China’s Global Dam Builders: Talking the Talk, Walking the Walk?

Grace Mang

In recent years, the global hydropower market has changed dramatically. Once the province of Western firms, these days large new companies from China and other countries are dominating the market. In a remarkable turn of events, these new companies have committed to following national laws, World Bank policies, UN guidelines and other standards as they construct their projects. What does this mean in practice? Which companies perform best, and which are lagging behind? At International Rivers, we decided to find out by conducting an extended research project.

Photo courtesy of The New York Times

Our effort had several goals; first, we wanted to find out how the social and environmental policies of the new actors compare with international best practices. Then, using empirical research, we wanted to see whether the policy commitments were borne out in the actual projects, and gather more evidence regarding project impacts on ecosystems, local communities and workers. Finally, we wanted to advocate for improved policies and practices and encourage companies to compete for a strong environmental track record.

International Rivers researchers visiting the Nam Ou Valley in Laos
International Rivers researchers visiting the Nam Ou Valley in Laos
International Rivers

For practical reasons, we focused the first stage of our research effort on the seven most important overseas dam builders from China, who collectively play a very strong role in the international dam building sector. We hope to expand this exercise to companies from other countries in the future.

Over the past two years, International Rivers came up with benchmarks to measure the policies and project performance of the major players in the Chinese overseas hydropower sector. We started by preparing a detailed questionnaire that reflected Chinese and international best practices around the numerous challenges of environmental protection, host community relations, the prevention of corruption, and other negative impacts. We asked how companies addressed environmental impact assessments, the rights of indigenous peoples, the sharing of information, and other challenges. We drew our criteria from frameworks such as the report of the World Commission on Dams, the UN Guiding Principles on Business and Human Rights and relevant Chinese guidelines for the hydropower sector.

Over an 18-month period, we discussed the questionnaire with the management of all seven companies. The companies took the process seriously. In numerous meetings, their managers went through policy documents with us, clarified field observations, and investigated grievances we had uncovered in our field work. In some cases, our meetings were the first encounter these companies had ever had with civil society groups.

Presenting the new report in Beijing
Presenting the new report in Beijing
International Rivers

Discussing policy commitments at corporate headquarters in Beijing was just the start. We identified typical projects for each company in Cambodia, Malaysia, Ecuador and other countries, and investigated what the various commitments meant in practice. Staying for an average of nine days, our researchers talked with local communities, government officials, workers, and company managers. Based on this research, we prepared two reports: a 26-page summary of our findings, and a detailed, 60-page compilation of our evidence.

After two years of work, we're publishing the findings of this effort today. We found that:

  • Generally, companies that build projects as contractors perform better than companies that invest in and own their projects. Among the various Chinese companies, Sinohydro International had the strongest record, and Huaneng and Datang had the weakest.
  • Not surprisingly, companies performed strongest at the project site if they were forced to do so by the laws of the host country. 
  • At the policy level, companies scored highest for dam safety measures. In actual practice, companies performed better when implementing environmental standards than standards relating to host communities, workers and general risk management.
  • There are still significant gaps between policy commitments and performance on the ground. Most companies talk the talk, but don’t necessarily walk the walk. The cost is borne by those who can least afford it – rural communities and fragile ecosystems.
Policy vs. Project Assessment results for the top three performing companies.
Policy vs. Project Assessment results for the top three performing companies

Over the past month, we have presented our findings at meetings with Chinese government officials, companies and civil society activists, and at the World Hydropower Congress in Beijing. We were frankly overwhelmed by the strong and positive response to our work from Chinese dam builders including Gezhouba and Sinohydro. Except for Huaneng, all companies formally responded to our project. They were interested to learn about our findings, and eager to see how they compared with their competitors.

We plan to continue our monitoring and accountability efforts, and hope to expand it to dam builders from other countries. We want companies to know that they are being watched and scored for their projects, and that they have an opportunity to strengthen their standards and practices and get credit for it. 

We want companies to compete on their environmental and social track records rather than simply on financial grounds. At the same time, we want host communities and local NGOs to know what commitments dam builders have made in their policies, and how credibly they are implementing them in their projects.

More information: 
Sunday, June 21, 2015