Bloomberg reported last week that Zijin Mining – China’s biggest gold mining company – had been fined $4.6 million dollars for environmental pollution, and that high company officials had been detained in connection with toxic spills in Fujian Province. The article focuses on the growing efforts of the Chinese government to enforce environmental laws, at least in extreme cases, and points out the inadequacy of fines that reach into the millions of dollars in a mining industry that sees revenues in the billions.
Zijin itself has a troubling record when it comes to accountability for earth rights abuses. It is the parent company of Monterrico Metals, a mining company formerly based in the UK, which has been implicated in the torture of several unarmed protesters at the Rio Blanco mine in Peru. In 2009, a British judge had to issue a freezing order preventing Zijin from removing all its assets from the UK, which would have shielded it from executing any eventual judgment against Monterrico for its actions. (The Monterrico case goes to trial in the UK later this year.)
These latest developments remind of us the continuing urgency of two of the biggest question marks in the field of corporate social responsibility: As Chinese extractive companies begin to operate more widely throughout the world, will they operate according to global standards of responsible behavior? And what will be the Chinese government’s role, if any, in ensuring that they do?
It’s worth noting that the fines levied by the Chinese government against Zijin were for misconduct within China’s own borders. As the government faces increasing public ire over corporate misconduct involving pollution, corruption, and contaminated food products like milk, buns, eggs, and even fried chicken, it stands to reason that efforts will be made to at least pay lip service to the idea that the government has a role in protecting its own people from corporate malfeasance. As for Chinese companies operating abroad – especially extractive companies that are spearheading China’s worldwide drive to ensure access to natural resources – the incentives for the government to push accountability are less clear.
This does not mean, of course, that there are no bright spots. The Chinese Export-Import Bank, for example, has fairly robust standards that are supposed to be respected by any Chinese company that receives its financial support. However, there is no official complaints mechanism through which the Bank could be called upon to enforce its standards. Chinese oil companies have engaged in important political processes with significance to the international human rights and corporate accountability movements, like John Ruggie’s mandate from the United Nations to elaborate standards for human rights and business, and the ongoing process at the SEC to develop rules implementing transparency requirements that were passed as part of the Dodd-Frank Wall Street Reform Act. It’s clear that China and its companies want to be seen as serious players on the world stage, and that they recognize that they cannot remain mute on issues of global significance, including environmental and human rights practices.
What this means is that companies like Zijin can be influenced to act more responsibly. But it can’t just be NGOs like FEDEPAZ in Peru, which has struggled to hold Monterrico to account for the violence against community members in Peru. Rather, Western companies have to start speaking out as well. Corporations like Shell and Chevron had strenuously resisted transparency legislation and have argued against liability for multinational companies that violate international human rights law, insisting that such strictures would make them less competitive against Chinese companies. But rather than resisting rules that would require human rights-compliant behavior, they should stand shoulder to shoulder with civil society to make it clear that high standards are expected of multinational companies with a global presence. If we can convert their threatened race to the bottom into the proverbial rising tide that lifts all boats, Chinese companies like Zijin will follow.