China adopts new Green Development Guidelines for Foreign Investment and Cooperation

On July 16, 2021, the Ministry of Commerce (MOFCOM) and the Ministry of Ecology and Environment (MEE) of China issued the “Green Development Guidelines for Foreign Investment and Cooperation” (hereinafter referred to as the 2021 Green Guidelines see link to full document at end of this article). 

The Guidelines focus on both investment and trade. With MOFCOM being responsible for regulating Chinese overseas projects including their environmental standards, while MEE is responsible for providing concepts and knowledge, these Guidelines must be considered highly influential in pushing for a green BRI where enterprises should “follow international green rules and standards” in their overseas economic activities.

Green BRI Guidelines

Compared with the previous policies, the 2021 Guidelines are significant for three reasons:

• first, the document clearly emphasizes “international green rules and standards”, driving Chinese overseas investments to go beyond “host country rules”;

• second, it is built on internationally consolidated guidelines;

• third, it expands from environmental protection and pollution control previously considered as the bare minimum in the 2013 Guidelines, to include more international ‘best practice’ climate and biodiversity protective measures in the new version.

Highlights of the Guidelines 

The key highlights can be summarized as:

• Chinese enterprises should adhere to “international green rules and standards”, where those are more stringent than “host country rules”; 
  
• Chinese enterprises need to “green” their overseas investments across the whole project lifecycle – from planning and evaluation to implementation and reporting;
  
• All three environmental aspects of pollution control (including solid waste, noise, waste gas), climate change, and biodiversity are building blocks for green development;
  
• Local stakeholder consultation and complaint mechanisms (i.e. grievance mechanism) is encouraged for better alignment with local needs;
  
• Specific industries are promoted, particularly clean energy (wind, solar, nuclear and biomass), better
  supply chain and green industry chains;
  
• Green technology innovation overseas is promoted, e.g. by setting up R&D centers, incubators, conducting joint research and attract overseas talents;
  
• China aims to pursue an open development model and take the lead in international cooperation and competition, including making Chinese companies “into world front-runners in green economy”
  
• The Guidelines are not limited to BRI cooperation, but to all overseas investment and cooperation activities with Chinese participation.

The Guidelines apply to entire Project Life-cycle

By stipulating a whole green lifecycle approach, the document specifies project activities and responsibilities, particularly of enterprises doing projects overseas:

1. In the project planning and evaluation phase, Chinese enterprises shall actively fulfill their environmental responsibilities, including complying with the host countries’ laws and regulations, and promoting the coordinated development of the local economy, society, and ecological environment. Chinese enterprises are encouraged to follow international common practices for the Environmental Impact Assessment (EIA) and due diligence, and identify potential environmental risks (before an overseas investment decision is taken) (Article 2 – Promote green production and operation); If the host country lacks relevant laws and regulations, or the environmental standards are deemed lax and insufficient, Chinese enterprises are encouraged to adhere to international organizations/multilateral agencies’ common standards or Chinese standards for their overseas investments and cooperation (Article 7 – Prevent ecological and environmental risks). 
   
2. In the project execution and implementation phase, Chinese enterprises shall conduct ecological and environmental risk prevention measures and improve the capacity of ecological and environmental management. Chinese enterprises are stipulated to follow the host countries’ rules and standards and take reasonable and necessary measures to reduce or mitigate adverse environmental impacts. They are asked to enhance the early-warning mechanism for environmental risks, and formulate contingency plans for environmental accidents and emergencies (Article 7); They are also encouraged to communicate more and often with host country governments, media, local communities and environmental NGOs while fulfilling environmental and social responsibilities (Article 10 – Enhance the reputation of green development) (albeit, the goal of Article 10 is clearly to promote Chinese green business credentials and dispel any other information “eliminate the impact of bad press”). 
   
3. In the project reporting and disclosure phase, regulators will consolidate the monitoring and analysis of the green development and improve the information-based supervision (Article 9 – Optimize green regulatory services). 
   
4. Throughout the project lifecycle, Chinese enterprises are propelled to comply with international requirements, including but not limited to the United Nations Framework Convention on Climate Change (UNFCCC), the Convention on Biological Diversity (CBD)^[1], the 2030 Sustainable Development Goals (SDGs), Green Investment Principles for BRI (GIP) (Article 8 – Comply with international green rules and standards). 

Read the full Green BRI Centre article here:

https://green-bri.org/interpretation-of-the-green-development-guidelines-for-foreign-investment-and-cooperation/

Source: Green Belt and Road Initiative Centre, 26 July 2021

Link to the English translation of the Green Development Guidelines for Overseas Investment and Cooperation

https://www.clientearth.org/latest/documents/green-development-guidelines-for-overseas-investment-and-cooperation-english-translation/