Chinese banks have a “dismal” rate of engagement with concerns about the human rights impacts of their overseas investments, a new report says.

The London-based Business and Human Rights Resource Centre (BHRRC) says China’s banks, including private, state-owned and development banks, have responded to only one of 20 requests to answer to human rights concerns raised by civil society organisations.

BHRRC, a corporate accountability watchdog tracks allegations made by local community groups, non-governmental organisations (NGOs) and others against companies and requests responses from them.

In a report published today [August 11] examining the human rights impacts of China’s burgeoning overseas investments, the group says Chinese companies have a 24% response rate overall, which compares unfavourably to other major Asian economies such as India, Japan and Indonesia, where companies answered between 43% and 68% of the time.

But China’s financial sector was by far the worst performer, according to the data. BHRRC says the 5% response rate, which it describes as “dismal”, indicates “a general reluctance by Chinese banks to engage with allegations from civil society actors or to learn more about their impact and improve their social and environmental performance”.

China’s banks’ 5% rate of response to BHRRC requests compares to the financial sector’s global response rate of 63%.

BHRC asked nine Chinese banks to respond to human rights concerns between 2016 and 2020, with the majority of requests being made last year. One institution, Bank of China, responded on one occasion but did not reply to three other requests from the organisation.

The China Development Bank, the Industrial and Commercial Bank of China (ICBC) and the Export-Import Bank of China (China Exim) were also sent more than one request but never responded.

Bank of China and ICBC did not respond to requests for comment from GTR, while China Exim and the China Development Bank could not be reached for comment.

The BHRRC classifies the absence of a response as “no response”, but its website shows that in some cases the organisation says they were unable to contact the bank to ask for one. It also includes in the data the Asia Infrastructure Investment Bank (AIIB), a multilateral investment bank headquartered in Beijing.

Most allegations against the finance and banking sector concern poor disclosure or environmental impact assessments, impacts on livelihoods and land rights.

Examples include protests by local community members against a zinc mine under development in Indonesia, the financing of a Malaysian palm oil conglomerate accused of labour abuses and concerns from NGOs about the financing of the East Africa crude oil pipeline.

BHRRC began tracking allegations in 2013, around the same time China started pursuing its Belt and Road Initiative (BRI) strategy of investing vast sums in infrastructure projects across Asia, the Middle East, East Africa and Southeast Europe.

The money has helped realise major infrastructure improvements such as railways, ports and airports in developing countries, but heavy debt loads have sometimes imperilled the finances of countries who borrow from state-owned Chinese lenders.

Chinese banks have also fuelled investments in resources and mining across Asia to sate enormous demand by the country’s giant manufacturing sector for raw materials and to meet its domestic energy needs.

BHRRC said that overall, it has recorded 670 allegations of human rights abuses “linked to Chinese business conduct abroad”. Countries where most complaints are recorded are Myanmar, Peru, Ecuador, Laos, Cambodia and Indonesia.

It recommends that Chinese banks develop “searchable, comprehensive and up-to-date databases on their proposed and current investments and projects” similar to those maintained by the AIIB and the World Bank.

Such databases, which are often also maintained by export credit agencies, include environmental impact assessments, key decisions and information on where concerns can be directed.

The report also suggests that the Chinese government use existing laws and regulations to “build on commitments to responsible business conduct” and put in place an action plan on business and human rights.

Golda S. Benjamin, a programme director at BHRRC, says: “China has shown commitment to international initiatives such as the Sustainable Development Goals and the Paris Agreement as part of its effort to build an image of a ‘responsible great power’. However, this image risks being undermined if the Chinese government and companies do not adequately address the need for urgent action to address human rights risks in their overseas business operations.”

“We welcome the Chinese authorities’ published frameworks to encourage companies and financial institutions to integrate environmental and social risk management into their overseas projects. There is a need for greater enforcement and transparency among companies’ approach to human rights abuse allegations.”

The Chinese government has typically been sensitive to allegations of human rights abuses by local businesses and has reacted angrily to efforts by overseas campaigners and some governments to stamp out alleged use of forced labour in supply chains, particularly in the province of Xinjiang.

The Chinese government introduced new measures in June that threaten punitive measures against foreign companies that seek to comply with US sanctions on China, some of which target Chinese firms and individuals accused of human rights violations.