Need to manage environmental and social risks in overseas investment

On Dec 14, 2012, I participated in a side-event organized by the World Resources Institute (WRI) on the topic of managing environmental and social risks in China's overseas investment. The event was held in conjunction with the China Council for International Cooperation on Environment and Development (CCICED) Annual Meeting at Diaoyutai State Guesthouse.

CCICED is high level environmental policy consulting body composed of senior officials and experts from home and abroad to provide policy advice to the State Council. It is currently chaired by Vice-Premier Li Keqiang.

The event aimed to provide policy recommendations to the State Council.

The 40 participants were made up of distinguished CCICED members and representatives from ministries, such as the Ministry of Environmental Protection (MEP), Ministry of Commence (MOFCOM), Ministry of Agriculture (MOA) and National Development and Reform Commission (NDRC). Representatives from influential think tanks, such as the International Environmental Policy Research Institute, Center for Global Environmental Policy, Chinese Academy of Social Sciences, and PetroChina's Research Institute of Petroleum Exploration & Development were also present.

After listening to the event keynote speech by doctor Hu Tao, Senior Associate of the World Resources Institute, I began to understand why the topic of "Managing Environmental and Social Risks of China's OFDI" is so important. Without an appropriate environmental and social management system, China will have more tension with host countries when going global. Managing environmental and social risks is a key factor in the implementation of China's "Peaceful Rising Strategy" and "Going Global Strategy". Xu Qinghua, Deputy SG of the CCICED, said that China must control the environmental risks of its OFDI.

During the event, doctor Arthur Hansen, Chief Advisor of the CCICED, spoke of his experience in China's investment in Canada and highlighted possible miscommunications of China's actions. Canadians like China's investments but dislike the behavior of Chinese companies. Interestingly, he said more and more Canadians love to hate China – this is the image of China's investment in Canada. Such an image is inevitably harmful for China's development. Unless the Chinese government implements appropriate policies, this image will continue.

Fortunately, doctor Hu of WRI informed me that a policy suggestion to curb this trend will be submitted to State Council and MEP via the CCICED secretariat. He explained that China's national image is easily damaged by a few individual investors' behavior. It is therefore crucial for the Chinese Central Government to be aware of this risk and establish relevant regulations. He said WRI would recommend more stringent environmental and social standards for investments.

The event highlighted that CCICED can provide a good platform to tackle the issue of a tarred Chinese image. Leading research organizations in the field can also help by analyzing and drawing policy recommendations from comprehensive case studies of managing environmental and social risks in China's overseas investments. The CCICED secretariat can then distill and pass significant policy recommendations to the State Council Premier directly.

Not only is the WRI CCICED-event, the fine food at Diaoyutai State Guest house fabulous too!

Jiao Xiaoli is a freelance writer of China Daily