Building responsible and sustainable supply chain frameworks: limits of international investment law and the CSR initiatives taken by the EU and China

ABSTRACT

Supply chains play a pivotal role in global economic relations, fostering growth, employment, and poverty alleviation. Multinational enterprises (MNEs) are central actors in these chains, bearing responsibilities towards workers and the environment. Corporate Social Responsibility (CSR) standards guide MNEs in assessing the societal and environmental impacts of their activities, though these standards remain largely voluntary. Recent investment treaty practice shows a trend to incorporate CSR provisions in international investment agreements (IIAs), but such clauses fail to impose direct human rights, labour and environmental obligations on investors. Amidst this landscape, the EU and China, major players in global trade and investment, have established diverging legal and policy frameworks to build responsible and sustainable supply chains. Considering these developments, the objectives of this article are twofold. First, the article explores the integration of CSR in international investment law. Second, it evaluates the different CSR initiatives taken by the EU and China that frame their foreign direct investments. Focusing on EU–China FDI relations, the article delineates implications for global supply chain governance offering insights into the evolving landscape of CSR frameworks, and the plagued path in adopting mandatory corporate responsibility standards.

KEYWORDS:

• Belt and road initiative
• China
• corporate social responsibility (CSR)
• European Union
• global supply chains

Acknowledgements

The author acknowledges and is grateful for the support of the Singapore International Dispute Resolution Academy's BRI Program. The author is indebted to Hor Wen Qin for her excellent research assistance and efforts in translating Chinese policy instruments for which no official translation exists. Lastly, the author is also grateful for the helpful comments received from the two anonymous reviewers. Any inaccuracies or oversights remain attributable to the author.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 All these concepts await uniform definitions. On CSR see, Kate Miles, The Origins of International Investment Law – Empire, Environment and the Safeguarding of Capital (CUP, 2013) 217. See also Jarrod Hepburn and V Kuuya, ‘Corporate Social Responsibility and Investment Treaties’ in Cordonier Segger Marie-Claire, Markus W Gehring and Andrew P Newcombe (eds), Sustainable Development in World Investment Law (Kluwer Law International, 2011) 592: ‘a corporation is expected to attain its profit-making goals while also ensuring that it behaves like a good corporate citizen whose activities enhance the enjoyment of human and environmental rights and reflect positive business ethics’. On RBC, see OECD, ‘OECD Due Diligence Guidance for Responsible Business Conduct’, <https://www.oecd.org/investment/due-diligence-guidance-for-responsible-business-conduct.htm> accessed 10 February 2024. On ESG, see Elizabeth Pollman, ‘The Making and Meaning of ESG’, ECGI Working Paper Series, No. 659/2022.

2 UNCTAD, World Investment Report (UN 2023) 6, 8. See also, European Commission, ‘EU's position in world trade’ <https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/eu-position-world-trade_en> accessed 15 February 2024.

3 Ministry of Commerce of the People's Republic of China, National Bureau of Statistics and State Administration of Foreign Exchange, ‘2022 Statistical Bulletin of China's Outward Foreign Direct Investment’ 15 <http://images.mofcom.gov.cn/hzs/202310/20231007152406593.pdf> accessed 1 February 2024. As reported, Chinese investment into BRI nations hit highest since 2018 as Chinese firms put 50 billion USD in foreign projects in 2023. See Bloomberg News <https://www.bloomberg.com/news/articles/2024-02-05/chinese-investment-into-bri-nations-hits-highest-since-2018> accessed 10 February 2024.

4 Stefanie Schacherer, Sustainable Development in EU Foreign Investment Law (Brill 2021) 148.

5 Lorenzo Cotula, ‘EU–China Comprehensive Agreement on Investment: An Appraisal of Its Sustainable Development Section’ (2021) 6 Business and Human Rights Journal 360, 363; See more generally, Julien Chaisse and Matthieu Burnay, ‘Introduction – CAI's Contribution to International Investment Law: European, Chinese, and Global Perspectives’ (2022) 23 JWIT 497.

6 Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937 Brussels, 23.2.2022 COM(2022) 71 final 2022/0051(COD). A final draft was leaked by MP Axel Voss in February 2024, <https://www.linkedin.com/feed/update/urn:li:activity:7158052468679917568/> accessed 29 February 2024.

7 The CS3D failed a first vote in the Council on 28 February 2024. <https://www.euronews.com/my-europe/2024/02/28/corporate-sustainability-rules-in-doubt-after-failing-secretive-national-vote> accessed 29 February 2024.

8 The Council approved a modified version of the CS3D on 15 March 2024. See Shearman and Sterling, ‘Perspectives’, 18 March 2024, <https://www.shearman.com/en/perspectives/2024/03/eu-council-waters-down-corporate-sustainability-due-diligence-directive--cs3d> accessed 22 March 2024.

9 See Section IV. These EU legislations include: Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 Establishing a Carbon Border Adjustment Mechanism, OJ L 130 52 (hereinafter CBAM Regulation); Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the Making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (EU) No 995/2010, OJ L 150 206 (hereinafter Deforestation Regulation); Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting OJ L 322 15 (hereinafter CSRD).

10 Comparative international law focuses on similarities and differences between national and regional actors in their approach to international law. See Anthea Roberts and others, Comparative International Law (OUP, 2018) 4.

11 The National Contact Points (NCPs) are implemented in domestic legislation, but States dispose of flexibility concerning their precise organizational form. OECD, ‘OECD Guidelines for Multinational Enterprises’, annexed to 2000 OECD Declaration on International Investment and Multinational Enterprises, DAFFE/IME(2000)/20); (2001) 40 ILM 237 as amended, part A. ‘An NCP may be a governmental unit, or an organisation consisting of government representatives, independent experts and representatives of business, worker organisations and other non-governmental organisations’.

12 OECD, Ministerial Council Meeting, ‘Declaration on International Investment and Multinational Enterprises’ (2023) Annex 1.

13 UN Global Compact, ‘Guide to Corporate Sustainability’, <https://www.unglobalcompact.org/docs/publications/UN_Global_Compact_Guide_to_Corporate_Sustainability.pdf> accessed 20 February 2024.

14 UN Global Compact, Participants <https://unglobalcompact.org/what-is-gc/participants> accessed 10 February 2024.

15 UN Human Rights Council, ‘Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework’ [2011] A/HRC/17/31.

16 John Gerard Ruggie and John F Sherman, ‘The Concept of “Due Diligence” in the UN Guiding Principles on Business and Human Rights: A Reply to Jonathan Bonnitcha and Robert McCorquodale’ (2017) 28 EJIL 921, 923.

17 Surya Deva, ‘The UN Guiding Principles’ Orbit and Other Regulatory Regimes in the Business and Human Rights Universe: Managing the Interface’ (2021) 6(2) BHRJ 338.

18 ILO, ‘Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy’ (1977 revised 2017).

19 E.g. International Council on Mining and Metals (ICMM), ‘ICMM Human Rights Due Diligence Guidance’ (2023), <https://www.icmm.com/website/publications/pdfs/social-performance/2023/guidance_human-rights-due-diligence.pdf?cb=58439> Roundtable on Sustainable Palm Oil (RSPO), ‘Principles and Criteria for the Production of Sustainable Palm Oil’ (2018, revised 2020) <https://rspo.org/resources/?id=6025> Global Organic Textile Standard, ‘GOTS Due Diligence Handbook for Certified Entities’ (2023), <https://global-standard.org/images/resource-library/documents/GOTS_Due_Diligence_Handbook_for_Certified_Entities_10.pdf> OECD and Food and Agriculture Organization of the United Nations, ‘OECD-FAO Guidance for Responsible Agricultural Supply Chains’ (2021), <https://mneguidelines.oecd.org/How-the-OECD-FAO-Guidance-can-help-achieve-the-Sustainable-Development-Goals.pdf> all accessed 14 February 2024.

20 E.g. Unilever, ‘Human Rights Progress Report’ (2021) <https://www.unilever.com/files/cefcd733-4f03-4cc3-b30a-a5bb5242d3c6/unilever-human-rights-progress-report-2021.pdf> Heineken, ‘Respecting human rights’, <https://www.theheinekencompany.com/our-company/respecting-human-rights>; Patagonia, ‘California Transparency in Supply Chains Act of 2010 (SB 657) <https://www.patagonia.com/california-transparency-in-supply-chains-act-sb-657.html> all accessed 14 February 2024.

21 OECD (n 12).

22 See Caitlin Daniel and others, ‘Remedy Remains Rare: An analysis of 15 Years of NCP Cases and Their Contribution to Improve Access to Remedy for Victims of Corporate Misconduct’ (OECD Watch 2015). See also, Caitlin Daniel and others (eds), ‘Glass Half Full? The State of Accountability in Development Finance’, Centre for Research on Multinational Corporations (SOMO) 2016.

23 The coal, oil, gas, cement, and flaring industries’ CO₂ emissions saw an upward trend from 2010 to 2022 despite a dip in 2020 due to Covid-19. See Our World in Data, ‘CO₂ Emissions by Fuel or Industry, World’ (2023) <https://ourworldindata.org/grapher/co2-emissions-by-fuel-line> accessed 15 February 2024. Deaths attributable to ambient air pollution and toxic chemical pollution (such as lead), ‘which are the unintended consequences of industrialisation and urbanisation, have risen by 7% since 2015 and by over 66% since 2000.’ See Richard Fuller and others, ‘Pollution and Health: A Progress Update’ (2022) 6 Lancet Planet Health 535, 547; See also, Anselm Schneider and Andreas Georg Scherer, ‘State Governance Beyond the “Shadow of Hierarchy”: A Social Mechanisms Perspective on Governmental CSR Policies’ (2019) Organisation Studies 1147, 1168: ‘The potential profits accruing from CSR do not seem sufficient to motivate companies to address effectively externalities’.

24 E.g. Royal Dutch Shell profess commitment to CSR since 2000 but practises non-compliance as the companies’ activities in Nigeria highlight. In 2021, The Hague Court of Appeal found Shell liable for damage resulting from an oil spill near the Village of Oruma in Nigeria. See Four Nigerian Farmers and Stitchting Milieudefensia v. Royal Dutch Shell plc [2021] ECLI:NL:2021:132 (Oruma), [2021] ECLI:NL:2021:133 (Goi) and [2021] ECLI:NL:2021:134 (Ikot Ada Udo). Repsol commits to CSR programmes since 2007. See Emily Billo, ‘Sovereignty and Subterranean Resources: An Institutional ethnography of Repsol's Corporate Social Responsibility Programs in Ecuador’ (2015) 59 Geoforum 268, 270. In 2022, Repsol Peru B.V. (incorporated in the Netherlands) and its parent company Repsol S.A. (incorporated in Spain) was found responsible for an oil spill at their subsidiary (La Pampilla) in Peru. Repsol S.A. is now facing a $1 billion class action suit in Dutch courts. See Marcelo Rochabrun, ‘Repsol Sued in Class Action for $1 Billion Over Peru's Worst Oil Spill’ Bloomberg (15 January 2024) <https://www.bloomberg.com/news/articles/2024-01-15/pogust-goodhead-sues-repsol-claiming-1-billion-over-peru-oil-spill> accessed 14 February 2024.

25 The international community is grappling with negotiations for a binding treaty on MNEs. Initiated in 2014 by the Human Rights Council at the behest of Ecuador, the Business and Human Rights (BHR) treaty process has been entrusted to an Open-ended Intergovernmental Working Group on Transnational Corporations and other business enterprises regarding human rights. See, UN Human Rights Council, ‘Elaboration of an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights’, [2014] A/HRC/RES/26/9.

26 UN Human Rights Council, Ninth session of the open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights, ‘Updated draft legally binding instrument (clean instrument)’ (July 2023) <https://www.ohchr.org/sites/default/files/documents/hrbodies/hrcouncil/igwg-transcorp/session9/igwg-9th-updated-draft-lbi-clean.pdf> accessed 15 February 2024, Arts 2 and 6.2.

27 Lise Johnson, Lisa Sachs and Nathan Lobel, ‘Aligning International Investment Agreements with the Sustainable Development Goals’ (2020) Columbia Journal of Transnational Law 58, 37.

28 Joshua Waleson, ‘Corporate Social Responsibility in EU Comprehensive Free Trade Agreements: Towards Sustainable Trade and Investment’ (2015) 42 Legal Issues of Economic Integration 2, 147.

29 Maya Steinitz, The Case for an International Court of Civil Justice (CUP, 2019) 4.

30 Ibid.

31 Draft BHR Treaty (n 25), Art 9.3(a).

32 Joshua Waleson (n 28) 147.

33 See also, Suya Deva argued that ‘the UNGPs alone are unlikely to be enough to challenge or confront the existing structure of irresponsibility and inequality’, see Surya Deva (n 17) 338.

34 Belengar Francis Maïnkade, ‘Corporate Human Rights Obligations of Investors in Recent Investment Agreements: The Progressive Hardening Process of CSR Clauses’ (2023) 9 Heliyon e15120; Mao Jun Xiang and Belengar Francis Maïnkade, ‘The Human Rights-Based Approach to Sustainable Development: Lessons from Recent African Investment Treaty Practice’ (2023) 9 Heliyon e18578; Takwa Tissaoui and others, ‘Research Health Policy Implications of Corporate Social Responsibility Provisions in International Investment Agreements’ (2024) 102 Bulletin of the World Health Organization 94; Makane M Mbengue and Stefanie Schacherer, ‘Evolution of International Investment Agreements in Africa: Features and Challenges of Investment Law “Africanization”’ in Julien Chaisse, Leïla Choukroune and Sufian Jusoh (eds) Handbook of International Investment Law and Policy (Springer 2019) <http://link.springer.com/10.1007/978-981-13-5744-2_77-1> accessed 21 March 2024.

35 Agenda 2030 promotes a multi-stakeholder partnership on sustainable development, which seeks to mobilize and to share ‘knowledge, expertise, technology and financial resources’. Multinational enterprises (MNEs) investing in foreign countries are part of the global partnership. See, Agenda 2030, targets 17.16 and 17.17.

36 Karsten Nowrot, ‘Obligations of Investors’, in Marc Bungenberg and others (eds), International Investment Law – A Handbook (Hart Nomos, 2015) 1165, pt 18.

37 Ibid, 1161, pt 11.

38 Potential enforcement avenues go beyond the scope of the present paper. For an examination of accountability mechanisms in international investment law, see Martin Jarrett, Sergio Puig and Steven Ratner, ‘Towards Greater Investor Accountability: Indirect Actions, Direct Actions by States and Direct Actions by Individuals’ (2023) 14 Journal of International Dispute Settlement 259.

39 E.g. EU-Colombia/Peru FTA, Art 271; EU-Central America FTA, Art 288.

40 CAI, Section IV, Sub-Section 1, Art 2 ‘Corporate Social Responsibility’.

41 Julien Chaisse, ‘FDI and Sustainable Development in the EU-China Investment Treaty: Neither High nor Low, Just Realistic Expectations’, Columbia FDI Perspectives No. 323, 24 January 2022, <https://ccsi.columbia.edu/sites/default/files/content/docs/fdi%20perspectives/No%20323%20-%20Chaisse%20-%20FINAL.pdf> accessed 22 March 2024. See also, Petros Mavroidis and Andre Sapir, ‘What Is so Special about CAI?’ (2022) 30 Asia Pacific Law Review 348.

42 See also Kathryn Gordon and others, ‘Investment Treaty Law, Sustainable Development and Responsible Business Conduct: A Fact-Finding Survey’ (2014) OECD Working Papers on International Investment 2014/01.

43 EUSFTA, TSD chapter, Art 12.11(4).

44 CETA, Art 22.3(b): continues ‘such as those in the OECD Guidelines for Multinational Enterprises, to strengthen coherence between economic, social and environmental objectives’; and EUVFTA, Art 13.10(2)(e).

45 CPTPP, Art 9.17.

46 PACER Plus, Art 5(2); See also Chile-Hong Kong China SAR BIT, Art 16.

47 See Canadian BITs with Guinea, Art 16; with Burkina Faso, Art 16; with Serbia, Art 16. An exception constitutes the BIT with Côte d’Ivoire as it contains a binding obligation: ‘shall encourage’, see Art 15. Similar hereto are Canadian FTAs, e.g. Canada-Peru FTA, Art 810.

48 EU-Angola SIFA, Art 34.1.

49 Qian Xu, ‘Scoping the Impact of the Comprehensive Agreement on Investment: Liberalization, Protection, and Dispute Resolution in the next Era of EU–China Relations’ (2022) 30 Asia Pacific Law Review 93, 121. The author finds that in general ‘human rights-friendly provisions in Chinese IIAs have gradually increased since 2000’.

50 China-Cambodia FTA, Art 8.3(3). See also China-Cambodia FTA, Art 8.4.

51 Nicolas Bueno and others, ‘Investor Human Rights and Environmental Obligations: The Need to Redesign Corporate Social Responsibility Clauses’ (2023) 24 The Journal of World Investment & Trade 179, 198. See also, Caroline Lichuma, ‘International Investment Law Reforms and the Draft Business and Human Rights Treaty: The More Things Change, the More They Remain the Same?’ (2023) 24 The Journal of World Investment & Trade 718, 742.

52 On the debate of whether corporations can be addressee of international law obligations, see Oliver de Schutter, International Human Rights Law (CUP 2019) 468.

53 Brazil-Suriname CIFA, Art 15.1-2; see also Brazil-Ethiopia CIFA, Art 14.1-2; Brazil-Malawi CIFA, Art 9.1-2.

54 Indian Model BIT, Art 12.

55 E.g. Argentina-Qatar BIT, Art 12.

56 Makane M Mbengue and Stefanie Schacherer, ‘The ‘Africanization’ of International Investment Law: The Pan-African Investment Code and the Reform of the International Investment Regime’, JWIT 2017.

57 The Protocol on Investment (POI) under the African Continental Free Trade Area (AfCFTA) began among the 54 countries that are parties to the AfCFTA in December 2021. At the 36th Ordinary Session of the Assembly of Heads of State and Government of the African Union on 18–19 February 2023, the Assembly concluded and approved a draft AfCFTA Investment Protocol. It is still subject to ratification and implementation by AfCFTA State Parties.

58 AfCFTA Investment Protocol, Arts 33–40.

59 Morocco-Nigeria BIT, Art 14.2-3.

60 Ibid, Art 17.

61 Ibid, Art 18.

62 Ghana Model BIT, Art 12; Botswana Model BIT, Art 11.

63 Bueno and others (n 51) argue that the legal liability of an investor in host states should be better addressed in IIAs. See also, Jarrett and others (n 38) 269, Xiang and Maïnkade (n 34) 12.

64 Metro de Lima v. Peru (I), ICSID Case No. ARB/17/3, Decision on Jurisdiction and Liability, 6 July 2021, paras 950–951 and 973.

65 Anglo American v. Venezuela, ICSID Case No. ARB(AF)/14/1, Award, 18 January 2019, paras 529–530; Aven and others v. Costa Rica, ICSID Final Award, 18 September 2018, paras 734–735, and 742; Burlington Resources Inc. v. Republic of Ecuador, ICSID Case No ARB/08/5, Decision on Counterclaims, 7 February 2017, paras 73–74; Rusoro Mining v. Venezuela, ICSID Award, 22 August 2016, para 606; Perenco v. Ecuador, ICSID Interim Decision on the Environmental Counterclaim, paras 34–35, 70, 321.

66 Aven and others v. Costa Rica (n 65) paras 699, 738.

67 Jean Ho, ‘The Creation of Elusive Investor Responsibility’ (2019) 113 AJIL Unbound 10. Jean Ho also finds that states are not making sufficiently use of counterclaims.

68 Elise Ruggeri Abonnat, ‘Counterclaims’, Jus Mundi, Wiki Notes, 1 August 2023.

69 For a more extensive examination, see, Xuan Shao, ‘Environmental and Human Rights Counterclaims in International Investment Arbitration: at the Crossroads of Domestic and International Law’, (2021) JIEL 24 Issue 1, 157.

70 Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07/26, Award, 8 December 2016.

71 Ibid, para 1188.

72 Markus Krajewski, ‘A Nightmare or a Noble Dream? Establishing Investor Obligations Through Treaty-Making and Treaty-Application’ (2020) 5 BHRJ 105, 122.

73 Urbaser v Argentina (n 70) paras 1194–1195. The tribunal also held that, even if a BIT does not contemplate investors as subjects of international law, this would not undermine the idea that foreign investors could be subjected to international law obligations. Moreover, the tribunal stressed that, in the light of recent developments in international law, it could no longer be admitted that companies operating internationally would be immune from becoming subjects of international law.

74 Ibid, paras 1205–1207.

75 UNCITRAL, Possible reform of investor-State dispute settlement (ISDS) Draft provisions on procedural and cross-cutting issues, 26 July 2023, Note by the Secretariat, UN A/CN.9/WG.III/WP.231.

76 Vaughn Lowe, International Law (OUP, 2007) 173.

77 For an overview of such legislations, see <https://mneguidelines.oecd.org/Session-note-2021-OECD-Garment-Forum-Mandatory-due-diligence-legislation-design-perspectives-from-the-garment-and-footwear-sector.pdf> accessed 4 March 2024.

78 Communication from the European Commission, ‘The European Green Deal, COM(2019) 640 final, 22.

79 Communication from the European Commission, ‘The Power of Trade Partnerships: Together for Green and Just Economic Growth’, COM(2022) 409 final, 3–4.

80 CS3D (n 6), CBAM Regulation (n 9), Deforestation Regulation (n 9).

81 Responsible Investor, ‘CSDDD Faces “Race against Time” after EU Member States Fail to Back Text’ <https://www.responsible-investor.com/csddd-faces-race-against-time-after-eu-member-states-fail-to-back-text/> accessed 25 March 2024.

82 The vote on 15 March 2024 marked the final chance for the CS3D to be approved by the Council before the European parliamentary elections scheduled for June 2024. The European Parliament is expected to pass the revised Directive on 24 April 2024, completing the formal legislative process. See Shearman and Sterling (n 8).

83 The March 2024 version of the CS3D is not available at the time of writing. Therefore, the analysis is mainly based on the previous proposal and on press reports.

84 Shearman and Sterling (n 8).

85 CS3D (n 6), Art 2 (1).

86 CS3D (n 6), Art 2 (1)(b), Arts 17–19 and Art 22.

87 LOI n° 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre, JORF n°0074 du 28 mars 2017.

88 European Commission, ‘Carbon Border Adjustment Mechanism’ <https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en> accessed 4 March 2024.

89 CBAM Regulation, consid. 72.

90 CBAM Regulation, Art 9.

91 Roza Nurgozhayeva and Dan W Puchniak, ‘Corporate Purpose Beyond Borders: A Key to Saving Our Planet or Colonialism Repackaged?’ European Corporate Governance Institute – Law Working Paper No. 744/2023, 24–26.

92 John Manners-Bell, ‘The Supply Chain Impact of EU's Controversial New Carbon Tax’, <https://futuresupplychains.org/whitepaper/the-supply-chain-impact-of-eus-controversial-new-carbon-tax/file:///Users/ssch/Desktop/Impact-of-Carbon-Tax_Jan-2023-2.pdf> accessed 4 March 2024.

93 Deforestation Regulation, Art 1. The Regulation will come into full effect on 30 December 2024, and 30 June 2025 for small and micro-enterprises.

94 Deforestation Regulation, Art 8.

95 Deforestation Regulation, Art 8 in combination with Arts 3, and 9–11.

96 Deforestation Regulation, Art 12.

97 Anthony Iswara and others, ‘European Union Palming Off Deforestation Regulation to Smallholders in Indonesia’ East Asia Forum 2023 <https://www.eastasiaforum.org/2023/10/10/european-union-palming-off-deforestation-regulation-to-smallholders-in-indonesia/> accessed 5 March 2024.

98 Ibid. See also, Politico, ‘Trade partners see red over Europe's green agenda’ 16 January 2023, <https://www.politico.eu/article/eu-green-agenda-has-its-trading-partners-seeing-red-climate-neutrality/> accessed 5 March 2024.

99 Nico Krisch, ‘Jurisdiction Unbound: (Extra)Territorial Regulation as Global Governance’ (2022) 33 EJIL 481, 504.

100 Ibid, 511 referring to Cedric Ryngaert, Selfless Intervention: Exercising Jurisdiction in the Common Interest (OUP 2020) 189. See Deforestation Regulation, consid. 11: ‘[Member States] have emphasised that since current policies and action at global level on conservation, restoration and sustainable management of forests do not suffice to halt deforestation’.

101 Nurgozhayeva and Puchniak (n 91) 20.

102 Heng Wang, ‘China's Approach to the Belt and Road Initiative: Scope, Character and Sustainability’ (2019) 22 Journal of International Economic Law 29, 43.

103 Li-Wen Lin, ‘Mandatory Corporate Social Responsibility? Legislative Innovation and Judicial Application in China’ (2020) 68 The American Journal of Comparative Law 576, 580. At the same time, the values of CSR exist in China since Confucius, see Menxin Lu, Corporate Social and Environmental Responsibility: Another Road to China's Sustainable Development (Brill, 2019) 229.

104 Lu (n 103) 228.

105 Lin (n 103) 581.

106 Company Law of the People's Republic of China (2023 Revision) Art 19: ‘When conducting business operations, a company shall comply with the laws, regulations, social morality, and business morality, act in good faith, and accept the supervision of the government and general public.’ The law is to be effective on 1 July 2024.

107 Company Law of the People's Republic of China (2023 Revision), Art 20.

108 Ibid.

109 Karin Buhmann, ‘Chinese Human Rights Guidance on Minerals Sourcing: Building Soft Power’ (2017) 46 Journal of Current Chinese Affairs 141.

110 Desheng Hu and others, ‘On the Environmental Responsibility of Chinese Enterprises for Their FDIs in Countries within the One Belt and One Road Initiative’ (2017) 5 The Chinese Journal of Comparative Law 36.

111 GIP website <https://gipbr.net/index.aspx?m=1> accessed 27 February 2024.

112 Ibid.

113 Ministry of Commerce and Ministry of Ecology and Environment, ‘Guidelines for Green Development in Foreign Investment and Cooperation’ (2021). See, unofficial translation by Client Earth <https://www.clientearth.org/media/jufbkljf/green-development-guidelines-for-overseas-investment-and-cooperation.pdf> accessed 27 Feb 2024.

114 Ministry of Ecology and Environment of the People's Republic of China (MEE) and the Ministry of Commerce of the People's Republic of China (MOFCOM), ‘对外投资合作建设项目生态环境保护指南’ [Guidelines for Ecological and Environmental Protection of Foreign Investment and Cooperation Construction Projects. Hereinafter: 2022 BRI Guidelines] (6 January 2022) <https://www.mee.gov.cn/xxgk2018/xxgk/xxgk05/202201/t20220110_966571.html> accessed 4 February 2024.

115 General Office of the MEE and the General Office of MOFCOM, ‘Notice on Issuing the “Guidelines for Ecological Environmental Protection of Foreign Investment Cooperation and Construction Projects”’ (5 January 2022).

116 Ibid.

117 2022 BRI Guidelines (n 114) Art 3.

118 Chinese Chamber of Commerce of Metals, Minerals and Chemical Importers & Exporters (CCCMC), ‘Guidelines for Social Responsibility in Outbound Mining Investments (GSRM)’ (2017).

119 Ibid, para 2.

120 Ibid, para 1.

121 Guidelines for Sustainable Infrastructure for Chinese International Contractors (SIG) issued by the China International Contractors Association and Dagong Global Credit Rating, <https://asiasociety.org/policy-institute/navigating-belt-road-initiative-toolkit/laws/chinese/guidelines-sustainable-infrastructure-chinese-international-contractors-sig> accessed 28 February 2024.

122 The State Council Information Office of the People's Republic of China, ‘Human Rights Action Plan of China (2021–2025)’ (September 2021) <https://www.ohchr.org/sites/default/files/documents/issues/business/workinggroupbusiness/2022-11-28/Human-Rights-Action-Plan-of-China-2021-2025.pdf> accessed 15 February 2024, 41.

123 BRI Guidelines (n 114), Art 3.

124 Guidelines for Green Development in Foreign Investment and Cooperation (n 113), Part III, para 8.

125 GSRM (n 118), para 3.7.11.

126 2022 BRI Guidelines (n 114), Arts 22–24.

127 China's comments on Article 8 of the BHR Treaty, see <https://www.ohchr.org/sites/default/files/Documents/HRBodies/HRCouncil/WGTransCorp/Session6/Article8/States/China_Article_8.docx> accessed 27 February 2024.

128 GSRM (n 118), para 3.3.4.

129 Ibid, para 3.3.6. referring to the ‘Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains’, elaborated by CCCMC and the OECD (2015) <https://mneguidelines.oecd.org/chinese-due-diligence-guidelines-for-responsible-mineral-supply-chains.htm> accessed 28 February 2024.

130 Ibid.

131 GSRM (n 118), para 3.2.2.

132 Mavluda Sattorova, ‘Investor Responsibilities from A Host State Perspective: Qualitative Data and Proposals for Treaty Reform’ (2019) 1(113) AJIL Unbound 26.

Additional information

Funding

This work was supported by the Singapore International Dispute Resolution Academy’s BRI Program.