18 September 2016

Environmental compliance for businesses in China

Rapid economic growth, stimulated by a policy of reform and opening-up, has helped China to increase the wealth of its population and provided employment and development opportunities. However, the rapid growth has not come without a price: natural depletion and environmental pollution of air, water and soil have been unintended, but significant, side effects. Furthermore, rampant industrial non-compliance has exacerbated environmental problems in China. As time passes, the effect of industrial non-compliance has become more apparent. 

But the era of considering compliance as a sunk cost has gone forever. Meeting social and environmental standards is no longer optional as the last decade witnessed an important acceleration in building a comprehensive regulatory and institutional framework for environmental management. So it is imperative for enterprises in China to reevaluate their approach to their environmental compliance strategy.  

As is often the case in such complex circumstances, there may be business opportunities as well as challenges.  The purpose of this feature is to explore compliance with China’s environmental regime. We select seven topics here to help businesses in China to tackle any environmental compliance issues.

Please read the seven articles (Chinese only):



Opening credits

Those highrises and skyscrapers

And constant traffic

We are enjoying

Prosperity and convenience

But

We are losing a lot…

Do you

Still remember what color the earth used to be?

To safeguard our green homeland, we are always on the move.

Wu Qing    Partner King & Wood Mallesons

In recent years, we still have quite a lot of environmental issues in China, and public supervision is badly in need. The environmental pro bono litigation is a good way of public supervision. The Environmental Protection Law was adopted in 2015, and by the end of that year there were altogether 48 environmental lawsuits nationwide, more than the total of the past 8 years. Still, it’s far from sufficient,  partly because many environmental NGOs are short of hands, experience and expertise. We at KWM can play a role in this regard. We have an international team of lawyers who have an awareness of the public interest as well as legal expertise.

Wu Wei    Partner King & Wood Mallesons

In fact KWM pays much attention to public good. We set up a special foundation as early as 2008, and have a pro bono committee. Over the past decade, we were involved in a lot of pro bono projects, with positive feedback from society. When news of the toxic tracks in Changzhou broke out, we wondered if we should lend a hand, as we have experience in this kind of litigation. Indeed we persuaded ourselves to take on the case. To our surprise, the local government was considerate and supportive towards us. Local officials said that they wanted synergy with NGOs to improve the environment. It is our hope that we’ll be able to use our pro bono litigation expertise and contribute to a better environment and ecosystem.

Transition 

In protecting the environment

We don’t want to just clean it up after it is polluted

We want to keep it clean right from the beginning

Wu Qing  partner 
King & Wood Malleson

Compared with our pro bono litigation, advising clients on environmental issues actually takes up a greater part of our job. This is especially true when there is a new environmental policy, a new law, big changes in relevant regulations, or when major environmental pro bono cases occur. As a member of the NPC, I have opportunity to participate in environmental legislation. In this way, we have a better understanding of relevant policies, regulations and law enforcement, which makes us better able to identify environmental risks faced by enterprises. As a result, we can better advise enterprises on compliance issues concerning environmental protection. 

Linda Liang  Partner King & Wood Mallesons

EHS departments are important in many multinationals and domestic companies. E stands for environment; H for health; and S for safety. A prominent feature of EHS is the complexity of compliance management and laws and regulations. Take environmental issues for example. Besides comprehensive legislation such as the Environmental Protection Law, a lot of detailed, specialized legislation need to be taken into consideration, like air pollution, water pollution, noise pollution, solid waste pollution and radiation pollution. For our EHS team, an important task is helping companies build an EHS management system that suits their characteristics, their industrial standards and meets their business needs.

Wu wei  partner King & Wood Mallesons

As for environmental issues in businesses, environmental emergencies pose the greatest challenge for companies. The number of environmental emergencies peaked in recent years. How to address emergencies effectively as quickly as possible is of great importance. Our environmental team has rich experience in these matters and succeeded in handling many such cases.

Transition 

Protecting the environment means getting in the way of a business? No!

It can live profitably with the environment.

It is what we must strive for

Jin Weiqing partner King & Wood Mallesons

The environmental protection industry is growing very fast, and along with it come urgent issues of environmental governance. About 70% of these issues are unsolved, especially in those second, third-tier cities where environmental governance mechanisms and facilities are virtually non-existent. Given this situation, we are exploring new ways and mechanisms with local governments and enterprises, like setting up environmentally friendly industrial parks. In this way, we can have quick or systematic solutions to major environmental problems. Besides, such an approach addresses issues in transformation of traditional enterprises or reinvestment into new areas. We’ve had meaningful experiments.

Transition

We call for environmental protection, without expediency

We practice what we preach, without excessive haste

With us, environment and livelihood can go hand-in-hand

Wu Qing partner King & Wood Mallesons

The Jiuzhoujiang River flows through both Guangdong and Guangxi Province. Millions of people in Yulin, Guangxi and Zhanjiang, Guangdong rely on it for drinking water. So both provinces attach importance to treating its pollution. The current treatment is based on an agreement between the two provincial governments, which proves effective in the short term. The river banks are cleared of aquaculture activities and polluters. But in the long run, how to establish a sustainable mechanism remains an issue.

Luo Ai partner King & Wood Mallesons

When we take on a project, we think about a problem: how a one-size-fits-all approach would affect local people’s lives. I believe that our Environment Compliance team is not only an advisor on a project, but also a strategist. We consider environmental governance in the context of the local economy and livelihood, we assist government resolving environmental issues and coming up with a sustainable, long-term solution.

Wu Qing partner King & Wood Mallesons

We hope to learn from Europe, the US and other countries and regions, and apply in this project their experience and practices in market-oriented compensation for pollution. Our ultimate goal is to cure pollution, upgrade industries, build a market-based model, and most important of all, to realize sustainable subsistence and development for people living along the river.

Closing credits

Clean water and blue skies are just one thought away

Driving to a “green future”,

We are already on our way.

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
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