Three years ago, China issued its most progressive recommendations linking the conduct of companies abroad with their environmental and social responsibilities.
The Guidelines for Ecological and Environmental Protection in Foreign Investment and Cooperation Projects went further than the overseas green policies of 2013 and 2021. They required, rather than merely called for, ecological and environmental transparency (in articles 16, 22 and 24) and meaningful community engagement (Article 23).
The guidelines were well received by academic think-tanks and civil society as a sign of China’s renewed commitment to guiding companies towards meeting environmental responsibilities abroad. They were expected to support China’s 2021 pledge to promote green-energy development in developing countries.
Yet, barriers remain to translating the progressive language into meaningful corporate practice.
Progressive guidelines, limited grip
The guidelines, jointly issued by the Ministry of Ecology and Environment (MEE) and Ministry of Commerce (MOFCOM), are broad in scope but thin on detail. They outline principles, not procedures – lacking enforcement tools, accountability mechanisms or clear benchmarks. In practice, this leaves companies largely to self-define compliance.
At the same time, China’s long-held principle of non-interference in the governance of foreign countries limits its willingness to oversee corporate behaviour beyond its borders. While environmental regulation at home has become more robust, this scrutiny rarely extends to overseas operations.
Compounding this, institutional support is weak. Ministries have issued little follow up, and Chinese embassies often lack the authority or capacity to monitor environmental or social compliance abroad.
Finally, the guidelines offer no clear incentives. They are not tied to financing access, licensing advantages, or reputational benefits that might encourage broader adoption. For many companies, they remain more symbolic than actionable – an expression of intent rather than a driver of change.
Good practices emerging among Chinese companies overseas are more likely to be driven by external market pressures or individual proactive company leadership, than by direct compliance with the guidelines themselves. Without stronger systemic mechanisms, which I will explore below, the positive examples remain the exception rather than the norm.
Why implementation still matters
Despite the constraints, the guidelines remain significant.
Chinese companies are not alone in facing environmental, social and governance (ESG) risks. But they frequently operate in countries where local regulation is weak or poorly enforced, as seen in Indonesia, Zimbabwe, the Democratic Republic of the Congo and Argentina.
In such contexts, relying solely on host-country regulations leaves dangerous gaps. This was the motivation for the call in the guidelines to adopt international standards or higher Chinese standards when local ones are insufficient (articles 3 and 7).
International frameworks like the UN Guiding Principles on Business and Human Rights or the International Finance Corporation’s Sustainability Framework carry moral weight but little binding force unless tied to external financing. They offer little leverage when companies self-finance or operate outside multilateral frameworks. Without concrete enforcement mechanisms, companies can easily sidestep these norms without facing consequences.
Public pressure from media and protests may trigger short-term responses, but it is rarely systemic. Internal corporate ambition and market incentives may drive some companies toward better practice, but these are the exceptions to the norm. For most companies, ESG remains secondary to commercial or geopolitical priorities unless anchored in enforceable expectations.
In this vacuum, the guidelines offer something different. They represent a very high-level policy commitment to green overseas investment. They offer a policy signal, a shared benchmark and moral authority that regulators, investors, civil society and companies can reference. Even if not directly enforceable in host countries, the guidelines represent China’s clearest commitment to responsible overseas investment.
But to realise their full potential, these policy ambitions must be translated into concrete oversight and practical tools. Turning aspiration into reality is only possible if the Chinese government actively supports and monitors implementation, through a model that respects host-country sovereignty without leaving a regulatory vacuum.
How to achieve transparency
A first area where implementation could be significantly strengthened is transparency. Despite growing international demands for corporate disclosure, many Chinese overseas projects currently operate without meaningful reporting obligations.
This is especially true for non-listed companies such as Tsingshan, a large metals company active particularly in Indonesia. It is also true for many other private actors whose overseas activities fall outside domestic market-driven or ownership-based ESG disclosure frameworks.
Stock exchanges, the China Securities Regulatory Commission, and Sasac, a government body which supervises state-owned companies, do play key roles in overseeing listed and state-owned enterprises. But their mandates rarely cover the environmental compliance of non-listed or overseas projects.
Here, the MEE, in cooperation with Chinese embassies, can play a crucial complementary role. Their involvement would fill regulatory blind spots at the project level, support the implementation of the guidelines, and reinforce China’s credibility in advancing responsible overseas investment – all without encroaching on financial or ownership supervision.
The MEE, for example, could establish a requirement for companies to submit annual project-specific ESG compliance reports, detailing adherence to host-country laws and the application of international or Chinese standards.
These reports could be made public on the ministry’s website to enable scrutiny and inform policy response. This would operationalise Article 22 of the guidelines, which concerns compliance reporting, and help close transparency gaps – especially for non-listed companies which face no market-driven disclosure requirements.
In cooperation with embassies, the MEE could also create accessible feedback channels in host countries – such as hotlines, email addresses or embassy open days – for affected communities and stakeholders to report ESG violations or emerging risks.
Reports should be investigated promptly, with responses provided and risk alerts raised to companies as necessary. This would add to the effect of articles 16 and 22, as the communities living near and working at mining sites are often the first to know if a project is off course.
Additionally, companies could be required to report major environmental or safety incidents to domestic authorities, Chinese embassies and host-country regulators in a timely manner. Companies should also release verified summaries, outlining the impacts, mitigation steps, and preventive actions to avoid recurrence. Both the emergency-incident reporting and post-incident summaries should be made public in a timely manner. This would operationalise Article 16 on emergency reporting.
In such ways, these methods have a potential to fill regulatory blind spots that currently leave significant overseas activities lacking supervision, while respecting the division of institutional responsibilities at home.
From box-ticking to meaningful participation
Community engagement requires equally deliberate attention. Article 23 of the guidelines calls for companies to “take the initiative to strengthen communication with potentially affected communities, relevant social groups, and citizens; and listen to opinions and suggestions on the environmental impact of their projects through events such as seminars and hearings”.
However, for too many overseas projects, such as the mining projects my work focuses on, consultation processes are treated as box-checking exercises rather than meaningful dialogue. In weak regulatory environments, local voices often go unheard, fuelling resentment and, in some cases, violent conflict.
Promoting community engagement under the guidelines is well within the remit of the MEE, MOFCOM and Chinese embassies. It also complements – not conflicts with – other regulatory functions. Unlike financial or ownership oversight, meaningful community engagement is a core part of environmental governance, especially for overseas projects where weak local enforcement and opaque consultation processes often lead to conflict.
Embassies are uniquely positioned to help MEE and MOFCOM standardise expectations, provide guidance, and create channels for communities to be heard. Their involvement can foster early conflict prevention and ensure that Chinese companies respect community rights abroad – an essential step toward building trust and long-term licence to operate.
Here are a few ways the ministries could help implement meaningful community engagement:
● Issue guidance requiring companies to maintain direct, ongoing dialogue with affected communities through regular meetings, public hearings and other inclusive formats throughout the project lifecycle – before, during and after major decisions. A formal record of all community-engagement activities should be maintained.
● Require companies to publish environmental impact assessment (EIA) reports in languages accessible to the local population through multiple channels, including local community bulletin boards, the host government’s official websites, and Chinese embassies. Communities should be given prior notice of such disclosures.
● Ensure communities are given sufficient time to review EIA documents and submit feedback, and require companies to document and respond to each comment received.
● MEE and MOFCOM could develop participatory decision-making guidance and practical tools for overseas projects. They could do so in cooperation with international organisations like the Office of the UN High Commissioner for Human Rights (OHCHR), which sometimes supports governments with capacity building and technical assistance; the UN Development Programme; the International Finance Corporation, as well as local governments and other stakeholders. They could also draw on China’s own experience with public participation in EIA processes. This would help companies engage in good-faith negotiations with legitimately chosen community representatives in line with the free, prior and informed consent (FPIC) principle, rather than relying on one-way notifications or symbolic consultations.
● In the minerals and mining space, Chinese embassies could support and encourage companies to engage with industry body the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters’ existing Mediation and Consultation Mechanism for the Mining Industry and Mineral Value Chain, by raising awareness among companies, facilitating initial contact, and helping follow up on action-plan implementation in host countries.
Respecting sovereignty, fulfilling responsibility
The 2022 guidelines offer a strong policy starting point for China to strengthen its role in global green and just transitions. Yet without stronger implementation, they risk remaining more symbolic than transformative.
Operationalising the guidelines offers China the chance to move beyond rhetorical commitments, to build trust with host communities, investors and international partners, and to demonstrate genuine leadership in defining what responsible global green development can look like.
Respecting host country sovereignty need not mean regulatory absence. Proactive oversight, meaningful transparency and authentic community engagement can coexist with sovereignty – and may in fact be essential to building China’s long-term licence to operate globally.
This article was originally published on Dialogue Earth under a Creative Commons licence.
