Appendix 2: Text of Relevant Laws, Regulations and Guidelines

World Commission on Dams (2000) key Recommendations

Summary by International Rivers.

1 Development needs and objectives should be clearly formulated through an open and participatory process, before various project options are identifIed.

2 A balanced and comprehensive assessment of all options should be conducted, giving social and environmental aspects the same signifIcance as technical, economic and financial factors.

3 Before a decision is taken to build a new dam, outstanding social and environmental issues from existing dams should be addressed, and the benefits from existing projects should be maximized.

4 All stakeholders should have the opportunity for informed participation in decision-making processes related to large dams through stakeholder flora. Public acceptance of all key decisions should be demonstrated. Decisions affecting indigenous peoples should be taken with their free, prior and informed consent.

5 The project should provide entitlements to affected people to improve their livelihoods and ensure that they receive the priority share of project benefits (beyond compensation for their losses). Affected people include communities living downstream of dams and those affected by dam-related infrastructure such as transmission lines and irrigation canals.

6 Affected people should be able to negotiate mutually agreed and legally enforceable agreements to ensure the implementation of mitigation, resettlement and development entitlements.

7 The project should be selected based on a basin-wide assessment of the river ecosystem and an attempt to avoid significant impacts on threatened and endangered species.

8 The project should provide for the release of environmental flows to help maintain downstream ecosystems.

9 Mechanisms to ensure compliance with regulations and negotiated agreements should be developed and budgeted for, compliance mechanisms should be established, and compliance should be subject to independent review.

10 A dam should not be constructed on a shared river if other riparian states raise an objection that is upheld by an independent panel.


State Council's "Nine Principles on Encouraging and Standardizing Foreign Investment"

Unofficial translation (October 25, 2007)

In order to seize economic globalization and regional cooperation opportunities, and encourage qualified enterprises to actively and steadily participate in international economic and technological cooperation, and to further enhance the level of opening up, the meeting stressed:

1 Insistence on mutual respect, equality, and mutual benefit, complementarity and win-win cooperation.

2 Strengthening of policy guidance, coordinating and standardizing orderly and rational distribution, preventing disorderly competition, and safeguarding national interests.

3 Improving the policy-making mechanism, the implementation of overseas investment enterprises, the autonomy of scientific studies and careful decision-making, and prevention of investment and operational risks.

4 Strengthening supervision of state-owned assets overseas, and supervision of sound evaluation and examination systems, establishment of security risk assessment and project cost accounting systems, and preserving and increasing the value of assets.

5 Complying with local laws and regulations, and adhering to fair, transparent public works project contracts, making a commitment to and fulfilling the necessary social responsibility to protect the legitimate rights and interests of local employees, paying attention to environmental resource protection, caring for and supporting the local community and people's livelihood.

6 Increasing the level of offshore project building contracts, improving product quality and efficiency, and constantly enhancing overall competitiveness.

7 Strengthening safety training, improving safe production responsibility systems, increasing protection of foreign funded enterprises, institutions and property safety.

8 Accelerating personnel training, paying attention to the cultivation of operating in the international talents, and enhance their transnational operations management capabilities.

9 Creating a friendly environment for public opinion, walking the road of peaceful development policy, and preserving our good image and a good corporate reputation.


Environmental Protection Policy of China Exim Bank

1. Environmental Management Policy

The core of the policy is to adopt preventive measures and enhance environmental management, in order to not produce and to produce less environmental pollution and destruction. the main measures include:

(1) To include environmental protection into the national economic and social development plan and the annual plan. to deal with environmental pollution and ecological destruction amid economic development.

(2) To strictly enact environmental impact assessment and the "three synchronized approach" for the construction projects, i.e. the design, construction and operation of the core project and pollution prevention facilities should be synchronized. Now, over 95% of construction projects comply with such requirements in China.

(3) To improve the environmental legislation, law and regula-tions, so as to bring environmental management into a legal and regulatory framework.

(4) To improve the environmental management institution.These institutions, which are formed at four levels of administrations, from central, provincial, municipal to county level, will implement environmental management according to law. State Council's departments and corporations can also building corresponding institutions to manage its own sector or corporations' environmental problems.

2. Environmental Economic Policy

It mainly includes capital investment and tax return or exemption policies:

(1) Corporations to include the expenditure incurred due to pollution abatement into the fixed assets investment plan.

(2) To give financial support to the national major pollution abatement and ecological protection projects; municipal government to spend the budget of municipal maintenance in the construction of environmental facilities; to levy the discharge treatment fee for pollution abatement.

(3) Tax return or exemption policies

  • Income Tax Incentives: those who make use of waste water, waste gas and waste residue as raw materials for production will have the partial or full tax return in five years;
  • Exemption for adjustment tax on directing investment: those who build sewage treatment plants and comprehensive resources utilization projects, the fixed assets adjustment tax on directing investment is set at zero;
  • Value-added tax exemption: those who use corollary waste, fly ash and other waste residue as raw materials for construction materials, and those who use waste liquid and waste residue to extract gold and platinum can have value-added tax exemption;
  • Construction tax exemption: the pollution abatement project at sources, when applying for premium loan, can have construction tax exemption;
  • Custom tax exemption: to impose fixed (lower) tax rate for the imported municipal and paper mill sewage treatment equipment;
  • Consumption tax reduction: to impose a 30% reduction of consumption tax for the production and sale of low emission cars, including sedan vehicles, sport utility vehicles and coach cars;
  • Tax return on specialized agricultural products: The specialized products due to the grain for green, restoration of forests and grassland policies will have 10 year specialized agricultural product tax exemption.

3. Environmental Technology Policy

Its purpose is to raise the energy and resources utilization efficiency, and reduce the pollutant's discharge. The main measures include:

(1) When taking the technological improvement measures, the industries should adopt advanced technique and clean production technology so as to raise resources utilization and energy efficiency;

(2) to impose a phase-out plan for the backward technol-ogy and equipment in corporations that waste energy, resources and pollute environment, according to the environmental law,

(3) Corporations should use non-toxic, harmless or lowly toxic, lowly harm materials during production.

4. Environmental Industry Policy

During the strategic adjustment of economic structure, we should promote the improvement of environmental industry, raise the technological elements in the environmentally friendly products and implement measures to promote socialization of environmental industry, and make environmentally friendly products marketable and standardized.

5. International Cooperation on Environmental Protection

China has been paying high level of attention to international cooperation on environmental protection. When seriously playing our part in environmental protection, China actively takes part in international environmental affairs. China aims at promoting regional and global cooperation together with a new partnership, so as to speed up the progress to resolve environmental problems. China emphasizes the respect for national sovereignty amid international cooperation, and take the national interests of different countries and long-term interests of the world into consideration when handling environmental problems.

6. China Exim Bank's environmental protection policy

China Exim Bank is paying a high level of attention to our funded projects' environmental impacts. We enhance environmental monitoring and management before, during and after the project implementation.

(1) Before - Project Review

China Exim Bank considers projects' environmental impact assessment as one of the basic requirements and elements during the project review. We require the funded projects to conduct feasibility study of environmental impacts, and obtain endorsement or approval from the recipient country's environmental administration. Those projects that are harmful to environment or do not gain endorsement or approval from environmental administration will not be funded. This policy is enacted throughout over thousands of China Exim Bank's funded projects.

(2) During - Project Examination

China Bank conducts regular examination for project implementation, which includes the project's environmental impacts.

Once any unacceptable negative environmental impacts result during the project implementation, China Exim Bank will require the implementation unit to take immediate remedial or preventive measures. Otherwise, they will discontinue financial support.

(3) After - Post-project review

When the project is stopped or completed, China Exim Bank will conduct post-project review in project implementation and completion status, and its impacts. Environmental assessment is a necessity in the post-project review. According to the post-project review, China Exim Bank will revise the measures taken before and during the project implementation for similar projects. If necessary the related requirements and policies will be fully revised.


China Exim Bank Guidance for the Environmental and Social Impact Assessment of Loan Projects

Excerpt; unofficial translation; the full guidance can be found at, China Exim Bank (August 2008)

Article 12, offshore project assessments should abide by the following principles:

(1) Environmental impact assessment should be done dur-ing the pre-loan and loan-period review, and monitoring of environmental impacts should occur during post-loan management.

(2) The host country's environmental policies and standards are the basis for evaluation. Offshore projects should abide by the requirements of host country laws and regulations, and should obtain corresponding environmental permits.

When the host country does not have a complete environmental protection mechanism or lacks environmental and social impact assessment policy and standards, Chinese standards or international practice should be referred to.

(3) Respect for local peoples' rights to land and resources,and proper handling of resettlement problems.

(4) For projects that have serious negative impacts on the local environment, open consultation with the public in accordance with the host country's requirements.

Article 13, China Exim Bank follows these procedures of environmental and social assessment for offshore projects:

(1) The borrowers or project owners hand in the approval document and environmental and social impact assessment report issued by the authorities of the host country.

(2) China Exim Bank reviews the loan application documents submitted by the borrower, and will hire independent experts when necessary.

(3) China Exim Bank negotiates with the project owners or the borrowers to amend the construction project proposal, based on the environmental and social assessments.

Article 14, China Exim Bank, if necessary, requires the inclusion of environmental and social responsibility in the loan contract, in order to monitor and restrain the behavior of borrowers.


China Development Bank (Summary of Environmental Policy Commitments)

Compiled by Friends of the Earth (US) based on the CDB Bond Prospectus (2005) and the CDB Corporate Social Responsibility Reports of 2007, 2008 and 2009.

Pre-lending stage:

Clients comply with all environmental laws of the People's Republic of China.

All loan applications require an environmental impact assessment (EIA).

For highly polluting and energy-intensive industries such as coal mining, oil and gas exploration and development, power generation and transmission, hydropower, etc., EIAs must be approved by relevant environmental authorities.

EIAs must be completed by an independent evaluator.

Environmental standards and costs can be written into loan contracts in order to commit clients to environmental promises.

Post lending:

In order for loan requirements to be considered fulfilled, clients must provide proof from a relevant environmental department that the project meets environmental protection requirements.


Excerpts from the Green Credit Guidelines

Source: China Banking Regulatory Commission, February 2012

Chapter I. General Provisions

Article 3 Banking institutions shall promote green credit from a strategic height, increase the support to green, low-carbon and recycling economy, fend off environmental and social risks, and improve their own environmental and social performance, thus optimizing their credit structure, improving the quality of services, and facilitating the transformation of development mode.

Article 4 Banking institutions shall effectively identify, measure, monitor and control environmental and social risks associated with their credit activities, establish environmental and social risk management system, and improve relevant credit policies and process management.

The environmental and social risks mentioned herein refer to the hazards and risks on the environment and society that may be brought about by the construction, production and operating activities of banking institutions' clients and key affiliated parties thereof, including environmental and social issues related to energy consumption, pollution, land, health, safety, resettlement of people, ecological protection, climate change, etc.

Chapter III Policies and Capacity Building

Article 11 Banking institutions shall develop client environmental and social risk assessment criteria, dynamically assess and classify client environmental and social risks, and consider the results as important basis for credit rating, access, management and exit. They shall adopt differentiated risks management measures concerning loan investigation, review and inspection, loan pricing, and economic capital allocation.

Banking institutions shall prepare a list of clients currently faced with major environmental and social risks, and require these clients to take risk mitigation actions, including developing and having in place major risk response plans, establishing suffIcient, effective stakeholder communication mechanisms, and finding a third party to share such risks.

Article 14 Banking institutions shall strengthen green credit capacity building, establish and improve green credit labeling and statistics system, improve relevant credit management systems, enhance green credit training, develop and employ related professionals. Where necessary, they can hire an eligible, independent third party to assess environmental and social risks or acquire related professional services by means of outsourcing.

Chapter IV Process Management

Article 15 Banking institutions shall strengthen due diligence in credit granting. The scope of due diligence on environmental and social risks shall be defined according to the characteristics of the sector and region in which the client and its project is located, so as to ensure the due diligence is complete, thorough and detailed. Where necessary, the banking institutions can seek for support from an eligible, independent third party and competent authorities.

Article 17 Banking institutions shall strengthen credit approval management, and define reasonable level of credit granting authority and approval process according to the nature and severity of environmental and social risks faced by the clients. Credits may not be granted to clients whose environmental and social performance fails to meet compliance requirements.

Article 18 Banking institutions shall, by improving contract clauses, urge their clients to strengthen environmental and social risk management. As for clients involving major environmental and social risks, the contract shall provide for clauses that require them to submit environmental and social risk report, state and avow that they will strengthen environmental and social risk management, and promise that they are willing to be supervised by the lender; the contract shall also provide for clauses concerning the remedies banking institutions can resort to in the event of default on environmental and social risks made by the clients.

Article 21 Banking institutions shall strengthen the environmental and social risk management for overseas projects to which credit will be granted and make sure project sponsors abide by applicable laws and regulations on environmental protection, land, health, safety, etc. of the country or jurisdiction where the project is located. The banking institutions shall make promise in public that appropriate international practices or international norms will be followed as far as such overseas projects are concerned, so as to ensure alignment with good international practices.

Chapter 5 Internal Controls and Information Disclosure

Article 24 Banking institutions shall make public their green credit strategies and policies, and fully disclose developments of their green credit business. As for credit involving major environmental and social risks, the banking institutions shall disclose relevant information according to laws and regulations, and be subjected to the oversight by the market and stakeholders. Where necessary, an eligible, independent third party can be hired to assess or audit the activities of banking institutions in performing their environmental and social responsibilities.

Chapter 6 Monitoring and Examination

Article 27 When organizing and conducting on-site examination, banking supervisory authorities shall take into full account the environmental and social risks faced by banking institutions, and make clear the scope and requirements of examination. As for regions or banking institutions involving prominent environmental and social risks, ad hoc examination shall be conducted and urge said institutions to improve in light of examination results.


Excerpts from the Provisional Measures for the Evaluation of River Hydropower Plans (RHP) and Plan Environmental Impact Statements (PEIS)

Source: National Development Reform Commission, 2011

Chapter I: General Provisions

2) These measures are intended for use on hydropower projects planned for important rivers, including large rivers, Transboundary Rivers and rivers along provincial borders (including state borders). The National Development and Reform Commission, or NDRC, will decide which rivers fall into these categories.

3) Projects on important rivers and river segments are the fundamental basis for the hydropower development, and their plans should be carried out in comprehensive coordination with the principles of ecological protection, overall efficiency, harmony between man and nature and the promotion of sustainable economic and social development. The PEIS is an integral part of any hydropower project. It should predict and analyze all impacts that a project might have on the environment. It should propose countermeasures to prevent or reduce the environmental impacts of a project, and a PEIS should draw a clear conclusion.


7) The evaluation process should ensure objectivity, impartiality and scientific quality. the evaluation of its RHP and PEIS should be the main basis for approving or denying a plan.

Chapter II: Evaluation of River Hydropower Plans (RHPs) and Plan Environmental Impact Statement (PEISs)

11) The review panel should ensure an objective, impartial, scientific, comprehensive review of the PEIS and produce recommendations which include the following aspects:

a) basic quality assessment, data validity, reliability and representativeness

b) utility and appropriateness of the evaluation methods used;

c) reliability and appropriateness of environmental impact analysis;

d) effectiveness and appropriateness of suggested prevention and mitigation measures;

e) the extent to which project planning has taken public opinion into account, and the effectiveness of changes made in response to public criticism, if any such changes have been made;

f) the scientific validity of PEIS conclusions;

g) the project's social, economic and environmental sustain-ability; the proposed plan's feasibility and ways to optimize it; and alternatives to implementation of the proposed plan. recommendations should be supported by at least by three-quarters of review panelists. Panel members who have different opinions shall truthfully record those (in the same document)

12) Given either of the following conditions, the review panel must reject a project's EIA:

a) Given present level of scientific knowledge and technology, it is impossible to predict the extent/severity of the negative environmental impacts resulting from the project.

b) Implementing the plan would have a medium or large negative impact on the environment, and available methods can neither prevent nor mitigate those impacts.

13) If, during review of the EIS, the panel identifies one of the following circumstances, the review team should recommend that it be returned for further amendments:

a) the basic quality of the PEIS is low, or its data is invalid;

b) the evaluation methods were inappropriate;

c) the PEIS was shallow, inaccurate, underdeveloped or invalid for another reason;

d) the suggested prevention and mitigation methods are seriously fawed;

e) the PEIS conclusions are unclear, unreasonable or wrong;

f) no attached materials describe the extent to which the project accommodates public opinion, or the reasons stated for not adapting the project to public opinion are distinctly unreasonable;

g) the PEIS has another major obvious deficiency or gap.

Chapter III: River Hydropower Plan Review

22) Under any of the following circumstances, an RHP shall not be approved:

a) RHP conclusions are incorrect or incomplete, cannot meet the basic requirements for comprehensive utilization of water resources;

b) data on the hydrology, geology, reservoir inundation, ecological environment and other basic information is not reliable, is unrepresentative or is inadequately scientific;

c) the cascade structure is unsafe, and no effective preventive measures are available;

d) the cascade design is not cost-effective, or other economic aspects of the project are lacking or mistaken;

e) the plan has no PEIS or its PEIS has not been evaluated properly;

f) RHP preparation procedures do not meet the requirements of hydropower planning.


Excerpt from The Guide on Social Responsibility for Chinese International Contractors

Source: China International Contractors Association, 2010

4.6 Environmental Protection

The environment is central to the survival and prosperity of human beings as well as a significant aspect of social responsibility. Enterprises should actively avoid or reduce a project's adverse impact on the environment, uphold green operations, build green projects, protect the ecological environment in which a project is located, and take effective measures to control greenhouse gas emissions.

4.6.1 Environmental Management

EN1 Establish, implement, and improve environmental management systems, develop environmental management schemes for all contracting projects, and invite specialized institutions to conduct environmental management system certification/registration.

EN2 Conduct environmental impact assessments prior to the construction of projects, evaluate risks and impacts of project activities on the environment with respect to risk management and sustainable development, and take preventive measures to control such risks and impacts on the environment.

EN3 Carry out environmental risk management, establish a project environmental management organization or position, identify environmental protection goals and schemes, and regularly check environmental performances.

EN4 Establish environmental protection training mechanisms for contracting projects and raise awareness and capacity of environmental protection among employees through information dissemination, education, and training.

4.6.4 Ecological Protection

EN13 Protect rare and precious fauna and flora species and their natural habitat, and reduce a project's impact on biological diversity.

EN14 During the implementation of a project, pay attention to the protection of ecological systems (wetland, wild animal passage, protection zones and farmland) and restore in a timely manner damages that have already occurred.

EN15 Encourage and organize employees of the enterprise and local inhabitants to conduct charity activities aiming at protecting and restoring ecological systems.

4.7 Community Involvement and Development

The community is an important external stakeholder for enterprises. Enterprises should value local traditions and culture, respect human rights, improve people's livelihoods, and participate in and support the construction of local community projects to achieve mutually beneficial development.

4.7.1 Community Involvement and Communication

SC1 Visit the communities where a project is located and evaluate the potential impacts of project activities on the community, learn the needs of the community, and identify development priorities.

SC2 Actively communicate project related information and learn and respond to the opinions and suggestions of stakeholders.

SC3 Develop community engagement plans and participate in community and public service and management activities.

SC4 Organize and support employees with professional advantages to engage in community volunteer activities.

4.7.2 Employment and Training

SC5 Offer maximum job opportunities to the community, taking into consideration the practical situation of the project.

SC6 Organize, participate in, and/or develop occupational skills training programs to improve the capacities of community inhabitants on the basis of the needs of the community.

SC7 Increase job opportunities for vulnerable groups within the community by collaborating with local institutions or organizations and developing special training programs.

4.7.3 Community Development

SC8 Pay tax in accordance with the law to guarantee community development.

SC9 Utilize project skills and support the development of public infrastructure in the community, including transportation, telecommunication, drinking water, and sanitation.

SC10 Help advance public services, management, and health care systems of the community to improve living conditions.

SC11 Taking into consideration community practicalities, explore local resources to help the community develop featured industries.

4.7.4 Culture and Education

SC12 Respect and protect the cultural traditions and heritage of the community, and provide support for community cultural activities and projects when necessary.

SC13 Support the development of community education, increase education opportunities for children and vulnerable groups, and reduce illiteracy in the community.

SC14 Help improve education facilities in the community and enhance education quality.

4.7.5 Donation and Disaster Relief

SC15 Support philanthropy initiatives and offer donations for community development and disaster prevention and relief.

SC16 Take advantage of project technology and facilities to engage in community disaster prevention and relief.