CHINA’S GREEN ENFORCERS
China’s green police get tough.
By Mike Chambers

Is China finally moving beyond talking green to taking real action? Last month, the State Environmental Protection Administraion (SEPA) announced it had delayed the IPOs of 10 major companies last year, including those of China Coal Energy and Zijin Mining Group. The agency said it would continue to use financial pressure—including attempting to derail bank loans for offending companies—as a tool to drive compliance.

Such enforcement efforts appear to be bearing fruit. State Environmental Protection Administration Minister Zhou Shengxian proudly claimed during a speech in January the first “‘double fall’ of the total discharge volume of [two] major pollutants nationwide in the first three quarters of last year, and the environmental protection work of China has shifted from the stage of passive treatment to active treatment.”

That active approach will only intensify now that the latest bureaucracy shuffle has elevated SEPA from low-level agency to a soon-to-be Cabinet-level ministry. But the environmental watchdog still faces constraints. For now, regulators still have to rely on local officials for most pollution reporting and regulation enforcement. “While SEPA is trying to actively enforce more regulations, the provincial level has a lot of autonomy in implementing national policy,” explains Liam Salter, head of climate program for the World Wildlife Fund (WWF) in Hong Kong. But the Chinese government is determined to “legislate increased public information” in an effort to expand SEPA’s reach, he says.

In fact, public activism—long dormant in China—may soon become another nettle for companies, according to a new report published by the WWF, China’s Institute of Public and Environmental Affairs, and CLSA Asia-Pacific Markets. Throughout the country, citizens living in heavily polluted areas are demanding faster action against polluters. A significant trend is “the public as watchdog, which has strengthened in the last 18 months,” says Slater. “This May, [China] will test a new law that mandates factories to disclose pollution data upon request.”

Such aggressive measures will force companies to examine the environmental records of vendors, investment targets, and partners in China. Whether such maneuvers can rein in China’s pollution problem remains to be seen, but WWF’s Slater believes the days are over for “companies and investors that have assumed they can continue to turn a blind eye to polluters in their supply chain and think they’ll keep getting away with it.”