Covered Documents: Measures for the Legal Disclosure of Corporate Environmental Information (Consultation Paper); Formats of the Legal Disclosure of Corporate Environmental Information (Consultation Paper)
Date of Announcement: 24 September 2021
Status: Consultation Ended
Following the release of China’s capital market regulator CSRC’s Standards for the Contents and Formats of Information Disclosure by Companies Offering Securities to the Public No. 2—— Annual Report (2021 Revision) to mandate listed companies’ disclosure of pollutants discharge and their prevention, the Ministry of Ecology and Environment (MEE) released a new consultation paper on corporate environmental disclosures. This paper asks non-listed Key Pollutants Discharge Units and listed companies that were fined for environmental violation to also disclose their environmental impacts. Consultation ended on 24 October and the final document is expected by year-end.
According to the measure, firms determined by the MEE as key pollutants discharge units, firms asked for mandatory clean production, listed companies and bond issuers with severe environmental violations during the past year should disclose essential environmental information.
Primarily, severe environmental violations include a penalty of more than CNY 100,000, restricted production or business suspension, and a withdrawal of environmental permits.
Scope of Disclosure
Apart from the additional requirements imposed on firms asked for mandatory clean production and those with severe environmental violations, the three types of firms will need to disclose their use of pollutant prevention facilities, discharge of wastewater/waste gas/hazardous stances, the production, storage and utilisation of wastes, and carbon emissions.
Notably, the disclosure of carbon emission is only a requirement on those involved in the carbon market. They will need to publicize the annual actual emissions of the current year and the past year, as well as the status of the surrendering of allowance.
According to the measures, firms that are not compliant with the rules, including those that do not disclose, or make false, incomplete, and/or late disclosures will be fined up to CNY 100,000 and their behaviour will be part of their record at the MEE.
Listed companies and bond issuers with severe environmental violations during the past year will additionally disclose the environmental characteristics of their financing behaviour, which include the form of financing (equity, bank lending, bond, etc.), the amount and use of proceeds, how their invested projects respond to climate change and the project’s environmental impacts and protection.
The latest document is in line with the plan to reform the mechanism of Mandatory environmental information disclosure released by the MEE in May 2021. The reform plan shows a roadmap where new measures on environmental disclosures will be available by 2021, which implies the official document will be released within year-end. According to the roadmap, the MEE will revise the regulation on the format of environmental disclosures made by listed companies and bond issuers by 2022.
The new measures involve more firms, including non-listed companies that have caused significant environmental impacts. However, firms will not remain on the list once they have remedied their improper conduct, as the aim of the measures is merely to improve the conduct of firms. Firms that leave the list of key pollutants discharge units will no longer need to make disclosures in the due year. Firms that require disclosures because of environmental violations will need to make disclosures for the following three years after the violation and would be free from such responsibilities if no new violations were found in the three-year period.