Exploring the Overseas Environmental and Social Risk Management by Financial Institutions under “The Belt and Road” Initiative

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China launched “The Belt and Road Initiative”, aiming at promoting the interconnection and extensive cooperation in economic and trade, infrastructure, finance, culture and other aspects among the countries, especially the developing countries along “the Belt and Road”, helping them to achieve independent, balanced and sustainable development. Due to the vulnerable ecological environment, the most important risk requiring attention and managment is environmental risk of investment projects of the countries and regions along “the Belt and Road”. It is the key challenge to the success of construction and investment in “Belt and Road” regions and sustainable development of the countries along “the Belt and Road”, so it needs multilateral development banks and financial institutions of countries to build capacity and deepen the cooperation in knowledge and banks’ policies development.

 Report

Date of Publication: August, 2016

Sustainable global governance model needs the support of economic and financial activities. In recent years, the development financing of developing countries has been increasing year by year. Driven by the 169 specific goals/targets for sustainable development, in coming two decades, the construction of low-carbon and sustainable infrastructure will require more capital input.

In this context, China launched “The Belt and Road Initiative”, aiming at promoting the interconnection and extensive cooperation in economic and trade, infrastructure, finance, culture and other aspects among the countries, especially the developing countries along “the Belt and Road”, helping them to achieve independent, balanced and sustainable development. Due to the vulnerable ecological environment, the most important risk requiring attention and managment is environmental risk of investment projects of the countries and regions along “the Belt and Road”. It is the key challenge to the success of construction and investment in “Belt and Road” regions and sustainable development of the countries along “the Belt and Road”, so it needs multilateral development banks and financial institutions of countries to build capacity and deepen the cooperation in knowledge and banks’ policies development.

As a dialogue mechanism for regional economic governance, G20 plays vital role in promoting international financial reform and realizing the goals set in The United Nations Sustainable Development Agenda for 2030 and Paris Agreement. For their financial institutions, emphasizing environmental and social risks for overseas investment will avoid and minimize investment loss on one hand; on the other hand, considering investment demands on part of developing nations, such emphasis will help developing nations to build diversified, responsible investment modes that have the least ecological effect and carbon footprints. Therefore, this report provides six suggestiongs for  major nations to promote the following reforms domestically or through bilateral or multilateral financial institutions.