.

 The work is being undertaken by the Chinese Academy for Environmental Planning (CAEP), in cooperation with the Global Environmental Institute (GEI) and the University of International Business and Economics. The first draft is now being discussed, the GEI said.

 A report released by the CAEP last week said the country lacked comprehensive environmental protection policies in its overseas projects, although investment had been expanding.

 Statistics show that between 2002 and 2006, China’s overseas non-financial direct investment grew by 60 percent annually. By the end of 2006, 5,000 Chinese companies had set up nearly 10,000 directly invested firms and invested $90.6 billion in 172 countries.

China’s overseas investment and aid mainly focuses on exploring oil and other resources, processing, manufacturing, and construction in African and Southeast Asian countries. Without proper management, such projects are likely to cause environmental problems, the report said.

In April, several companies, including China Mobile, Haier Group, and China International Marine Containers, joined “Caring for Climate”, a voluntary UN initiative to combat global climate change. Liu Meng, director of UN Global Compact China Office, told China Daily earlier that these companies’ participation suggests that China’s business sector is catching up with its international counterparts on climate issues.

China National Petroleum Corporation, the country’s largest oil producer, has pledged to stick to stringent environmental requirements before deciding on overseas projects.

Currently, only four banks in China have either formulated independent environmental standards for financing, or have joined the United Nations Environment Program Finance Initiative to reduce environmental risks.


Chinese Banks would benefit from disclosed environmental policies

April 1, 2008

Banktrack has released an interesting report on the environmental performance standards of China’s financial institutions. The report recognises the need for policies to be put in place, as China’s financial institutions are becoming important players in financing environmentally and socially sensitive activities around the world.

The report found that:

Only two of China’s ten most important banks — China Development Bank (CDB) and the Export-Import Bank of China (Chexim) — have publicly-disclosed environmental policies…   … The rest of the eight banks surveyed had no publicly-available environmental financing standards.

There are also some encouraging sign that suggest progress is being made:

The Peoples’ Bank of China has recently developed a new credit database which includes borrowers’ environmental compliance data. This will allow Chinese banks to evaluate how well companies have followed environmental laws before offering loans.

The report also claims that many international banks, who own significant shares of Chinese banks, have the ability to institute world-class environmental standards through their strategic investment agreements. This is another example of the growing environmental demands being placed on international banks, and there needs to be careful consideration as to whether the demands are reasonable and if there is genuine scope for influence.


UNEP FI Sustainability Workshop in Mumbai, India

October 13, 2006

This promises to be an exciting event in consideration of the significant finance opportunities in India. Robert Tacon is an eloquent speaker on the subject of risk management and I anticipate this will be a highly insightful event.

 

UNEP FI Workshop: Mainstreaming Sustainability in Indian FIs
5 December 2006, Mumbai, India

Organised by the Outreach Group of the Asia Pacific Task Force, in close collaboration with UNEP FI Signatory YES BANK, the workshop is targeted at senior-level executives of Indian financial institutions.

The event will focus on sustainable finance and reporting. A CEO Luncheon ill be held in parallel, aiming to sensitise senior management on India’s sustainability challenge and the risks and opportunities faced by the financial sector. Speakers will include UNEP FI Head Paul Clements-Hunt, Robert Tacon, Head of Risk Reporting at Standard Chartered, Bart Jan Krouwel, Head of Sustainable Developments Department at Rabobank and Toshiro Nishizawa, Deputy Director General at Japan Bank of International Cooperation (JBIC).

This is the first such event to be organised by UNEP FI in the country.

For further information, please visit:
http://www.unepfi.org/events/2006/mumbai/index.html
Contact: ap@unepfi.org


Investment in emerging markets – opportunities for risk management and sustainability

October 2, 2006

Until the last few years, the conventional view towards investing in emerging markets was that sustainability considerations too often appeared subordinate to the quest for economic growth. Emerging markets are now seen by many in the investment community as a place where good rewards can be earned.
EIRIS had just completed a review of the opportunities for responsible investment in emerging markets, which reveals the possibilities for diversification and risk management for investors as well as wider potential gains for sustainability.

The report identifies factors hindering Socially Responsible Investment in emerging markets:

  • perceived lack of consistent and widespread good corporate governance
  • continuing government ownership and control such as with many large listed Asian companies that can be a critically important variable in Environmental and Social Governance performance
  • the retention of large controlling interests by families in many emerging market companies that limit the rights and influences of minority shareholders.
  • even where governance, environmental or labour regulations are strong in some countries, enforcement is sometimes weak.
  • doubts about the honesty of some disclosed information or its credibility. For instance, in relation to ISO14001, the reputation of those providing the certification is crucial for trusting the information disclosed.
  • difficulties in engaging with companies in emerging markets. Although language may be a factor in some cases, the corporate culture of many companies is not yet responsive or attuned to international investors especially relating to environmental and social issues.
  • a limited number of third party organisations in these countries or regions to undertake the research required on companies. The Iinternational Finance Corporation is undertaking initiatives to facilitate and increase this research capacity.

2005 was a record year for investment in the renewable energy sector

August 23, 2006

Investment rose from from USD 30 billion in 2004 to USD 38 billion in 2005. A REN21 report estimates that at least 85 renewable energy companies or divisions have market valuations greater than USD 40 million, up from 60 companies or divisions in 2004. The estimated total market valuation of companies in this category is USD 50 billion, double the 2004 estimate, as several high-profile initial public offerings have recently taken place. The solar PV industry invested record amounts in new plant and equipment (about USD 6 billion), as did the biofuels industry (more than USD 1 billion).

In the last year there were many new policies adopted to support renewable energy, and several more were extended, revised, or discussed. Not only were the EU and US active, but more than 16 developing countries as well, including Brazil, China, Egypt, India, Mexico, Thailand, and Uganda.

A number of countries dramatically stepped up targets and mandates for biofuels – ethanol and biodiesel mixed with conventional fuels. The number of countries with “feed-in” policies for the purchase of power from renewable sources increased to 41, and the number of countries with future targets for the share of energy from renewables increased to at least 49.


India has become the world’s third most attractive market for renewable energy

July 31, 2006

India has become the world’s third most attractive market for renewable energy investment, displacing Germany in the top three, according to Ernst & Young. The UK has also pushed ahead of Germany to fourth place, following the publication of the government’s energy review this month.

“India’s rise to third overall … has been precipitated by excellent national and regional government support for both foreign and local investment in renewable technologies,” the consultancy says in its latest quarterly Renewable Energy Country Attractiveness Index. “Consequently, rapid growth is expected to continue in this market.”

The report notes that installed renewables capacity in India – currently standing at 8GW – is now expected to double every five years, and is forecast to reach 20GW by 2012, twice the government’s target. Full article in Environmental Finance Magazine.

Ashok Toshniwal has provided some valuable comments on the Renewables Market in India (below):
The Hector Molina Sugar Cane Biomass Project provides an interesting example of how project finance risks can be reduced to allow early penetration into renewables markets.


First CSR Report by a Chinese Bank, and China’s first SRI Fund

July 25, 2006

The first CSR report by a Chinese bank has been released. The Shanghai Pudong Development Bank (SPDB), with 26 branches and 350 ATMs and total assets of 573.1 billion RMB and foreign currency reserves of 377.2 billion RMB, published its 26-page report in Chinese online. It provides some insight into how Chinese banks may understand CSR and what reporting might look if other mainland banks start reporting.

So far, no Chinese banks have signed up to the Equator Principles (although Citigroup is, which owns 4.2 percent of SPDB).

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Stephen Frost, CSR Asia Weekly, Vol. 2, Week 28

 

China’s first SRI fund

 

The Bank of China has launched the first responsible investment fund. According to the fund managers, the Sustainable Growth Equity Fund aims to capture investment opportunities by assessing companies’ growth potential as well as the sustainability and prudence of their business model. The focus will be on companies that possess core competence, good corporate governance, innovative capabilities as well as a sense of social responsibility.

Given the continued debate about the returns on long established responsible investment funds in the US and Europe, no doubt this fund’s success will be watched with great interest. Posted by Michael Jarvis on July 25, 2006