美中贸易委员会-美国公司在中国的环境合规性（英文）-2019.3-27页_1mb

Environmental Compliance for US Companies in China: Challenges and Best Practices

Executive Summary

Since 2014, when China declared a "war on pollution," environmental protection has become a top political priority. This has led to stricter regulations, enforcement campaigns, and increased emphasis on sustainability. While this has helped level the playing field for foreign companies with strong environmental controls, it has also increased costs and uncertainty in the supply chain due to the rapid pace of regulatory changes and unpredictable enforcement actions.

Core Challenges

• One-size-fits-all enforcement: Regulators sometimes impose production cuts or shutdowns regardless of a company's environmental performance, affecting even those with advanced technologies.
• Excessively stringent, non-science-based requirements: Some local regulations exceed international standards, making compliance difficult and sometimes unattainable.
• Insufficient transparency: Environmental standards and policies are not always accessible or clearly communicated, creating uncertainty for companies.
• Hazardous waste disposal capacity: A lack of certified disposal companies leads to compliance challenges and increased costs.
• Unpredictable environmental approvals: Delays and lack of clear timelines for approvals, especially for environmental impact assessments (EIAs), disrupt business planning.
• Relocation pressure: Companies may be pressured to move due to local policies, land use changes, or community complaints.
• Intellectual property (IP) protection concerns: Some companies worry about the disclosure of sensitive information during EIA reviews.

Best Practices

• Proactively engage with regulators: Building relationships and communicating with regulators at all levels can help align compliance efforts with policy goals.
• Closely monitor regulatory changes: Use internal and external resources to track policy updates and ensure timely compliance.
• Mitigate supply chain risks: Diversify suppliers and create contingency plans to reduce the impact of sudden production restrictions.
• Conduct due diligence and regular audits: Regularly assess suppliers, industrial parks, joint ventures, and M&A targets to maintain compliance and supply chain integrity.
• Train staff on inspection responses: Prepare employees to handle environmental inspections by educating them on compliance procedures and testing methods.
• Shadow inspectors: Collect samples alongside environmental inspectors to verify results and identify discrepancies.
• Track post-inspection follow-up: Use internal databases to log inspections and ensure timely responses to identified issues.
• Communicate IP concerns: Engage early in the EIA process, request expert lists, and address potential conflicts of interest.
• Be vigilant for relocation signals: Monitor local government policies and engage with regulators to anticipate and respond to relocation pressures.

Environmental Policy and Enforcement in China

China's environmental policies have evolved significantly since 2014, with the central government playing a more active role in enforcement. Key developments include:

• 2014 "War on Pollution": Initiated a shift toward more sustainable economic practices.
• 2015 Environmental Protection Law: Enhanced penalties for polluters and allowed NGOs to file environmental lawsuits.
• 2016-2020 13th Five Year Plan: Incorporated environmental goals, including commitments under the Paris Agreement.
• 2018 Environmental Tax Law: Increased costs for polluting activities.
• 2018 Three Year Action Plan for Blue Skies: Aimed at reducing air pollution in heavily affected regions.
• 2018 Water Pollution Prevention and Control Law: Introduced discharge quotas and increased penalties for non-compliance.
• 2019 Soil Pollution Prevention and Control Law: Established a dedicated legal framework for soil protection.

Centralized Oversight and Enforcement

The Ministry of Ecology and Environment (MEE), formed in 2018, has strengthened central oversight and enforcement. The MEE has established a permanent inspection office, indicating that national-level inspections are now institutionalized rather than temporary. These inspections have led to increased enforcement actions, including fines, detentions, and production restrictions, although enforcement intensity has moderated slightly in recent years.

Emerging Trends

• More science-based enforcement: Regulators are gradually moving away from one-size-fits-all measures.
• Increased transparency: Some local governments are publishing environmental ratings and violator lists.
• Focus on high-impact regions: Areas like the Yangtze River Delta are seeing stricter policies, affecting chemical industry operations.

Case Study: One-size-fits-all enforcement

A company was asked to formulate an emergency plan for reducing emissions during heavy air pollution. Despite already implementing advanced technologies, the company was pressured to freeze production. Through effective communication with regulators, the company was able to demonstrate its compliance and secure a more flexible solution, highlighting the importance of proactive engagement.

Case Study: Overly Strict Scrap Import Ban

China's abrupt restrictions on scrap imports, including paper and plastic, have led to the closure of smaller recycling firms and a shortage of raw materials. This has forced manufacturers to use more energy-intensive materials, increasing their environmental impact. The policy underscores the need for companies to balance compliance with environmental goals.

Conclusion

Environmental compliance in China has become more complex and challenging for US companies due to the rapid pace of regulatory changes, increased enforcement, and lack of transparency. While these changes have created a more level playing field for environmentally responsible businesses, they also introduce new risks and costs. Proactive engagement, relationship-building, and strategic planning are essential for navigating these challenges effectively.

Appendix

• Enforcement Statistics (2016-2017): Highlighted the scale of environmental enforcement actions.
• Functions Absorbed by MEE: Detailed the integration of various government bodies into the new environmental ministry.

Glossary

• EHS (Environment, Health, and Safety): A corporate function responsible for managing environmental and safety risks.
• EIAs (Environmental Impact Assessments): Required for new operations and expansions, often delayed or uncertain.
• MEE (Ministry of Ecology and Environment): Central environmental regulator formed in 2018 to streamline oversight.