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.

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New Report on Conflict-Sensitive Business Practice (CSBP)

September 29, 2006

A new report Conflict-Sensitive Business Practice: Engineering Contractors and their Clients, has been prepared by Engineers Against Poverty and International Alert

Contractors operating in unstable states face a range of conflict risks. Oil, gas and mining projects, which frequently have significant contractor involvement, can inadvertently trigger or sustain violence, or become the focus of resentment themselves. Produced in partnership with Engineers Against Poverty, this guidance note is addressed both to engineering contractors and their clients. It examines some key issues related to conflict, contractors and conflict sensitivity, and introduces conflict-sensitive business practice (CSBP) – steps through which these issues can be understood and managed.

The report outlines some of the key costs of conflict to projects, which include:
Direct costs:

  • Security – Higher payments to state/private security firms; staff time spent on security management
  • Risk management – Insurance, loss of coverage, specialist training for staff, reduced mobility and higher transport costs
  • Material – Destruction of property or infrastructure
  • Delays – Lost time through site blockades or disruption of materials and services
  • Capital – Increased cost of raising capital
  • Personnel – Kidnapping, killing and injury; stress; recruitment difficulties; higher wages to offset risk; cost of management time spent protecting staff
  • Reputation – Consumer campaigns, risk-rating, share price, competitive loss
  • Litigation – Expensive and damaging law suits

Indirect costs:

  • Human – Loss of life, health, intellectual and physical capacity
  • Social – Weakening of social capital
  • Economic – Damage to financial and physical infrastructure, loss of markets
  • Environmental – Pollution, degradation, resource depletion
  • Political – Weakening of institutions, rule of law, governance movements

Training the oil and gas industry in human rights

August 11, 2006

It is excellent to see guidelines being released that can assist oil and gas companies manage difficult human rights issues. Although, such companies should also consider the value of obtaining some specialist expertise to help them customise the Toolkit, and provide practical advice that is related to the particular experiences and situations that they have already been faced with.

The Training Toolkit aims to raise awareness of human rights issues in the oil and gas industry. It provides managers with a template that can be used and adapted to conform to a company’s policy or position on human rights and applicable domestic laws and regulations. This Toolkit is not intended to be an in-depth instruction on how to conduct human rights training.

Company representatives should review the trainer’s manual prior to using the Training Toolkit to customise it to the needs of their particular circumstances. The trainer’s manual provides information on how to finalise the materials for a company’s specific purposes.

The toolkit examines the history and background of human rights and defines key risk areas for the oil and gas industry. The largest section of the toolkit deals with the engagement with stakeholders, including

  • Non-Discrimination
  • Employment Terms
  • Supply Chain Issues
  • Mitigating Community Impact
  • Indigenous People
  • Land Rights and Resettlement
  • Local Content
  • Relationships with Governments

The toolkit also presents dilemmas and scenarios that may arise form these engagements and presents a decision-making tool.

The Toolkit consists of four sections:

    1. a presentation with the key messages for use in a training session
    2. a workbook to be used in conjunction with the presentation
    3. a trainer’s manual
    4. a resource guide.