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Advocating via Stock Exchanges. Experience of the Rivers without Boundaries Coalition

Authors:
  • Daursky Biosphere Reserve and School of Humanities & Social Sciences at UNSW Canberra

Abstract and Figures

Presentation describes the RwB Coalition experience with financial advocacy at different stock exchange institutions. It was compiled to argue that despite highly specialized nature of stock exchange operations there are clear advantages for grassroots groups to pursue their advocacy objectives there.
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Advocating via Stock Exchanges:
How to take advantage of stock exchange mechanisms to
influence large overseas investments. E.Simonov
CHINA shares 17
basins with neighbors
RwB keeps watch on 8
of those...as well as on
some other great rivers
Stock Exchange as a platform
for advocacy groups
Why stock exchange?
I. High vulnerability of target company - all
stakeholders behave as if a placement at SE is
the ultimate test for a company\project
II. Bonanza of Mandatory Disclosure!!! - they
have to publish ALL data on their operations.
III. Wide publicity - more eyes watch IPOs and
other placements than some other deals
IV. Ability to campaign referring to rules of the
stock exchange to show project weakness
Hong Kong Stock Exchange 2011
2010 - China Yangtze Power (CYPC - belongs to CTGC) and Russian
En+Group (EvroSibEnergo Co.) formed JV "Yes Energo" and announced
USD 1.2.bln IPO to support 10GW hydro in Asian Russia at undisclosed
locations.
Feb-March 2011 the RwB teamed up with leading conservation groups in
Russia and issued an Appeal to Financial Institutions and Stock Exchange
Operators claiming lack of transparency and sustainability in the JV and
EvroSibEnergo Co.
The RwB cooperated with Banktrack, Pacific Environment, International
Rivers and issued " Investor’s Guide to EuroSibEnergo (ESE) "
Hong-Kong Stock Exchange (HKSE) replied to the RwB asking for
clarifications and then promised to discuss with En+Group necessity to
disclose specific hydropower projects and associated environmental risks.
They emphasized they cannot share this communication with us.... We
thanked them in advance and parted forever......
Hong Kong Stock Exchange 2011 Outcomes
Due to bad market conditions and growing criticism the IPO
was postponed 3 times and finally cancelled in mid 2011.
Environmental issues were routinely quoted as one of
obvious drawbacks\deficiencies of the IPO.
Likely, our appeal was the last drop for already very
problematic IPO, but this gave us weight in the eyes of
investors and helped in further campaigning against
EN+\CTGC hydropower projects
(see Transsibirskaya Hydro campaign also in Ejatlas)
The final outcome of this long campaign was joint assessment
of hydropower options in Amur river basin published in 2015
by En+Group and WWF which marked cancellation of any
En+\CYPC hydropower plans in that basin.
Taipinggou-Hingansky
most contested dam site on Amur River saved by HKSE:)
In 2015-17 HKSE (unknowingly) helped us by freezing trade in Hanergy
Thin Film Stocks, investigating and disqualifying its President Li Hejun
for unfair behavior.
We successfully used good HKSE news to persuade Russian agencies to
decline proposal from Hanergy Holdings (parent company of HKSE-listed
firm) to build Taipinggou Hydro - most damaging hydropower design
that haunts Amur-Heilong river since 1956. In Spring 2016 we
addressed Hanergy urging it to cancel both its proposal for Amur and its
intention to build Konglong Hydro on Salween River in Myanmar.
Amazar Pulp Mill at Shenzhen Stock Exchange 2015-2018
Amazar Pulp and Saw Mill (APSM) (2 million cubic
meters of wood per annum) was initiated in
Zabaikalsky Kray by Heilongjiang Province to make
up for decline in forest resources in China
In 2013 the RwB and partners assisted locals at EIA
hearings and documented huge potential harm to
forests, rivers and indigenous people, but
construction went on using the CDB loan.
In 2015 to raise new funds owners tried to sell
60% of the mill owner XingBang Co. to ZJR Sewing
Machine Co. via private placement at Shenzhen
Stock Exchange (SZSE) where the ZJR is listed.
This gave the RwB immense source of information
on the project, reasons it lacks finance, associated
companies and helped to plan strategic campaign.
In late 2015 APSM became focus of a report by
Russian President's Human Rights Council
In spring 2017 Environmental Paper Network and
RwB initiated a letter to Shenzhen Stock Exchange
Regulators on inadequate disclosure and violations
of SZSE Rules. Banktrack posted a "dodgy deal".
In summer-fall 2017 Shenzhen
Stock Exchange Regulators publicly
questioned ZJR Company regrading
APSM sustainability. Answers were
elusive and inaccurate, which we
reported back to SZSE Regulators.
In November 2017 the ZJR fired
underwriters of the placement and
in March 2018 officially applied to
China Securities Regulatory
Commission to cancel the
placement... (Bye, SZSE!!!)
The EPN, Greenpeace and RwB
warn other potential funders to
back out of the APSM unless the
project is completely revised
London and Singapore SEs - work in progress
En+Group owns Angara river Hydropower Cascade, which distorts natural water
regime of Lake Baikal World Heritage Site. Russian government in 2017 adjusted
water management regulations to allow the Group to abuse the Lake.
In 2017 the Group owner Oleg Deripaska announced 1.5 bln. IPO at London SE
The IPO "cornerstone investor" was Anan Group - parent of Anan International
owned by CEFC's Chairman Ye Jianming and listed at Singapore SE
LONDON:
RwB and Greenpeace addressed En+, LSE
Group and UK Listing Authority (UKLA)
with request to disclose impacts on Lake
Baikal in the IPO Prospectus.
In IPO Prospectus the EN+ recognized it
needs to mitigate its impacts, but failed
to specify how and when.
IPO Prospectus disclosed new important
information
In Russia En+ sponsors media-campaign
to show absence of impacts
RwB considers further communication
with UKLA on disclosure, but we have to
wait for final outcomes of the US Treasury
Sanctions imposed on the company.
SINGAPORE:
Anan's executive director was invited to
En+ Board, but no information on LSE IPO
found on Anan Int. website. In April 2018
he resigned after sanctions imposed by
the US on En+.
Actual 500 million at LSE was actually
paid by Russian VTBank which allegedly
"loans this money to Anan Group"
CEFC's Chairman Ye Jianming was
detained in China for corruption
investigation making the fate of Anan Int.,
which he owns, highly uncertain.
The RwB presently cannot decide
whether it is worthwhile to address
Singapore SE Regulators on the issue or to
wait and see the Annual report
(postponed).
Lessons learned from SE cases so far
Do not measure your success just by "lowering stock value" -your
action at SE may have other outcomes and help in other facets of
your campaign;
Act early , sometimes even when the prospectus is still undisclosed.
Refer to SE disclosure standards and "sustainability reporting rules"
Demonstrate ability to reach out to international constituencies and
coalitions - make them understand that the whole world is watching;
Your access to SE disclosure information - often is the key asset in
domestic campaigning - they no longer can tell lies unpunished;
If practicable one person\NGO should take on many cases from the
same stock exchange - because once you learned the rules and
tapped information channels it requires little resources to take on
additional cases at the same Stock Exchange;
Current level of skills and capacity to work systemically with SE,
Chinese or not, is relatively low in NGO community. So if we want
them to perform better - we need to make additional effort.
Disclaimer: The RwB has no lawyers or financial
experts on board. All stock-exchange advocacy tools
we used are available to any other grassroots group.
Go for it!!!
Selenge River -Source of Lake Baikal
Dam Construction on
Amazar River
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