{"id":36820,"date":"2020-01-30T10:00:00","date_gmt":"2020-01-30T10:00:00","guid":{"rendered":""},"modified":"2020-06-20T18:25:59","modified_gmt":"2020-06-20T18:25:59","slug":"11820-banks-need-to-take-belt-and-road-environmental-risks-seriously","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/11820-banks-need-to-take-belt-and-road-environmental-risks-seriously\/","title":{"rendered":"Banks need to take Belt and Road environmental risks seriously"},"content":{"rendered":"

China\u2019s Belt and Road Initiative (BRI) is intended to catalyse the economies of countries around the globe.<\/p>\n

Yet BRI projects overlap some of the most ecologically fragile places on earth. The multi-trillion-dollar initiative \u2013 to build transcontinental networks of roads, railways and ports, studded with dams, mines, power plants, and solar and wind farms \u2013 has its environmental impacts. These include air and water pollution, soil contamination and erosion, habitat and wildlife loss.<\/p>\n

For project developers and funders, failure to address these impacts can translate into regulatory and reputational risks. So they need to take mitigation seriously.<\/p>\n

Risks confronting developers can include penalties, legal action and backlash from communities causing project delays and even closures. According to a 2018 study<\/a>, 14% of BRI projects in 66 countries have faced some kind of local pushback.<\/p>\n

Problem projects<\/h2>\n

At the Myitsone dam in Myanmar, Chinese developers and investors faced the worst-case scenario, locking in funds indefinitely after the dam was suspended mid-construction on environmental grounds. Fishing communities feared the project would jeopardise their livelihoods and obstruct fish migrating upstream to spawning areas. The dam was shelved after sustained local and international opposition, leaving China Power Investment Corporation (CPI) and the investor China EXIM bank in limbo.<\/p>\n

A dam in Indonesia\u2019s Batang Toru rainforest funded by the Bank of China (BOC) was also met with significant local and international opposition and litigation as it threatened the only habitat of the rare and critically endangered Tapanuli orangutan<\/a>. Cambodia\u2019s proposed Sambor dam<\/a>, dubbed an imminent environmental disaster for the Mekong river, faces similar problems.<\/p>\n

Pressures on state banks<\/h2>\n

Environmental risks can spill over to affect project financers. They may face loan defaults or find themselves forced to withdraw funding where they have failed to vet projects pre-emptively or to ensure risk management during implementation. For example, unrelenting opposition from environmentalists forced BOC to re-evaluate its funding<\/a> to the Batang Toru dam last year.<\/p>\n

Six Chinese state-owned banks (CDB, CHEXIM, BOC, ICBC, ABC, CCB) have reportedly<\/a> provided more than 90% of BRI\u2019s financing, which puts them at disproportionate financial risk from BRI\u2019s environmental impacts.<\/p>\n

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How green\u00a0is the Belt and Road?<\/h2>\n<\/header>\n
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