20th January 2022
A report on the alignment and implementation of the two key frameworks for greening finance in China’s Belt and Road Initiative (BRI) has been released this week by a partnership including ClientEarth.
The report is the final outcome of the year-long project “Harmonisation and Capacity Building for Green Finance in Belt and Road Investments”, in which ClientEarth is an implementing partner, along with the Belt and Road International Green Development Coalition (BRIGC), and Beijing Institute for Finance and Sustainability (BIFS).
The project engaged with the largest Chinese financial institutions that invest in BRI projects, to make the BRI more sustainable. It was funded by the UK Partnership for Accelerated Carbon Transition (UK PACT), a capacity-building programme created by the UK Government to support countries around the world to accelerate their climate change mitigation efforts.
Initiated by the Chinese government in 2013, the BRI is the world’s largest infrastructure development strategy. It has a huge scale, covering over 60 countries and including projects worth an estimated 448 billion USD between 2014 and 2018.
While the BRI represents a chance for many developing countries to fund much-needed roads, ports and transport infrastructure, it has given rise to many concerns about the potential environmental impacts. The construction of power plants and infrastructure projects have been points of particular concern.
These risks have been acknowledged by the Chinese authorities, and efforts are underway to create safeguards and environmental standards for such investments. Chinese president Xi Jinping’s announcement in September 2021 that China would no longer build coal plants abroad was a significant step in this direction.
The report draws on the workshops ClientEarth held with Chinese financial institutions over the course of the year. Written by Chinese and international experts, it focuses on the two main frameworks created to promote green investment in the BRI: the government-led Green Development Guidance for BRI projects, advanced by BRIGC and partners; and the sector-led Green Investment Principles, established by the China Green Finance Committee and the City of London, and already counting 40 signatories in 14 different countries.
The report compares the two initiatives and makes recommendations towards their alignment and further implementation. It finds that the two frameworks are highly compatible, and equip both China and other BRI countries with important means to reduce environmental risks in investments.
The report also makes recommendations, including the further development of practical tools, such as on how to conduct information disclosure and public participation, as well as increased capacity building with financial institutions and the authorities in recipient countries, and continued collaboration between the two secretariats to ensure ongoing alignment between the two initiatives.