Results

The results presented below offer an analysis of industry trends and an overview of company performance.

RANKING RESULTS INDUSTRY TRENDS DETAILED COMPANY RESULTS

RANKING RESULTS

In the final rankings based on the policy dimension of the benchmarking project, the companies with the most experience in overseas hydropower construction – Sinohydro International and Gezhouba – ranked number one and two respectively. Both companies had sophisticated policies and internal regulations across a number of KPIs, and the case studies revealed areas where project implementation exceeded company commitments. In contrast, Huadian and Huaneng struggled to do well in the area of Community and Labor Relations, and were ranked sixth and seventh respectively.

Comparing the company policy and project rankings, it is worth noting that some companies did well across the policy dimension because they made blanket commitments to international standards, such as those established by the World Bank’s Safeguard Policies. However, based on our fieldwork, companies often failed to translate these commitments to the project level. For example, Datang and PowerChina Resources were ranked third and fourth in the policy assessment, but dropped to seventh and fifth place in the project assessment.

Good

Fair

Poor

Rankings of Policy Commitments Assessment of ChineseOverseas Hydropower Companies

Rankings	Company Name	Environmental Management Scores	Community & Labor Relation Scores	Risk Management Scores	Overall Scores
1	Sinohydro International
2	Gezhouba
3	Datang
4	PowerChina
5	Three Gorges
6	Huadian
7	Huaneng

Rankings of Project Performance Assessment of ChineseOverseas Hydropower Companies

Rankings	Company Name	Environmental Management Scores	Community & Labor Relation Scores	Risk Management Scores	Overall Scores
1	Sinohydro International
2	Gezhouba
3	Three Gorges
4	Huadian
5	PowerChina Resources
6	Huaneng
7	Datang

The rankings reflect the actual scores awarded to the companies. Only the color ratings (good, fair and poor) are contained in this report. The final scores will be released after additional consultation is conducted.

INDUSTRY TRENDS

Finding 1. EPC Contractors outperform BOT Companies

In both policy and project assessments, EPC companies performed better than BOT companies. One of the reasons could be that EPC companies Sinohydro International and Gezhouba entered the global hydropower industry more than 10 years before the other BOT companies, and therefore have the advantage of experience. Another reason could be that the EPC contracts carry less responsibility than the BOT contracts, and therefore the risks are fewer.

Finding 2. Impact of Local Country Standards and Laws

The projects evaluated in this study are located in Latin America and Southeast Asia. Significant differences in performance were found between countries. With regards to environmental and social impact management, the projects in Ecuador were completed to a higher standard than those in Cambodia. Project performance in Malaysia and Laos was also much higher than in Cambodia. This indicates that local laws and standards in the host country are a key factor in determining project performance. Although about half the companies are committed to incorporating Chinese laws and standards as a minimum, on-ground implementation of this commitment is poor.

Finding 3. Policy Standards

Across all seven companies, policies regarding Risk Management were slightly better than Environmental Management or Community and Labor Relations.

The two EPC companies, Sinohydro International and Gezhouba, have developed more comprehensive policies than the BOT companies. However, the BOT companies are committed to following international standards. PowerChina Resources and Datang have committed to World Bank safeguards policies, and Datang, Huadian and Huaneng have endorsed the United Nations Global Compact. Datang ranked as the top company in policy among the BOT companies.

Out of all the KPIs, RM4 (Dam Safety) averaged the highest score. All seven companies have established safety management plans for project implementation and operation, which meet the relevant international standards. The second highest-scoring KPIs were EN3 (Environmental Management Plans) and EN4 (Environmental Impact Assessment), with Chinese companies commitments in these areas being very close to international standards.

Compared to international standards and best practices, important policy gaps include:

Environmental Management: None of the companies had policies or commitment to comply with relevant water management plans including basin development or water resource plans (EN5), or adopting environmental flows (EN10), which resulted in these two KPIs being the lowest scored in the policy assessment.

Community and Labor Relations: The majority of BOT companies have yet to develop policies promoting local employment and related training (CL8) and many of the surveyed companies haven’t developed adequate community relationship policies (CL1 involuntary resettlement and indigenous people, CL2 Social Impacts Assessment, CL3 meaningful and accountable consultation, CL4 complaints and grievance mechanism and CL5 benefits sharing commitment).

Risk Management: Most BOT companies have yet to make commitments to comply with local and national laws (RM2), and develop policies addressing transboundary impacts (RM3).

Finding 4. Project Implementation

Through the assessment of projects, we found that companies performed much better in the area of Environmental Management, compared to Community and Labor Relations, and Risk Management. Similar to our findings in policy standards, the two EPC companies, Sinohydro International and Gezhouba, again ranked as top performers.

Compared to international standards and best practices, important project implementation gaps include:

Environmental Management: The lowest scoring project assessment KPIs were EN4 (carry out rigorous and verifiable EIAs) and EN5 (comply with relevant basin development and water resources management plans). Reasons contributing to these low scores in EIAs include: in Cambodia, companies didn’t wait until EIAs were approved before starting construction, BOT companies did not incorporate or respond to local stakeholders’ comments in the EIAs, and none of the project EIAs were publicly disclosed. In relation to EN5, the Chinese companies didn’t have relevant policies, or pay attention to basin development plans in the implementation of the projects. All the BOT companies adopted environmental and social standards lower than Chinese requirements in their projects (EN2), and paid limited attention to protecting biodiversity and ecosystem (EN6) and maintaining environmental flows (EN10). Almost every Chinese company developed a project Environmental Management Plan (EMP) covering the necessary topics (EN3), but none of them had publicly disclosed the EMPs in line with international standards.

Community and Labor Relations: Chinese companies gained better scores in labor relations than community relations KPIs. The BOT companies generally failed to conduct comprehensive SIAs (CL2) or publicly disclose the SIAs, carry out meaningful and accountable stakeholder consultation (CL3), provide appropriate compensation measures and improve livelihoods and living standards for the displaced people, take measures to protect downstream communities, provide opportunities for project-affected communities (CL1), and establish complaint and dispute mechanism (CL4). Most of the companies had not committed to any benefit sharing measures. In the Labor KPIs, five out of seven projects had documented incidents of workplace death, which resulted in low scores in the occupational workplace safety (CL7).

Risk Management: all companies performed especially poorly in addressing transboundary issues (RM3), and systematic risk reporting and sharing information with local communities (RM5).

Finding 5. Comparison between Policies and Projects Performances

Overall, company project performance scored lower than company policies. Only Huadian and Three Gorges gained slightly higher scores for their projects, however the availability of information may have impacted this result, as both company project teams facilitated field visits. Poor policy assessment scores for these companies could also be attributed to the fact that no policies were publicly disclosed, and the companies did not respond to requests from International Rivers to meet with them. Datang ranked last in project performance.

The biggest gap between policy and project assessments was found in the EN4 – carrying out rigorous and verifiable EIAs. According to Chinese laws, large hydropower projects must have approved EIAs before construction commences, public consultation must have taken place during the EIA process, and the full reports of EIAs must be publicly disclosed. Although some Chinese companies committed to fully comply with Chinese laws, there were many instances of non-compliance. Two companies failed to receive formal approvals before commencing project construction. Additionally, the project EIAs had not been publically disclosed, and did not include a proper public consultation processes, nor had the EIAs been publicly disclosed. Similar issues exist in the SIA process.

DETAILED COMPANY RESULTS