Mining companies facing stiff CSR challenges, says report
Source: www.chinamining.org Citation: China Daily Date: July 16, 2015
Mining and extraction companies are accelerating their overseas sales and investment plans, on the back of two key government-led sources of potential funding - the Asian Infrastructure Investment Bank and the Silk Road Fund, according to a new report.
Last year Chinese investors ploughed $116 billion directly into 6,128 overseas companies in 156 countries or regions, according to the study, called Transparency and Risk Management for Chinese Extractive Industry`s Overseas Investment, which is supported by the United Kingdom`s Department for International Development.
Reporting on the findings, the 21st Century Business Herald said Chinese enterprises are facing more intense international competition as they go global, and rising scrutiny of their social responsibility provisions, particularly in the so-called extractive industries, or those which involve the removal of raw materials from the earth to be used by consumers.
The report shows that Chinese foreign investment in the extractive industry was worth $106.1 billion by the end of 2013, accounting for 16 percent of the country`s total overseas investment.
But it also said companies are facing stiffening challenges involving their social responsibilities, including legal requirements, levels of localization, environmental protection, community participation, and that now they need to work harder at their levels of local information transparency and communication with different local parties, to reduce potential risks.
China is currently involved in numerous exploration projects in countries such as Kenya and Tanzania in Africa, which play a key role in growing national revenues and raising standards of living across the continent.
However, Shan Mitra, a senior economist at the UK`s Department for International Development, said the country`s continued involvement in the global extractive industry could present many more risks than in other industries, as practically every stage in the industrial process is being scrutinized more closely than ever before.
A recent industry survey showed that just 28 percent of Chinese mining companies currently met international standards of transparency, even though most said they regarded full information disclosure as an important factor in assessing overseas investment risk.
Nearly 65 percent insisted they put a premium on creating efficient communications mechanism within their overseas operations, but admitted that communication was still often limited to local government departments, suppliers and employees.
Zhang Jianping, director of international economic cooperation at the Institute for International Economic Research, part of the National Development and Reform Commission, said Chinese enterprises must pay more attention to the laws and social customs of any market in which they invest, and underlined the importance of cooperating with local non-governmental organizations and labor unions, as well as national governments.
Some of the country`s largest State-owned enterprises have taken steps to tackle social problems and protect ecological environment overseas, said Zhang, but small and medium-sized enterprises often had inadequate experience and ability to carry out their social responsibilities.
By the start of last month, seven major extractive enterprises - all owned by the Chinese central government - are believed to have released 23 overseas social responsibility reports on activities in 13 countries or regions.
Sinosteel Corp, involved in mining, trading, equipment manufacturing and engineering, published the sector`s first overseas social responsibility report in 2007.
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