China, Natural Resources and the World: What Needs to be Disclosed

The project aimed to develop a set of proposed guidelines for the Shanghai Stock Exchange (SSE) that would determine what extractive industry companies should disclose, especially in their operations outside of China. Accordingly, the Capstone student team defined what SSE’s reporting, legal disclosure, and compliance guidelines should be for the extractive sector in overseas emerging markets in terms of their use of natural resources and their sustainability. The team used international sources such as recent US Securities and Exchange Commission regulations (in particular the Dodd-Frank Act), proposed laws and regulations in the EU, and IFC guidelines, as well as conduct an examination of the practices of Chinese extractive industry companies in Latin America. In doing so, the team aimed to identify challenges and to determine what stockholders, investors, and other parties reviewing SSE-required reports should know in order to properly evaluate the prospects and risks of these companies.

The Capstone project team visited Colombia and Brazil in mid-March for field research. There, they conducted interviews with extractive companies, NGOs, investors, lawyers, and government entities. In addition to evaluating the practices of Chinese companies, the students was also interested in comparative studies of the overseas impact of extractive companies from other countries such as Canada. Their interviews and case studies from Colombia and Brazil were informed by a survey circulated to investment organizations, especially pension funds, to see what risk factors they consider valuable to be disclosed when determining whether to invest in an extractive company.