Chinese banks ‘ten years behind’ on environmental standards

Financial institutions in China are lagging behind leading international lenders when it comes to ensuring the projects they are backing meet basic environmental standards.


A report published by Friends of the Earth USA and Bank Track, an NGO which acts as self-appointed watchdog of global financiers, suggests that both private and state-run banks in China are failing to meet widely accepted standards when it comes to environmental responsibility.

As Chinese companies quickly expand their operations overseas, so do the banks which back them.

Chinese financial institutions, for example, are now the leading lenders in Africa meaning the policies they follow will have a huge impact on whether development of the continent proves to be sustainable in years to come.

According to the NGOs’ report, however, China’s banks are currently stuck in a mindset which those in the industrialised West shook off a decade ago.

“Despite their new and influential role, Chinese banks have not yet adopted policies that are comparable to those of leading international lenders,” says the report.

“Especially among the commercial institutions, Chinese banks currently view environmental issues as a matter of charity rather than a core business issue – similar to how international banks viewed their environmental responsibility ten years ago.”

The report also raises questions about the transparency of China’s banks, highlighting that although government standards say they should have policies requiring borrowers to act in line with environmental laws, only two of the country’s biggest ten banks publish such a policy – and the backing of controversial projects questions whether or not these even these two implement them.

The report also contains a dossier giving examples of socially and environmentally dubious projects currently backed by Chinese banks, including a number of dams which will lead to water poverty and displacement of thousands of people, industrial installations which pollute their environment and necessitate the unsustainable use of natural resources and poorly situated mines which are destroying great ape populations and damaging other wildlife in their vicinity.

Sam Bond

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