Business · Companies · 13 hrs ago
Chinese overseas mining firms face challenges on social ESG standards
Chinese mining companies operating overseas are working to adopt environmental, social and governance standards.
These standards cover how companies affect the environment, manage their businesses and treat people.
In Indonesia, Chinese nickel processors have made progress on environmental and emissions rules but struggle with community relations.
Nickel is used in electric vehicle batteries, wind turbines and solar panels, and Chinese investment in Indonesia has brought jobs.
Experts identify social issues as the main ESG challenge for Chinese overseas mining firms.
A global ratings provider classifies 80 per cent of Chinese mining companies as lagging in ESG management, which can hinder their overseas operations and investment.
China has introduced new disclosure rules and industry guidelines, some modelled on international standards, and several have received international recognition.
The standards are still developing, and China lacks an internationally trusted system for independent ESG certification.
A Chinese industry alliance plans to issue an international standard this year for companies working outside China.
Chinese overseas mining companies face their biggest environmental, social and governance challenge in community relations, experts say.
A report by the International Institute for Sustainable Development says Chinese nickel processors in Indonesia do relatively well on environmental and carbon standards but poorly on community communication and relationship management.
MSCI ranks 80 per cent of Chinese mining firms as “laggard” in ESG management, which can hamper their overseas investments and operations.
China has introduced domestic sustainability rules and guidelines, some aligned with international standards, but differences remain.
Experts also point to the lack of an internationally trusted third-party system in China for checking ESG performance.
- Who
- Chinese mining companies operating overseas, including nickel processors in Indonesia.
- What
- They are working to meet environmental, social and governance standards, but experts identify social issues as their main challenge.
- When
- The sources describe recent findings and standards introduced over the last decade. The report’s publication date is not stated.
- Where
- Indonesia and other overseas markets where Chinese mining companies operate.
- Why
- Companies face difficulties with community communication and relationship management, while China lacks an internationally trusted third-party ESG certification system.
This story does not have two clearly opposing sides.
The central government focused on developing domestic ESG standards and increasing compatibility and mutual recognition.
CCCMC updated guidelines for responsible mineral sourcing, including checks for conflict, human rights abuses and corruption.
The London Metal Exchange conditionally approved the CCCMC guidelines, the first standard from a non-OECD country it had approved.
The Chinese government published guidelines requiring information disclosure and substantive community participation in foreign investment and construction projects.
The China Mining Association published standards for ESG disclosures and assessment.
The Zhongguancun Green Mine Industry Alliance published guidelines on green minerals covering supply chain traceability and due diligence.
- MSCI rating
- 80 per cent of Chinese mining firms are ranked as “laggard” on ESG management
- IISD report
- Chinese nickel processors in Indonesia perform relatively well on environmental and carbon standards, but weakly on community relations
- CCCMC guidelines
- Updated in 2022 to address conflict, human rights abuses and corruption in mineral supply chains
- London Metal Exchange
- Conditionally approved the CCCMC guidelines in July 2022
- Zhongguancun Green Mine Industry Alliance
- Published Guidelines on Green Minerals in May
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What people are saying
Another challenge is the lack of a domestic system for checking ESG performance. In the EU, companies are required to use a designated certification body. But China lacks an internationally trusted third-party certification system or standards for the certification.
with Chinese characteristics