New Global Economic Powers and the Environment Dr. Peter Bosshard Policy Director, International Rivers Beijing, April 18, 2011

International Rivers For 25 years, mission to protect rivers and communities Offices in the US, Brazil, India, Thailand, Africa Work to support local NGOs, improve decision-making, find sustainable solutions

Global Dam Building Today Western companies no longer #1: Sinohydro with 50% of the global market? Chinese companies with more than 250 projects in 68 countries New dam builders from Brazil, India, Thailand, Iran, Russia and Vietnam Example for new economic South-South cooperation

A New Era of South-South Cooperation South-South trade “the most dynamic segment of world trade” South-South investment growing faster than other investment flows Southern companies have become dominant actors across the developing world

Outline of Presentation Some trends and figures Benefits and risks of the new South-South cooperation Emerging guidelines on enterprises and the environment Remaining challenges

Some Trends and Figures

Motives of New South-South Cooperation Southern companies have acquired the technology to compete globally Search for new markets in other developing countries Efforts to access natural resources Global integration of production

Growth in South-South Trade 46% of all developing country exports goes to other developing countries (2006) South-South trade makes up 17% of all global trade (2006 – 3x more than in 1996)

Financial Flows Follow Trade Leading role of export credit agencies, but Southern commercial banks also expanding around the world Financial Times : in , loans from China Exim Bank and CDB ($110 billion) bigger than World Bank Group ($100 billion)

Developing Country Foreign Investment Increase from $1 billion (1984) to $229 billion (2009) China: increase from $1 billion (2000) to $48 billion (2009) Box: foreign investment from Brazil, China, India (stock)

Southern Transnational Corporations UNCTAD: 28% of the world’s 82,000 TNCs from the South Forbes: 18 of the top-100 TNCs are from the South

Benefits and Risks

Benefits Increased demand for natural resources has boosted economic growth in Africa Investment in infrastructure helps achieve long- term development New trade and investment partners reduce political dependence on Northern governments

Risks New investment has a strong focus on environmentally sensitive sectors (oil and gas, mining, timber, hydropower etc.) Late comers on the global market look for new places to invest – often in environmentally sensitive regions

Guidelines for foreign investors

Early International Guidelines Since the 1980s, social and environmental guidelines by World Bank Group, OECD etc. Interference with national sovereignty? But many host countries don‘t have strong legal framework. And investors have a self-interest in avoiding social and environmental problems.

Shared Global Standards Convention on Biological Diversity Agenda 21, UNEP Finance Initiative World Bank safeguard policies Equator Principles for project finance

Business and Human Rights “Protect, Respect and Remedy” framework: adopted by UN Human Rights Council in 2008, Guiding Principles discussed in June Requires policy commitment and due diligence procedures for enterprises, including “meaningful consultation” with stakeholders

Outlook

Remaining Challenges Progress has been made, but challenges remain: Guidelines need to be adopted and implemented in practice More attention on small and medium companies Need for more transparency („sunshine is the best antiseptic“)

Concluding Statement “TNCs need to do more to factor in the development dimension and the public interest in their decision-making, and to find the right balance between the ‘bottom line’ of business shareholders and the ‘bottom line’ of development stakeholders.” (UNCTAD 2010)

Thank you! Peter Bosshard Policy Director International Rivers (m) (o)