Collaboration with Governments and Corporations Through Safeguard Policies: NGO's Perspectives - Presentation

This presentation focuses on the public finance for overseas investments or trades as an effective arena where governments, private companies and civil society groups can collaborate to enhance CSR in Asia.

Mekong Watch was established in 1993 with the aim of addressing and preventing negative environmental and social impacts of development in the Mekong Region. One of our approaches has been to work with public financial institutions in Japan to promote environmentally and socially sound investments and trades in developing countries. In particular, we have closely worked with the Japan Bank for International Cooperation (JBIC), which is the second largest Export Credit Agencies (ECAs) in the world providing loans or guarantees for overseas investments and trades with annual commitments of US$14billion.

When JBIC decided to establish its new safeguard policy called the "Guidelines for Environmental and Social Considerations" (hereinafter, "Guidelines") in 1999, the study group was formed voluntarily among responsible directors of JBIC and line-ministries, academics and NGOs. Some expected the Guidelines to screen out "destructive business" in early stage in order to avoid unnecessary environmental and social cost, some hope them prevent public financed projects from destroying livelihoods of affected people. This study group submitted the recommendation to JBIC after 17-time meetings and most of the recommendations were incorporated into the final version of the Guidelines by JBIC. In the process to constitute the Objection Procedures as their compliance mechanism, a couple of major industrial groups turned to joining the public forum to protect their business opportunities. In this sense, the JBIC’s Guidelines and their compliance mechanism are products of collaboration among the government, companies and civil society groups.

We can see positive outcomes brought by the new Guidelines after 5 years have passed since their establishment. There are at least a few cases in Asia in which JBIC did not provide loans with the projects which had lack of mitigation and compensation measures for the people who should be resettled or will be negatively affected by the projects. In these cases, Japanese trade companies expected the loan from JBIC to export equipments. During the first 5 years, no "Objections" have been filed by affected people in accordance with the Guidelines. On the other hand, the commitments of JBIC for private investment and guarantees are increasing in amount. It implies that while the advanced environmental and social policy has restrained some of destructive business, it does not reduce the business opportunities on contrary to initial worries of the industry groups. The financial sector would be a quite effective arena where various actors can collaborate to enhance CSR in overseas investments and trades.

However, some challenges are also found out. First is a relative decrease of public finance in its importance due to diversification of private financial resources in Asia such as bond markets and stock markets. Second is an increasing financial capacity of emerging donor/lender countries such as China, India and Thailand. Since these countries are not OECD members, various common rules of OECD countries are not applied for them. Mekong Watch co-organized with a few Chinese NGOs the workshop on Chinese finance and environment in December 2006 in Beijing. High-rank staff of JBIC and Mizuho Corporate Bank, which is one of the Japanese mega banks, participated into the workshop and presented their policies to avoid environmental and social negative outcomes from their financed projects and to promote finance for sustainability. It is a small but crucial first step for NGOs in China and Japan to collaborate with governmental agencies and private banks to enhance CRS in Asia.

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