{"id":50005028,"date":"2016-02-02T17:31:50","date_gmt":"2016-02-02T17:31:50","guid":{"rendered":"https:\/\/stage.dialogochino.net\/?p=5028"},"modified":"2023-06-05T16:45:57","modified_gmt":"2023-06-05T15:45:57","slug":"5028-global-south-can-advance-sustainability-in-international-finance","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/climate\/5028-global-south-can-advance-sustainability-in-international-finance\/","title":{"rendered":"Global South can advance sustainability in international finance"},"content":{"rendered":"

The Global South is currently generating more new ideas about ensuring sustainable development through environmentally responsible finance than traditional sources of lending, according to a new report series<\/a> by Friends of the Earth<\/a> (FoE).<\/p>\n

Big national development banks from China and Brazil are now important players in development finance and can lead lenders from the West on innovative investment rules.<\/p>\n

\u201cAs major finance institutions, China Development Bank<\/a> (CDB) and the Export-Import Bank of China<\/a> (China Exim) will play a powerful role in promoting sustainability and environmental protection domestically and internationally,\u201d according to the first in a series of three reports entitled Emerging Sustainability Frameworks<\/em>. The series examines the environmental policies of Brazil\u2019s national development bank BNDES and two major Chinese banks – CDB and China Exim.<\/p>\n

CDB can downgrade a borrower\u2019s assets or even cancel their loans if they breach environmental regulations. BNDES can fine its clients and schedules the disbursement of funds to encourage adherence to its rules. Western-based multilateral development banks such as the World have long incorporated<\/a> social and environmental policies into their lending but emerging national banks have built on them, the report says.<\/p>\n

But despite these rules BNDES, CDB and China Exim still encounter considerable obstacles implementing their policies.  The absence of any effective mechanism to report violations within CDB and China Exim means they often go unpunished.<\/p>\n

Green history<\/strong><\/p>\n

In Brazil, \u2018sustainable development consistent with environmental consciousness\u2019 was enshrined in the National Environment Policy of 1981. In 1987, BNDES incorporated environmental considerations into loan packages with two resolutions that allowed the bank to levy fines on borrowers guilty of breaching environmental rules.<\/p>\n

In addition to strong top-down edicts, the world\u2019s second largest national development bank has also been responsive to pressure from civil society, which has frequently lobbied for tougher rules.<\/p>\n

\u201cThe greening of Brazil\u2019s financial sector has evolved in response to not only top-down government policy, but from other drivers such as court cases, voluntary industry commitments, and civil society concern,\u201d the report says.<\/p>\n

China\u2019s central government has released a succession of policies aimed at safeguarding sustainability in recent years that reflect the growing clout of its banks in international development financing.<\/p>\n

The People\u2019s Bank of China<\/a> and the State Environmental Protection Administration (SEPA) \u2013 the body responsible for environmental affairs before the establishment of China\u2019s Ministry of Environmental Protection<\/a> (MEP) \u2013 have pushed for more sustainable lending practices since 1995.<\/p>\n

In 2005 and 2006 the State Council introduced the \u2018two-highs\u2019 policies, which encourage limited lending to high polluting and high energy-consuming industries.<\/p>\n

But the 2007 Green Credit Directive<\/a> marked a \u2018major underpinning\u2019 of China\u2019s turn towards green finance. The policy requires banks to proactively evaluate loans based on environmental risks and monitor them throughout the loan cycle. In 2012 the policy was extended to apply to investments overseas<\/a>. However, serious breaches of the rules appear to have gone unpunished, raising questions<\/a> about their effectiveness.<\/p>\n

Whereas BNDES counts on internal units that carry out environmental impact assessments (EIA) and monitor environmental performance, CDB and China Exim do not appear to have in-house staff with environmental expertise to help vet and review the qualities of submitted EIAs.<\/p>\n

China Exim has come under fire in Latin America for not being up front about the risks of huge hydropower projects at which fatal accidents<\/a> have occurred. A 2014 report<\/a> by Peruvian NGO DAR<\/a> ranked China Exim unfavourably next to Latin American regional development banks in terms of disclosing the risks implied by their projects.<\/p>\n

The FoE report argues that transparency is an \u2018important prerequisite\u2019 in monitoring a project\u2019s impacts and exacting punishments consistent with policy.  Although CDB and China Exim have begun to \u2018green\u2019 their practices; \u201cmore work must be done to expand, standardize, and operationalize sustainable finance principles into practice,\u201d the report concludes.<\/p>\n

The G20 stage<\/strong><\/p>\n

China is currently chair of the G20, which offers a platform to showcase their green finance policies and gives impetus to existing national policies.<\/p>\n

\u201cThe G20 needs to explore ways to encourage greener financial institutions worldwide, and improve the capacity of capital markets in channeling resources to green industries, thus developing the environment-friendly economy,\u201d Xi declared on assuming the chair in December last year.<\/p>\n

The group held its first ever green finance study group<\/a> in Beijing last week.<\/p>\n

However, the ability of the G20 meetings to provide a platform may be limited since it involves only government representatives with no space for civil society participation.<\/p>\n

According to FoE, the Brazilian experience shows that a combination of stakeholders including industry, government and civil society is needed in order to \u201caccelerate a more robust and successful shift towards a green economy\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"

New report praises \u2018greening\u2019 Chinese and Brazilian banks but says transparency must improve<\/p>\n","protected":false},"author":40000225,"featured_media":50005030,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[761],"tags":[544,20000237],"hashtags":[],"country":[],"class_list":["post-50005028","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-climate","tag-finance","tag-sustainable-development"],"acf":[],"yoast_head":"\nGlobal South can advance sustainability in international finance | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"New report praises \u2018greening\u2019 Chinese and Brazilian banks but says transparency must improve\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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