China Issues New Rule on Mandatory Environmental Disclosure

From February, companies will be required to compile annual environmental disclosure reports for submission by 15 March of each year.

China’s Ministry of Ecology and Environment (MEE) has issued new rules on the disclosure of environmental information by domestic enterprises.

The regulations seek to improve the legal disclosure system of corporate environmental information, as well as to promote the modernisation of the ecological and environmental governance systems and capabilities of local enterprises.

Under the rules, companies are required to compile annual environmental information disclosure reports for submission by 15 March of each year, covering environmental information from 1 January to 31 December of the previous year.

Companies must disclose information on the generation, governance and emissions of major water and air pollutants as well as overall carbon emissions, focusing on public health and corporate behaviours that are of interest to the public.

This includes disclosure of information on the discharge of toxic and hazardous substances and the generation, storage, flow, utilisation, and disposal of hazardous waste – so as to encourage companies to increase pollution control and carbon emission reduction efforts.

Companies also have to disclose information on ecological environmental governance, environmental risk prevention, environmental credit evaluation – to effectively open up information barriers between market entities and regulatory agencies, and guide enterprises to adopt environmentally friendly production, operation, and investment methods.

The focus is on companies with a high environmental impact, companies that implement mandatory clean production audits, listed companies, and bond issuers. Listed companies and bond issuers should disclose the information on financing and investment projects in terms of their impact on climate change, ecological and environmental protection.

Companies that do not disclose their environmental information, or disclose information which is false or inaccurate, can be subject to correction orders, criticism from regulators, and fines of CNY100,000. Late filings can be penalised up to CNY50,000.

The objective of the rules is to improve environmental performance, allow companies with outstanding environmental protection work to gain better visibility, help the market better choose partners with superior environmental governance, improve market fairness, and promote green transformation and development of enterprises, the MEE said.

The rules are also expected to improve standardisation and comparability of disclosed information, reduce descriptive and general information, ensure that environmental information is easy to understand and use, and ensure the public has easy access to environmental information.

The corporate environmental information disclosure system will be available for use by enterprises and the public for free.

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