China Development Bank's overseas investments

China Development Bank’s overseas investments: An assessment of environmental and social policies and practices China Development Bank’s overseas investments: An assessment of environmental and social policies and practices For more information contact: Friends of the Earth 2150 Allston Way, Suite 240 Berkeley, CA 94704 510.900.3150 Friends of the Earth is a bold and fearless voice for justice and the planet. We believe all people deserve to live in a healthy environment. BankTrack is a global network of civil society organisations and individuals tracking the operations of the private financial sector (commercial banks, investors, insurance companies, pen- sion funds) and its effect on people and the planet. BankTrack members share the ambition to help contribute to a private fi- nancial sector

accountable to society at large, whose operations contribute to creating healthy and just societies and preserve the ecological well being of the planet. Acknowledgements Special thanks to Adina Matisoff, lead author of this report. Many organizations helped review and contribute to it, includ- ing Green Watershed, Greenovation Hub, Greenpeace East Asia, International Rivers, Profundo, and Rainforest Action Network. We deeply appreciate their assistance, although any errors are the sole responsibility of Friends of the Earth US. We also gratefully acknowledge the financial support of the Ford Foundation, the C.S. Mott Fund, and the JMG Foundation. The views expressed in this report are those of Friends of the Earth and do not necessarily represent those of individual con- tributors to Friends of the Earth or the funding organizations. For more information on this and our other campaigns, visit www.foe.org. 2 China Development Bank’s Overseas Investments Table of contents Introduction …………………………………………………………………………………………………………. 4 Background ………………………………………………………………………………………………………….. 5 Capital raising …………………………………………………………………………………………………….. 5 Governance ……………………………………………………………………………………………………………..…….. 6 Overseas governance …………………………………………………………………………………………………….. 6 Sectoral focus ………………………………………………………………………………………………………………… 7 Geographic reach ………………………………………………………………………………………………………….. 10 Mechanisms for financing overseas investments ……………………………………………………….. 13 Energy-backed loans ……………………………………………………………………………………………….... 13 Loans to Chinese companies for overseas M&A ……………………………………………………..... 13 Private equity …………………………………………………………………………………………………………..... 15 CDB’s environmental policies and practice ……………………………………………………..... 16 Environmental policies ………………………………………………………………………………………….…..... 16 Green Initiatives ……………………………………………………………………………………………………..…….. 18 Environmental performance ………………………………………………………………………………….…..... 20 Transparency and accountability ………………………………………………………………………….……… 21 Controversial cases …………………………………………………………………………………………….. 23 China National Petroleum Corporation (CNPC) …………………………………………………….…….. 23 Sino-Myanmar oil and gas pipelines project, China National Petroleum Corporation (Myanmar) ………………………………………………………………………………………….…. 23 Canadian tar sands, China National Petroleum Corporation (Canada) ………………..…. 26 Ultra mega power plants, Reliance Power (Madhya Pradesh and Jharkhand India) …… 28 Asia Pulp & Paper (APP) Group (China and Indonesia) ………………………………………….…….. 29 Conclusion …………………………………………………………………………………………………………… 34 Friends of the Earth 3 Introduction infrastructure projects as a means of generating wealth in their own countries. Over the past several years, Chinese lending has had a powerful global impact, particularly through poli- However, the mining, oil & gas, large-scale hydro- cy banks such as China Development Bank and the power and large-scale agriculture sectors in which China Export-Import (Exim) Bank. These banks are CDB invests carry tremendous environmental and so- mandated to provide foreign currency loans and invest cial risks. Many of the countries in which these proj- overseas, and in 2009 lent more money to other devel- ects are located lack rigorous environmental and social oping countries than the equivalent departments of the protections. At the...

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