Beijing acts to make green efforts a must for IPOs
Eric Ng in Beijing and Daniel Ren in Shanghai
Beijing plans to require listed companies to report efforts at environmental protection in a move to further tighten regulations on corporate polluters and foster conservation and green business practices, a State Environmental Protection Administration (Sepa) official said.
Sepa and the China Securities Regulatory Commission were drafting rules on the initiative and might launch a pilot programme next year, Wang Jinnian, an associate dean and chief engineer of Sepa's Chinese Academy for Environmental Planning, told an investment conference.
'The government has already implemented rules banning companies failing to meet environmental protection regulations from raising funds either through initial public offerings or secondary share issues,' Mr Wang said.
'But after the fund-raising activities, how can we ensure their expansion projects are developed in an environmentally responsible way?'
For the pilot programme, Sepa and the CSRC plan to pick 100 listed companies from 11 key sectors whose activities are most likely to pollute or damage the environment. Mr Wang did not give details of the rules.
A CSRC spokesman said Sepa would have ultimate decision-making power on the policy but the CSRC would provide a list of the 11 sectors.
'We will co-ordinate with Sepa to enforce the new rules,' he said. 'The CSRC has been attaching great importance to healthy industrial development and environmental protection.'
A spokesman for Hong Kong-listed China Power International Development said additional disclosure requirements should not be burdensome, as the firm had already been reporting green initiatives, such as progress in installing desulphurisation equipment and closing small plants, in their earnings reports.
Beijing in August tightened implementation of corporate pollution control measures, giving Sepa power to review compliance by listing candidates and new share sales by listed firms. It replaced provincial-level agencies as the lead authority to audit pollution-prone companies that seek to offer shares.
As part of listing requirements, firms must meet national and local pollution discharge standards and have an advanced level of pollution control in their respective sectors.
They must also have a 100 per cent compliance rate in submitting documentation on environmental impact assessments of plant construction, renovation or expansion.
Pollution reduction facilities must also attain a 95 per cent operating rate and all pollution charges must be paid as required.
Sepa blocked the A-share listing of Zijin Mining Group after finding one iron and four gold mines it operated failed to meet environmental standards. Zijin closed those mines and excluded them from listing.
Mr Wang said Sepa was working with relevant authorities to create a 'green capital market, green bank credit market, green financial products and green insurance systems.'